Q1 2020 Earnings Call
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First quarter 2020 financial results conference call.
Then so be in listen only mode should you need assistance. Please send them a conference specialist by pressing the star Keith followed by zero.
Speaking today, so these chief.
<unk>, Chief Executive Officer, Scott Durbin, and Jenny Swindled Senior director of corporate Communications. Please note that this event is being recorded I will now.
On the Carlo work to do they need swindle.
Thank you operator and welcome everyone before we begin we would like to remind you that this conference call may contain forward looking statements regarding future events, where the future financial performance of the company any statement that is not a statement of historical fact is a forward looking statement. This includes remarks about.
Corporations projections expectations plans beliefs and prospects.
These statements are based on judgment and analysis as if the data this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward looking statements.
These risks and uncertainties are described more fully in the company's annual report on form 10-K, and other filings made with the FCC, which are also available on the company's website.
Oh, so any forward looking statements represent management's views only as of the date of this conference call and should not be relied upon as representing management's views as of any subsequent date.
I would now like to turn the conference call over to Scott Durbin, Our Chief Executive Officer.
Thank you Jamie good afternoon, everyone. Thank you for joining us today.
I'd like to begin the call. This afternoon with a summary of our first quarter results and milestones next I'd like to discuss the commercial impact of Kobe 19, and outlined the deliberate actions we've executed to significantly cut costs throughout the organization in order to reduce cash burn and to strengthen.
Our balance sheet.
Finally, I'd like to outline the trajectory of IRS, you like clinical development program.
And highlight the important upcoming milestones as well as provide our perspective for our business going forward.
To begin 2020 started with a quarter that demonstrated strength from a commercial clinical regulatory and financial perspective.
The effectiveness of our new U.S. recurring revenue model designed to increase physician adoption rates by reducing upfront costs and barriers to adoption was continuing to show traction and momentum was building well ended the quarter.
Arm with confirmation of the commercial models growing success and increasing physician enthusiasm. We began the initial steps early in the quarter to scale the program within our U.S. sales customer sport and marketing departments.
As previously stated this model was designed for rapid scalability. It was implemented in June of 2019 to provide the company with greater long term revenue per customer lower selling costs improve revenue from consumable sales provide more predictable quarterly and annual sales growth.
And improved profitability.
Scale, we believe this model can quickly lead us to cash flow breakeven.
As a reminder, the change to the recurring revenue model from the former capital sales model in the U.S. was a massive transformation for the company and its results were continuing to be realized through the end of February of this year.
However in March we began to directly experienced a disruptive commercial lift accept the corona virus pandemic.
Despite the commercial impacting Q1, we are reporting total revenue of one point threemillion.
And as of March 31st 2020, the company had an installed base of 849 for these systems worldwide.
479 of them in the U.S., which 91 had been placed under the recurring revenue model.
On the regulatory front during the first quarter clearances for next generation 2.0 system and treatment tips in Taiwan, a global key market and in Canada were reported these clearances are a testament to the company's continuing achievement of regulatory milestones manufactured at a significantly lower costs.
Cost in our first generation system.
I have 2.0 platform and consumable treatment tips are now commercially available throughout North America Asia I need over 30 European countries.
In Q1, we also achieved significant clinical milestones in our stress urinary incontinence harass you like clinical development program.
That advanced arched three arm short term feasibility study and with timely efficiency.
This progress however, preceded the topline read out of our U.S. sexual function trial and Unfortunately as reported in early April the Viiv to study did not meet its primary endpoint of demonstrating a statistically significant improvement at the mean change from baseline in the total female sexual function index at 12 months.
Although there was substantial improvement demonstrated in the active study are there was not sufficient statistically significant separation from the sham treatment group.
As I will discuss in detail in a few minutes continuing evidence both commercially and through multiple studies at the benefits associated with our see MRF treatment and the company's enduring potential to realize a multibillion dollar consumable market opportunity has resulted in our strategic business decision to.
Okay. That's all of our near term efforts and resources on advancing our assay like clinical development program.
Next I'd like to discuss the commercial impact of Cobot 19, and discuss the deliberate actions weve executed to significantly cut costs throughout the organization in order to reduce cash burn and strengthen our balance sheet.
The beep like the majority of companies and all industries had to respond swiftly to the unprecedented health market, an economic challenges, resulting from Covidien 19 crisis.
Let me summarize our organizational response first and then provide some detail.
First we implemented a range of operational changes is designed to support and protect the health and safety up our employees customers distribution partners and other contacts as necessary.
The majority of our organization continues to work remotely.
Despite restrictions that are beginning to lift in some cities in states.
The Companys financial health and commercial business Likewise required an urgent response.
As reported in April a series of significant cost cutting actions were implemented to drastically reduce expenses and reposition resources to support our current customers and our pivotal clinical development program in the treatment of stress urinary incontinence.
Although the expense cutting and realignment actions involved extensive sales team and staff reductions we have retained our ability to resume full operations and re scale commercial grows quickly as conditions improve.
Additionally, the successful warrant exercise transaction that was recently announced combined with existing cash has strengthened that leaves balance sheet and have provided the resources necessary to maintain our business strategy and advance. The S. You like clinical development program in the coming months as the co they'd 19 crisis continues to evolve.
Oh.
The ultimate goal of the important actions that we have taken as to preserve and create long term value for the company.
In April reductions made to our commercial organization, where significant and a result of approximately 70% to 80% of our existing U.S. customers, either temporarily closing or dramatically reducing services and staff in their medical practices.
This was the same with targeted or perspective physician practices and customers. As you know this was a result of the Kobe 19 stay at home orders and directives to hold nonessential medical treatments and elective procedures in an effort to combat the spread of Corona virus and protect public health and safety.
As a result of the commercial organization was significantly but temporarily reduced and refocus to support existing customers.
The reductions were done as full and partial furloughs to help ensure our ability to rapidly re scale the commercial team and operations when conditions improve.
We anticipate that until the cobot 19 pandemic abates practices begin to reopen and elective patient safety concerns are reduced that we will continue to experience reduced revenue from existing subscription customers as well as a greatly reduced number of new and prospective customers.
However, in the meantime, our talented commercial customer care and marketing teams are focused on support of our existing customers and engaging with new practitioners through a variety of digital means.
Our but leave University practice development and marketing programs are now available and virtual formats and participation is in fact at a record high level with existing customers and targeted physician prospects.
Many practitioners are using the force downtime to take advantage of our educational resources that will help build and support treatment volumes in their practices as elective procedures restart.
Overall, we are confident that the recent changes made to our U.S. commercial activities will support customers reduce costs and preserve cash.
Sale of our products outside the United States continue to be supported by the company's current distribution partners without significant tank change to the international business model.
Our predominate focus since the second half of 2019 has been on growing the business in key countries and regions in Asia.
As we know this region was initially the epicenter of the Corona virus, but thankfully countries within Asia had been showing signs of commercial recover.
Currently we anticipate a return to near normal physician utilization and distributor sales activity in the coming quarter and through the remainder of the year.
However, as in the U.S. selected patients continuing health and safety concerns may somewhat throttle the speed of returned to pre Kobe procedure rates.
And we continue to support existing distributors and customers in Europe in other global markets as Cobot 19 recovery efforts are less advanced.
Finally, I'd now like to address the advancement of our stress urinary incontinence clinical development program.
It is the achievement of near term key milestones in this program that we believe will set the course for our see MRF technology and the company going forward.
As she wise it condition that affects an estimated 25 to 30 million women worldwide and represents a 10 to 12 billion dollar total available consumable market opportunity.
We have demonstrated in three previous clinical studies that the viiv treatment safely improves that see why symptoms and reduces leakage for women.
Our resolute focus to which the entire organization has been repositioned.
It's too one complete the read out of the three are actually why feasibility study now targeted for late summer of this year.
And to achieve ft, A.I.D.E. clearance for our U.S. pursuit trial, which was re submitted in April and begin the trial as soon as practicable. Its he asked me why feasibility study is positive.
The current net three I'm asked you I've feasibility study compares our see MRF treatment and a cryogenic only sham treatment to a totally inert sham treatment for improvement about July and when it.
The prospective randomized single Blind study is being conducted at three clinical sites in Canada, where they planned enrollment of approximately 36 subjects randomized on a one to one to one ratio to each of the three study arms.
The primary efficacy endpoint is the mean change from baseline in the standard one hour pad way test at five months post treatment.
The primary goal of this trial is to demonstrate directional separation between the treatment arms, Andy inert sham or true placebo arm of the study.
Positive data read out from the short feasibility study, which strongly support initiation of our pivotal pursue trial in United States.
Fortunately from a timing perspective, the feasibility study investigational testing application was approved by health, Canada. The trial initiated enrollment completed in March before Cobot 19 shut down medical centers from performing nonessential medical procedures.
We have also initiated to change to the final follow up visits from three to five months.
We anticipate that this two month extension will provide more time for the investigational sites to resume medical services with Covidien 19 patient safety measures enacted and reduce patient health concerns.
This will also better support subjects compliance with the final follow up visits and minimize any potential protocol deviations.
As previously stated the final read out for the S. You I feasibility study is targeted in the late summer of this year and represents a major clinical milestone for Vivitrol.
Moving to the pursuit U.S. trial the importance of this study its design and implications for our future represented in the meaning of the word pursuit.
In keeping with our commitment to scientific rigor initiation of this pivotal U.S. trial pending I'd he approval by the FDA and a positive read out of the S. You I feasibility study will enable the company to continue its strategic pursuit for U.S. label expansion of our see MRF technology for a national.
Why indication.
Again re submitted to the F.D.A. in April the I'd Eve for the proposed pursue trial is a multi center randomized double blind Sham controlled trial.
The primary efficacy endpoint is intended to be the one hour pad weight tested 12 months post treatment.
Enrollment is intended to be approximately 240 patient set up to 25 study sites in the United States.
Randomized in a two to one ratio subjects in the active treatment arm will receive this I see MRF treatment of 90 jewels per centimeter squared of RF and Cragin Cooley.
Subjects in the control arm will now receive a clinically inert sham treatment of less than one jewel per centimeter squared of radio frequency and less than two degrees tissue cooling for criger.
It's important for me to emphasize the comparative treatments in the active control group in this pursue trial.
Unlike previous to the clinical trials with the exception of the currently underway asked you I feasibility study the sham treatment that will be administered in the control group will be a clinically entered or true sham treatment.
The minimal RF energy and the cragin cooling delivered by the Sham treatment, Ted will be at subclinical and therapeutic levels and thereby should not induce a treatment response in subjects in the control group.
By design highly powered pursued asked you IDE trial will compare that leaves see MRF treatment and the active group to an inner Cham treatment in the control group using the standardize objective one hour pad weight test and the anticipated target for initiation pending FDA approval of the I.D. is in the fall of this year.
In spite of the unprecedented challenges and uncertain duration of the co they'd 19 caused health and economic crisis, the importance of our upcoming milestones in the S. You like clinical program remains Paramount.
A positive read out from the asked you I've feasibility studies showing directional separation between the two energy arms and they enter Cham are true placebo arm will provide confidence in the ability of the U.S. pursue trial to achieve positive results and position for the need for a potential last July indication.
Although severe the actions taken to cut costs reduce cash burn reposition resources and refocus the organization, where imperative for the company to survive the magnitude and breadth of the cobot 19 crisis.
As a result of these actions and with continued diligence to cost containment measures I believe the company and our talented team will successfully address and adapt to the challenges we are and continue to face from this pandemic.
We are United in our focus to support our existing customers.
And to successfully achieved the upcoming clinical milestones that will advance our commercial efforts and ask you lie.
I'm so proud of the dedication and continued perseverance that it's the hallmark of the beef our vision has always been and remains to be the global leader and innovator and women's intimate health and wellness.
Operator. This is the end of our prepared remarks I'd like to thank everyone for participating in our first quarter conference call today.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.