Q2 2020 Adamas Pharmaceuticals Inc Earnings Call
Thomas Pharmaceuticals second quarter, 2020 financial results and corporate update conference call. At this time, all participants are no listen only mode.
After the speakers presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone few require any further assistance. Please press star zero.
I would like to turn call over to Peter Vozzo Investor Relations Representative predominate Pharmaceuticals. Please go ahead.
Thank you Gabriel and good afternoon, everyone before we begin I would like to remind everyone that this call will contain forward looking statements, which are subject to risks and uncertainties any statements regarding future events rope results or expectations are forward looking statements. Please note that these forward looking statements reflect our opinions only as of the data.
This call undertake no obligation to revise or update these forward looking statements in light of new information or future events, except as required by law information concerning factors that could cause actual results could differ materially from those contained in or implied by such forward looking statements are discussed in greater detail in our form 10-Q filed to.
Day, with the FCC, especially under the caption risk factors I'll now turn the call over to Neal Mcfarling Chief Executive Officer.
Thank you Peter good afternoon, everyone and thanks for joining us.
I'm pleased to be here with VJ Shreedhar, our chief commercial officer, and Chris practice, our Chief Financial Officer, VJ, and Chris will discuss the details of our second quarter performance in a moment before they do I would like to highlight a few key areas of progress.
During the second quarter 2020, Damas team continued to deliver strong performance and advanced the business towards our corporate goals I'm pleased that our colleagues were able to achieve this performance in light of the ongoing challenges posed by the cobot 19, pandemic and I want to thank them for their dedication and commitment.
As an organization, we've been able to rapidly identify and focus on the things within our control, we've adapted well and continue to see positive results from our new ways of working.
Although we expect the external environment to continue to evolve I'm confident in our ability to remain focused on delivering solutions to patients who rely on us.
And on executing our three strategic priorities to grow go coverage to raise the urgency to treat to differentiate to drive adoption and to improve access and fulfillment.
I'm pleased with the continued progress in these priority areas, which are critical to realizing in the large addressable opportunity for go covering.
During the second quarter, which you two key milestones in our strategy to differentiate discovery first the FDA accepted for review our supplemental new drug application for go coverage as a treatment option for off episodes in Parkinson's disease patients receiving 11 dopa based therapy.
The anticipated PDUFA action date is February Onest 2020.
If approved the amended indication would reflect the full spectrum of go coverage therapeutic benefit.
PD motor complications and better support physicians to identify appropriate treatments for their patients.
Second we received the new patent forget recovery that covers a method of reducing off time and IEC, increasing good ontime in people with Parkinson's disease being treated with love a dopa. This is a second patent to be issued for go covered that covers reduction in off time and demonstrates the strength of our IP portfolio.
In Q2, we achieved strong growth in product sales.
Driven by patient demand and physician adoption, which BJ will elaborate on at the moment.
In addition to product sales our financial results now include royalties from our longstanding collaboration with our again that began in 2012.
Midway through the quarter, we began recognizing royalties for namzaric, a once daily treatment for moderate to severe Alzheimer's disease in patients who were taking then epicel.
These royalties are in addition to the upfront and milestone payments, we previously received.
We continued to be disciplined with our operating expenses and dynamically investing resources to drive the growth of our business.
With a reduced cash burn clarity on our near term R&D commitments available cash on the balance sheet and confidence in our continued growth of go coverage. We believe we have the resources to execute our near term strategy.
In summary, we made substantial progress during the first half of 2020 on our strategic priorities.
We will continue to monitor the impact of Cobot 19 on our business. However, I remain confident in the resilience of our employees and in our ability to achieve our long term goal of delivering value for patients and shareholders I'll now turn the call over to BJ BJ.
Thank you Neil and good afternoon everybody.
I'm pleased to be speaking with you today.
I will begin with an overview our performance in Q2 and comment on how we have continued disciplined and focused execution of our commercial strategy through a highly unusual time.
Starting with performance Q2 total good called repeat prescriptions for Trx that exclude products from the free trial program, where 8150, representing strong year over year growth of 32% versus Q2 last year, and a 13% increase versus the prior quarter.
This trx performance reflects continued demand momentum for good coverage and was propelled by three factors hi read of refills improvements in fulfillment as well as new patients to the brand.
The high rate of refills was driven by patient persistence, which remains strong and steady at 45% to 50% at 12 months continuing to highlight the value recovery is bringing to people with Parkinson's disease.
In Q2, we saw the impact of this persistence with 7780 recurring paid prescriptions or our acts in the quarter versus the 6710 auto racks, we reported in Q1 2020.
In terms of improved fulfillment conversion rates from free trial to paid prescriptions rose to between 55 and 60% into two compared to the 50% to 55% we reported in the last two quarters.
Reflecting the continued positive impact off the koby care coordinators and other initiatives to improve our fulfillment center processes.
As we shared on our Q1 call our team rapidly you'd recognize the potential impact of Steve orders on patients on recovery and implemented several tactics to mitigate the disruption this might have caused either to patients transitioning from free trial to be prescriptions or would those reselling their prescriptions.
We enhanced communications from Gabelli onboard the clinics as well as to patients and carefully track the status of refill shipments with the purpose of ensuring our current patients did not experience any additional burden in refilling. Their prescriptions. We are pleased that strong execution of these initiatives and even.
Patients on recovery to continue just staying on and benefit from the treatment.
In Q2, we continue to adapt rapidly to minimize the impact of the pandemic on prescribers ability to get new patients started on recovery as I mentioned last quarter. There have been a mark decline in patient visits to clinics and therefore, an impact on new prescriptions for go covering.
Despite this impact there were 370, new paid prescriptions are and Rx in the quarter around 75% of the 500 and Rx we saw in the previous quarter, which we believe is positive given the challenges that all stakeholders faced during this time.
In order to drive demand, our Salesforce continued their virtual interactions with health care providers through HCP engagements as well as speaker programs delivered by the opinion leaders on our Speaker Bureau.
Strong execution on this front resulted in our maintaining approximately half of the pre pandemic salesforce activity level throughout the quarter.
We also provided brand information prescribers through digital campaigns and continue to support them with resources through the recovery care coordinators to ensure access or logistical issues were not barriers to adoption during this period.
The field access specialist team provided education and case supported prescriber offices navigating the prior authorization process for good coverage.
Further we supplemented our four week free trial program, allowing prescribers and additional pathway to initiate a patient.
Starting this quarter HCP can begin to free trial doing in office consultation or as previously request direct shipments to a pretty tough patients Hall.
We have designed both options to be tailor made for a hybrid commercial environment.
We also designed we also increase our direct to consumer communication with we've targeted virtual programs in collaboration with patient advocacy organizations seen robust participation by patients and caregivers.
We believe these activities drove new prescription even through the pandemic lockdown with physicians utilizing the newly implemented submitting prescriptions for recovery.
The effectiveness of our virtual promotional activities is also highlighted by the continued addition of new prescribers to the brand during the quarter.
Looking forward, we continue to remain focused on our three strategic priorities first increasing the urgency to diagnose and treat.
Through disease State education on the functional disruption caused by Dyskinesias at all.
Second you effectively communicating the clinical and health economic value to differentiate cookery and ensure appropriate patients are started on therapy.
And third reducing barriers to access to enhance the overall customer experience.
As we navigate the early part of Q3.
We continue to lean into a fluid complex situation and our innovating and Iterating based in our experience in Q2 in successfully executing on our priorities.
As of now we see a mix of in office patient visits and Tele health utilization within Rx continuing to be impacted since the overall number of patient appointments remained lower than at the start of the year.
We expect that patient appointments returned to pre pandemic levels and Rx growth will do so as well.
In the meantime, we are pleased with initial success that we've seen the solutions and tools that we launched in response to the pandemic and are confident that these tactics are durable and sustainable moving forward in the hybrid commercial environment emerging for the foreseeable future.
We are incredibly proud of our team for nimbly adapting to these uncertainties and continuing to execute effectively with an unwavering focus on serving patients.
Lastly, I will reemphasize that our addressable opportunity remains large with around 200000 patients being impacted by just can you show and off every day.
We remain focused on addressing this unmet need with good recovery.
I will now turn it over to Chris to provide an overview of our financial performance.
Thanks, BJ and good afternoon, everyone.
Please refer to our press release issued earlier today for a summary of our financial results for the second quarter 2020.
Total revenues for the second quarter 2020 were 18.8 million, which includes go covering product sales of 18 million and royalty revenue of approximately 800000 earned from Namzaric.
Based on our 2012 agreement with all again, we began recognizing a low double digit royalty on net sales of Namzaric, starting may 18th 2020 and will earn quarterly through 2024.
As for go covering the 18 million of product sales for the second quarter was a 41% increase over the same quarter last year.
This was driven by approximately 32% volume growth year over year.
The gross to net adjustment was in the mid teens slightly lower than our expectations at the beginning of the year, reflecting the number of new paid prescriptions in the period.
R&D expenses were 2.6 million for the second quarter 2020, compared to 8.6 million for the second quarter 2019.
R&D expenses were focused on completing our development activities for the Ats 51, or two for multiple sclerosis patients with walking impairment program.
As well as continuing our open label extension study, which will run through the end of this year.
With clarity around our near term R&D commitments, we've reduced our full year 2020, R&D expense guidance to be eight to 12 million, which included 1 million of stock based compensation from the prior range of 10 to 15 million.
During the second quarter 2020, SGN expenses were 23.2 million compared to 25.2 million in the second quarter of prior year.
Our ask DNA expenses represent our continued investment in go covering while the decrease from prior year reflects a combination of cost management activities as well as a slightly lower cost structure as we execute in a hybrid environment.
We are maintaining our 2020 SGN a expense guidance to be 105 to 115 million, which include stock based compensation of 7 million a reduction from our previous estimate of 9 million.
Cash and investments as of June Thirtyth 2020 were approximately 103 million.
Overall cash burn for the second quarter was 12 million a decrease from the approximately 17 million in the prior quarter.
We believe our cash position reaffirms that we are making the appropriate investments in the strategies and tactics that will make a meaningful impact to our tech for our stakeholders.
That concludes our prepared remarks with that I will now open the line for questions.
Thank you.
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Your first question will come from the line of Rudy Lee SVP Leerink. Please go ahead.
[noise] Committee on an iPhone.
So first congrats on the strong quarter.
Two quick question regarding Henry.
Parkinson's.
I was just about the prescribers kind of give us some color about other changes.
Scrubbers on how do you could be knocking changed the trend.
Progress prescribing in high volume prescribers.
These forward R&D at the we have like 2.2 meetings.
We'll go Curry.
Got it sounds like how much we spent four and that then I'm going to be spent four practices.
Thanks, Rudy I appreciate the the kind words I'll ask.
BJ to touch base in terms of the prescriber trends in our high volume prescribers, and then I'll ask Chris to talk a little bit about our R&D opex, but thanks Vijay.
Sure. Thanks, Rudy for the question.
We are pleased with what we saw in Q2 in that despite a highly disruptive environment. We continue to see pretty strong execution against our strategic priorities in terms of prescribers. What I would highlight is that we continue to add new prescribers to brand even during this entire.
Our period and.
Our prescribers, who are current prescribers continued to continue to prescribed for new patients all the way through the quarter as well. So both of these trends that we saw during the quarter are quite encouraging to us and Thats. Why we are are validating our strategic priorities and are focused on execute.
Versus GAAP.
Chris Great. So on the R&D side in terms of delineating between MSW NPD. Those are both considered go coverage. So if you look in our 10-Q and we break out the various projects. They're both listed under go coverage. So we don't have specific guidance. There just to remind you that we do have the open label study.
That is continuing throughout the year and so when we think about R&D guidance. We have the range of 10 to 12 million for the year and as you noted we spent about five so far for the first six months.
Got it that's very helpful. Thank you.
Your next question will come from the line of Jason Butler of JMP. Please go ahead.
Hi, Thanks for taking the questions and congrats on the quarter.
I guess just calibrate what can you talk about the trend of new patient.
Throughout the quarter did you see.
Hey, higher growth break towards the end of quarter then at the start.
And.
Any color that you can give about how you expect that's the progress in Threeq too and then to what extent, what strokes driven by existing prescribers versus new prescribers.
Hey, Jason Thanks for the for the kind words as well.
Let me maybe take a quick stab at a 30000 foot level.
The trends that we saw in Q2 were really off of the back.
The diagnosis of the business back in Q3 of last year and a lot of the tools, we've been implementing and tactics. We've been executing on over Q4 Q1 and now into Q2. So it really is around all three of our strategic areas that drove the performance and I'll ask VJ to talk a lot.
Little bit about that the trends that we saw in the quarter, what our expectations for three and the growth of existing versus new prescribers.
Thank you Jason for the question.
I would say that Q2, all the way through the quarter remained relatively fluid as it remains as we enter into Q3.
The largest proportion of our business was returning scripts as we have reported before.
And we saw an impact on and Rx.
In Rx business part of our business. During Q2 now this is not surprising given that we've seen an overall reduction in the number of patient visits to physicians either virtually or each person and this is not something unique to us. This is an industry wide impact that we have seen and what we are pleased about is the is the way that we and our.
Teams have pivoted and navigated well and the early success that we've seen with our tools that we've rolled out I won't get into a particular month over month trends within the quarter or what we are seeing.
In Q3, except to comment on the fact that and Rx remains impacted by the bye bye.
By the coal Colby pandemic and add the broader in environment improves and patients return we are entirely confident that the in Rx growth quarter turn as well because.
As I always highlights there is a huge unmet need and a tremendous opportunity to serve patients that are 200000 patients out there experiencing just can you run off and our tools and resources that we put into place are proving to be durable and sustainable even beyond what what we are seeing.
In Q3, so we're excited about that and as Neal pointed out we see the growth that we saw in Q2 as a validation of our strategic priorities.
Okay, great and if I could just a quick follow up on Namzaric could you just remind us all the.
Very good tolerability of the royalty stream, what we know about that in terms of any relevant generic settlements are ongoing challenges from generics for the products.
Jason I'll take the stab at the first part of this and that we're really pleased.
The long term partnership and.
First for us and allergy and them now.
Absolutely and feel like Brian said that partnership with solid in regards to the durability of Namzaric.
Forward looking statements in that regard, Chris you want talk a little bit about that yes. So we expect to receive a low double digit royalty on net sales of Namzaric through 2024 to answer your question Jason.
Okay, great. Thanks for taking my question.
Your next question will come from the line of David Amsellem Piper Sanders. Please go ahead.
Hi, everyone. This is zack.
David Thank you for taking my question just one quick one from me on good coverage.
Could you provide any color on where you think recovery might slot in the target since treatment paradigm for other management Abbas that said, especially given that the data is already in the label. So I guess basically what does it said that you think the label expansion will actually be able to drive uptake in usage for the product. Thanks.
Okay.
Great question.
I would highlight that go country remains highly differentiated.
Among the treatment.
Options management options available to physicians today, because it's the only pharmaceutical product proven to reduce both disclosure and off and thereby increase on time for patients who is a highly unique clinical profile what the the additional indication on the label will allow physicians to do is.
Identify patients who are experiencing these much faster because patients tend to talk more about their off episodes with physicians. So as that discussion gets into motor complications I think the identification of patients with disc in Asia and off would be will be simplified further so we see it.
Remaining in its place in terms of the treatment paradigm.
For a as an adjunctive therapy of choice for patients I'll leave it up a therapy.
Yeah. Thanks, BJ I always Adam I'll add maybe just a little bit more color on that Zach. This is about these three pillars, we talk about with go covering right raising the urgency to treat differentiating in driving adoption and that last one around improving access and decrease or decreasing the barriers to access.
And fulfillment or improving them. This.
Label extension for US really allows us and allows physicians to best identify appropriate therapies for their patients by raising it into the label.
Great and that makes sense. Thank you.
Your next question will come from line of Tim Lugo of William Blair. Please go ahead.
I think if this is John on for Ken. Thanks for the question Congrats on the strong quarter and just to from US. So first just wondering what kind of color you could give us on how effective your new digital engagement efforts had been in driving new prescription.
And second just wondering if you're seeing any regional impact for new starts around the pandemic and have those mid changing over time as outbreaks emergency side. Thanks.
I'll start with the second question first and I'll tell you that what we see in terms of patterns and prescription patterns are really all over the place when we look at the National map I think theres no correlation from our analysis to which states are officially opened versus close because we see them.
In impacted more by local and regional considerations, and which clinics are open and welcoming patients versus not so there's not a clear correlation in terms of or if you look at the Cdcs report on which states are open versus close.
You will not see a correlation to go coverage so we see it.
Relatively dependent on what the local conditions aren't which clinics are open then functioning at which clinics honestly have adopted tele medicine better than others and are seeing patients. So that's where we see the closer correlation in terms of our digital.
Performance, we've had strong execution of digital tactics to get our koby messages to increase and enhance.
Awareness of good coverage of the product option as well as its differentiated clinical profile, we see strong impressions numbers that have been generated we talked about them a couple of quarters ago. We are maintaining those levels, we see good engagement among high value physician populations and.
Most importantly, now all of our engagements having turned virtual.
We're also seeing encouraging signs of how would reaching out to patients in collaboration with our advocacy groups.
Conducted a few programs and attendance is really quite robust hundreds of patients and caregivers participating in them showing us the interest they have in a therapeutic option like recovery. So we're quite encouraged by that.
All right, thanks, and congrats again.
Thank you.
Your next question from from line of Rumsfeld Raj you have H.C. Wainwright. Please go ahead.
Hi, This is Blair coming on for Rob a couple of questions for me.
Expect to see a catch up period with our taxes and same thing would be patient, Sir you, except see a catch up there as well once economies start open.
Hey, Jay.
Yes so.
What we entirely expect to see when the economy starts to open and.
And and a patient patient visits start to normalize.
Is that as the broader environment improves patients will have to make appointments with their physicians, one way or another either live appointments in person or tele medicine appointments and as they make these appointments. We expect the Rx is especially the in our access to normalize because those have been the ones impacted by patients.
Not being able to speak with their physicians.
But but this is as I said before not unique to us, it's an industry wide phenomenon and.
Given the.
Kind of demographic that we serve these patients tend to be the highest risk in terms of the pro the profile of patients so vulnerable to the cobot pandemic. So we're not surprised that they're staying home and not making appointments, but when things ease up we entirely expect things to normalize.
I might add just want one into that Blair.
The rules that and I hope I mentioned previously that the diagnosis of our business and how we best put our resources towards investing in the tactics that are working are really starting to show that durability right. We started a lot of what VJ talking about quarters ago, not just this wasn't something that we pulled off in Q.
Two.
The diagnosis and the execution and the continued focus from our people.
Who are who quite honestly the team that we have the management team as well as our entire employee base all working through challenging times and these folks are stepping up and I have to tell you that I'm grateful for how they've executed but it gives me more confidence in the three areas that we've identified and are executing against give me real.
Real confidence that the future when people start going back to both.
To see their positions in a hybrid environment, we will be successful.
Okay, Great I appreciate the color and then just last week or me can you give us a little color on your discussions the FDA regarding Sn da and you expect to change your marketing efforts at all post approval.
The discussions are pretty easy they accepted our flash.
We are we are I got a PDUFA of the first of February 2020.
2021, I'm, sorry, 2021, and and we will we Havent our label today and clinical section of our label the treatment of off episodes and the clinical data. That's there to go with the Scania I think it will allow us to be able to ensure that we enjoy we have m. ours that are appropriately.
Okay.
Mentioning the indication statement with that fully addresses the full spectrum of motor complications, so we'll double down but it won't change what we're doing I think the messaging around.
The fact that go covering is approved and the only product that's out there to treat this confusion and all in terms of its clinical benefit.
We will remain.
Okay, great. Thank you.
We have no further questions at this time ill now turn the call back over to Mr. Neal Unfurling for closing remarks.
Thank you Gabriel in summary.
We remain focused on our long term goals and continue to execute our growth strategy for go covering.
We've been able to quickly adapt and implement new ways of working for the benefit of patients.
And we believe we have both the people and the resources to execute our near term strategy to deliver value to patients and shareholders I want to thank everybody for joining the call and appreciate your time, we look forward to speak with you again next quarter. Thank you.
Okay.
This concludes today's conference call you may now disconnect.
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