Q2 2020 Acorda Therapeutics Inc Earnings Call
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Welcome to accordion Therapeutics second quarter, Twentytwenty financial and business update at this time, all participants are to listen only mode. There would be a question answer session to follow please be advised that this call is being taped at the company's request I would now introduce your host for todays call Tunis like have you know executive Vice President corporate communications at Acorda.
Please go ahead.
Thank you good afternoon, everyone before we begin that let me remind you that our presentation will contain forward looking statements. You tell me closures can be found in our SEC filings, which are public and which we encourage you to refer to.
I'll now pass the call over to our CEO, Ron Cohen <unk>.
Thanks, Jeremy good afternoon, everyone.
Starting with Ampyra Ampyra net revenue for the second quarter was 26.1 million Anvisa as well as July sales were consistent with our internal projections physicians and patients are continuing to express brand loyalty and.
And a quarter continues to offer to a pay co pay mitigation as well as free trials to those patients who are eligible.
Moving to Embry show as a reminder.
Imbruvica is inhaled leave a dopa leave it dopa is the gold standard therapy for improving symptoms of Parkinson's and embryos indicated to address the return of symptoms also known as off periods as needed.
Covert 19 impacted in breezes sales for the quarter visits to neurologist offices decreased by about 80% beginning in the middle of March and in breach a new prescription request forms or Prs dropped significantly beginning in the second half of March.
Our teams adapted rapidly to virtual platforms, and communications with prescribers and patients and Impreza Prs began to rebound in late April and have increased progressively every month since then.
In addition, despite these challenges Q2 and breaches sales net sales increased 7% over Q1 to 4.7 million that was a 57% increase over Q2 2019. We were also encouraged to see total paid prescriptions grew 6% in Q2 over Q1.
We incurred higher than expected Medicare rebates in the first half of the year, which impacted net sales, we believe that Medicare rebates. The rest of this year are likely to be lower the highest impact of rebates occurs in the donut hole period, which tends to be most marked earlier in the calendar year.
We believe that the various new programs, we implemented beginning in the first quarter have begun to yield results. Several additional metrics also improved in the quarter again, despite the challenges imposed by cobot 19, the number of cartons of embryo dispensed to patients increased by about.
30% over Q1 and by 87% compared to Q2 2019 dispense cartons are an indicator of true demand since prescriptions can vary in size because embryos used as needed up to five times a day, a month's prescription can range from one carton.
Up to five depending on the patient the averaging breach a prescription is now about 2.5 cartons up from closer to two cartons last year.
I mentioned that prescriptions began to rebound from the initial effect of Cove in late April and of progressively increase in each month. Since then including July. In addition July dispensed cartons increased by 8% over June to the highest level since launch.
The conversion rate of prescription requests to filled prescriptions also increased in the second quarter to 75% and that was a material improvement from an average 57% in Q1 and 48% during 2019.
We also had 6% growth and prescribers in the second quarter and now have over 2200 physicians, who have prescribed embryo since launch.
We were pleased to see high persistency among patients who use in breach at least every other day on average with about 70% of those patients still on therapy at 12 months.
Feedback from physicians and other health care providers has been the indicating that the additional inhaler training, we've been providing has improved outcomes and patient willingness to use cimbria.
So in 2020, we've been focusing on three areas to accelerate the growth of embryo and they are to drive patients to talk with their doctors abandoned brisa to expand access and to optimize the prescriber and patient experience will discuss.
These in more detail and becoming slides and I'll also provide more color as to how we been adapting to the challenges presented by covert 19.
So first with regard to cobot 19.
Our teams quickly adapted to the virtual environment. They move planned in person educational events to virtual programs and they also communicated with providers offices virtually.
In the second quarter, we held 56 digital programs with top movement disorder physicians speaking to other neurologists about 200 physicians attended these programs. We also ran 34 programs, reaching almost a 1000 people with Parkinson's a number these programs were developed in partnership with National.
Advocacy groups.
More recently, our sales team has returned to making in person office visits on a limited basis. All field personnel are following rigorous guidelines for social distancing wearing personal protective equipment.
So we discussed last quarter, the driving patient demand would be a major focus of the launch going forward by the end of 2019, we achieved about 92% awareness of embryo by health care professionals, our research indicated that patients who asked their doctors about ambrish.
We're likely to receive a prescription about two thirds of the time.
So we launched a sophisticated digital campaign in Q1 based on artificial intelligence machine learning engines. In Q2, we delivered approximately 103 million impressions through multiple channels. These included 59 million impressions through display banner ads and almost.
36 million video impressions on you tube in programmatic videos and of those.
70% of viewers watched the entire video.
Now bear in mind that these impressions were specifically to people with a known interest in Parkinson's disease.
These programs resulted in 238000 visits to the embryo consumer website with over 20000 high value actions taken such as downloading the Doctor discussion guide viewing patient videos or registering to receive more information and we believe that.
This contributed to the increase prescriptions in the quarter end in July even against the background of covert 19.
So as we also noted in our Q1 call in 2019, we learned that patients needed better training on inhalation and the use of embryo.
And we developed a helpful hints brochure and modified the instructional video that we provide to address these findings we've been providing these in all patient starter kits and as one marker of the impact of these new materials, we mailed a letter with a helpful hints guide to patients.
Actually had a prescription for enbridge and discontinued it and to date about 140 of those we just received the mailing have come back on the medication.
We've also provided nurse educators to proactively reach out to train patients who have received a prescription and in the middle of the second quarter. We added video chat capability to that to enhance the training further.
Ensuring a good initial experience is a key success factor and we're now hearing from physicians that as a result of these programs more of their patients are having positive experiences both with samples and their initial prescribed boxes.
We're also hearing from prescribers that the process for getting a patient onto a therapy has become progressively easier and is much easier now than it was last year. During Q2, we increased our covered commercial lives without medical exception to 80% from 75%.
We've also seen a softening of the enforcement of prior authorization criteria across both commercial and Medicare plans in the last few months as some of this may be cobot related we don't have any indication that these prior offs will become more restrictive in the future.
We continue to have 25% of covered lives in Medicare that have access to embryo without medical exception. However, theres been a significant decrease in a number of Medicare lives that are blocked from access to the medication and in most cases now when physicians are willing to take the next the necessary steps.
I got to patient on Brisa, they can gain access and our hub and reimbursement teams are supporting their efforts of course in a compliant fashion.
We've been pleased to see progressively improved conversion rates from Prs the prescription request forms to actual filled prescriptions as I mentioned in Q2, the average conversion rate of Prs to a filled prescriptions with 75% compared to 57% in Q1.
And 48% in 2019.
So moving to our second quarter 2020 financial performance.
This slide outlines key financials for the year, which you'll find a dressed in detail in our press release, we ended the second quarter with cash cash equivalents investments unrestricted cash of $103.8 million as we previously reported in July we received a 12.7 million dollar tax refund under the.
Cares Act, which allowed us to carry back 2019, and our wells to prior tax years and resulted in the refund.
This amount this 12.7 million dollar amount is not included in our quarter end cash balance that we're reporting today.
So in summary, our teams adapted to the challenges imposed by Cobot 19, and we saw significant progress for enbridge across multiple fronts and metrics in Q2, which have continued through July.
Our top priorities for 2020 are to accelerate in breezes growth using all of the strategies. We've just reviewed and to continue to support in breach ampyra as it continues to generate valuable cash and is still an important medication for Vms community and to drive long term value for shareholders managing our cost.
Structure and strengthening our balance sheet and in that regard one of our key initiatives and this.
Now is to monetize the excess capacity of our Chelsea manufacturing facility, which could offset expenses further and reduce our cost of goods were actively working on that now.
I'll now open the call for questions.
Thank you at this time I'd like to remind everyone in order to ask your question. Please press Star then one layer telephone keypad again, the start one to ask the question.
Pause briefly to compile the Q1 day roster.
Your first question comes from Michael You with Jefferies. Your line is open.
Hey, Ron Thanks for the update I appreciate it a two questions one ish.
How you are observing.
Short of the dynamics kind of commonality covance environment, how you're thinking about.
Steady increases in demand in step option in Q3 in Q4, presumably you're going to show growth in each of those maybe just talk about how the shape of that looking has ashworth going in August and then second question is the balance sheet question can you just kind of frame the key points as to exactly how much debt is due in 2021 what.
The options.
And then with.
The.
Current outstanding convertible I guess, just a question and then how to think about that versus one other options. You have just talk a little bit about that that would be would be great. Thanks. So much okay. Thanks, Mike.
So first with regard to the dynamics coming out of Covance. So, yes, it's it's a bit difficult to characterize given that although the parts of the country that started out with major issues back in March April have generally speaking.
Gotten much more control other parts of the country at the same time have been flaring up so.
Fortunately those trends just now seem to be stabilizing so hopefully we're going to reach the terminal phase in the not too distant future.
But what we have seen is that the physician's office as they the big shock was in March March April and that was really a stunning development, 80% decline at least in the neurologists offices that we track.
They've adapted to that and what we've seen is a progressive opening up of office is seeing people in person a lot more telemedicine and so generally we're seeing that both the patients and physicians have adapted to the conditions.
It could there be some some set back slightly in the next couple of months as as different parts of the country just have bigger issues.
The only be speculating what I can say is that at least through July we were really pleased because as I mentioned on a few metrics July actually was excellent compared even to June.
With an 8% increase in dispense cartons, which is as I said, the real measure for true demand and that was just month over month. So we're certainly cautiously optimistic we cannot predict where that's going to go but as far as we can see right now.
The entire medical establishment that we track and the patient population has largely adapted to the conditions and are getting back.
Certainly not to normal as we knew it six months or a year ago, but something much closer to normal.
Okay with regard to the convertible debt.
Just by way of reminder, for everyone. We we exchanged our convert that was do all of which was due at the end of June of 2021, we exchanged 80% of that for new debt that is now due at the end of 2020 for the remaining.
Dead or stub. If you will is 69 million worth that is still do.
At the end of June we are working with our advisors, our external advisors on ways of addressing that I can't give you any detail right now, but I can tell you. It is certainly top of mind and we are working on various options.
But can be clear Ron just because I think it's important you could either refinance that stab 69, nine you could paid in cash, which I don't think it's unlikely, but or you can exchange. It for stock can you just explain that because I think it doesn't matter versus the current cash, but yet so well.
Just broadly speaking and this would be generic to convertible debt right and what you just outlined our three of the main ways that you address it right. One is you you paid in stock. Another one is you paid in cash and another one is you do and exchange on new term.
For a longer period, so that those those are all ways that people can address convertible debt thats coming due.
Okay. Thank you.
Your next question comes from Laura Chico with Wedbush Securities. Your line is open.
Thanks for taking the question. This is Ken its yields on for Laurence.
So Ron we'd be interested in any commentary around you see the introduction of another account treatment to increases uptick typically neurocrine indicates there'll be launching on gentex starting this quarter.
That was long.
You are speaking specifically about Neurocrine strug.
Yes.
Okay.
Okay, so as far as I am aware.
Right now there are only two drugs on the market for on demand.
Treatment of off periods, one of them has been around a long time its application, which is a needle form of apomorphine that has various issues not least of which is that it's a needle.
And then Theres embryo, which is LIBOR dopa.
The treatments, you're talking about broadly come under a different.
Umbrella, which is chronic medication that is added to the Kurt the current chronic medication regimen of the patient.
That is intended to reduce the overall amount of time that the patient spins off during the day versus on.
That is not specifically competitive to what we're doing and in fact embrace Asia is intended as an adjunct to pretty much any chronic medication regimen you have to be under you have to be taking lever dopa carbidopa as part of it which 70% of parkinsons patients do take but many part.
And since patients require more than one drug some of them are taking two three or four drugs with different mechanisms in an effort to.
Alleviate there parkinson symptoms during the day.
In breach is meant for those times during the day or night when wed ever the regimen is whatever the daily chronic regimen is it fails the patient it stops working or it works its symptoms reemerge before your next scheduled time that youre supposed.
Take your drug.
And that has to do with the fact that the got absorbs medication poorly and many people with Parkinson's, it's actually highly variable we've shown that in our own PK studies.
Whereas and inhaled form.
We have shown to be.
A reliable way of absorbing the drug the onset of action occurs.
As soon as 10 minutes with with Enbridge. So what it does is it gives the patient the opportunity to intervene on their own when they feel that they are going into a wearing off of their existing drugs or an off period. It gives them the opportunity on the spot as needed to take an intervention.
And that is going to bring them back and and address those symptoms until.
Hopefully there next scheduled doses of of regular daily drug kick in so we don't see that as competitive it's.
It's a different category now.
I'll I'll offer that there is we believe another drug that is for as needed use coming onto the market. We expect in September it is apomorphine and it is delivered in a film under the tongue.
Thanks, it's absorbed in two or three minutes I understand under the tongue.
That is intended for.
As needed use and what we've said for a long time about that is that we actually believe it's likely to be a net positive because you will now have two companies to marketing teams to sales forces out there really impressing doctors and patients and educating them.
With the need to talk about off periods and address them and that would be a case of a rising tide raising all boats we believe.
Okay.
Okay. Thank you that's very helpful.
And then I guess.
One question on cash runway.
Cash equivalents of about 104 million, which includes the roughly 40 million in restricted cash.
Given the current degree pure revenue trajectory, how should we think about kind of friendly.
Yes.
Yes.
I'll hasten to add that those numbers do not include the 12.7 million that of tax rebate that we that we that we just mentioned.
Yeah.
You know I can't I can't comment specifically on that I can tell you that.
What we already have said publicly which is that we have we're projecting a 170 to 180 million of expenses on the year.
And that we are working right now too.
To reduce expenses further and the goal would be that as soon as possible. We would like to have that crossover point, where revenue is or cashes cat excuse me that the product sales or cash neutral to expenses and then go to cash flow positive.
So we are working on that right now in real time, and I mentioned one of the initiatives that.
That were very actively working on in terms of monetizing.
Additional capacity for manufacturing spray drying it at our embryo manufacturing plant.
Okay. Thanks, Ron.
Your next question comes from Ram Selvaraju with H.C. Wainwright Your line is open.
Thanks for taking my question.
I just wanted to know Ron if you could provide us with additional color on the relaxation fire off the requirement.
Being any evidence that what is driving that is not simply related to the cold at 19 pandemic is there anything I'm sorry, Ron It cut out just briefly in your first sentence. So could you I'm sorry to ask you to repeat it could you repeat but again.
Sure. So what I was asking what about the prior all so you mentioned that you're seeing some relaxation of fire Austin I was just wondering if you're seeing any factors that are not cold at 19 related that is driving that developed.
You know, it's very hard to say.
We can only speculate so we don't know for sure.
What we do see is that they're they're really appears to be relaxation, because we're hearing repeatedly from positions around the country that.
That they have been it's been easier to get access it's been easier to get through the prior auths easier to get Medicare patients and in fact, one of the silver linings of the higher than expected Medicare rebates that we talked about and then in the first half of the year is that it indicates that more patients.
Than we expected on Medicare were actually paying the out of pocket costs, which we think indicates the value that they're placing on the therapy.
Okay, and then with respect to the face to face promotional activity that you indicated that review.
I think that there's any risk in the upcoming month.
Given the way the covert 19 crisis has.
Evolve over the past several we use.
Restrictions might be re imposed on those activity or do you think that yet quickly now become the status quo.
We have seen no indication that's all we can say right I mean, we've seen no indication.
We have not heard through the great fine that there are any imminent plans to tighten those up again of course.
You don't know is is that going to be the same story six months for now we don't know, but what we can say is that.
The wide in our circles the wide spread and strong impression is that the Medicare relaxation has mostly been due to covert.
But now that it has been relaxed and you know and sort of everyone's getting used to the new normal it's not clear that they're going to have an easy path back to tightening up again, it could happen, but we just don't have an indication of that.
Okay can you tell us when you might potentially be in a position to resume given in region revenue guidance like what set of parameters what conditions would need to be there in order.
Yeah.
Well.
No I don't want to front run our decision on that we need to feel that theres enough stability in the marketplace and with regard to all the variables that were particularly the variables that were introduced by co vid that they are unlikely to backslide and that we can make projections with some confidence going for.
Forward. So I do think we need a little more time here.
We were.
As I mentioned were quite encouraged by what we what we've been able to accomplish over the last few months.
We're very encouraged by the trend, but we also now that it's new it's only a few months all we need to see as we come out of the Covidien crisis, we need to get a sense of what what the.
What the metrics are likely to be and what the trend lines are likely to be once those variables are out of the picture. So I don't know the bottom line is I don't know when we will be able to do that.
But we need some more time and more more data coming in over the next few months I would think.
Thank you.
Again, if you'd like to ask the question. Please press Star One. Your next question comes in Cory Kasimov with JP Morgan Your line is open.
Hey, Thank you for taking my questions is Turner on for Corey just a couple of quick one I'm just curious how much of the Medicare block wise decrease from softening prior auth criteria or do you do key outreach and then I'm just curious whats the current mix of commercial versus Medicare insurance.
I'm sorry, how much does how much to the logs to what.
How much did.
The reduction in Medicare block lives come from softening of prior auth criteria or some of your key outreach and work with.
You know with payers and providers or.
And then just what's the mix versus a commercial versus Medicare insurance.
Yes look it's it's.
It is an art more than a science to be able to decipher what was most.
What was most responsible what we can say is that we know for sure that there were.
Policy changes so yes, although I think I might have used I don't know if I use the term softening, but there were actual policy changes at the insurers.
That made the burden of the prior auths that reduced the burden the prior offs. So they would need to go back and reinvest in order to change that they would need to go back and reinstate old policies. So right now we don't see a move toward that but this was primarily.
The reason was that we had policy changes in place.
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And then with respect to Medicare versus commercial.
Where about.
60, 40, 60 somewhere between 65, 35, 60 40 Medicare to commercial.
Yes.
And the area and there are no further questions at this time.
Okay and.
Let me just let me.
Be more precise about the question or the response the question on.
On.
Policy changes in softening of PPA is because it can be a little bit dense so specifically.
We saw a reduction in people being blocked from getting access on Medicare part D and that was a policy change those were policy changes at the ensures we also did see.
A lowering of enforcement of prior auth, so it's a little bit different one is a complete block where you just can't get the drug those were lower due to policy changes the softening of the PPA days was.
Just the insurance companies not enforcing the PPA phase to the degree that they had previously so that also reduce the burden on the physician who wants to give the patient access and prescribed the drug. So it's really two part two parts of the same coin in a way.
And you said there are no more questions operator.
Assessing.
Do you have another question the Q is from Kenneth Atkins with Cowen and company. Your line is open.
Hi, guys. Thanks for taking my question you indicated that there were higher than expected Medicare rebate rebates during each one where those mostly felt in Q1 or Q2 and would you be willing to quantified the magnitude of that impact.
On sale, just we have a better idea.
So it takes too.
The the I can tell you that it was several hundred thousand dollars.
And that you know again, we work with a very highly regarded external group on those but as I said, it's very very challenging, especially in the first year of a launch.
Were you haven't even gotten through an entire year of experience because we launched or beginning of March end of February last year.
So, it's very challenging, particularly with med part D. When everyone's resetting their insurance and resetting their initial coverage period and donut hole for the year in January.
So we we estimated charge for the for for the first quarter.
It came in in the second quarter, when we actually got the actual charge from the government. It was much higher or significantly higher than what we had allocated for the first quarter. So we took the additional charge in the second quarter.
Again, as we gain more experience over time.
Which is what happened when we launched empyrean, we expect that we will get closer and closer and then get a much more finely tuned on being able to project those accurately.
Got it okay. That's helpful. Thank you.
And there are no further actually.
Again, if you'd like to ask the questions. Please press Star then one on your telephone keypad.
And those are all the questions you have at this time.
Okay, well thank you.
Thank you all for tuning in or we look forward to updating you in the next quarter have a great rest year week.
This concludes today's conference call you may now disconnect.
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