Q3 2020 Antares Pharma Inc Earnings Call
Really they are identified and described in today's press release and the accompanying slide presentation on slide two.
And from time to time in the Companys filings with the FCC on form 10-K, and as updated on cars is recent periodic filings on form 10-Q and form 8-K on parts is providing this information as of the date of todays conference call and does not undertake any obligation to update any forward looking statements contained in this conference call and as a.
A result of new information future events and circumstances. After the date hereof, except as required by law or otherwise the company cautions investors not to place undue reliance on these forward looking statements joining me on the call today are Bob Apple President and Chief Executive Officer, Fred Powell Executive Vice President Executive Vice President and Chief.
Financial officer, as well as Pat shape senior Vice President of commercial.
Let's review the agenda on slide three.
Bob will begin with a high level review of our business and Pat will provide a more in depth discussion on our commercial strategy and tactics for our proprietary portfolio. Fred will then go through the detailed financials and Bob will conclude with closing comments before opening up the line for your questions. Please turn to slide four.
And I will turn our call over to our CEO, Bob Apple Bob.
Thanks, Tom and good morning, everyone.
We are excited to report another quarter of record financial and operating results for the quarter third quarter, 2020, which we believe illustrates the tremendous growth opportunities across our business with our proprietary portfolio and partnerships.
Our total quarterly revenue increased by almost 17% year over year to $40 million, beating Street estimates with contribution of almost 38% year over year growth revenue growth from our proprietary portfolio and.
And a 6% from our totally partnered product development and royalty revenue.
This also brings our nine month year to date revenue to a record $105 million, a 23% increase year over year.
Furthermore, we grew third quarter net income by almost 380% year over year to $5 million or three cents per share and generated cash from operations of more than $14 million for the nine months ended September thirtyth.
Throughout the quarter, we effectively reach physicians and patients with our proprietary portfolio of products supported our partners with their development programs and manufactured over 1 million commercial auto injectors for our products and our partners products. Despite the ongoing impact of the COVID-19 pandemic on our employee.
Lease suppliers and communities we serve.
Furthermore, the recent announcement of the licensing of Nok during that for us from varying pharmaceuticals immediately expands our proprietary portfolio and adds another lever to our growth strategy.
As we continue to work diligently to support our growth initiatives. We are reaffirming our full year 2020 revenue guidance of $135 million to $155 million, which represents growth of between 9% to 25% for the full year compared to 2019.
With that overview of the third quarter achievements, let me start with our proprietary portfolio on slide five which represents our highest margin business and is the most significant growth driver of the company.
While trucks it remains a steady contributor our flagship product designs that remains our fastest growing brand in testosterone product on the market based on volume with.
With revenue growth of 74, and 160% in the third quarter and nine months of 2020 versus the same period last year.
Total prescriptions presided also increased 129 and 237% in the third quarter nine months ended September 32020 versus the same period last year based on QB a data.
The testosterone market continues to expand and we believe the demand for an easy to use virtually painless at home testosterone replacement therapy will further support the adoption as I've said.
We believe our switch messaging has already and will continue to resonate with physicians not wanting to crowther waiting rooms in offices, Brian injections and patients reluctant to venture into any type of health care facility for non emergency care.
We were steadfast in our strategy at the onset of the pandemic and leverage their virtual detailing platform and social media presence to connect with existing and potential patients and healthcare professionals.
As our sales force garner more in office visits with their physicians, we continue to effectively manage through to varying stayed home orders restrictions and phased openings as a pandemic hit the second wave in the U.S.
We believe a hybrid between virtual and in office detailing will actually provide our sales force with more efficiency on a going forward basis, particularly as we launch not derner, which brings me to slide six.
Is a detailed sensitive product that will benefit from improved disease state awareness as well as the attention of our specialty account representatives to aid physicians in proper patient identification and pull through.
We're excited to reintroduce reintroduced to physicians and their patients suffering from nocturia due to nocturnal poly urea a therapy that is clinically proven to treat the underlying etiology of the disease.
The second phase of the Nok during a re launch is targeted to start in the first quarter of next year, we plan amongst other initiatives to broaden and intensify our educational efforts to health care providers and introduce patient education and awareness initiatives all delivered through a multichannel effort.
Low have improved across the country.
Our most recent data shows nationally on average 60% of our sales calls have returned to in person with providers the remainder delivered via virtual tactics.
We believe the continued execution of both types of calls virtual and in person will be critically important to our continued growth throughout the remainder of the year.
Safety of our field personnel and health professionals as our top priority and we will continue to closely monitor and adjust activity based on state and local conditions.
In summary, we are very pleased with the continued growth of our proprietary business, while navigating through a very challenging environment in.
It remains an exciting time for our commercial organization as we integrate and relaunch nocturnal while continuing to stay focused on driving sustained growth of our flagship Xyo said Bob.
Bob I'll hand, the call back to you.
Thanks, Pat I hope, adding pad join our call helps our investors and any potential new investors better understand the opportunity. We believe lies ahead for zions that and what is successful relaunch of nocturnal could look like.
Let me now transition over to our partner business on slide eight which is also a driver of our overall growth.
First and foremost a success established generic epipen and its contribution to our growth. This quarter is a testament to the multiple shots on goal, we have with our partner business.
Even with the pandemic, we're pleased to see to have a recently garner a 48% market share of the epipen markets, which is their goal to reach nearly approximately 50% market share split with mindless epipen.
Their expertise and our expertise and delivery technology and support we provide our partners allows and towards the sharing their success with attractive royalties on top of cost-plus margin for the device itself.
That will also recently launched generic tear per tied to 11 European countries, Canada in Israel.
<unk> is it drove the right combination used for the treatment of osteoporosis and represents the first commercialization of our multi dose Penn platform in Europe.
The international approval and launch a generic term.
The net income for the quarter represent the highest amount in the company's history. So.
So let me know provide a more detailed review of the financial results for the third quarter and nine months ended September 30th 2020, starting on slide number nine.
Total revenue generated from product sales license and development activities and royalties was $40 million for the three months ended September 30th 2020, and increase of 17% compared to $34.3 million in the same period in 2019.
For the nine months ended September 30th 2020, total revenue was $105.5 million, which represents a 23% increase from $86 million for the comparable period in 2019.
Sensing and development revenue was $4.3 million and $8.8 million for the three and nine month periods ended September 32020, as compared to $1.2 million and $4.4 million for the comparable periods in 2019, the increase in the licensing and development revenue for the three and nine months ended September Thirtyth 2020 was.
Primarily from the Pfizer rescue pen and the Dorset slot of rope end development programs.
Royalty revenue was $6.7 million.
For the three months ended September 32020, compared to $8.4 million for the same period 2019 for the nine month period ended September 32020 royalty revenue was $16 million as compared to $18.1 million for the same period in 2019.
COVID-19.
Net income was $5 million or three per share for the third quarter of 20 compared to a net income of a million dollars or one per share in the same period of 2019 net income was for $8 million four three per share for the nine months ended September 30th 2020, as compared to a net loss of six $7 million.
Or four per share in the comparable period of 2019.
This quarter also represents the fourth how the last five quarters, where we've reported positive net income.
Finally, we have a strong balance sheet that we believe can support our growth initiatives.
As of September 30th 2020, cash cash equivalents in short term investments were $52 $2 million.
Paired to 45 $7 million.
As of September 30th 2019, we have generated more than $14 million in cash from operations for the first nine months of this year, which is a $24 million improvement from a cash burn almost $10 million in the same period last year I will now turn the call back to Bob for closing remarks, Bob Thanks, Greg.
In closing, we delivered outstanding quarterly results with record revenue profitability significant cash generations and continued upward momentum that is indicative of the strength of our organization.
We strongly believe our diversified business provide sustainability and will continue to advance and support our future growth as reflecting on slide 10.
While partnerships with Tyva dorsett, and Pfizer remain dedicated to the advancement of their pipeline.
We also have an extended product portfolio with nocturnal. It now represents another lever of growth beyond Zeiss day.
As we expect to continue to outperform we will look for additional opportunities to further enhance our proprietary portfolio.
We believe we are building a rapidly growing business for our shareholders that is not reflected in our market value.
Has it been demick continues to affect how we do business I appreciate the dedication of our employees as we effectively navigate a world that has obviously changed.
Operator, you can now open the mind for questions.
Thank you, ladies and gentlemen, once again, if you wish to ask a question at this time.
Calling on so or making calls on either virtual or live.
About 1900 of those are also not during their targets.
One of the things we want to remember that the volume of not turn up from a prescription perspective.
Somewhere around in total about 500 550 prescriptions per month.
Which gives us a good base all coming from this urology group to to kind of start building that back up.
Over the next next couple of months so from our standpoint, we look at.
As I have said primary target or a primary call and then and not during the secondary call with that Urology group that I just mentioned.
Okay, and maybe a little bit of press you a little bit there in terms of how many are currently writing for nocturnal and it sounds like the target is to get to 1900. So what is the delta maybe a bit of history on yeah.
Why you know under bearing it was under invested in why perhaps it settled in spite of the 515 prescription per month range.
And you know really the path to the upside is it more DTC marketing it looks like coverage tier three coverage is in place and so tactically what is the plan to expand the monthly prescription count Yep Yep.
Sure So I'll answer.
Both of those components from a strategy perspective, as as we kind of looked at this brand.
It was clear that fairy and strategically was kind of moving out of the <unk>.
Urology space for a number of different reasons.
And therefore did not put a.
Robust effort behind the product.
<unk>.
With their detailed calls.
But to be honest you know, we're still not at pre cobot levels for new patients patients still aren't coming in as much as they were in the past, but we are almost at those pre koby levels as far as new patient starts. So we're really starting to see that that building of the of the product and again in October which we.
Positions and so we expect that trend to continue and we really look forward to.
I see it continue on its growth trajectory going forward.
Right. If you want to take the second question sure.
Morning, Anthony.
Regarding generic Forteo, we're waiting to get the first royalty report for the international sales, we have the agreement with that type of where we would actually received were we do receive minimum royalty report 45 days. After the end of the quarter and sense have a announced that they started selling the.
Product in the third quarter of 2020, we would expect that report to come in the Middle of November we don't know what that amount is for the royalty but.
Well once we actually have the royalty report we would then receiving payment after that period of time regarding the device sales.
We would we have sold the you know the pre launch materials to Teva in 2019.
Oscar own injections, because there's fewer office visits that's number two.
And then lastly on business development can you just talk about how aggressive do you intend to be to add more assets to leverage your commercial infrastructure.
Infrastructure and are you are you also looking at.
Clinical stage assets. In addition to commercial stage assets like nocturnal help us understand your thought process there okay. Thanks.
David Thanks, David This is Pat Yeah, just to address the first part of the question right now all 100% of our sales representatives are active in the field.
We got a test hole.
Targets.
And encourage those folks to switch desire that and we had some success over the summer doing that as well and we will continue to look at that throughout the fall.
Okay and then.
David on your business developed means how aggressive we will we will be we continue to be very aggressive and looking at multiple assets and then what we what we are doing from a 30000 foot view is.
Strategically we're focusing on assets that are in endocrinology or urology, because that's where are 90% sales team is that is where they're having a lot of success and we want to build off of those relationships is the value of the sales team besides what they're dealing with reside in.
And no tracks and now hopefully not Donna is that is leveraging those relationships that they have with the physicians.
One of the few urology endocrinology sales teams out there and we have really good access so when we look at.
Business development opportunities, we're really trying to focus in on those areas. So we have a team is completely dedicated to looking at business development, we looked at.
Assets that are already on the market like Nocturne and we've looked at assets that are under review at the FDA and for various reasons.
Either or moving forward or we've decided to pass on those opportunities, but it's it's a key component to our strategy going forward is to build in additional products for our product portfolio now when we look at click.
Clinical stage versus marketed products I think what we're trying to do is get more products for the bag like we did with not during until we can build.
The revenue so we can build the.
The value very near term and then really.
Start to look at earlier stage assets as we get more and more success with the with the revenue growth and with our sales team and so forth. So.
When we look at earlier assets I would say that we want to really be past proof of concept, we want to be passed base to we wanted to be in a phase three or no that the data on one or two studies have been positive.
Clearly.
In the in the best way possible for the company for our shareholders.
And try to.
Limit any type of dilution and so when we look at opportunities depending on the size of them really depends on the avenues in which we live.
Okay, and how we're going to finance those and so royalty streams is clearly something we have as a company and they have a lot of value, particularly with the ones that are on market like at B. Penn and others.
And then we also obviously have a pipeline of royalty opportunities that also can be looked at so so David we do look at the various ways to finance eat and what I can say is when we initially assess an opportunity how we're going to finance. It is not part of the equation, we want to make sure. It's the right asset it's.
Two three which was up from 176000 units in queue too. So clearly there was a back to school increase.
But overall the market itself or back to school was impacted by Covid.
Year over year, the market was down 22%.
In the third quarter for both.
The myelin product tevis product any overall epipen, Mark which also includes a another rescue 10 from another company.
Like when you look at it.
Request by the FDA to pull the product and only thing. We can do is continue to provide product to a bank. During the review process. He makes been very public.
Public about their intent to challenge the FDA is positioned on Makena and.
You know they have publicly stated that the process will take some time.
No exactly how much time that will take but we know we're pretty confident.
In Q4, we will continue to supply product and then beyond that it really is a function of you know.
How he made.
Response to the FDA, but again their public statements have been indeed the appear.
The period of time that it takes could be extended you know into next year for sure.
So a very healthy spot.
Thank you.
Okay.
Thank you we take our next question from IDR waiver of Raymond James. Please go ahead.
Thanks, Good morning first.
First question for.
Bob and Pat I want to go back to the commentary provided around.
The synergies in terms of the call pattern with respect to not during a N enzymes, Dan I'm, obviously, a significant amount of overlap with existing [noise].
As I said subscribers, but I want to ask me. The question then in inverse manner I mean, there's a fairly large prescription base out there in terms of products prescribed off label for nocturia.
I'm not sure if you've really had a chance as if you had to kind of dig into that but wondering.
If you have sort of you know whether or not that may provide and additional opportunity in terms of being able to leverage xyo stead into urology practices that may be rent would have under prescribe birth of.
Zions did but are fairly high prescribers of ER products for right now period, not just knocked arena.
Yeah sure I'll answer that you know in that in the first phase.
Yeah were clearly staying focused on that core group of Xyo said prescribers that have a strong overlap with with nocturnal as we move into phase two we will certainly look at broadening that approach yeah, we want to make sure we're doing it.
In a way that's.
Super responsible to the flagship satisfy them, we're not going to get ourselves distracted and off course and driving that brand. So.
We have started to look at that and we'll start to refine that as we look for as we look into kind of first quarter of 2021 I.
I think too that if there is a segment of stock.
Doctors that mark.
Hendi prescribers for Nocturia, Yeah, we can look in business development to see if there are other companies that are covering that.
And look at a co promote whether you know they take you know nocturne into their bag, yeah, Laurie resides dead horse or so for it. So that you know we can explore other opportunities. If we see a segmentation that were not covering with our current footprint or we could you know I always add reps if we see.
That there's value at this point our plan is not to add reps.
To to cover nocturnal, but as we learn more and more about nocturia, which is a it.
An area that is a affects a lot of patients about 40 million people in the U.S. haven't it's essentially getting up at night, what he wants to urinating and obviously as you age there's more and more.
Patients that suffer from it.
So we think that you know if it's if this turns out to be.
No somewhere where we want to expand through corporate development or through sales force size.
We obviously want to maximize the opportunity, but really just starting to understand you know how our current doctors are writing it what it what the value proposition is you know from a from a patient standpoint, and we'll we'll try to maximize that as best we can and like we have like we are with as I said.
Okay. Thanks, and then I wanted to ask a follow up question of pet as well.
Just wanted to get sort of your high level observations on the you know the current strategies in game plans around.
But xyo stead and Otrexup, you know, obviously kind on the outside looking in with respect as I have said it would seem that things are going relatively well in the message would be sort of a you know who they broke don't.
Don't fix it but obviously, there's things that you probably see there that maybe.
Maybe a further optimizing and you know similar question for for Otrexup as well, whether or not you think there is anything that you know can be there to done there to sort of accelerate conversion of Oh, well you know what it's a very large methotrexate market, but has a you know not.
Yeah, and actually converting to the injectable form to the extent originally expected.
Yeah sure. So I'll start with with Xyo stead, there was some some key observations and we touched on this and and the overview I think that the part around focusing the effort in that.
Core group of physicians, who have written the brands since launch right that the kids that 6500, it maybe even up to 6800. Most recent data we really feel that that's.
A great opportunity for us to go deeper into prescribing a with that with that group and Weve sub segments of that group it into three or four segments and we're deploying our field force.
Against those folks so so going deeper with those who have already tried the brand that we believe is a great opportunity.
The second piece is we've only scratched the surface or from a digital social media standpoint, and looking into next year, perhaps being more assertive in in a in a space. There and then the therapy says as was alluded to as we evolve in this in this new environment and.
You know number one focus is face to face calls we're also looking to evolve our virtual platform overtime right because we've done a great job from the start everybody's doing it.
And the business is catching up to that and now we want to try to start evolving those those tools and those tactics in order to have this this hybrid dual approach what physicians. So those are three areas around zions to otrexup.
You know, we have a small and very focus group of prescribers as well and the key right. There for US is to maintain that focus in that group and see where we can we can do to go deeper with that that core set of physicians more to come on on Otrexup I think we're we're obviously, we see it as an important brand.
We're really dialing in a very focused effort there, but we're spending a majority of our time, making sure we can drive and sustain robust growth for xyrem stuff.
I think that when we look at it from a strategic standpoint really you know when we look at the upside of desires dead versus any upside of Otrexup is I've said clearly you know dwarfs otrexup any opportunity. So we don't want to divert the attention.
Of our sales team and even when you. If you were to AD sales team members, you and you still don't want to divert them from the flagship product design instead, and so we're looking at how to improve.
So with you to Otrexup performance, but you know one thing I'll remind everybody, it's a profitable product for the company.
It only right now about 15% of our sales call focus or about 20%, but now nocturnal will go down about 15%. So you know we we believe that we're doing the right thing by putting quality energy behind as I've said in a more energy around.
Knocked on a going forward.
Because we think that that both of those assets how much more upside than in otrexup, but overall again addresses profitable it's still valuable assets patients still use a doctor still use it and I think it'll continue to be utilized for rheumatology or for rheumatoid arthritis on a go forward basis, and we'll see what we can do to two.
To try to get more out of that product as we look ahead.
Okay and one.
Last question for Fred any directional commentary you can provide with respect to operating cash flow and operating income trends in the fourth quarter, given the incremental investment required to.
It's important to the relaunch of a doctor and I understand its could be relatively small but a any.
Any a directional commentary there would be helpful. Thanks.
Sure enough looking at the fourth quarter clearly our biggest drivers are exhausted as well as at B. Penn and so we continue to see the same level of support investments operating costs and margins coming through for both of those products. When it comes to unusual tax expenses or anything.
Larger in the fourth quarter as opposed to the third quarter.
Looking at where we stand now I don't see anything you know clearly we're still you know look.
Looking at the quarter as momentum from the third quarter building into the fourth quarter. Historically, we've seen our strongest quarters had been our fourth quarter. So we're looking to continue that as we end the year. One thing you know about the the margins we saw.
Going forward clearly proprietary products that have the highest margin.
Next year, we will continue to see that with nocturnal that actually has a better margin than our auto injector. So we would hope that would continue to drive the margin piece of our business. When it comes to the lower margin products. It's on the partner side and the third quarter had significant development dollars significant.
<unk> dollars and 50% of our year to date dollars for development came in the third quarter is really the doors just lateral pad as well as the Pfizer product. You know has started to really ramp up in terms of the work being done and so we would expect that a component to continue to go into the fourth quarter and 2021, So you almost half.
Heating pieces, if you will with higher product proprietary margins plus the partnered products and development. So overall I think when you're taking a look at the business I think we will see a margin improvement continue in 2021 from where we are right now because of the the focus on the islands outstanding.
And nocturnal and seeing both of those have significant growth.
Thank you our last question comes from Matt Kaplan of Ladenburg Thalmann. Please go ahead [laughter].
Hi, guys. Thanks for taking the questions and congrats on the progress during the during the quarter.
I wanted to zero in on balance that for a minute and can you give us a little bit more detail in terms of.
What your learnings have been as you continue to launch the product.
Nice uptick in T., though because it 19 pandemic situation as you pivoted to kind of more virtual sales.
Sales organization, what are the learnings that and systems that you put in place that you think you can expand or continue going forward to continue the momentum and in in growth that you see in that and and you know even ads as we kind of exit the pandemic you know sometime next year.
Hey, Matt I'm going to give that one to Pat. Thanks, Thanks, Matt Yeah, I mean, it's a great question and we've benefited over the course of the last six months from.
You know the extensive learnings from the virtual platform that we we long straight out of the gate right in our systems I think from a very sophisticated in terms, what we're able to capture in terms of rep activity and we have learned that.
Those folks who are balancing the effort of virtual calls with face to face calls are doing very very well. So they have they have embraced the virtual platform there.
Getting out to prescribers in a safe and effective way, where they can for face to face, but when they can't they're really pushing hard with a number of virtual tactics and so what we've done in this fourth quarter. In addition to five.
Fine tuning our targeting strategy to that 6500 group of writers to go deeper we have also.
Given guidance to our sales force in terms of the types of calls and the number of calls both face to face and virtual so we've taken those six months of learnings and now have tactically apply that across the entire country with all 79 representative. So there are certain virtual tools that that seem to pay.
Hi out better than others anytime we have a chance to do a face to face virtual luncheon or I'm, sorry, virtual lunch and learn a with a provider that's always always front and center email traffic is pretty high text messaging is pretty high and also letter campaigns and email camp.
Haynes that allow providers to a request clinical information promotional information patient information co pay card information, they're all in play and we see the variability across the country in terms of who is using it and who is not and as I said, we're giving that guidance to our team for fourth quarter and I think that did you know that common to the debt.
The pharmaceutical industry was historically, a little slow in adopting technology and and really how you changed the business and what I would say is I don't see that the <unk>. The the industry going back mean, meaning that if they've been successful like we've been in the virtual platform we're absolutely.
Going to continue to use a virtual platform post code.
We have seen it is more efficient and I think that once people are comfortable with technology and they see that you can get your job job done and actually can do a better job with it. It just becomes part of the normal process going forward and clearly virtual detailing everything before comment about you had to be in front of the doctor.
It'd be in front of the Doctor well now we're learning and I think as an industry. We're learning that you don't have to be in front of the Doctor. Every single time, you can be more efficient by doing a blend and so I think we're going to get more calls from our reps are going to get more productivity from our reps are using a combination of you know the virtue.
Oh platform as well as in person right. There's always that element of that touch point that I think is key for a product success and for it to be top of mind of a doctor or when they're going to write a prescription but in the end I think that going forward, we're going to definitely see a hybrid of how people detail.
And I think it will be.
Great for products like as I said and it took particularly in year two year three of the launch and continue to get momentum to be able to focusing more doctors and more calls about using both.
Right. So that's very helpful. Thanks for taking the.
The question.
Thank you.
Thank you.
Ladies and gentlemen, there are no further questions in the queue that will conclude today's Q and a session.
That concludes today's conference call. Thank you for your participation you may now disconnect.