Q3 2020 Adamas Pharmaceuticals Inc Earnings Call

Welcome to the Adam.

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Third quarter 2020 financial results and corporate update conference call at this time.

All participants are in listen only mode. After the speakers presentation there'll be there will be a question and answer session to ask a question. During the session. Please press star one on your telephone keypad. Your part first there since it's for an operator. Please press star Zero I'd now like to turn the conference over to Peter.

Awesome.

Situation representative from school Excusing Pharmaceuticals. Please go ahead.

Thank you Ryan and good afternoon, everyone on the call with me today are Neil Mcfarling, Chief Executive Officer, CJ, Shreedhar, Chief Commercial officer, and Chris Prentice, Chief Financial Officer before we begin I would like to remind everyone that this call will contain forward looking statements, which are subject to risks and uncertainties. These.

Any statements regarding future events results or expectations are forward looking statements. Please note that these forward looking statements reflect our opinions only as of the date of this call. We 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 to differ materially from those contained in or implied by such forward looking statements are discussed in greater detail in our form 10-Q filed today with the FCC, especially under the caption risk factors I will now turn the call over to Neil Mcfarland.

Thank you Peter good afternoon, everyone. Thank.

Thanks for joining us today.

BJ and Chris will discuss the details of our third quarter performance in a moment before they do I would like to highlight a few key areas of development.

During the third quarter of 2020, your Domus team continued to make progress advancing the business in line with our corporate strategy.

Our employees have shown resilience creativity and an extraordinary dedication to our mission during this challenging time.

Inspector coverage reduced off time for Parkinson's patients with dyskinesia.

Demonstrating prolonged efficacy for at least two years, thereby advancing our strategy to effectively differentiate the recovery.

In the quarter, we bolstered our company leadership, where the addition of Dr. Adrian Courtelle as Chief Medical Officer, Jill Jean as head of corporate development and expanded our board with the addition of Anna Rico.

This expansion of operational strength and industry experience will allow us to harness the full potential forego covering and accelerate our efforts to achieve our long term corporate goals.

As an important manufacturing achievement, we received FDA approval for a supplemental new drug application for a secondary supplier of active pharmaceutical ingredient Fargo covered and a new geography.

This approval during the Covid crisis allows us to further diversify our supply chain and continue to provide uninterrupted supply for patients.

As we announced earlier this week, we've signed the memorandum of understanding to settle a pending securities Classaction lawsuit. This settlement agreement, which remains subject to court approval will be paid entirely by our insurance carrier and avoids potential expense and distraction to management.

We are committed to capital efficiency.

And have been disciplined with operating expenses as we make strategic investments for future growth.

Combined with increased product revenue. This has enabled us to significantly reduce cash burn over the last five quarters.

Given the available cash on the balance sheet and continued growth of go covering we remain confident in our long term outlook and.

In summary, the fundamentals and potential of our business remains strong as we head towards the end of the year and into 2021.

I believe the investments, we're making now will allow us to continue to deliver benefit to patients and value to shareholders I will now turn the call over to VJ.

Thank you Neil and good afternoon, everyone.

I am pleased to be speaking with you today.

I will begin with highlights of our performance in Q3 and comment on the strong execution of our commercial strategy. Despite the prolonged impact of the pandemic on treatment of Parkinson's patients.

Starting with performance Q3, total Google repaid prescriptions that exclude product from the free trial program, where 7930, representing year over year growth of 19% versus Q3 last year.

As a reminder, total prescriptions and a quarter or the sum of new paint prescriptions and recurring prescriptions. The number of recurring prescriptions is heavily influenced by the number of new paid prescriptions in previous periods.

The Q3 total prescription performance was 3% lower versus queue to reflecting the cumulative impact of new paid prescription volume in prior quarters.

In Q3 patient visits to clinics, we're still impacted with states across the nation in various stages of reopening and several pausing or reversing decisions.

As a result of these changes the conversion rate in Q3 now reflects a subset of patient flow previously reported.

The Q3 conversion rate for this subset was between 50 and 55% demonstrating the durable positive impact of recovery care coordinators and other initiatives to improve our fulfillment center processes and we are pleased with the results seen in these different circumstances.

We remain focused on our three strategic priorities in the quarter first increasing the urgency to diagnose and treat through education and the functional disruption caused by disclosure and off.

Second communicating the clinical benefit and health economic value that differentiates coverage, thereby ensuring appropriate patients are started on therapy.

And third reducing barriers to access to enhance the overall customer experience.

To increase the urgency to recognize the impact of disconnect and effectively treated without delay we launched a patient ambassador program in Q3 with Parkinson's patients. We're on good coverage therapy. These.

These ambassadors participate in speaker programs to educate and answer questions from an audience consisting of physicians patients caregivers and patient advocacy group personnel, thereby intensifying our outreach to the Parkinson's community.

We have seen robust interest in these educational programs from members of local and regional AD advocacy organizations.

This effort complements the disease state educational materials delivered through our sales representatives and multichannel messaging campaign.

Our sales force conducted a mix of virtual and live interactions with healthcare providers. According to their local environment. These consisted of rep details as well as speaker programs delivered by the opinion leaders on our Speaker Bureau.

These interactions resulted in achieving a significant proportion of the sales force activity level, we had at the beginning of the year an improvement versus our performance in Q2.

We also launched a new streamlined speaker deck to facilitate shorter presentations to adapt further to the new virtual environment.

Two more effectively differentiate recovery and articulate its clinical value, we launched a new patient focused branded campaign in the quarter.

This campaign validated through extensive market research to be effective related bull and motivational to both physicians and patients highlights the unique efficacy and safety profile of recovery.

The motive quote go coverage is the difference between getting up and getting out and quote campaign is being delivered through a multichannel digital ecosystem to engage the Parkinson's community.

We believe these initiatives steadily increased breadth of adoption in the quarter with new prescribers to the brand.

From an access perspective, we supported eight Cps and patients through the recovery care coordinators and field access specialists to help stakeholders effectively navigate the fulfillment process for recovery.

Recovery care coordinators received high satisfaction scores from our fielded surveys, indicating their effectiveness with customers.

We are presenting health economic value information to payers and formulary decision makers that includes new data highlighting the cost effectiveness clinical differentiation and long term durability of good coverage.

As we enter Q4, we see a fluid and complex situation with patient appointments remaining disrupted across the country.

The latest data from the Michael J Fox Foundation sponsored patient survey underscores the prolonged impact of the situation. This year, which has increased the vulnerability of Parkinson's disease patients with 75% of patients reporting a change in healthcare and nearly 50% reporting canceled.

Just seven months after the first shelter in place orders.

Only 40% of patients have engaged in tele medicine based on this survey.

We currently see a mix of Innophos patient visits and Tele health utilization and we expect this to continue for the foreseeable future.

As patient appointments returned to pre pandemic levels, we expect to prescription growth to do so as well.

We are pleased with the initial success, we have seen with the solutions and tools. We have launched recently and are confident these tactics are durable moving forward in an emerging hybrid commercial environment.

Lastly, with around 200000, Parkinson's disease patients in the United States being impacted by disclosure and off everyday the opportunity for good coverage is large we remain focused on addressing their significant unmet need and we are incredibly proud of our team for adapting seamlessly.

The new environment, and continuing to execute effectively to drive positive results for patients who are more impacted today than ever before.

I will now turn it over to Chris to provide an overview of our financial performance.

Thanks, Jay and good afternoon, everyone. Please.

Please refer to our press release issued earlier today for a summary of our financial results for the third quarter 2020.

Total revenues for the third quarter 2020 were 20.2 million, which includes go covering product sales of $19.0 million and royalty revenue earned from Nems Eric of approximately 1.2 now.

Product sales of discovery in the third quarter increased 36% over the same quarter last year.

This was driven by approximately 19% volume growth year over year as well as a more favorable gross to net adjustment compared to the same quarter in the prior year, reflecting the number of new paid prescriptions in the period.

During the third quarter 2020, R&D expenses were $2.3 million compared to 6.0 million for the third quarter 2019.

R&D expenses for the current quarter relate to the open label extension study for the EPS 51, or two Ns walking impairment program.

This study will complete in the fourth quarter with the final close out costs for the program to run in the first half of 2021.

We are adjusting our full year 2020, R&D expense guidance to nine to 11 million, which includes 1 million of stock based compensation.

As DNA expenses for the third quarter, 2020, or $26.1 million compared to $31.2 million in the prior year quarter.

Our current quarter SGN, a expenses represent our continued focus on maximizing the opportunity for go coverage, while continuing to implement new tactics to succeed in the current environment and going forward.

As we expect to continue to operate in a hybrid environment due to local rules and physician practices. We are reducing our full year 2020, SDMA expense guidance to be 100 to 110 million, which includes stock based compensation of $6 million.

As a reminder, at the beginning of the year. Our 2020 total operating expense guidance was $120 million to $135 million compared to our current estimate of $109 million to $121 million, reflecting our proactive management of expenses and ability to prioritize investments.

Cash and investments as of September Thirtyth 2020 were approximately 92.5 million.

Overall cash burn for the third quarter was $11 million a decrease from the approximately $12 million in the second quarter of 2020.

This decrease demonstrates continued progress on the topline as well as thoughtful expense management.

As our quarterly cash burn has continued to diminish quarter over quarter and is down from approximately $18 million in the third quarter last year.

That concludes our prepared remarks with that I will now open the line for questions operator.

Yes, we do have some questions at this time before we do go to the questions. A reminder, please press star one if you do have a question and our first question comes from the line of David Amsellem from Piper Sandler.

Hi, how are you. This is zack on for David Congrats on the quarter and thank you for taking my questions I just had a couple on the label expansion.

Also asserts that is coming up.

Where do you think that recovery will slot in the current Parkinson's.

Parkinsons treatment paradigm, that's obviously, becoming more varied as of late and then also do you expect to grow your marketing efforts our investment.

Sales and marketing initiatives initiatives like DTC, if you do end up getting.

Well expansion. Thank you.

Thanks Zack.

So as a reminder, go coverage clinical profile is well differentiated from all of the other parkinsons disease products in that at both effects.

The increases discussed Asia as well as decreases off episodes that clinical data is currently in our label today, we expect by elevating that off episodes clinical.

Indication into our indication statement and will allow us to better allow access for physicians to find and better diagnose and treat those patients.

Your other question was in regards to expense and efforts in direct to consumer.

Appreciate the questions and I would say as Neil said, we already have a highly differentiated clinical profile with the clinical data for the off in.

In the clinical section of our label already.

We expect to continue delivering that message to the same physician targets that we have right. Now. So we will have a very responsible plan with respect to expenses, which was a.

When when we get that additional label.

For off.

Okay, great. Thanks.

And there are more questions on the line. Our next question comes from the line of Tim Lugo from William Blair.

Hi, guys. This is John on for Ken. Thanks for the question. So just to from US first just wondering if you can provide some color on any initiatives that you're working on to improve patient persistence and where do you see potential for improvement there.

Second do you have any room or just wondering if you have any room for pricing increases orator, considering any price increases in the future. Thanks.

S VB Lee rink.

Hi, This is Rudy on the line for Mark So congrats on a solid quarter just out too quick questions first based on my calculation. It shows that three Q goes tonight, the simich to be below double D. G's can you help me understand that I'm, not making a quarter cause you.

Talk about that is related to new.

Hate creeks prescriptions in the quarter second is regarding the Royal T. V moved only 1.2 meeting revenue in the quarter is that still based on double digit route your race and that's for a full quarter.

Hi, Rudy Thanks for the questions I'll ask Christa dressers.

Thanks, as it relates to gross to net uhm. So the dynamics there really are the same as we saw last year were from our payer mix. We are heavily influenced by the part depopulation. So that's what influences are liability there.

People work through their their donut hole liability, we really see a higher rate in the first two quarters of the year and then it drops down quite a bit in the back half of the year. So we've seen that plague out again this year as well.

And it's also driven by really new patient starts so having a lower volume of new patient starts relative to prior year hasn't.

Had an impact there as well.

And then the second piece of that is related to the royalty for Nims, Eric I would say the first thing I would go to is that we really appreciate it getting to know the team over at Abbvie as they've completed the acquisition their last quarter. As you noted are royalty with this quarter first full quarter. It was one.

$2 million you are correct, it's still a low double digit royalty nothing has changed there I think what I would note is that this is a mature brand. They are also serving a vulnerable population during this time and.

This is really the best estimate that we have as we go forward.

Got it that's very helpful. Thank you.

Thank you.

At this time no one notices in the queue for questions.

Thank you.

I want to thank the entire enormous team for their dedication and performance this quarter and summary, we'd remain focused on execution, we bolstered our leadership team and we strengthen the foundation of our company to deliver value to patients and to shareholders. Thank you for joining the call I. Appreciate your time, we look forward to speaking with you again.

Next quarter.

And this does include our cost per Se E mail and anticipate speakers one moment, while I transfer your last night.