Q1 2021 Nabriva Therapeutics PLC Earnings Call
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Thank you for standing by the conference will begin momentarily until such time, you will hear music. Thank you and please continue to standby.
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Yeah.
Thank you all for standing by and welcome to the and Abreva Therapeutics first quarter 2021 financial results call.
All lines have been placed and listen only mode until the question and answer session of today's conference.
To ask a question over the phone that by that time, you May press to Starkey followed by the number one.
I'll now turn the call over to your host Dan Dolan, Sir you may begin.
Thank you and good afternoon, everyone welcome to <unk> and Breathe This conference call and webcast, where we will discuss the first quarter 2021 earnings and also provide a business update.
The slides for today's presentation are posted on the company's web site Www dot and Abreva dot com and can be found under the investors tab and the events and presentations section.
We recommend that you refer to the presentation as we will be using those slides for today's discussion.
Before we begin on slide two I would like to remind everyone that this conference call and webcast will contain forward looking statements about the company.
These statements are subject to risks and uncertainties that could cause actual results to differ.
Please note that these forward looking statements reflect our opinions only as of the date of this call.
We will undertake no obligation to revise or publicly release the results of any revisions to these forward looking statements in light of new information or future events.
Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward looking statements are discussed in greater detail and our most recent filings on form 10-K, and our other periodic reports on forms 10-Q, and 8-K filed with the SEC.
Ted Schroeder and Abreva CEO will start with a business update and will present, an overview of the commercial highlights from the quarter.
Then I will provide a financial review and Ted will come back with some summary comments and lead the Q&A session.
In addition to Ted and me joining us on the call for the Q&A session is Dr. Steeped alone, our president and Chief operating Officer, I would now like to turn the call over to our Chief Executive Officer, Ted Schroeder.
Thank you Dan and thanks to everyone joining our call this afternoon.
Let's start on slide five the progress we made in 2020 to build our infrastructure and to correctly positioned our commercial efforts and the community are continuing to advance in 2020 one.
Let me begin by reviewing our key objectives for this year incur.
Increasing awareness and prescription growth for both <unk> and <unk> in the community remains our primary focus and we are seeing ongoing positive momentum.
Through our partnership with ample tea health, a leading contract sales organization 60 sales representatives were deployed in the field late last year targeting almost 8000 health care providers.
As COVID-19 restrictions are beginning to be lifted and access to doctors' offices is improving.
These sales reps are now able to have more in person visits and are having more face to face interactions with hcp's.
During the pandemic according to data from the CDC infill.
Influenza like illnesses showed a dramatic decline versus the prior flu season, and widely prescribed antibiotic products such as Levofloxacin declined approximately 50%.
The decline and respiratory infections and the associated decrease and antibiotic prescriptions created headwinds in the near term for the broader industry, and specifically Ford and Abreva as respiratory infections declined due to social distancing and other preventative measures.
As we see a return to normal activity post pandemic, we are continuing our efforts towards keeping our products front of mind with health care providers for appropriate patients with community acquired bacterial pneumonia or cap and acute bacterial skin and skin structure infections.
We're at sea.
According to the U S.
Wiring and the U S rights to <unk> from Merck was an important milestone for <unk> given that physicians are already familiar with sort of extra for ABSSI.
It was also a testament to the brief as commercial capabilities and.
<unk> as of April 12th of this year. So the extra was now available under a breathe as national drug code or and D. C and the brief and has begun and exclusive distribution of <unk> in the United States and certain of its territories as part of an agreement signed in July 2020.
<unk>.
We will discuss the positive financial impact of this later in the presentation, but it means that 100% of sort of extra net sales are now being recorded by <unk>. One should therefore expect our product revenue to significantly increase.
And the successful marketing execution of our two products as we discussed last quarter, we are expanding our pipeline organically and we are opportunistically looking for complementary business development opportunities.
Cystic fibrosis is an area we have highlighted given and then let us therapeutic and safety profile and the significant unmet medical need.
We plan to initiate a phase one trial in the second half of the year for patients with cystic fibrosis, who often use antibiotics chronically.
Additionally, business development for us and let it outside the U S remains active with ongoing efforts to partner the drug in Europe and other territories. We continue to have multiple parties interested and are moving forward through the process.
We want to ensure that we have a transaction that is and the best interest of patients and the brief as shareholders.
Regarding CONTEMPO despite the FDA recently issuing some additional guidance, we don't have a lot more clarity at this point.
We continue working with our consultants to understand the agency's guidance and the implications for Resubmission of the can Tipo NDA. We're encouraged that the FDA is thinking beyond just live in person inspections and that they're looking for alternatives to those inspections.
We do not intend to file <unk> NDA and so we have confidence that the FDA can complete any required inspections within the six month could do for clock.
Finally, as we have done in the past we are carefully deploying our resources to support our existing infrastructure and to drive sustainable growth.
Slide six speaks to the depth of our pipeline across serious and rare infectious diseases let.
Let me talk a little bit more about our work and C F.
So what have we done so far.
We convened a scientific advisory board and they were enthusiastic about and letter as an option for cystic fibrosis patients and we believe could provide incremental peak sales in the $100 million to $200 million range. The.
The expert panel encouraged us to complete a phase one safety and PK study in CF patients. So we're planning to start that study and the second half of this year, we expect to have some non clinical data and the second half of this year with clinical data to follow in 2022.
And.
It's important to mention that much of this work is being supported through grants.
In addition to the CF trial I would also like to point out that our partner in China and completed their first completed their phase III and let a trial and is planning for and MDA NDA submission and the second half of this year for the treatment of community acquired bacterial pneumonia.
Now turning to slide eight I would like to provide a commercial update starting with <unk>.
Our marketing approach to <unk> is clear and focused first and we know that drug is promotional sensitive and that there is a significant prescriber base of physicians, who have experience with <unk>.
Therefore, our sales force has been hard at work re engaging with doctors, who are who are already familiar with some extra and we know who these healthcare providers are and we are currently focusing on them to reemphasize. The key benefits of <unk>, a once daily short course monotherapy for ABSSI with total.
And activity against a broad range of pathogens, including MRSA.
Given that skin infections tend to be seasonal with the summer season being the high point for physician treatment of patients we are pushing hard to capitalize on the opportunity in the coming months. In addition to focusing on previous prescribers, we are overcoming patient barriers by offering <unk>.
Assistance indigent patient assistance and sampling of physicians to offer bridge doses, while the patient sales prescriptions at the pharmacy.
On slide nine let me walk you through some of the market research findings and discuss in more detail why we are excited about the <unk> opportunity.
Safety and convenience are key attributes that favorably positions of extra with physicians and the messages about potency six day course of therapy and no drug to drug interactions with other classes of drugs such as Ssris are all benefits important to prescribers.
As we increased call frequency and continue to communicate these points. We believe that we will begin to see a rise and prescription growth again, our view is that as the summer activity begins to rebound to normal levels, there will be a higher number of infections driving patients back into medical offices.
And.
Slide 10 summarizes the execution strategy that I've laid out for <unk> by focusing on identifying the patient delivering and and impactful message and supporting health care providers by making the product more readily available.
<unk> is indicated for a broad range of ABSSI infections for both adults and adolescence. The drug has excellent managed care coverage.
$269 million or 91% of all insured lives have coverage for <unk>.
The majority of those lives are unrestricted which means no step edits or prior authorizations and the market access team continues to work to expand this coverage.
One thing that I think is worth calling out on the right hand side of this slide is the number of face to face visits we are conducting which is running at 64%.
That is up quarter over quarter versus 56% at our year and update and is well above the industry average for primary care visits is a metric that we think is important is an important component to the strategy and also demonstrates how the experience of the empathy sales representatives is an advantage to getting.
And to physicians offices.
Slide 11, where it goes back to what I said at the beginning that a major achievement. This quarter was completing the transaction of savak stroke to and Abreva branded the transition of some extra two and debris that branded product realizing 100% of net sales in.
In addition to the financial benefit. This is also important because it allows us to have greater information around the product information such as inventory levels, and which wholesalers are buying and when I can tell you that as of today and the breathe of brand and <unk> has been purchased.
By the three largest wholesalers and the breathe of anticipate seeing the return of historical peak sales trends force of extra by mid 2022.
Now I would like to turn your attention to is in Atlanta, We have previously discussed how the brand recognition of <unk> has actually helped to get added time with physicians to educate them about Zen letter, we continue to lay the groundwork for <unk> ahead of the fall season, when we typically see an increase and pneumonia.
We just exited the winter season have drastically reduced upper respiratory infections and as people resume normal activities, it's reasonable to expect that future rise and the number of patients seeking treatment.
Moving to slide 13, the takeaway from this slide is the rising rate of resistance to the leading cause of community acquired pneumonia Streptococcus pneumoniae, which is why the CDC has deemed drug resistant strep pneumoniae, a serious public health threat in fact resistance to <unk>.
Common macro lives like the Z Pak, which are widely prescribed for treating community acquired pneumonia are becoming increasingly less effective as a treatment option.
In fact, the community acquired pneumonia guidelines published by the infectious disease Society of America, and American Thoracic Society stayed at that and any region of the country, where resistance to strep pneumoniae is greater than 25% the monotherapy with a macrolide.
Is not appropriate.
As you can see from the map all regions across the U S have resistance to community respiratory strep isolates above 25%.
Validating the need for alternative treatment options and.
And so macro Lloyds are quickly, becoming inadequate choice for treating pneumonia, particularly and more complicated patients.
And <unk> are looking for alternatives, where they can be sure that the first five day course of therapy will cure their patients and potentially avoid hospitalizations.
We are confident that's and leather will be recognized as a promising therapeutic for cap with its novel mechanism of action short course of therapy, low propensity to develop bacterial resistance and favorable safety profile.
Slide 14 is an example of our planned marketing campaign.
<unk> to increase awareness and letter and establish it as the optimal choice for the appropriate patients and the community those with more complicated medical histories, such as older patients who have recently been on antibiotics, and thus are and increased risk for resistance with traditional antibiotics.
<unk>.
And this patient profile as demonstrated more clearly on slide 15, the opportunity for US and led is the patient that has comorbidities, such as diabetes, or COPD, which complicates achieving a positive outcome. It's the patient at risk for resistance to other classes of antibiotics like Macrolide Tetra <unk>.
<unk> and penicillins.
And in the safety concerns with Fluoroquinolones and I think you can understand why we see a unique opportunity for us and letter.
Without patient cap cases estimated to cost $9 3 billion annually with the largest driver costs were outpatient care is subsequent hospital admission we believe it is and let it fills a gap and the treatment of cap.
Slide 16 summarizes then led us value proposition. These.
And these are the messages the field forces conveying to physicians abouts and ladder that we think differentiate the product.
And then let it can be used as a reliable monotherapy and <unk>.
China has micro biologic activity against a broad spectrum of pathogens that are most often associated with cap.
And then letter as a new class of antibiotic with a novel mechanism of action.
And Linda has a low rate of discontinuation due to adverse events and as and letter has a short five day course of therapy.
Collectively these attributes differentiate and letter and we believe make it a compelling treatment option for physicians.
As the sales reps are able to increasingly interact with doctors and lay the groundwork ahead of the fall cap season, we would anticipate seeing an uptick in and let it prescriptions as we move throughout the year.
I would now like to turn the presentation over to Dan for the financial review.
Dan.
Thank you Ted.
As we turn to slide 18, I'd like to touch on some key highlights for the first quarter of 2021.
We recognized $2 million of revenue and the quarter, including $1 million of collaboration revenue from our agreement to promotes of extra with Merck as well as the achievement of milestones with our partner in China for the family.
We exited the quarter with cash and cash equivalents of approximately $55 million providing.
Providing a cash runway into the fourth quarter of this year.
Our first quarter cash requirements included the purchase of initial sort of extra supply under and agree with one MDC. This inventory was used to fulfill the orders that started to go out to the three largest wholesalers after April 12.
Later I will describe the positive impact of new MDC has on our P&L.
We are excited to launch our own and DC as it provides a meaningful increased profitability and enhance the operating leverage of our existing infrastructure.
Going forward, we will continue to focus our investment allocation and areas that we believe will provide the best return on investment and help us leverage our existing infrastructure.
Moving on to Slide 19, we look at our P&L for the three months ended March 31, 2021 versus the same period for 2020.
We experienced a significant year on year growth on our top line revenues driven by the recognition of collaboration revenue and some extra with the Merck agreement as well as the achievement of milestones from our Chinese partner.
We are encouraged by our partners progress and its potential impact for Chinese patients and the positive impact and agreements cash inflows.
Operating expenses decreased $5 million, a year on year with R&D decreasing by $1 million and SG&A by $4 million.
The decrease in R&D was primarily driven by a decrease in personnel costs, while the SG&A decrease reflects lower commercial investments as we reallocated, our marketing and selling mix towards a more efficient model.
As a reminder, and Q1 'twenty, we paid down our debt with Hercules, which resulted in a loss on the extinguishment of the debt in Q1 of 'twenty. This helps strengthen our balance sheet by reducing our debt as we will see on the next slide.
Turning to slide 20, we take a look at our balance sheet for Q1 'twenty one as.
As mentioned earlier, our cash and cash equivalents at March 31, 2021 were approximately $55 million and increase of $40 million and December 31, 2020, driven by activity and our ATM program and the net proceeds from our March one 2021 financing.
This was offset by our operating cash burn, which included the initial payment for some extra inventory for our new MDC.
This can be seen as part of the increase and our prepaid expenses and the quarter.
Turning our attention to the liability section Youll see we continue to maintain a minimal amount of debt.
If we can now turn to slide 21, I'd like to take some time to highlight the impact of and agreements owns of extra and DC on the shape of our P&L.
Prior to the launch of our own NBC and debris and recognize the percentage of merck's growth sales of extra one.
While we have been deploying our full complement of commercial resources for some extra promotion.
Starting on April 12, we launched our own and Dcs of extra and realizing the full benefit of the patient demand and our reported net sales.
We had given prior guidance that the shift to our NBC will increase our gross sales to a mid to high single digit multiple of what had been reported as collaboration revenue and prior quarters.
This number will then need to be adjusted by the typical growth to net sales adjustments in order to arrive at our reported net sales number.
This change and the revenue composition on the P&L for and debris and provide an immediate increase to our profit margins as well as unlocks enhanced operating leverage on the P&L.
This increase and revenue is expected to generate higher profits.
With that I will now turn the presentation back over to Ted for the next part of the call tabled. It make some closing remarks, and then we will head into a Q&A session.
Ed.
Thanks, Dan and finishing up on slide 23, which takes us back to the 2021 key objectives slide as we went through today's presentation. I Hope you can see that our near term focus is all about execution of the commercial growth of <unk> and then later the most critical goal this year.
Completing the transition of <unk> to being a new breed of branded product is a major step and successfully marketing this product as Dan discussed it not only allows for a positive financial impact, but additionally, it provides us visibility on material new data to help them.
Form a more strategic approach information, such as which payers are.
Covering the drug and what the co pays are by payer.
Which wholesalers are purchasing and which pharmacy stocks of extra.
We see access to physicians offices, improving with more patients returning to see their doctors, we believe that the incidence of skin infections will be on the rise as we as we return to normal activity and into the summer months. When there are higher rates of ABSSI. All the work our sales representatives are doing now.
Al.
And should also solidly positioned us for the fall, what's and letter when pneumonia becomes more prevalent our field force has now been into the doctor's offices for several sales cycles and are beginning to conduct more face to face interactions with health care providers. They are reestablishing.
Personal dialogues and medical education, which should lead to a greater pull through prescriptions in parallel we are continuing to evaluate our pipeline for longer term potential.
Potential upside opportunities, we think CF is an interesting area that we have decided to initially pursue internally through grant funding. We are committed to get through at least the phase one program and cystic fibrosis force in Atlanta.
Discussions are ongoing as we aggressively seek partners in Europe, and other and partner territories outside of those that are already partners, which are China and Canada.
We plan to resubmit the NDA for <unk>, when we have clarity that the FDA will be able to meet their produce the obligations.
And finally, we will do all of this while closely monitoring and managing our expenses as we move through the rest of the year.
I would now like to ask the operator to open up the line for questions Jessy.
As a reminder to all participants its star one to ask a question over the phone.
The pound key to withdraw your request and remove yourself from the queue.
Again, Thats star one to ask a question.
Or the pound key to withdraw your request.
Okay.
Our first question is from the line of Ed Arce of HC Wainwright.
Your line is now open.
Great. Thanks for taking my questions.
And congrats on getting the MDC first of extra few weeks ago.
Yes, Thanks Ed.
Also appreciate the slide on the impact of that on your P&L.
And sort of the line items and how that how that flows through that.
And Thats helpful.
I'm just wondering now it's been just a few weeks I realize it's quite early still and.
Summer months.
Definitely helped to kick in.
More interest.
If you could.
Since the transition.
What kind of.
And commentary.
Are you hearing on the ground.
With the new branding.
What kind of feedback are you getting that perhaps cash.
And help you feel more confident about your guidance.
Reaching that run rate preview.
Previous run rate by the middle of next year.
Yes, thanks, Thanks, Ed.
Good good questions.
I'll always appreciate those.
So we're hearing a lot a lot on the ground certainly earlier in the year, we were hearing that.
And I'm, just not seen as many patients some not seen even in the winter months as many skin infections that I used to.
And I don't think that Thats.
Really surprising people werent out and about doing the sorts of things, where they get bumps and scrapes and inevitably infections follow.
And people not working and on their feet all day and those sorts of things. So as we see what we're hearing from physicians now is that we're seeing more people and the office.
One of the other things that came with the <unk>.
Switching to the debris the NBC as we are also now hand carrying samples into the physician's office.
And that actually makes the the.
Close of the sale are much much closer.
Most are to the communication that the rep has what the physician so the sample acts as a good reminder.
And we're able to deliver it when a product.
<unk> messages delivered and.
And and.
Yeah.
What what kind of level of gross to net would you expect.
You know as a steady state perhaps later in the year.
Thank you.
Dan Why don't you go ahead and answer that.
Yes, sure Thanks, and then.
Thanks for the question Ed.
I think in terms of <unk>, we haven't really provided any guidance and we're still kind of getting our arms around around the gross to nets and the contract. So I think it gave us a quarter or two to kind of wrap our head around that and I think on Zen letter and the past, we'd given a mid 30% range as a guide.
<unk>.
So.
You might want to use that for landmark right now, but give us a few more quarters and we can tighten up this of exercise.
Okay fair enough.
I appreciate it.
Thanks, Ed.
Yeah.
No further questions on queue.
And that concludes today's conference.
Thank you all for participating.
You may now disconnect.
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