Q2 2021 Alimera Sciences Inc Earnings Call

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Ladies and gentlemen, thank you for standing by good morning, and welcome to the Eylea marrow Sciences second quarter 2021 financial results and corporate update conference call. At this time all participants are in a listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by Europe.

Operator: Ladies and gentlemen, thank you for standing by. Good morning, and welcome to the Alamara Sciences second quarter 2021 financial results and corporate update conference call.

Operator: At this time, all participants are in list and list only mode. Should you need assistance, please signal a conference specialist by pressing the Starkey, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask your question, you may press any star than one on your telephone keypad. To withdraw your question, please press star than twice. Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes.

After todays presentation, there will be an opportunity to ask questions to ask any question. You May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.

Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes.

Operator: A webcast replay of this call will be available approximately one hour after the end of the call through November 12, 2021. I would now like to turn the call over to Scott Gordon of CoreIR, the company's investor relations firm. Please go ahead, sir.

Cast replay of this call will be available approximately one hour. After the end of the call through November 12.2021.

I would now like to turn the call over to Scott Gordon of core IR, The company's Investor Relations firm. Please go ahead Sir.

Thank you Tom and good morning.

Scott Gordon: Thank you, Tom. Good morning, and thank you for participating in today's conference call. Joining me today from Alamara's leadership team are Rick Eisworth, President and Chief Executive Officer, and Phil Jones, Chief Manchu. During this call, we'll be making forward-looking statements, including statements that address Alamara's expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the cautionary statements in Alamara's press release today.

And thank you for participating in today's conference call joining me today from <unk>.

All American leadership team are Rick is worth President and Chief Executive Officer, Phil Jones, Chief Financial Officer.

During this call management will be making forward looking statements, including statements that address all of them there was expectations for future performance or operational results.

Forward looking statements involve risks and other factors that may cause actual results to differ materially from those statements.

More information about these risks please refer to the cautionary statements <unk> press release today.

Today's conference call includes adjusted EBITDA, a non-GAAP financial measure that Alan there I believes can be useful in evaluating its performance you should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP.

Scott Gordon: Today's conference call includes adjusted EBDA, a non-GAAP to natural measure that Al-AMara believes can be useful in evaluating its performance. You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP. For reconciliation of this non-gap financial measure to net income or loss, its most directly comparable GAAP financial measure, please see the reconciliation table located in Alamara's earnings press The content of this call contains time-sensitive information that is accurate only as of today, August 13, 2021.

For a reconciliation of this non-GAAP financial measure to net loss net income or loss.

The most directly comparable GAAP financial measure. Please see the reconciliation table located in Allen marriage earnings press release.

The content of this call contains time sensitive information that is accurate only as of today August 13th 2021.

Sept as required by law Almere disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur. After this call. It is now my pleasure to turn the call over to Rick <unk>. Rick. Please go ahead.

Scott Gordon: Accept is required by law, Alamara, this claims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to Rick Eisberg. Rick, please go ahead.

Richard S. Eiswirth: Thank you, Scott, and good morning to everyone on the call. First, I want to thank all of you for your patience with respect to the timing of our earnings release. As most of you know, we completed a significant transaction with Occupmention Therapeutics, in which we received a $10 million upfront license payment, a $10 million equity investment, and a warrant for Occamension stock earlier in April of this year. The accounting for this transaction was rather complex and resulted in some delays in closing our books for the quarter.

Thanks, Scott and good morning to everyone on the call.

First I want to thank all of you for your patience with respect to the timing of our earnings release as most of you know we completed a significant transaction with like you mentioned therapeutics in which we received a $10 million upfront license payment of $10 million equity investment and a warrant Barak you mentioned stock earlier in April of this year the accounting for this transaction was rather complex.

<unk> and resulted in some delays in closing our books for the quarter.

As we released this morning, we are reporting $21.7 million and consolidated net revenue during the quarter, including the license revenue from the Entre mentioned transaction.

Richard S. Eiswirth: As we released this morning, we are reporting $21.7 million in consolidated net revenue during the quarter, including the license revenue from the Occamension transaction. Phil will provide more detail regarding our reported results in a few minutes. Although the COVID-19 pandemic continues to have an adverse effect on our business due to reduced patient volumes and limited access to physicians, depending on the market, we are seeing positive growth trends in most of our markets.

So we will provide more detail regarding our reported results in a few minutes.

Although the COVID-19 pandemic continues to have an adverse effect on our business due to reduced patient volumes and limited access to physicians depending on the market. We are seeing positive growth trends in most of our markets.

In the second quarter, we saw end user demand increased significantly across the United States growing by 17% in comparison to Q2.2020.

Richard S. Eiswirth: In the second quarter, we saw end-user demand increase significantly across the United States, growing by 17% in comparison to Q2 2020. Despite our growth, it is clear that patient volumes in US retinopractices still have not recovered compared to pre-pandemic levels. In July, we conducted a survey among 50 practices across the United States and learned that, on average, only about 60% of practices are seeing their DME patient volume back at pre

Despite our growth it is clear that patient volumes in U S. Retina practices still have not recovered compared to pre pandemic levels. In July we conducted a survey among 50 practices across the United States and learned that on average only about 60% of practices are seeing their DNA patient volume back at pre COVID-19 levels.

We believe this is likely the result of several factors, including Vimy patients needing to catch up on visits with multiple positions due to the complications in diabetes short staffing in some offices and new office protocols to safeguard patients and personnel that can slow down throughput.

Richard S. Eiswirth: We believe this is likely the result of several factors, including DME patients needing to catch up on visits with multiple physicians due to the complications of diabetes, short staffing in some offices, and new office protocols to safeguard patients and personnel that can slow down throughput. Importantly, we are seeing signs of increased access across the U.S., as our reps were able to increase their in-person calls by 14% in the second quarter over the previous quarter.

Accordingly, we are seeing signs of increased access across our U S. All across the U S. As our reps were able to increase their in person calls by 14% in the second quarter over the previous quarter.

Our U S reps have also been seeking out new accounts with success, while our existing user volumes down.

Richard S. Eiswirth: Our US reps have also been seeking out new accounts with success, while our existing user volume is down. We have added new accounts who have started prescribing in the second quarter at the highest level we have seen since 2019, before the pandemic began. These are encouraging signs for the rest of the year in addition to the end-user demand growth of 17%. In our international segment, we recorded 16% net growth in end-user demand, driven by six of the seven European markets in which Alumin was available during the second quarter of last year. For clarity, markets in which Alibian has recently been made available were not included in this end user calculation for a more accurate comparison.

We've added new accounts, who have started prescribing ILUVIEN in the second quarter at the highest level, we've seen since 2019 before the pandemic began.

These are encouraging signs for the rest of the year. In addition to the end user demand growth of 17%.

In our international segment, we recorded 16% net growth in end user demand driven by six of the seven European markets, and which ILUVIEN was available during the second quarter of last year for.

For clarity markets in which ILUVIEN has recently been made available were not included in this end user calculation for a more accurate comparison.

The exception was Germany, where we did experience a decline in utilization did clinics being close to our sales force your rival the third wave of Covid in may and a relatively low rate of vaccination in the country during the quarter.

Richard S. Eiswirth: The exception was Germany, where we did experience a decline in utilization, did clinics being closed to our sales force, the arrival of a third wave of COVID in May, and a relatively low rate of vaccination in the country during the quarter. Despite the challenges associated with the substantial spike of COVID cases in Germany and comparisons with the prior year, we were encouraged to see the significant end-user demand increase across Europe as a whole, which resulted in a record second quarter for end-user demand. Importantly, with this demand, we are seeing our distributor partners in France, Spain, and Italy reducing their inventories and placing orders with scheduled distributor shipments for each of the next three quarters.

Despite the challenges associated with the substantial spike in Covid cases in Germany in comparison to the prior year. We were encouraged to see the significant end user demand increase across Europe, as a whole which resulted in a record second quarter for end user demand.

Importantly, with this demand we are seeing our distributor partners in France, Spain, and Italy, reducing their inventories and placing orders with scheduled distributor shipments for each of the next three quarters.

Because of these positive trends, we believe that it is now time for us to start investing more aggressively behind delivering to drive our performance back to the more consistent growth we were seeing before the pandemic.

Richard S. Eiswirth: Because of these positive trends, we believe that it is now time for us to start investing more aggressively behind Deluvian to drive our performance back to the more consistent growth we were seeing before the pandemic. We believe the financing obtained from the Occamension transaction allows us to make these strategic decisions. As we previously disclosed, we made the decision to maintain our employee base and their relationships with physicians at the outset of the pandemic and, as a result, reduced a significant amount of our promotional expenditure. Our conservative promotional spend during the pandemic has weakened our share of voice.

We believe the financing obtained from the Ark, you mentioned transaction allows us to make these strategic investments.

As we've previously disclosed we made the decision to maintain our employee base and the relationships with physicians at the outset dependent.

And as a result reduced a significant amount of our promotional expenditures.

Our conservative promotional spend during the pandemic has weakened our share of voice.

Given that ILUVIEN is promotional sensitive.

Richard S. Eiswirth: Given that Alluvian is promotionally sensitive, meaning that we need to keep the brand top of mind for our physicians, we need to move ahead with investments in marketing and medical initiatives. We believe that the COVID pandemic and the associated challenges of treating patients on a frequent and recurring basis with short-duration antitivethefs and other intradial steroid injections highlight the value of alluvium, giving us the opportunity to communicate this value through numerous channels.

We need to keep the brand top of mind for our physicians, we need to move ahead with investments in marketing and medical initiatives.

We believe that the COVID-19 pandemic and the associated challenges of treating patients on a frequent and recurring basis from a short duration anti VEGF and other interventional steroid injections has highlighted the value of ILUVIEN, giving us the opportunity to communicate this value in numerous channels.

We believe the advocacy development and peer to peer communications will be important to our future success.

Richard S. Eiswirth: We believe that advocacy development and peer-to-peer communications will be important to our future success. In the second quarter, we hired Dr. David Dyer as our chief retina specialist to bring the voice of the retina specialist in-house and help drive this initiative.

In the second quarter, we hired Dr. David Dyer as our chief retina specialist to bring the voice of the retina specialist in house and helped drive this initiative.

We're expanding our medical science liaison and thought leader liaison teams globally to increase the frequency and level of communication with our future advocates Dr.

Richard S. Eiswirth: We are expanding our medical science liaison and thought leader liaison teams globally to increase the frequency and level of communication with our future advocates. Dr. Dyer and our medical team will be engaging in advisory boards over the remainder of this year and next year to review and discuss the Paladin study with an eye to develop papers and publications that highlight the benefits of living in that prospective clinical trial. This group will also discuss the New Day study, helping to shape some of the analysis and messaging that could come from this important study.

Dr Dyer and our medical team will be engaging in advisory boards over the remainder of this year and next year to review and discuss the Paladin study with an eye to develop papers and publications that highlight the benefits of ILUVIEN in that prospective clinical trial.

This group will also discuss the new day study, helping to shape some of the analysis and messaging and that could come from this important study.

The New day study continues to screen and enroll patients and we are seeing momentum build over the last few months as we implemented some changes to the study and access to patients has improved as of today. We have 51 patients randomized in the study and an additional 11 in the steroids screening phase.

Richard S. Eiswirth: The New Day study continues to screen and enroll patients, and we are seeing momentum build over the last few months as we implement some changes to the study and access to patients has improved. As of today, we have 51 patients randomized to the study and an additional 11 in the steroid screening phase. In our European markets, where hospitals have strained capacity, we believe we have a significant opportunity to demonstrate Lugent's value to the healthcare system, to increase clinic efficiency, reduce high costs, and alleviate the tremendous treatment burden of short-acting treatment.

In our European markets, where hospitals have strained capacity. We believe we have a significant opportunity to demonstrate ILUVIEN has value to the health care system to increased clinic efficiency reduce high cost and alleviate the tremendous treatment burden of the short acting treatments. We believe these messages will also translate in certain U S channels such as the.

Richard S. Eiswirth: We believe these messages will also translate in certain U.S. channels, such as the VA hospitals. Physicians across the world have become more digitally savvy. Further motivated by the collective COVID experience, we too are becoming more digitally focused. We're developing a new educational hub to create a one-source extensive clinical database to include webinars and other educational events. It'll provide easy access to the data and targeted delivery of pertinent information.

Hospitals.

As physicians across the world has become more digitally savvy further motivated by the collective Covid experience, we too are becoming more digitally focused redevelop a new educational hub to create a one source extensive clinical database to include Webinars and other educational events.

Easy access to the data and targeted delivery of pertinent information. We're also increasing advertising on physician specific digital channels.

Richard S. Eiswirth: We're also increasing advertising on physician-specific digital channels. And importantly, we will be restarting our direct-to-patient (DTP) campaign in the U.S. as we move into 2022. As you may recall, we ran a six-month pilot test of a DTP campaign in a few select key markets in 2019. During that campaign, we saw elevated patient engagement and an increase in physician utilization in those markets. We learned a lot at that time about which channels were affected and which were not.

And importantly, we will be restarting, our direct to patient or DTP campaign in the U S. As we move into 2022.

As you May recall, we ran a six month pilot test of a DTC campaign in a few select key markets in 2019 during that campaign, we saw elevated patient engagement and an increase in physician utilization in those markets.

We learned a lot at that time about which channels were affected and which were not.

Our core message of maintaining vision longer with fewer injections resonated well with patients in that time period.

Richard S. Eiswirth: Our core message of maintaining vision longer with fewer injections resonated well with patients in that time period. We believe the relevance of that message is only further heightened by patients' experience over the past 18 months of the pandemic. Many patients were unable to see their retina specialist during the pandemic, resulting in a potential lapse of treatment due to the short duration of other intraditional injections. When they did return, many presented with worse vision than they had previously experienced.

We believe the relevance of that message is only further heightened by patients experienced over the past 18 months of the pandemic.

Any patients were unable to see their retina specialists during the pandemic, resulting in a potential lapse of treatment.

Due to the short duration of other individual injections when they did return many presented with worst vision than they previously experienced.

Because ILUVIEN delivers a consistent microdose everyday continuously for up to three years, the promise of maintaining vision with fewer injections is very appealing and it <unk>.

Richard S. Eiswirth: Because Alluvian delivers a consistent microdose every day continuously for up to three years, the promise of maintaining vision with fewer injections is very appealing and an excellent message to communicate to patients with our DTP spend. We will be preparing for the launch of this campaign over the next few months before launching it in 2022. Our geographic expansion continues to be a critical part of our strategy. At the end of 2020, Lovium will be commercialized in seven European countries.

Excellent message to communicate to patients for their DTC spend.

We will be preparing for the launch of this campaign over the next few months before launching in 2022.

Our geographic expansion continues to be a critical part of our strategy at the end of 2020 ILUVIEN was commercialized in seven European countries in the first six months of this year units have been sold in five new markets. Despite little promotional support because of the pandemic as markets continue to open up we anticipate an increase in commercial support.

Richard S. Eiswirth: In the first six months of this year, units have been sold in five new markets despite little promotional support because of the pandemic. As markets continue to open up, we anticipate an increase in commercial support and revenue growth in both the countries where we sell directly and in the countries where we sell through our distributor partners. Further, we expect to leverage our uveitis indication in all of these markets. We believe that Alluvian for non-infectious posterior viugitis could and should be the gold standard of treatment given our indication for the prevention of recurrence of disease and limited ocular alternatives in this market. Remember, anti-vege-f therapies are not an option to treat uveitis.

And revenue growth in both the countries, where we sell directly and in the countries, where we sell through our distributor partners.

Further we expect to leverage our uveitis indication in all of these markets. We believe that ILUVIEN for non infectious opposed to year over your guidance could and should be the gold standard of treatment given our indication for the prevention of recurrence of disease and limited ocular alternatives in this market.

Remember the anti VEGF therapies are not an option to treat uveitis and to date ILUVIEN has only been launched for your guidance in Germany, and the U K in late 2019, right before the start of the pandemic we.

Phil Jones: And to date, Louvian has only been launched for UVitis in Germany and the UK in late 2019, right before the start of the pandemic. We hope to launch UBI syndication across the remaining markets over the next 12 to 18 months as we receive pricing and reimbursement in each country. Just this week, we also announced a partnership with the Tanner Pharma Group to initiate a named patient program for Alluvian. Hanner is now the exclusive provider of Alluvian globally for diabetic macular edema and in Europe and the Middle East for the treatment of non-infectious posterior utitis in specific countries where the product is not commercially available for patients with, and UVI. I'll now turn the call over to Phil for more detail on our financial results for the quarter. Okay, Phil?

We hope to launch the uveitis indication across the remaining markets over the next 12 to 18 months as we receive pricing and reimbursement in each country.

This week, we also announced a partnership with the Tanner Pharma group to initiate a named patient program for ILUVIEN painters now the exclusive provider of ILUVIEN globally for diabetic macular edema and in Europe, and the middle East for the treatment of non infectious posterior uveitis in specific countries, where the product is not commercially available for patients with <unk>.

And uveitis I'll now turn the call over to Phil for more detail on our financial results for the quarter Phil.

Phil Jones: Thanks, Rick, and hello everyone. For the second quarter of 2021, we reported consolidated net revenue of $21.7 million, up approximately 117% compared to the $10 million that we reported in the second quarter of 2020. Solidated net revenue for the second quarter included $10.7 million in product revenue and $11 million in license revenue during the quarter generated from the Occamension transaction that Rick mentioned earlier. U.S. net revenue, which was all product revenue, was approximately $5.8 million for the second quarter of 2021, up 71% from the $3.4 million reported in Q2 2020.

Thanks, Rick and Hello, everyone for the second quarter of 2021, we reported consolidated net revenue of $21.7 million up approximately 117% compared to the $10 million that we reported in the second quarter of 2020.

Holiday net revenue for the second quarter included $10.7 million in product revenue and $11 million in license revenue during the quarter generated from the occupant and transaction that Rick mentioned earlier.

U S net revenue, which was all product revenue was approximately $5.8 million for the second quarter of 2021 up 71% from $3.4 million reported in Q2.2020.

U S end user demand, which represents units purchased by physicians and pharmacies from our distributors.

Phil Jones: U.S. in-user demand, which represents units purchased by physicians and pharmacies from our distributors, rose 17% in the second quarter of 2021 to 731 units compared to 625 units in the second quarter of 2020. As we have previously shared, our gap revenues in the U.S. do not always correlate with in-user demand due to the timing of purchases by our specialty distributors. In the second quarter of 2021, our distributors purchased approximately the same number of units they sold to end users, while in Q2 2020, our US distributors purchased 36 percent fewer units than they sold in order to reduce inventory during the. Net revenue from our international segment increased by approximately $141% to $15.9 million for the second quarter of 2021 compared to $6.6 million for the same period last year.

<unk>, 17% in the second quarter of 2021% to 731 units compared to 625 units in the second quarter of 2020.

As we have previously shared our GAAP revenues in the U S do not always correlate with end user demand due to the timing of purchases by our specialty distributors in the second quarter of 2021, our distributors purchased approximately the same number of units. They sold to end users. While in Q2.2020, our U S distributors purchased 36.

Percent fewer units than they sold in order to reduce inventory during the pandemic.

Net revenue from our international segment increased by approximately 141% to $15.9 million for the second quarter of 2021 compared to $6.6 million reported for the same period last year International net revenue includes the $11 million in license revenue associated with the Ark mentioned transaction.

Phil Jones: International net revenue includes the $11 million in license revenue associated with the Occamension Transaction. International product revenue was down 26% to approximately $4.9 million compared to $6.6 million for Q2 2020. The decrease in product revenue was driven by two facts. One, a lack of orders from our distributor partners who continued to sell off inventory acquired in 2020, and two, a significant decrease in end user demand in Germany in Q2 2021 compared to Q2 2020. This was due to restricted healthcare facility access in response to a substantial rise in reported COVID cases over the quarter compared to the prior year.

International product revenue was down 26% to approximately $4.9 million compared to $6.6 million for Q2.2020.

The decrease in product revenue was driven by two factors.

One a lack of orders from our distributor partners, who continue to sell off inventory acquired in 2020 and to a significant decrease in end user demand in Germany in Q2, 2021 compared to Q2.2020.

This was due to restricted health care facility access in response to a substantial rise in reported COVID-19 cases over the quarter compared to the prior year.

The decrease in product revenue was partially offset by the acceleration of $1 million in deferred revenue associated with the termination of our Canadian distribution agreement with Knight Therapeutics.

Phil Jones: The decrease in product revenue was partially offset by the acceleration of $1 million in deferred revenue associated with the termination of our Canadian distribution agreement with Night. As Rick mentioned, end-user demand across Europe was at a new high for the second quarter. Across our seven European markets where we were selling in Q2 2020, the United Kingdom, Germany, Portugal, France, Italy, Spain, and Ireland, net in-user demand grew from 824 units in the second quarter of 2020 to 955 units in the second quarter of 2021, a net increase of 16% despite the challenges in Germany.

As Rick mentioned end user demand across Europe was at a new high for the second quarter.

Across our seven European markets, where we were selling in Q2.2020.

The United Kingdom, Germany, Portugal, France, Italy, Spain, and Ireland.

Net in user demand grew from 824 units in the second quarter of 2020 to 955 units in the second quarter of 2021, a net increase of 16% despite the challenges in Germany.

Phil Jones: Total operating expenses were approximately $12.9 million in the second quarter of 2021, an increase of approximately 30% compared to $9.9 million reported in the second quarter of 2020. With access to customers increasing, we are spending again on certain initiatives to drive sales recovery and future growth in the second half of 2021 and into 2022. We reported a positive adjusted EBIDA of $7.9 million in the second quarter of 2021 compared to an adjusted EBDA loss of $300,000 in Q2 2020.

Total operating expenses were approximately $12.9 million in the second quarter of 2021, an increase of approximately 30% compared to $9.9 million reported in the second quarter of 2020.

With access to customers, increasing we are spending in certain initiatives to drive the sales recovery and future growth in the second half of 2021 and into 2022.

We reported positive adjusted EBITDA of $7.9 million in the second quarter of 2021 compared to an adjusted EBITDA loss of $300000 in Q2.2020.

Adjusted EBITDA for Q2.2021 includes the impact of $11 million in license revenue from the Ark, you mentioned transaction and the acceleration of $1 million in deferred product revenue associated with the termination of our Canadian distribution agreement with Knight Therapeutics.

Phil Jones: Adjusted EBidafel Q2 2021 includes the impact of $11 million in license revenue from the Occamension transaction and the acceleration of $1 million in deferred product revenue associated with the termination of our Canadian distribution agreement with Knight Therapeutic. For the second quarter of 2021, we reported net income of approximately $7.6 million compared to a net loss of approximately $2.5 million for the second quarter of 2020. Basic and diluted net income per share for the second quarter was $1.3 on approximately $7.6 million weighted average shares outstanding. This compares to a basic and diluted net loss per share for the second quarter of 2020 of 51 cents on approximately 5 million weighted average shares outstanding.

For the second quarter of 2021, we reported net income of approximately $7.6 million compared to a net loss and possibly $2.5 million for the second quarter of 2020.

Basic and diluted net income per share for the second quarter was $1 <unk> on approximately seven 6 million weighted average shares outstanding. This compares to basic and diluted net loss per share for the second quarter of 2020 or 51 cents on approximately 5 million weighted average shares outstanding.

On June 32021, we had cash and cash equivalents of approximately $24.8 million compared to $8.3 million in cash and cash equivalents that we reported on March 31.2021.

Phil Jones: On June 30th, 2021, we had cash and cash equivalents of approximately $24.8 million compared to $8.3 million in cash and cash equivalents that we reported on March 31st. Given our recently strengthened balance sheet, we believe that we are in a strong financial position to fund the growth of our business going forward. I'll turn the call back over to Rick for his closing remarks. Thank you, Phil.

Given our recently strengthened balance sheet, we believe that we are in a strong financial position to fund the growth of our business going forward I'll turn the call back over to Rick for his closing remarks.

Thank you Phil.

We remain very focused on getting back to pre pandemic sales levels and growth rates by investing in our commercial infrastructure and corporate activities. The license, we granted document and in Q2 for the rights to develop and commercialize ILUVIEN.

Richard S. Eiswirth: We were very focused on getting back to pre-pandemic sales levels and growth rates by investing in our commercial infrastructure and corporate activities. The license we granted Occamension in Q2 for the rights to develop commercialized alluvial for Greater China Territory and other Western Pacific countries, along with Occamension's equity investment in us, has significantly improved our balance sheet, as Phil said. The Occamension License Agreement also offers the potential for us to receive up to $89 million in future sales-based milestones, plus a markup on commercial products that we furnish to Occamension under the license agreement.

Greater China territory, and other Western Pacific countries, along with Aki mentioned equity investment in us have significantly improved our balance sheet as Phil said I can mentioned license agreement also offers the potential for us to receive up to $89 million in future sales based milestones plus a markup on commercial product that we furnished the art you mentioned under the license agreement as a result, we do bill.

Richard S. Eiswirth: As a result, we do believe we have the capital resources to execute on our core business in the U.S. and Europe, and we plan to get back to the strong position that we were in prior to the pandemic. With that, I'll turn the call over to the operator to begin the question-and-answer session.

Leave we have the capital resources to execute on our core business in the U S and Europe, and we plan to get back to the strong position that we were in prior to the pandemic with that I will turn the call over to the operator to begin the question and answer session.

We will now begin the question and answer session.

Operator: We will now begin the question and answer session. To ask a question, press star than one on a touchdown phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then too. At this time, we will pause momentarily to assemble our roster.

You ask a question press Star then one on a touchtone phone.

If youre using a speakerphone please pick up your handset before pressing the keys.

You withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

Okay.

Operator: And the first question comes from Alex Nowak with Craig Howlem Capital. Please go ahead.

And the first question comes from Alex Nowak with Craig Hallum Capital. Please go ahead.

Great Good morning, everyone.

Richard S. Eiswirth: Great, good morning, everyone. Rick, just hoping you could expand on the month-to-month cadence of results throughout Q2 for both U.S. and OUS and user demand. How are things tracking towards the end of the quarter and just how is Delta playing in the game starting here in Q3? Yeah, so great question, Alex, and thanks for joining us today. I had to tell you, it's still inconsistent.

Rick I was just hoping you could expand on the month to month cadence of results throughout Q2 for both U S and O U S end user demand how are things tracking towards the end of the quarter and just how is delta playing into things starting here in Q3.

Yeah, So great question, Alex and thanks for joining us today.

I have to tell you it's still inconsistent we see a lot of inconsistency month to month, depending on the country. We will have a strong months in the U K and a and a weak month in the U S. And then it will flip the next months and a lot of that is tied to the variability in these spikes with the delta bearing and things like that so there is not.

Richard S. Eiswirth: You know, we see a lot of inconsistency month to month, depending on the country. You know, we'll have a strong month in the UK and a weak month in the U.S., and then it will flip the next month. And a lot of that is tied to, you know, the variability in these spikes with the delta variant and things like that. So there's not, there is just, unfortunately, a lot of inconsistency right now as things continue to open and close. You know, there are certain jurisdictions where, you know, we had access for a while, and that access has been limited again for a period of time, and it just seems to continue to stop and start.

There is just unfortunately, a lot of inconsistency right now as things continue to open and close.

There are certain jurisdictions, where we had extra access for a while and that access has been limited again for a period of time and it just seems to continue to stop and start overall I'm really pleased that.

Richard S. Eiswirth: Overall, you know, I'm really pleased that our utilization appears to be at a slightly greater share than maybe the availability of patients coming back to the offices, and we are adding new accounts. So that message that we talked about about the COVID pandemic highlighting the value of Aluvian is working. And I think as we get more and more consistency with patient volumes, we'll see that consistency when you come back. But, you know, just like you read the news every day, things continue to change and evolve.

Our utilization appears to be at a little slightly greater share than maybe the availability of patients coming back to the offices and we are adding new accounts, so that message that we talked about about.

The COVID-19 pandemic highlighting the value of ILUVIEN I believe is working and I think as we get more and more consistency with patient volumes, we will see that consistent and you come back, but just like you read the news every day and what things continue to change and evolve.

Richard S. Eiswirth: Yep, enough understood. And how much inventory do you think is sitting outside the U.S. right now? Do you think that's mostly drawn down and end-user demand is good, or, excuse me, orders shift is going to track closer to end-user demand here in the second half? It should.

Yes, no understood and how much inventory do you think is sitting outside the U S. Right. Now do you think thats, mostly dropdown in end user demand is good or excuse me orders.

<unk> is going to track closer to end user demand here in the second half.

It should yes, we should get much closer back to end user demand.

Richard S. Eiswirth: Yeah, we should get much closer back to end-user demand. There are orders that we have on hand, as we said, for deliveries in the next three quarters. So there's some in the third quarter, some in the fourth quarter, some in the first quarter of next year. I would say we're probably not quite back to a perfect match just yet, but I would expect us to be there by the fourth quarter.

There are orders that we have on hand, as we said for deliveries in the next three quarters. So there is some in the third quarter some fourth quarter. So in first quarter of next year.

I would say, we're probably not quite back to a perfect match, just yet, but I would expect us to be there by the fourth quarter.

Okay, that's great and can you expand on the Tanner group deal just how to think about that is that going to be a material piece of that relative to like just given the lack of reimbursement in some of those markets yeah. So.

Richard S. Eiswirth: Okay, nope, that's great. And can you expand on the Tanner Group deal? What do you think about that? Is that going to be a material piece, or is that relatively light just given the lack of reimbursement in some of those markets? Yeah, so, you know, I'm hesitant to quote a number on that. I mean, I would tell you that what we see is that we do get a lot of interest at trade shows and things like that from countries where Alluvian is not yet approved and available.

I want to.

I'm hesitant to quote a number on that I mean, I would I would tell you that we see is we do get a lot of interest at trade shows and things like that from countries, where ILUVIEN has not yet approved and available. So we hear a lot of interest from South America.

Richard S. Eiswirth: So, you know, we hear a lot of interest from South America. We do hear a lot of interest from You know, Asian markets where the product's not available yet, right, even though Occamension is trying to get it there. And so we do think there is demand out there for what we can supply. You know, the Tanner Group has said that they believe eventually it could be, you know, a million to two million dollars a year, but how quickly that ramps up, we'll have to see.

We do hear a lot of interest from Asian markets, where the products not could not available yet right, even though Aki mentioned is trying to get it there and so we do think there is demand out there we can supply.

The Tanner group has said that they believe eventually it could be a 1 million to $2 million a year, but how quickly that ramps up we will have to see.

Okay understood and then given the cash infusion you mentioned a number of different investments that the team wants to make across sales and marketing, but I was just hoping you can kind of rank order of those were with the additional cash where do you plan on using that most wisely from a sales and marketing side from a clinical.

Richard S. Eiswirth: Okay, understood. And then given the cash infusion, you mentioned a number of different investments that you want to make across sales and marketing, but I was just hoping you could kind of rank where those are. Where, with the additional cash, where do you plan on going?

Richard S. Eiswirth: that most wisely from the marketing side, from a clinical regulatory side, covering UVitis and then just any comment on the pipeline there too. Yeah, so it's, I would say really, really two things, maybe three. The two things that would be top of mind in that are advocacy and face-to-face engagement with the doctors, right? So I want more of my team to be face-to-face with more doctors in quality environments as often as we can to develop that advocacy and get that peer-to-peer discussion going.

Regulatory side from expanding uveitis and then just any comment on the pipeline there too.

Yeah, So I would say I would say really really.

Two things maybe three the two things that would be top of mind on that are going to be the advocacy in the face to face engagement with the doctors right. So I want more of my team to be face to face with more doctors and quality environment as often as we can to development advocacy and get that peer to peer discussion going. So for example, we are in.

Richard S. Eiswirth: You know, for example, we are increasing the size of our thought leader liaison team in the U.S. We're adding MSLs, both in the U.S. and in Europe. And we're adding a position that is similar to a thought leader liaison in Europe as well, although because the compliance rules are slightly different, it's not a TLL. But the focus is that professional relationship, getting those in-depth conversations with the doctors. You know, so, and a lot of advisory boards through that format.

Creasing the size of our thought leader liaison team in the U S.

Adding <unk> both in the U S and in Europe.

We're adding a position that is similar to a thought leader liaison in Europe as well, although because of the compliance rules are slightly different it's not a CLO, but the focus is that professional relationship getting those in depth conversations with the doctors.

So and a lot of advisory board did that format.

Richard S. Eiswirth: Another example is I'm trying to get out there myself and talk to these doctors quite a bit with myself and Dr. Dyer and more of our senior leadership team. I had dinner here in New York with six or seven doctors last night. I have, you know, four or five of those types of dinners.

Another example is I'm trying to get out there myself and talk to these doctor practices quite a bit with myself and Dr. Dyer and more of our senior leadership team I had a dinner here in New York with six or seven doctors last night I have four or five of those types of dinners, playing with different practices around the country over the next three weeks.

Richard S. Eiswirth: plan with different practices around the country over the next, you know, three weeks. The second thing would be, you know, the market access side of things. We think we've got a great argument, specifically in Europe, for the hospital systems there, where they're overcrowded, and they do have capacity issues associated with COVID, to show them that Alluvian can make their practice more efficient, both from an operational standpoint, but also from a cost standpoint with the Luvian.

The second thing would be.

The market access side of things, we think we've got a great argument specifically in Europe for the hospital systems, there, where they're overcrowded and they do have capacity issues associated with Covid to show them that ILUVIEN can make their practices more efficient.

And and both from a just from an operational standpoint, but also from a cost standpoint, with ILUVIEN and we think Theres a great argument there around UV items. So that's going to be a big part of the story as we rollout for uveitis and then the third thing would be that DTP effort in 2022, we'll be building towards that over the rest of this year, but we really think.

Richard S. Eiswirth: And we think there's a great argument there around UVITA, so that's going to be a big point. part of the story as we roll out for UVitis. And then the third thing would be the DTP effort in 2022. You know, we'll be building toward that over the rest of this year. But we really think, and I think many people agree with this, there's a huge opportunity to demonstrate to patients or potential patients out there the value of living and then drive that, you know, through to the doctor's practice. No, that's great. And just anything in the pipeline as far as new retinal ass, And not right now. Not right now. We are out there looking aggressively.

And I think many people agree with this there is a huge opportunity to demonstrate to patients or potential patients out there the valuable, leaving and then drive that through to the doctors' practices.

Got it that's great and then just anything on the pipeline as far as new rental assets.

No not right now not right now we are out there looking aggressively I will say that you know as things have started to open up and we see some meetings on the horizon, we do expect to be able to engage in a little bit more dialogue.

Richard S. Eiswirth: I will say that as things have started to open up and we see some meetings on the horizon, we do expect to be able to engage a little bit more dialogue, but nothing right there on the front burner at the moment. Okay, excellent. Appreciate the update. Thanks. Absolutely. Thank you, Alex.

But nothing nothing right there on the on the front burner at the moment.

Okay excellent I appreciate the update thanks, absolutely. Thank you Alex.

The next question comes from James Molloy with Alliance Global Partners. Please go ahead.

Operator: The next question comes from James Malloy with Alliance Global Partners. Please go ahead.

James Francis Molloy: Hey guys, thanks for taking my questions. I had a quick, quick follow up on the New Day trial. Did you quote 51 patients currently in the New Day trial at this point?

Hey, guys. Thanks for taking my questions I had a quick quick quick follow up on the new day trial.

Did you quote 51 patients currently in the New day trial at this point.

Richard S. Eiswirth: Yeah, that's right. So we've got about 51 patients in the study right now. There are 11 that are in the screening phase. We have seen that ramp up over June and July as some of that patient volume and access has come back. It's a little bit slower than we'd like, Jim, unfortunately, because some of the people that have not shown up in the office are new patients, you know, where things were shut down or access was restricted. But we're starting to see an improvement in that, and, you know, hopefully, that will continue to build through the rest of the year.

Yeah, that's right. So we've got about 51 patients in the study right now there's 11 that are in the screening phase we have seen that ramp up over June and July as some of that patient volume and access has come back.

It's a little bit slower than we'd like Jim.

Unfortunately, because some of the people that have not been shown up in the office or are those new patients where things were shut down or access was restricted but we're starting to see an improvement in that and I'm hopeful that we'll continue to build through the rest of the year.

Yeah, obviously the.

Richard S. Eiswirth: Yeah, obviously, the pandemic hitting that, I mean, much slower than you anticipated. With the 11 in, it's hard to know with the Delta variant, of course, but would you anticipate, you know, that's 50 in a year? Granted, in the teeth of COVID, would you expect like 100 in a year over the next year or so?

The pandemic hitting that.

Much slower than you anticipated.

With 11 in it's hard to know what the Delta varies of course, but we do anticipate.

It's $50 a year granted in the teeth of Covid.

Do you expect like 100, and a year over the next year or so.

Richard S. Eiswirth: I certainly hope so. I mean, I certainly hope that, you know, enrollment will increase exponentially over the next 12 months. You know, I'm not giving up on it being enrolled, you know, this time a year from now. The challenge we've had, as I said, is the specific type of patient that we're trying to recruit is, you know, that naive patient, you know, or a patient that has deemia that's been treated very, very lightly, you know, so far in the study. And, you know, a lot of times companies will try to change that enrollment criteria to accelerate it.

Certainly hope so I mean, I certainly that you know that that enrollment will increase exponentially over the next 12 months.

I'm not giving up on it being being enrolled this time a year from now.

The challenge we've had as I said is the specific type of patient that were trying to recruit is that naive patient.

We're very patient than it has do you mean thats been treated very very lightly so far in the study and you know a lot of times companies will try to change that enrollment criteria to accelerate it. We're just not going to do that because we think it's so important to focus on these early patients. So we're going to be patient with it we're doing the things we can do to speed it up and we are seeing some positive signs over the last.

Richard S. Eiswirth: We're, we're, we're not a patient that has been treated very well. We're not. We're not a patient that We're We're just not going to do that because we think it's so important to focus on these early patients. So we're going to be patient with it. We're doing the things we can to speed it up, and we are seeing some positive signs over the last, you know, eight to ten weeks in that enrollment.

Eight to 10 weeks and that enrollment.

Great. Thank you and then can you talk a little bit about the U S sales how many how many reps you guys have currently is.

Richard S. Eiswirth: Great, thank you. And then you will talk a little bit about U.S. sales.

Is there a <unk>.

Is there a.

I didn't change too.

Richard S. Eiswirth: How many reps do you guys currently have? And is there a change to obviously face-to-face, very important? You're showing excellent leadership doing it yourself with the Delta variant, hitting everyone. How is that? Working out at Alamira, are you able to get the face-to-face that you need? Or are people starting to get there?

Obviously, you face to face very important.

Youre showing excellent leadership doing it yourself.

With the Delta Varian hitting hitting everyone.

How is that how is that.

Working out at Altamira are you able to get the face to face that you need or are people starting to get there.

Yeah, absolutely. So we've got about you asked how the number of reps, we've got 29 reps.

Richard S. Eiswirth: Absolutely. So, you know, we've got about, you asked how the number of reps is. We've got 29 reps, you know, right now. There is one territory that, you know, we had some turnover in, and we just decided to leave it open, you know, in the COVID situation down in South Florida. I would say our reps' access is getting better. As I mentioned, there was about a 14% increase in face-to-face calls or in-person calls by reps in the second quarter over the first quarter.

Now there is one territory that we had had some turnover and we just decided to leave it open and the Covid situation down in South Florida.

I would say our reps access is getting better as I mentioned, there was about a 14% increase in face to face calls or in person calls by reps in the second quarter over the first quarter. So we're definitely seeing some improvement there we are seeing more practices open us open up for lunch and learns rate is where we get to go in and have a lunch the entire practice.

Richard S. Eiswirth: So we're definitely seeing some improvement there. We are seeing more practices open up for lunch and learns, right, where we get to go in and have lunch for the entire practice and, you know, get greater access and more quality time than, you know, five to ten minutes in an injection lane.

You know get greater access and more quality time than you know five to 10 minutes in our in our injection lanes. So we're definitely seeing improvements there I hope that will continue to improve as I said to Alex there is a lot of variability though.

Richard S. Eiswirth: So we're definitely seeing improvements there, and I hope that will continue to improve. As I said to Alex, there is a lot of variability, though, and it's not consistent across the U.S. because of, you know, spikes in the delta variant. You know, I think we've seen things open up in Georgia. We got some access over the last month or so with Georgia Retina, who's one of our biggest customers here, and frankly, that had been pretty tight for most of the time.

And it's not consistent across the U S because of spikes in the in the Delta bearing.

You know I think we've seen things open up in Georgia, We got some access over the last month or so with Georgia retina Who's one of our biggest customers here and frankly that had been pretty tight for most of the time and over the last couple of weeks <unk> seen a spike in the Delta Varun here in Georgia. So we'll have to see how those things play out and I think it's going to be a little bit of stop and start for <unk>.

Richard S. Eiswirth: And over the last couple of weeks, we've seen a spike in the Delta variant here in Georgia. So, you know, we'll have to see how those things play out. I think it's going to be a little bit of a stop and start for a couple more months.

More months now.

And last couple of questions on could you speak a little bit to the sale sales versus sales and marketing spend.

Richard S. Eiswirth: And last couple questions, can you speak a little bit about sales versus the sales and marketing spend? The sales and marketing spend was up 11% quarter to quarter versus the sales down 5%. Is there a lag in marketing sales or a decoupling between when the spend goes out versus when it comes back in sales? Can you talk a little bit about the linkage between the spend out there and the revenue coming in on top?

Sales and marketing up 11% quarter to quarter versus the sales down 5% is there is there a lag on the sales and marketing or decoupling.

When the spend goes out it comes back in sales or can you talk a little about the linkage between the spend you spend out there in the revenue is coming into town.

Phil Jones: Bill, do you want to provide some comment on that first? Yeah, first.

Bill do you want to provide some comment on that first.

First Jim.

Phil Jones: Jim, I'll talk a little bit about the spending. As you know, if we look at the spending in the sales and marketing area, we've had severe lockdowns for about the last 16 to 18 months. And what we're seeing now is that our rats are able to get out into the field and be able to travel a little bit more. And as that happens, we do see an increase in activity related to travel and the engagement related to those interactions that we see between our field force and the doctors. So we will see that increase. And I think that's just a, you know, somewhat of an advance effect of what, hopefully, are good results to come based on that interaction.

I'll talk a little bit about the spending as you're aware if you look at it we look at the spending in the sales and marketing area. We've had severe lockdowns for about the last 16.

16 to 18 months and what we're seeing now is that our reps are able to get out into the field and be able to travel a bit more and as that occurs we do see an increase in travel related to travel and the engagement related to that those interactions that we see between our our field force and the doctors. So we will see that increase in that.

I think that's just.

Somewhat of a of an advance of pattern of what hopefully is a is good results to come based on that interaction.

Richard S. Eiswirth: And then any, any, any, uh, last question, any, any, any, any thought from guidance for, for 21, here halfway through?

And then any any last question any any thoughts on guidance for 'twenty, one here halfway through.

Richard S. Eiswirth: Jim, I don't think so. We're not real comfortable doing that right now. I mean, we think there are a lot of positive signs that are pointing to positive trends from the activity that we went through in the call. But, you know, probably, especially with this spike in the Delta variant right now, just not comfortable providing guidance for the rest of the year. Understood. Thank you. Thank you for taking the question.

Jim I don't think so.

Not real comfortable doing that right now I mean, we think there's a lot of positive signs that are.

Pointing to positive trends from activity.

You know that we went through in the call but.

Probably especially with the spike in the Delta right now just not comfortable providing guidance for the rest of the year.

Understood. Thank you. So thank you for taking the questions.

Okay.

Thanks, Jim.

Again, if you would like to ask a question press star.

Operator: Again, if you would like to ask a question, press star than one to join the queue. The next question comes from Yi Chen with H.C. Wainwright. Please go ahead.

And then wanted to join the queue.

The next question comes from E. Chen with H C. Wainwright. Please go ahead.

Thank you for taking my questions.

Yi Chen: Thank you for taking my question.

In the second half of this year do you think the U S revenue gross skew exceed the international revenue growth.

Richard S. Eiswirth: In the second half of this year, do you think U.S. revenue growth will still exceed international revenue growth?

Richard S. Eiswirth: Ye, that's a great question. I would say probably not because we do have those additional countries that have started selling the product in the first half of the year. And we do expect to see some of those distributors come back. So I think that, you know, as Europe sort of comes back to get to a normalized level, growth will be greater in Europe for a little bit of a period of time. I got it.

Yeah.

Yeah. That's a great question I would I would say probably not because we do have those additional countries that have started selling product in the.

And the.

In the first half of the year and we do expect to see some of those distributor order back so I think that.

As you see Europe sort of come back to get to a normalized level you know the growth will be greater in Europe for.

We're a little bit of period of time.

Got it and then with respect to the enrollment for the New day trial do you think.

Richard S. Eiswirth: And with respect to the enrollment for the new day trial, do you think it would be reasonable to expect that the enrollment should be completed in the 2023 or 2024 timeframe? We're certainly going to be pushing and working on strategies to get people enrolled in 2022. And for the second half of this year, how should we look at operating expenses? So I think we will be building back over the course of the year to the levels that you saw in the fourth quarter of 2019, and potentially increasing a little bit. Okay, I got it. Thank you.

It would be reasonable to expect that the enrollment should be completed in the 'twenty to 'twenty, three or 2024 time frame.

We're certainly going to be pushing and.

And working on strategies to get enrolled in 2022.

And for <unk>.

Second half of this year, how should we look at the operating expenses.

So I think we will be building back over the course of the year to the levels that you saw in the fourth quarter of 2019.

And potentially increasingly looking at around 2022.

Okay got it thank you.

Richard S. Eiswirth: Thank you. This concludes our question and answer session. I would now like to turn the conference back over to management for any closing remarks.

Thanks Keith.

This concludes our question and answer session I would now like to turn the conference back over to management for any closing remarks.

Richard S. Eiswirth: Great. Thank you all for participating in today's call and for your interest in Alamara Sciences. We do look forward to sharing our progress on our next quarterly conference call when we report our third quarter results. Thank you and have a wonderful day.

Great. Thank you all for participating on today's call and for your interest in Almere Sciences, We do look forward to sharing our progress on our next quarterly conference call. When we report our third quarter results. Thank you and have a wonderful day.

Operator: The conference is now concluded. Thank you for sending today's presentation. You may now disconnect.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Yes.

[music].

Yes.

Okay.