Q3 2021 Aerie Pharmaceuticals Inc Earnings Call
Good afternoon. Thank you for standing by and welcome to the <unk> Pharmaceuticals third quarter 2021 earnings Conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time.
Today's conference call will be recorded.
It is now my pleasure to turn the floor over to General Counsel John Larocca. Please go ahead Sir.
Thank you Chris Good afternoon, and thank you for joining us.
With us today are Ben Mcgraw areas interim executive Chairman, Tom Mitro, Ares, President and Chief operating Officer, David Hollander areas, Chief Research and development Officer, Casey Kopczynski areas, Chief Scientific Officer, and Jeff Calibrate areas, Vice President of Finance and principal accounting officer.
Today's call is also being webcast live on our website investors that aerie pharma dot com and it will be available for replay as indicated in our press release.
Now for forward looking statements and non-GAAP financial measures on this call we will make certain forward looking statements, including statements forecasts and observations regarding our future financial future financial and operating performance and impacts of the COVID-19 pandemic, including our observations regarding ongoing operating expenses and net revenue per bottle. These.
These statements will include observations associated with our commercialization of Rhopressa and <unk> in the United States, our collaboration in Japan and prospects for potential collaboration in Europe. They will also include plans and expectations regarding the success timing and cost of our clinical trials. Additionally.
Interim performance, you'll hear that and Tom mitral reporting of the results for the quarter. Our two commercial products are gaining market share and are consistently hitting analysts' revenue projections.
Second.
We are leveraging our products via ex U S partnerships. It's our expectation these partnerships will enhance our balance sheet and will further provide and I'll provide further comment on that one.
Third we have to clearly differentiated phase III ready product and development and a strong pipeline behind them.
To hear that from David Palmer.
Fourth we have a well functioning manufacturing operation Athlone, Ireland, and I'll comment on that fifth.
And a good financial position and Jeff Calibrates will cover that.
I know some of you are concerned about the two departures from our senior management team. The management team we have is strong.
And we're making good progress in filling those vacancies as we've previously reported we have a search Oakland.
For our CEO and we are now and reviewing well qualified candidates.
The board takes its fiduciary responsibility very seriously and we will take the time necessary to find the person best suited.
To execute the responsibilities of the job. In addition, we had that we have an active search for a CFO and we are interviewing very good candidates for that position right now.
Now I'll turn the call over to Tom to provide an update on the U S. Glaucoma franchise, after which David will provide an update on the pipeline I'll address our global activities and Jeff Calibrates will wrap up with the financials, Okay. Tom Thank.
Thank you Ben.
Our third quarter.
2021, net revenues of $29 3 million are up 46%.
Year over year, and up 8% compared to the second quarter of 2021.
Our September year to date revenues of $79 5 million.
Our up 36% over the comparable period of 2020.
With two months left in 2021.
We continue to remain comfortable with the analyst consensus for the full year 'twenty one net revenue.
Order of 2020 with the last five months, all exceeding 100000 units.
And this continues to show a significant increase from where we were at this time last year and this quarter's numbers are more than 37% higher than our pre COVID-19 levels of the first quarter of 2020, providing proof that we powered through the pandemic.
Just as we reported in our previous calls are glaucoma franchise continued to fire outperformed the glaucoma market and all other branded glaucoma products.
Just on a QB of data the third quarter of 2021 total prescriptions for our franchise rose 19%.
For 28000 prescriptions over 30 over the third quarter of 2020, whether glaucoma market was up just 2% for the same period.
New prescriptions for our franchise increased 20% in the third quarter of 2021 compared to the third quarter of 2020.
Facing the market growth of 1%, we believe that the continued growth and new prescription speaks very well for the future growth of our franchise.
And I'm looking at the last 12 months ending September of 2021, so to be clear that is October of 2022 September of 2021, our franchise grew by 110000 prescriptions are 20%.
Couple of market declined by 1% or 430000 prescriptions over the same period.
So once again our franchise prescription by inch grew significantly looking at both the third quarter of this year in the last 12 months and we continue to significantly outperform.
Broader glaucoma market.
Now our sales representative call activity continues to increase with year to date September 21, 2021 call volume up 52% compared to the same period last year.
With the vast majority of physician offices now open 90% of our physician visits are now face to face. The primary driver of our strategic growth is the increase in number of offices that are open.
Our salesforce strategy remains unchanged our sales team is calling on the approximately 10500 highest prescribers of glaucoma products in July of 2020 or contract Salesforce began calling on the next 1500 highest prescribers and the telesales team, which we added in June of 2020 began calling on the next 4000 highest prescribe.
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We continue to capitalize on the momentum we established prior to Covid, our glaucoma products are increasingly being prescribed by many eye care practitioners and with our current managed care coverage levels, our strategy to move monthly prescribers to weekly prescribers in our share of voice initiatives and improvement in our net revenue per bottle, we continue to see the associated benefits.
I would like to make a comment before David covers the Rd program then.
Thanks, Dan and before David starts I'd like to clear up a point and I think that would be beneficial to everybody just before I took over as interim executive chairman.
The company announced the results of the phase III B clinical trial in dry eye I know that some are disappointed with the results of the trial however, others.
Typically those inside the company that were involved in the trial.
Viewed it as a terrific study with results that were better than.
And then any they've seen in their many years of doing dry eye studies.
When I joined the management team I spent a long time, working with David and others to understand the divergent views.
Here's what I discovered.
Company's specified primary endpoints for the <unk> trial the hope.
If the products hit those endpoints the trial could serve as a pivotal efficacy trial.
And that would save the company time and money in the development front.
The choice of primary endpoints for the Phase III trial was based on the results of a small one month phase.
The phase Iia study done by visitor ex pharma in Spain, which was later bump by area in their trial.
They used a formulation that would not be acceptable for regulatory agencies for the phase two b trial are developed and tested a new formulation that would be acceptable to letters the small size of the Spanish trial and the change in the formulation made projection of what would be the most.
Appropriate endpoints very difficult.
Because of the uncertainty associated with the choice of primary endpoint the company built and multiple other endpoints that would allow it to assess what would be the most reproducible endpoints for the phase III.
Program, because that's exactly what our phase two trial is for.
The Bottomline is that although there was uncertainty about hitting the primary endpoints to team in pre specified a full array of other endpoints to hedge against the failure against primaries.
Well in the most larger three months study run by Aerie product did failed to achieve statistical significance on those primary endpoints that have been chosen.
Because of that I was left wondering why those involved in the study called as some of the best dry our results they'd ever seen it turned out the team was pleased because they have achieved.
Those findings 30 to select a concentration to advance to phase three and to determine the endpoints for future F. D. A pivotal studies by testing that's novel M O a against the number of well established signs and symptoms.
Has reported the high dose, 0.003% concentration demonstrated statistically significant efficacy across multiple validated prespecified sign and symptom endpoint.
In addition by went to also demonstrated a rapid onset of action efficacy was observed in both signs and symptoms as early as day 14 and showed continued improvement in symptoms through day 84.
Based on these results, we have defined tier production and sandy score as the coat primary signs and symptoms and points for the phase III trial.
And points are consistent with what would be expected from a drug with this mechanism of action confirmation.
Confirmation of the common one results in our face with child would clearly differentiate 512 from other topical products.
We intend to initiate phase III trials in the first half of 2022.
Planning to conduct two phase III efficacy studies and a 12 months safety study for 512, we will confirm the regulatory past with the F. D. A in an end of phase two meeting in the first quarter of next year.
Now shifting our attention to the retina pipeline, we've completed our discussions with the U S and European regulatory agencies regarding clinical and regulatory pathways for phase three clinical trials for a R. 11 O. Five are dexamethasone sustained-release implant. We now expect to start the first phase III clinical trial for 11 O five.
First half was 20 twenty-two the date was moved into 2022 because of supply chain issues that developed through the implant applicators as.
As a reminder, in July of 2020 released the phase two top line data for 11 O five which demonstrated up to six months of sustained efficacy and improved envision in patients with long standing retinal edema secondary to retinal vein occlusion. This is a very prolonged efficacy profile compared to other injectable steroids and the <unk>.
Markets, such as Ozzie, Ozzie deck, which generate today about $400 million in revenue and revenues in the U S and Europe combined.
Last month the phase two data was presented by Doctor Michael singer at the S. R. S annual meeting in San Antonio.
Dosing and strong safety profile and parts of the deal achieved impressive IOP lowering efficacy in a population with a low baseline intra ocular pressure, we believe that the testicle superiority shown may suggest a bright future for an entire studio in the Japanese market and fulfill an unmet need for this population.
We are very pleased with the results of the trial, which was completed a quarter ahead of schedule. These positive results in a low IOP population confirm our prior results, indicating that it's hard to do has a unique effect in this patient population.
As a reminder, Erik conducted its first phase III trial as part of the collaboration agreement signed in 2020 now.
Now Santander will oversee the rest of the development in Japan, which consists of one additional one month efficacy study and a 12 month safety study and now I would like to turn the call back over to Ben.
Okay. Thanks, David.
Shifting to Europe.
We expect to announce the collaboration agreement on our market and draw from our products for Europe and other regions in the world before the end of 'twenty one.
Given that the glaucoma market in the top five European Nations alone totaled 98 million barrels in 2020 compared to $55 million in the U S.
On an annual basis as we continue to edify volumes to the ethylene plant.
Our third quarter of 2021, GAAP net loss was 39 $7 million or 86 cents per share when excluded the six $6 million of stock based compensation expense are totaled adjusted net loss was $33.1 million or 72 cents per share.
The third quarter of 2021 adjusted cost of goods sold was seven 6 million and adjusted total operating expenses were $47.5 million with the adjusted selling general and administrative expenses of $33 million and adjusted research and development expenses of $17 2 million.
For the third quarter of 2021, our net cash used in operating activities was $18 $9 million and we had 167 $6 million in cash cash equivalents and investments as of September 30th 2021.
The net cash used in operating activities of $18 $9 million in the third quarter of 2021.
As further improved from the third quarter of 2020 for which we reported to $22 $9 million in cash used.
This reflects continued revenue growth he continued expense controls.
Shares outstanding at the quarter and totaled $47.2 million.
Okay.
Capture getting Annabel.
And yes here.
And not so much description sure maybe maybe just one more question if I can.
You know I think one of the big concerns that people have is that you are still you know we're working towards you know growing your franchise and investing in SG&A R&D I'm getting your pipeline Vince I guess the question always is around cash and how comfortable are you that you can get this business profitable without any further rate.
Do you feel that that EU partnership to get you there. Thank you.
Yeah.
The EU partnership.
Jeff just told you were at 168 or so million now.
EU partnership, Texas up by 50 to 100 more that takes away any short term pressure, we have two phase III ready products that.
Our.
Can you can be sources of additional cash to the balance sheet.
We are.
What I can say right now we're just under no pressure to do anything.
Now at all.
Okay, great I'll get back in queue. Thanks.
Okay.
Thank you.
Next we have.
We put off and put off and put off timing for that and then just finally picked a time and move forward that's it.
With regard to.
What's the best path for the company.
I understand what you are saying completely.
And I'll I'll revert back to a point I made in the comments there. The board takes its fiduciary responsibility very seriously they really do.
And.
If someone were to come with an appropriate offer we would absolutely look at it.
And give it the diligence that it would deserve Ken so.
That's just all I can say at this point.
Right then I appreciate it thanks, so much.
Okay can.
Thank you.
And that has been these 10 cancel.
Your line is open.
Hi, Thanks for taking my questions here, So I had a few to follow up on what.
My colleagues fast here, so they're Vince management changes, obviously, so as a standalone company that how does the poor it think about Ares strategic vision, you've had a lot of important things coming up here.
And then secondly, how will you or what would you do to accelerate the growth for Rocklatan or press I think people have been waiting for it to really take off and it's done well, but just thinking it's gonna be bigger than it is by this point and its launch and then just back on cash how would you characterize your cash runway.
Just on what you know today. Thank you.
Okay. Thanks Luis.
So.
Comment on the further question about the board because I was the lead director and I'll be the chairman after this.
I can't add anything other than well actually so okay. So I'll answer the question directly which is.
We believe.
The prospects for the company is aboard leave the prospects of the company you are quite good.
We believe in the products that are on the market, where they think they have good potential.
And we liked the portfolio.
We have two phase III ready products, you just don't have many.
I mean, that's.
That's terrific for accompanied this session. So we have.
Our coverage and as you can see from the report that we gave our managed care coverage is in very good shape now at this point. So I think combining those two that we've got very good coverage and Covid is going away puts us in a situation to do very very well from a growth growth standpoint, I will say one other thing that sort of.
Tyson that managed care part if you look back a number of the number of prior authorizations that have been submitted.
For our franchise, it's well over 200000.
So that just shows you what first off that managed care was a real issue, but secondly, it shows you that physicians are highly interested in these products because that number I think is frankly unparalleled from a medication standpoint in ophthalmology. So so that's why I look Eric Louise I looked at it is managed care coverage, improving continuing to improve putting us in good position and of course.
Covid.
Continuing to decline.
Okay. Thank you.
Okay.
Thank you.
Yes, Barry.
Bank of America. Your line is open.
Hi, This is ashwin on producing I had two.
So one is on Japan.
So you have positive phase III, which was the first trial.
So congrats on that just curious what's the status of the program going forward.
To withdraw your guidance I think you mentioned that there could be doing some of these studies. So is there any kind of make milestone payment associated with that.
That's the first one and the second one is.
Alright.
Oh, when can we expect that denominator.
Okay.
Okay. So in terms of milestones yes.
If youre asking about.
Japanese partnership.
Fan-tan, yes, they are carrying the products.
Through the remainder of the regulatory process.
And I think we've already stated previously that.
We'll achieve.
Royalty payments.
You mentioned the in terms of the managed care and the whisky you just help us understand here as you say, it's getting better maybe the comments on on this call versus private quarters. You know the changes that have happened here or is it pretty steady and we're just hoping that the steadiness keeps keeps going here.
No I think it is well thanks for the question by the way I think it is has been pretty steady through time now and we're pretty much you know normalize where we are so that physicians don't view our products is being hindered by managed care any longer. So I think just making sure that they understand that but you've got to repeat that message over and over again, so that they continue to remember them.
It's only logical that that burn rate will incrementally increase.
Okay, Alright, thank you very much.
Okay.
Thank you.
And again to ask a question you need to press star one on your telephone.
We now have great.
Truth Securities Your line is open.
Good afternoon folks and thanks for taking the questions.
One openly the EE partnership.
Is the timing there simply a matter of the negotiation process or are there other considerations like pricing discussions in Germany or other countries that would make a difference.
Now its just pure negotiation and.
Yeah.
That's all they do so though there's still you know I mean, everybody looks at this I've made this point before.
It is just a straight license it's more than that I mean, you'll see when you see the deal you'll see it's quite a bit more complicated than just what you were thinking of as a straight license.
So closing comments.
Okay.
Thanks.
I'd like to end by reiterating the five points I made at the beginning first we have good commercial performance. Our two commercial products are now gaining market share and consistently hitting the revenue projections.
Second we're leveraging our product via ex U S partnerships and that will enhance our balance sheet third we have to clearly differentiated phase III ready products in development and a strong pipeline behind them fourth we have a well functioning manufacturing operation in Athlone, Ireland fifth we're in a good financial position and have adequate resources to X.
<unk> our business plan.
We want to thank all of you for joining the call today.
Okay.
This concludes today's conference call. Thank you all for participating you may now disconnect and have a pleasant.
Yes.
Okay.
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