Q4 2021 Antares Pharma Inc Earnings Call
[music].
Please standby.
Ladies and gentlemen, and welcome to the NN terrorists pharma fourth quarter and full year 2021 financial and operating results conference call throughout today's recorded presentation. All participants will be the listen only mode. After the presentation. There will be an opportunity to ask questions. If you'd like to ask a question. Please press star one on your tongue.
Phone keypad.
I would now like to hand, the conference over to Trombley, and tariff Vice President and corporate Communications and Investor Relations. Please go ahead.
Thank you operator, and good morning, everyone.
We are today, we announced our fourth quarter and full year 2021 financial results and operating achievements.
A copy of the press release and slide presentation for today's conference call are available in the Investor Relations section of the entire as part of our corporate website before we begin I'd like to remind listeners that some of the statements made during this conference call will contain forward looking statements within the meaning of the safe Harbor provision of the U S. Private Securities Litigation Reform Act.
Of 1995 examples of forward looking statements include those related to our future financial and operating results, including our expectations regarding the impact of the ongoing COVID-19 pandemic on our overall business.
Operating results and financial condition, our ability to achieve our 2022 revenue guidance future revenue growth prescription volumes product market and market share for our products and our partner products FDA action and potential regulatory approval for our products and partner products timing and results of ongoing and future development program.
Clinical trials by product and by our partner product future actions by our partners and future business development efforts.
Forward looking statements are subject to certain risks and uncertainties and actual results could differ materially.
Our identified as described in today's press release in the accompanying slide presentation on slide two and in the company's filings with the SEC Form 10-K , and as updated in charges recent periodic filings on Form 10-Q , and form 8-K, I charge is providing this information as of the date of today's conference call and does not undertake any obligation.
Legations to update any forward looking statements contained in this conference call as a result of new information future events or circumstances. After the date hereof, except as required by law or otherwise the company cautions investors not to place undue reliance on these forward looking statements.
This presentation will also include reference to non-GAAP financial measures. These measures are used by management to evaluate the operating performance of the company over time, they should not be considered in isolation or as a substitute for GAAP measures. A reconciliation of our non-GAAP measures to the nearest GAAP measure can be found in our earnings release.
Joining me on the call today are Bob Apple, President and Chief Executive Officer, Fred Powell Executive Vice President and Chief Financial Officer, Dr. Peter Richardson Executive Vice President Research and development and Chief Medical Officer, and Joe Renter Senior Vice President of commercial.
Let's review the agenda for todays call on slide three.
Bob will begin with a review of our overall business and accomplishments in 2021, and then hand the call over to Joe to provide an update on our commercial achievements and strategy for our proprietary portfolio. Dr. Richardson will then discuss our R&D pipeline and initiatives before handing the call back to Bob to provide a review.
Yes.
Greg will then go through the detailed financials and Bob will conclude with closing comments before opening up the line to your questions, which we ask you limit two questions per caller. Please.
Please turn to slide four and then I will hand, the call over to Bob Apple Bob.
Thanks, Tom Good morning, and.
Thank you for your interest in our fourth quarter and full year 2021 results and operations update.
We're very excited to report another record year with outstanding financial and operating results and.
In 2021, it's already successfully executed on our strategic initiatives and we believe we have built a foundation for continued growth.
We believe our financial and operating results for the full year.
What is the overall strength of the company as well as highlight the potential future growth opportunities, we have across our proprietary and partner business.
For the full year, our total revenue increased 23% year over year to $184 million, which puts us at the midpoint of our revenue guidance range of $180 million to $190 million.
We also generated almost $40 million and adjusted EBITDA and substantially improved our balance sheet with almost $66 million in cash as of the end of the year.
I'm extremely proud of the accomplishments we achieved across the entire organization. Despite another challenging year due to the ongoing pandemic.
Throughout the year, our commercial team continued to build and maintain strong positioning relationships that help drive the 34% annual revenue increase in our flagship proprietary asset <unk> to over $62 million.
We also worked relentlessly to support the strong demand for <unk> generic epipen, which contribute approximately $70 million in annual revenue.
As before is more balanced between our proprietary and partner business. These two assets were foundational to our growth in 2021.
We also executed on our strategic objectives to expand and streamlined our proprietary portfolio focus which supports our strong growth expectations in 2022.
First the.
The in licensing of <unk> gives us the opportunity to complement the guys did with the oral formulation of testosterone, which has been tentatively approved by the FDA.
We intend to leverage our expertise and success in the testosterone market to support the launch of <unk> and drive market share gains with our broader offering.
With the Fda's acceptance of our NDA submission Resubmission for <unk> <unk>.
Look forward to the March 28, <unk> date.
Pending final FDA approval, we are excited to launch in the second quarter with an expanded commercial organization.
At the end of the year, we completed the divestiture of Otrexup, which was a non core legacy asset.
Back in 2013.
This divestiture allows our commercial team to focus their call points with urologists and endocrinologists, while at the same time strengthen our balance sheet.
Overall, we expect our proprietary portfolio with Zeiss dead Orlando enough data to be core to our future growth.
As we look ahead, we expect our 2022 revenue to be in the range of $200 million to $220 million and does not include any unapproved products, such as Thailand, where tablets for Teo.
During the past year, we also made significant advancements in the development of our pipeline, particularly Atr's 19 O two for adrenal crisis rescue.
Completing our <unk> filing in the third quarter of last year allowed the company to initiate and subsequently report positive phase one results.
In addition, the Fda's recent fast track designation was further validation for the unmet need for this rescue pen for those suffering from adrenal crisis.
Our advances of $19 two highlights our commitment to our research and development as well.
Well as the opportunity to continue to leverage our platform technology with HRS 19 old one and the recent introduction of HRS 19 O three.
Our advancements on our internal pipeline were bolstered by the progress in our partner pipeline of products led by the initiation of endorsed use phase III program for <unk> heart attack rescue pen.
We anticipate these internal achievements coupled with the potential opportunities that remain with our partner business to provide a strong foundation, which we expect we will continue to grow.
As the organization continues to expand and flourish. We have built a leadership team that is cultivating a high performing culture, where our employees are critical to our ongoing success.
With that I am excited to welcome Claude Richardson.
He joined <unk> as our senior VP of human resources.
I look forward to leveraging his proven ability to develop and manage and HR strategy that will help drive performance and support our future growth.
Let me now hand, the call over to Joe to provide an overview of our commercial achievements and provide more detail on our commercial strategy for our proprietary portfolio Joe.
Thanks, Bob and good morning, everyone.
I appreciate the opportunity to join today's call throughout the year. The commercial organization successfully supported the growth of <unk> and a doctor in a while managing otrexup until its recent divestiture.
With a 27% increase in annual revenue for our proprietary products in 2021, the team effectively reached physicians and patients. Despite the challenges throughout the year due to the pandemic first with the Delta variant and then with omni Crown as we closed out the year.
Physician access fluctuated from quarter to quarter as well as it did from region to region, but overall, we were able to maintain a roughly 60 40 split between in person and virtual detailing in the fourth quarter.
The commercial team remains committed to balancing their physician reach effectively and efficiently, especially with more focus as we enter the new year carrying out a more compelling bag with the opportunity to complement Zeiss dead with Colorado.
And also with nocturnal.
As you can see on slide five the overall testosterone replacement therapy market remains strong.
With 8 million prescriptions annually.
Between Injectables with nearly 6 million prescriptions and gels with approximately 2 million prescriptions in 2021 really supports the excitement and opportunity to grow <unk> as well as introduce till endo in the second quarter of the year.
Let me first focus on <unk>, which remains one of our leading growth drivers.
<unk> total prescriptions increased year over year from approximately 34% in the fourth quarter and 45% for the entire year.
You can see that in slide six.
Although the pandemic persisted throughout the year, we were able to close out the year on strong strong footing with our highest weekly prescriptions that actually happened in the month of December .
The end of the year, we also expanded to over 90 or actually to 90 field representatives to enable us to get to even more prescribers and new geographic markets.
And they continue to penetrate and grow our prescriber base to now more than 11000 physicians.
We remain pleased with the fairly consistent split between new patients and switches in the fourth quarter as well as throughout 2021.
As we look ahead, we continue and expect to continue to drive prescription growth for us is that the.
Only easy to use painless subcutaneous injection for testosterone replacement therapy, or CRT and we expect to continue to hit weekly highs with prescriptions in 2022.
With that said, we also believe physicians and patients prefer different options, which brings me now to Orlando and oral formulation for TRT that we in licensed in the fourth quarter.
In anticipation of the final FDA approval for to Lando on its <unk> date, which is March 28, we are excited to potentially launch commercially in the second quarter of this year and.
In preparation, we're expanding the commercial organization by approximately 20% as we entered the new year with this new head count, we expect to reduce territory size and efficiently.
Secondly, detail the larger metropolitan areas in order really to reach more potential prescribers.
The year, we also will be working hard to ensure appropriate market access for calando, which we anticipate overtime to be similar to that as I said, which is currently covered by approximately 75% of all commercial lives.
With our upcoming National sales meeting in the second quarter, we expect to use this venue as a launching platform to train the commercial organization on detailing to lando and really building their expertise so that they can demonstrate themselves as experts in that TRT space now offering a portfolio of treatment options.
We expect to market Commando, two physicians and patients is complementary to <unk>.
Instead as convenient once weekly injection and Thats, an option with a compelling clinical profile to Lando offers an oral treatment alternative, particularly for those men, who would not choose an injection as their first option and we believe that the almost 2 million prescriptions for the gels and 2021 are a prime target for.
<unk> Lando, given the challenges specifically with daily application and the risk of transference to their children or their spouse or significant other.
We also believe to Lando had several positive product attributes such as strong efficacy profile no requirement for titration, which really means youre starting dose is your maintenance dose.
Physicians and our focus groups have expressed the need for a simple world product that doesn't need to be titrated.
And as such we are in the process of building a comprehensive launch strategy inclusive of market research and message testing, which we are in the place of building as we speak.
The opportunity to have both viasat into Orlando and our sales forces bag. This year gives our team the ability to offer both options to physicians and their patients and it allows them to choose what best suits their treatment needs.
We believe our growing commitment and expertise in the TRT space will support our market share gains and revenue growth in this market.
We also remain committed to continue to grow nocturnal.
With the official commercial relaunch of nocturnal during the pandemic in March of 2021, we saw prescriptions remained stable throughout the remainder of the year.
Due to the longer sales cycle that we believe is needed. So that we can educate physicians and patients on nocturnal poly react.
In the fourth quarter, we started to see a pick up in prescriptions is our branded consumer and provider digital campaigns enhanced our sales and marketing tools made a bigger impact as the year progressed.
As we look at 2022, we have seen a doctor in a prescriptions pick up in the first quarter of the year.
Looking forward we.
We will have a bigger stronger commercial organization in 2022, which we believe will enhance the growth of our proprietary portfolio with <unk>.
Calando and Doctor in a week.
We expect to continue to build and leverage our physician relationships with Zeiss status of simple convenient TRT option, while commando offers a compelling treatment alternative.
We believe that knocked around the opportunity will also continue to contribute to our growth as we educate physicians on identifying the appropriate patients.
Cited to embark on yet another year with a more competitive bag to offer our physicians and their patients.
And with that I'm going to hand, the call over now to Dr. Peter Richardson Peter.
Thank you Joe and good morning, everyone.
I'm very pleased to be able to highlight the significant progress we've made on our clinical development initiatives in 2021.
Let me begin my discussion on ATM, It's 19, though too is an adrenal crisis execute pen shown on slide seven.
The FDA acceptance of the IMD for $19 two in the summer allowed us to initiate with phase one study according to plan.
Right before the start of the fourth quarter, we dosed. The first subjects. This study with our proprietary liquid stable formulation of hydrocodone without the need to reconstitute the product.
The crossover study in 32 healthy adults was designed to establish the PK profile of <unk> 19 O two compared to solve your culture reference with the drug and to evaluate the safety Tolerability and pharmacokinetics of illiquid stable formulation of hydrocodone and given by intramuscular.
<unk>.
Now with the positive results. We just reported earlier this year, we expect to initiate the pivotal PK clinical study using the new device named by sharply in the second quarter.
And if we assume the successful completion of this study along with another human factor study to further demonstrate the relative ease of use of our auto injector under stimulated stresses we continued to target filing the <unk> NDA with the FDA by the end of the year.
With the development of 19 now to introduce design, which is a new proprietary ultra injector platform that demonstrates our ongoing commitment to rescue therapies to an underserved patient population.
This new device platform offers a simple convenient injection versus the covenant Multistem standard of care, which is cumbersome.
The challenging for patients and that kind of give us, particularly in this time of crisis.
The opportunity to provide an essential treatment that can be easily administered with potentially life threatening situation remains a core focus of our research and development efforts.
We're particularly encouraged by the positive feedback we've received from North American based patient groups supporting good regional diseases as well as the Sba's ground fast track designation to this asset.
We believe the FDA fast track designation underscores the urgent need for an improved therapeutic option for these patients.
Look forward to working collaboratively with the agency on this programs continued development.
As a reminder, with fast track designation process is designed to accelerate the development and review of treatments for serious and life threatening diseases with no treatment exists or where the treatment and discovery may provide the advantages of the <unk>.
What is currently available.
We believe the open communication with the FDA will prove beneficial to the potential success of 19 O two.
Australia with 19 of one second internal pipeline asset, but once weekly auto injector.
Yogurt oncology, we will be advancing the preclinical studies in this program throughout the year.
We anticipate completing this study in healthy volunteers into next U S clinical trial authorization in order to select the doses to be explored and late to patient studies under an IND, which we expect to be filed with the FDA. Shortly thereafter.
We are also pleased to be able to announce a third development program HOS $19, three but an emergency use rescue pen to be used in an acute immunologically mediated reactions.
Recently completed the formulation work for this asset and expect to conduct a phase one proof of concept study for this program later this year under the next U S clinical trial authorization, which we believe will allow us to file an IND with the FDA thereafter, if successful.
This expansion of our development pipeline scopes of strategic initiatives to continue to grow our proprietary portfolio by leveraging our formulation expertise and also injected technology with an emphasis on rescue therapies.
We remain committed to developing better therapies for patients and physicians with this more robust pipeline.
And as we start the new year, we look forward to moving many of these programs forward.
With that I'll now hand, the call back over to Bob.
Peter.
While we continue to grow and expand our proprietary portfolio. We also have a strong partner business that remains extremely valuable to the company I'll start with <unk> generic epipen on slide eight.
Our total partner royalty revenue increased 77% to almost $38 million in 2021, which was primarily driven by Teva is that would be paid.
Total prescriptions for <unk> generic epipen increase year over year as well as from pre pandemic levels and when you combine the mass vaccination centers that required epipen during the vaccine rollout there was a heightened demand in 2021.
Although our suppliers, we're not immune to the staffing issues that affected almost every organization worldwide. We were pleased with their ability to manufacture millions of that would be auto injectors and support the overall strong demand.
As we start the new year, we expect Teva to maintain their market leading share while we.
We also rebuild their safety stock of our product.
We share <unk> belief at the Epipen is a durable generic and believe that the opportunity for generic for Teo will also soon bear fruit.
Of course, we continue to anticipate the potential approval forward retail.
But as I mentioned earlier, we have decided to exclude any unapproved products from our 2022 revenue guidance in order to remain conservative.
As for the undisclosed rescue pen with Pfizer, we continue to work on this development program in 2021, and we expect to continue to develop this product for an NDA submission, which was targeted to be filed with the FDA last year.
I would note that we still believe that there had been no adjustments to the market opportunity and need for this rescue pen, but rather pfizer's priority shifted in 2021.
During 2021, we continue to support the doors use advancement of they're still adequate heart attack rescue pen.
Phase three trial, which was initiated last year and expect to continue to enroll throughout this year.
We remain excited about this potential future opportunity and wish them as well as all of our partners continued success in our development programs.
Overall, we believe that our technology platform, we will continue to support <unk> position as a leader in rescue pens and combination products.
I'll now hand, the call over to Fred for a detailed review of our financials Bryan Thanks, Bob and good morning, everyone.
I'm very pleased with the significant financial improvements that we've achieved across both our income statement and balance sheet throughout the year.
For both the quarter and full year of 2021, we achieved record revenues for the three months ended December 31, 2021 are revenues of almost $49 million was 10% above the same period in 2020.
For the full year, our total revenues increased 23% year over year to $184 million putting.
Putting us right in the middle of our revised guidance range of $180 million to $190 million.
In addition, our net income was over $46 million.
Excluding the gain on the sale of taxes, our adjusted net income was $17 $7 million or <unk> 10 per share, which was more than double our adjusted results for 2020.
Another significant accomplishment we achieved in 2021.
With the termination of our venture debt with Hercules capital and the reduction of our outstanding debt from 'twenty from $40 million to $20 million.
Our new credit facility with Wells Fargo has allowed us to significantly lower the interest rate on that remaining debt by almost 75% compared to the beginning of 2021.
After generating almost $37 million in cash from operations in 2021.
Starting the new year on strong financial footing with almost $66 million on our balance sheet and that excludes the remaining $26 million. Due this year from the sale of Otrexup that was completed in December .
Let me now provide a more detailed review of the financial results for the fourth quarter and full year, which brings us to slide number nine.
Total revenue was $48 $7 million for three months ended December 31, 2021, a 10% increase compared to $44 $1 million in the same period in 2020.
<unk> months ended December 31, 2021, total revenue was $184 million or 23% increase from $149 $6 million for the comparable period in 2020.
Sales of our proprietary products <unk> and nocturnal generated revenues of 21, 5% and $80 million for the three and 12 months ended December 31, 2021, as compared to $19 seven and $62 $9 million for three and 12 months ended December 31 2020.
The 9% and 27% increase in the proprietary product sales for the three and 12 months ended December 31, 2021 compared to the same periods. In 2020 were principally attributable to continued growth in prescriptions and sales of zoster.
Royalty revenue was eight 4% and $37 $7 million for three and 12 months ended December 31, 2021, compared to five 3% and $21 $3 million for the same periods in 2020, the substantial increase in royalty revenue in 2021 was primarily attributable to an increase in royalties from Teva.
Net sales of generic epipen.
Our gross profit.
Okay.
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Right.
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Got it.
Okay.
80% gross margin.
Great.
Thanks.
The increases in gross profit margin in 2021 were primarily attributable to increases in <unk> sales and that'd be royalty.
Research and development expenses were $3 nine and $14 $5 million for three and 12 months ended December 31, 2021, as compared to $2, three and $10 1 million for the comparable periods in 2020 the.
The increase in research and development costs in 2021 was attributable to our ongoing internal development programs.
Selling general and administrative expenses were $18, seven and $73 $9 million for three and 12 months ended December 31, 2021, as compared to $16 seven and $62 8 million for the comparable periods in 2020.
The net increase in SG&A expenses in 2021 was primarily attributable to expenses associated with the relaunch of nocturnal as well as an increase in sales and marketing expenses that had decline during the height of the pandemic.
Net income was $32 $7 million or <unk> 19 per basic and diluted earnings per share and $46 $3 million or 27, and 26 per basic and diluted earnings per share for the fourth quarter and full year ended December 31, 2021, which includes the gain of $38.
$6 million on the sale of Otrexup.
Adjusted net income for the fourth quarter and full year, 2021 was $4 $1 million or <unk> <unk> per adjusted diluted earnings per share and $17 7 million or <unk> 10 per adjusted diluted earnings per share, which excludes the gain on the sale of Otrexup.
The company generated cash from operations of $36 $6 million for the 12 months ended December 31, 2021, and as I touched upon earlier as of December 31, 2021, our cash cash equivalents were $65 $9 million compared to $53 1 million as of December 31, 2020.
Earlier today, we announced our 22022 revenue guidance of 200 $220 million as Bob has mentioned our revenue guidance excludes products, which have not yet been approved and remember that we also did complete the sale of Otrexup in December exclude.
Excluding 2021 attracts a proprietary revenue our guidance represents a year over year growth rate of 18% to 30%.
In 2022, we expect to continue to invest in our growth specifically for the central wants it to Atlanta and the development of our internal pipeline. We believe these investments will enhance our future growth.
I'll now turn the call back to Bob for closing remarks, Bob Thanks, Greg.
Overall, we were quite pleased with our performance in 2021, despite the pandemic they persisted throughout another year.
We believe our strong revenue growth EBITDA net income and cash generation driven by Zionist dead <unk> generic epipen and the rest of our diversified business, our proprietary and partnered products all demonstrates the breadth of our organization.
As we continue to grow the organization and enhance our capabilities, we remain committed to supporting our growth trajectory with the expansion of our proprietary portfolio with new products, such as <unk> as well as supporting the development of our pipeline with a Trs 19, O two or adrenal crisis rescue pen leading the way.
<unk>.
Finally, we also expect to continue to execute on corporate development and still have multiple opportunities to potentially supplement our future growth with our partner pipeline.
We appreciate the strong performance and hard work of our employees and we look forward to another record year again. Thank you for your interest and operator, you can now open the lines up for questions.
Ladies and gentlemen, if you would like to ask a question. Please signal by pressing star one on your telephone keypad. As a reminder, please limit yourself to one question and one follow up question once again star one for questions.
We will begin with Eric Elliot Wilbur with Raymond James.
Thanks, Good morning.
Encouraging to see continued upward trajectory enzymes that prescriptions I guess kind of in light of the challenges that emerged and.
In December .
Of the year, maybe just first for Joe could I, maybe just sort of get your perspective on kind of where things stand in terms of relative visit levels amongst your key prescriber specialties versus.
Sort of what you had.
Been anticipating.
And then also where things stand in terms of the relative detailing mix I think you mentioned last call or a couple of calls ago that you were basically at sort of 60 40 in person versus virtual just wondering how that trended over the fourth quarter and is currently trending and then.
Just a bigger picture follow up question for Bob here on BD priorities, maybe just talk about.
You know what your priorities are over the balance of the year I mean, the company seems to be approaching an interesting inflection point in its evolution.
Obviously, you've got a much stronger balance sheet than you've ever had in the company's history and certainly the biopharma funding environment here is going to present a lot of challenges for probably an extended period of time. So it just seems like it's opening up a lot more potential asset opportunity for you guys and just trying to gauge sort of how you are seeing.
The.
The BD flow in the environment and evolve here and whether you may consider actually taking on a little bit more development regulatory risk as you look to bring in additional assets in the portfolio.
Yeah.
Okay, Yeah I can.
I'll start Elliot thanks, so much for the question.
Candidly, obviously with Zeiss that what we saw happen last year first with Delta certainly created some challenges for us because obviously, both physicians offices became a little bit more challenging during that time as well as obviously patient volume.
And then we started to see a little bit of a comeback.
That kind of subsided and then obviously omicron kind of hit us at the tail end of the year. So we definitely saw an impact as it relates to physician access that became more challenging for us certainly in the very beginning of this year.
We saw that the good news is though now.
We're seeing the opposite begin to happen. So we are beginning to see.
Obviously with the patient volume beginning to pick back up that's just good news for us and as Omicron continues to subside that continues to be good news for us from an access standpoint, and patient standpoint, you asked about kind of the split.
60, 40, we think is still a good healthy split for the brand obviously.
Obviously, as we see more patients coming back into the offices, we are anticipating that new patient starts should be impacted positively by that.
We're still seeing about 30% of the business come from urologists about 20% is coming from the <unk> group.
There is coming from primary care GPS.
So that's a little bit of kind of what we saw.
And certainly if that didn't answer your question I'm happy to give you more but I'll kick it back over to Bob and then see if we answered it.
Thanks, Joe.
On the BD priorities.
For the balance of the year, we continue to look at assets.
And we continue to look at ones that are a little bit earlier than even commercial assets we.
We have the ability and the flexibility to maybe take on some.
<unk>, a little bit earlier right.
Phase III, that's already been completed or.
<unk> two that's moving into phase III, but I think what's interesting for US is that you know when you look at our focus with <unk> and Lando and now knockdown the baggage relatively full for endo in urology and the good news is that we also have.
<unk> in development right now that are going to go into that bag in the future. You know we have the the adrenal rescue pen wisdom.
Andrew chronology focused asset and then we have the euro oncology asset, which is obviously going to be focused on urologists and so I think we have a really strong pipeline to continue to make sure that that bag, we owe for that commercial team who calls on the sandoz in euros as it has a full complement of products as we move forward. So when I when we look at <unk>.
Develop and right now our corporate development were looking beyond urology and endocrinology because of the good state of our current focus on Endo in Euro and we have another rescue pen that we announced 19 O three which gives us a new area of the therapeutic indication, where we can start focusing on.
Potential other assets to bring in whether they are commercial or.
Or some development assets in anticipation of building that.
<unk> sales team, which will be kind of an add on eventually as we get that in 19 or three across the goal line and so I think that we're really focusing on niche products niche areas specialty areas, where we could we can effectively detail with 50 to 75 reps, but right now we.
Have an amazing amount of opportunities that are being presented to us because I think what you said earlier that there is a tough.
Financing environment for so many earlier stage companies, there's a tough financing environment for single product companies and so it's given us a lot more opportunities to potentially execute on those.
The balance of this year or into next year. So it's.
It's probably the biggest busiest I've ever seen it in the history of our company as far as corporate development opportunities and we're being very selective likely wherewith calando like we werent nocturnal and I think that now we have the ability to go beyond just urology and endocrinology, but again on a very disciplined.
Disciplined way in a very.
Structured way that doesn't stretch the organization and make sure that we continue to be profitable continuing to be cash flow generating so that we can continue to look at these type of opportunities.
One other thing I didn't get a chance to clarify on your message I think I missed one thing you also asked about which was the lead time between in person and virtual kind of how we're seeing that play out.
At the beginning of the year definitely saw obviously leaning more heavily on the virtual side and less on the in person side because of omnicom, but now we are beginning to see some states.
Office is open back up we have some that are upwards of 80% in person versus virtual I will say that I. What we are guiding our team with is to really continue to find ways to access our customers in person because that's our preferred method of engagement, but we're still continuing to leverage our virtual capabilities in.
Actually some of the digital things, we did last year and are doing again. This year have had really showed some some positive impacts. So we're going to continue to push hard on our digital.
Campaigns this year as well, so sorry, I didn't get a chance to answer that part of your question.
Well now move to our next question and that will come from David M film with Piper Sandler.
Alright.
So just a few so I wanted to drill down more deeply on the on.
On the top line guidance, so with Otrexup out of the portfolio.
I guess is it safe to say that you're factoring in.
Some degree of contribution from knocked Donna maybe talk about how that's reflected in the guidance and then on <unk>.
Can you talk about some of your assumptions.
That underlie.
The guide as well I know, you're not providing product specific guidance, but maybe talk to how you're thinking about volumes. How are you thinking about the gross to net.
On on drives that.
And then just switching gears a bit.
As the footprint of Zeiss that grows can you just talk about.
The payer landscape.
And the extent to which it might evolve potentially become more restrictive.
Or not.
But just wanted to get your general thoughts on how youre seeing the.
The payer landscape precise that.
Play out not just for 2022, but longer term. Thanks.
Okay. Thanks, David This is Fred.
A lot of items to cover here is looking at our guidance as well as what makes it up as well.
You're right when we take a look at our guidance. It's our approved products right. It's the proof products that we have as well as our partner products.
That we have as well and nocturnal is certainly an area that we're focusing on this year.
We expect we will see significant growth in nocturnal in 2022 and <unk>.
Joe was mentioning.
We're pleased to see the growth that we're seeing with the scripts in Q1, which is great but.
We continue to believe that long term asset that has value for us.
And we will see.
As I said significant growth there I can't give you a range because as you know we don't break out the amount that we have for each individual item there.
When it comes to <unk>.
There that's probably the assets that we're looking at obviously the greatest dollar growth year over year.
As we've mentioned we've expanded the sales force we've taken it from the.
The sales reps that we started within 2021, which was around 80 grew that during the year, where right. Now we are focused on 180 sales reps.
We split up the sales territories as well to focus on major metropolitan areas as well as those areas that we were successful and we knew there was more business. We were leaving on the table. So by adding the reps are going to be able to to get those those doctors. There. So we're looking at the growth really there are ins outs that with the addition.
Reps with the additional reach that we will have providing us the increase in the revenue the coverage, though we're expecting to remain constant we are.
We're very satisfied with the coverage we have.
With the major Pbms were in the mid 70% coverage for <unk> that we think we can maintain that but it is a challenge as you mentioned about the gross to net that's a constant challenge that I think all pharmaceutical companies suffer from or or are challenged by it and we're not unique.
When we.
Starting with the product we were at one level for rebates and Thats only continued to increase as the market has has gotten much as the pbms have continued to consolidate right. If you go back to when we launched we have six or seven different pbms and providers that we that really cover our product really now it's been solid data down to the big three.
We have and it's always a focus every year is that how do we maintain the focus that we have to have the gross to net that we have but continue to keep the coverage. That's out there when you take a look at our numbers for 2021 and 2022 I do think that we will probably have a slight decline in our gross.
That as we see the.
The.
Rebates.
Going in one direction and that is up we tried to limit the amount that goes up to and also allow us to have some price protection. So we can continue to increase our prices for Zhao said, but that is a pressure that is a pressure. So as we take a look at the number of units, we're selling clearly we need to to continue.
To expand the units to get a similar level of revenue that we had in the prior years, we're not looking at dramatic change in gross to net.
And it may stay flat, but it may go down a little bit there.
Uh huh.
Yeah, I was going to just add if anything is going to be online for I. Just you mentioned about nocturnal I just would mention that two or three things. We saw happened last year with nocturnal that really didn't make an impact we're now beginning to see.
The fruits of that labor pay off as we launched digital campaign in the middle part of last year, which we're seeing really good results with that helps spread the news and the word about nocturnal polar area, which we know is an important component and then the second really key marketing event that we did was peer to peer programs. So we did.
Educational programs with with speakers that could help physicians better understand.
Kind of how to identify these patients and then also provided our field team with avoiding diaries that to get back to you can give to physicians to help them identify these patients in their practice all of those things kind of hit the ground in the latter part of last year and Thats I think part of the threat point about why we are seeing a little bit of a nice increase this year so far.
So we anticipate to see things continue to go in a positive direction with nocturnal and the only other thing I was invention Matthias data is obviously that 75% coverage. We have you know it comes it comes at a price, but it's but that that access is important that combined with our partnerships with specialty pharmacies throughout the country regionally as well.
Nationally helps also.
Getting those patients through that process of getting on therapy. So.
Yeah, It definitely hits the gross to net but in some regards it also a positive because it helps get access to the to the brand.
Okay helpful. Thank you.
Now moving to a question from Steve <unk> with Cowen and company.
Hi, good morning, congratulations on the progress I appreciate all the details and thanks for taking our questions.
So.
First another product specific follow up on guidance I. Appreciate your prepared remarks around Tevez partners Epipen.
Further clarify it sounds like 2020 tissue continue to be a strong year.
Less demand related to the COVID-19, vaccines, but continued growth and potentially at least from 2020. So please let us know if we're thinking about this the right way.
And then second question given all this kind of conversation around Payor support for <unk> as we think about.
To lend out do you expect the standard six to nine months timeframe for better access can you leverage your kind of <unk>.
Coverage as you think about that the expected timeframe for Atlanta to meaningfully kick it. Thank you.
Thanks, Stacy I'll take your first question around Epipen. So we believe Teva is going to maintain their market leading position throughout 2022, and you know when they start at the beginning of the year 'twenty one their market share was lower and it grew at over 2021 to 50, 56% to 60%.
Depending on the week that was reported and we expect that it would.
We're seeing that continue in 2022, and so we expect them to either to continue to maintain that market share.
We're not expecting growth in the market share.
But overall, because they have a higher market share.
For the duration of we believe in 'twenty, two that will obviously provide growth.
We believe that that will likely offset some of the upside that we saw on the pain from the Covid vaccine centers and additionally, during the year, because we had really sold.
A lot more devices than we expected, whereas <unk> sold a lot more devices than expected, we depleted our safety stock of our devices and so we're in the process of really trying to replenish that now as you can imagine in 2021 with the pandemic are manufacturers, who make epipen were stressed and.
Like everyone else was as far as labor was concerned and so forth and so we're now starting to see that open up again, where labor consistency is there and so we will likely see an increase in the overall device revenue when we sell the product to Teva. So when you look at that we did $70 million of business.
Last year between royalties and devices, we expect to see growth from that number and the mix will probably be a little bit more heavier on the device side.
And relatively hopefully flat on the royalty side you just don't know the overall impact of the pandemic is how how it how.
How much of the volume was related to that.
Italy, we do expect the back to school in the third quarter to be normal and that will be key.
And we saw that in 2021 with the back to school being relatively normal we saw a huge improvement in that market or that timing and so we don't expect to see anything different from last year, then from this year on that guys.
If you want to cover the.
Because he got him when he Atlanta I can.
Sure a couple of things that are often then.
So a couple of things I would say with regards to Thailand and the question about coverage.
Our anticipation is we'll get to a point, where we've got coverage similar to that as I said.
Obviously, that's going to take a little bit of time.
To develop that initially we're thinking well hopefully at least half.
101 partner, hopefully onboard potentially with us or are they on.
The other thing I would say, though is going to help us regardless of that out of the gates is really two things one is.
Customer relationships. So we know these customers we've been calling on these customers.
So that's going to be a big help for us to at least help them identify the appropriate patients for Toledo, and then secondly, I would say, we really have built a team of experts across our field team with how to advise offices to go through that prioritization process to get patients on therapy. So that's a real skill set that we've got in our field team.
That we know will help us up to the point, where we do have broader payer coverage, but Fred anything else you wanted to I don't know I just echo what you said, having the strong coverage that we have with SaaS that we have regular communications are our market access team has already been in communications with all of them already putting together that get as to what we're looking at the price we expect.
To go out and getting their initial feedback with <unk>.
<unk> said it took up to a full year to get full coverage in place for US we're launching in the second quarter of this year. So we certainly hope will come out with coverage as soon as we launch and then add additional coverage during the year, but yeah, I think being in front of the doctors being.
Seeing zelle.
<unk> that grow with the payers right now gives us a step up as we launched Atlanta.
Really helpful. Thank you.
Moving to our next question and that will come from Matt Kaplan with Ladenburg Thalmann.
Hi, good morning, guys.
That's on the fourth quarter and 2021 results.
I just wanted to focus a little bit on the growth opportunities for the business.
With respect to our future.
Future products, driven I guess initially by your internal pipeline 19, 119 to 19, three and then.
Products with partnering with the doors yeah.
Pfizer and <unk>.
I guess can you give us a sense with respect to the.
The internal.
Pipeline what what.
Each of those the opportunities that each of those represent and give us a sense in terms of the timing potential timing of the impact of of launches for those clients as well.
Hey, Matt I'll try to take that question there was quite a number of things in there and quite them are very low.
Forward looking.
But as far as our future products. Obviously, you did the most near term product for US is our hydrocortisone rescue pen.
For adrenal crisis, and we right now we continue to expect to be targeting a NDA filing by the end of this year.
If we get a normal review cycle, that's a 10 month review with Eagle.
We would obviously look for accelerated for you, but there is no guarantee on that.
So yes, we're looking at a 2023 potential approvals I mean everything goes extremely well.
And so that would be a launch at the end of that year or beginning of 'twenty four.
Yes.
When we look at our assets when we look to when we look to develop something internally, there's a threshold that we try to maintain as far as value is concerned with.
With the hydrocortisone rescue pen.
<unk> publicly stated that we believe is that it's at least $100 million opportunity and we kind of use that as our benchmark.
For all of our internal assets and so it's not like we're going to we don't know forget definitely get to that point, where we could obviously exceed that.
We're going to eventually with as I said.
But you know it.
It's an internal.
Measure that we use for ROI in order to develop our assets and that applies to $90 to $90 three and I'm not going to go through the timelines of those because they are still really early stage and we're working through not only the clinical program. But then also just the commercial assessment of those and so forth. So overall I think we have a very good very strong robust pipeline and we are going.
Continue to add to that you know that's one of our goals internally is to always try to add one more new development candidate a year as we move forward.
And we believe with our technology that we have that capability as well as through Corp. Dev that's really our success in our revenue our success and our cash generation is really opening up our opportunities like we did with plan like we do it not there were two out of our three things in our current bank weren't even develop.
Internally. So that's a huge difference for us relative to where we were just a few years ago and so.
When we look at our future products for internal I think we will continue to bring up assets in that range or bigger in Corp. Dev, We're obviously looking for assets in.
Rescue therapy for looking for assets in orphan indications because number of our assets are in that and there is a high value for those and so we believe we will continue to look at those type of assets that we can either finished developing or get it already commercial and launch it.
Our opportunities are pretty broad.
When you look at our partner pipeline. That's just another whole set of opportunities that we really don't talk too much about.
Our partners are developing knows and we're helping them with the device side, but as you see with happy where they are.
Our successful when they get across the goal line. They can be significant growth drivers for our company and so we are committed to not only the internal programs I mean, I'm sorry, the pipeline.
The partnered products that we have with our.
Different partners, but also continuing to increase those number of alliance programs will continue to talk to new partners potential partners and try to get more of these combination products more of the rescue pens in conjunction with with partners because it's a really good mix for us that has both internal development as well as the partner lines.
Because at the partner lines, but it just gives us a lot of.
Potential future cash opportunity.
Paid during the development and it's a for us it's a low risk opportunity that could have a very high yield like like the epipen.
Okay, Great Great Fair enough and then just moving back to just maybe a little bit more color on Pfizer.
You said you had expected them to.
File for that last year, and there is still a commitment to moving forward. This year are you.
Yes.
Do you have visibility to that to that filing or what's your sense at this point.
Yeah, well I mean as far as you know, we're working with with Pfizer to to move that filing along.
You know.
It's obviously their file and so we're supporting them and we're trying to target this year.
Filed but again, we're working on.
What is the strategy.
And how how is it going to get done and we are in constant contact with Pfizer to move that program along and so that's all I can say again, when we're talking about external programs I really don't have the ability to speak about them, they're not it's not our product, it's our partners products and so.
That's the best I can say for now and like I said in my prepared remarks.
It is a rescue pen it's still need.
No doubt about it the market Hasnt change if not if anything its gotten bigger and so yes.
We're committed to the program and you know we're gonna.
Continue to try to move that forward and.
Hopefully we'll have some.
More guidance on that in next couple of months once we have further conversations with Pfizer.
The timing of that program.
Okay, great. Thanks for the color and congrats again.
Now moving to Greg Fraser with truth to Securities.
Good morning, and thanks for taking the questions.
I'm not sure if I missed this but was there any material changes in payer coverage for <unk> for 2022 relative to 2021 that will help support Bonanza, you mentioned the slight decline in gross and net but does that come with better coverage.
And then how should we think about operating expense growth in 2022, excluding the incremental spend that will be tied to the Atlanta launch. Thank you.
Sure No problem, Greg It is RMB laugh when you said that about the payers.
I'll cover that real quick.
Payer coverage is exactly the same.
Obviously every every quarter you know you might gain in regional pain might lose the reason I'm, saying, but we're still right around that 75% coverage and the reason why we lap is youre not getting anything additional for their for their additional.
Fees that you're charging and it's not I mean, that's the most frustrating part about the current payer environment is that a lot of the increase in the in the re basically what I'll call arent really rebates or fees to those pbms and so.
The rebate levels have been relatively consistent they just increased their fees where data increased their fees whenever they want to call them. It's just an increase in their cost and that effects. Our net our gross to net and so coverage you just seen fees have gone up and the rebates are relatively stable.
On the.
On the Opex I think think about that and Greg I think you hit it right. When you looked at the commercial side.
There's two pieces there right we have the additional salesforce coming onboard for the majority of the year and we have the launch of Atlanta, we want to make sure. We have a proper launch of a product. So those two items are going to contribute for the increase that we see on the SG&A side.
On admin side I'm not expecting much of a change there year over year when it comes to our research and development.
Peter went through earlier in his presentation, we are moving the products forward.
With hydrocortisone.
$19 two.
We're targeting end of this year for an NDA 19 of $119. Three are continuing to have work done as well. So we will see an increase year over year in our R&D expenses from 'twenty, one to 'twenty two based upon our own internal R&D projects that we've been now.
Yes, I mean, our overall strategy for 'twenty, two is invest and grow we want to invest in the brands that we have there. We got we had launched we have a launch of <unk>.
And that doesn't really didn't have a launch per se right. It was launched during a pandemic and so were committing the same level of resources in year or two that you typically would do in year, one because of that loss of a year with the pandemic for especially for green for new products.
It was much more challenging for to get access to doctors that they didn't know what the product was about or how it work and things like that so we're investing in nocturne and obviously, we're continuing to invest in that because that's in a very early stage of its lifecycle.
And we're in year four we're still seeing accelerated growth in that product and so we obviously won't invest in it and in our pipeline. It's really important for US is to continue to bring these opportunities forward and so with the increase in revenue with the increase in cash generation and profit, we're able to put some of that back.
Into the business. So that we can continue to have a really strong commercial portfolio as we as we move as we continue to grow.
Got it thanks for all the color.
And ladies and gentlemen, this does conclude your question and answer session I will turn the call back over to try and believe for closing remarks.
Thank you everyone for joining us today, please feel free to reach out to me do you have any additional questions have a great day.
Ladies and gentlemen, this does conclude your conference for today, we do thank you for your participation and you may now disconnect.
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