Q4 2021 RVL Pharmaceuticals PLC Earnings Call
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Good day, and thank you for standing by and welcome to the RV L Pharmaceuticals fourth quarter 2021 earnings results and business update call.
At this time all participants are in a listen only mode. After the speaker presentation, there will be a question answer session.
A question during this session you need to Chris Star one on your telephone.
If you require any further assistance. Please press star zero I would now like to hand, the conference over to your Speaker today, Lisa Wilson Investor Relations for RPX. Please go ahead.
Thank you operator, welcome to RV, all pharmaceuticals fourth quarter, 2021 business update call.
This is Lisa Wilson Investor Relations for RVO.
With me on today's call are RVO, Chief Executive Officer, Brian Marcussen Chief.
Chief operating officer JD shop.
And Chief Financial Officer, Andy Einhorn.
This afternoon, the company issued a press release detailing financial results for the three months ended December 31 2021 is.
This press release and a webcast of this call can be accessed through the investors section of the RVO website at <unk> Dot com.
Before we get started.
I would like to remind everyone that any statements made on today's conference call that express a belief expectation projection forecast anticipation or intent regarding future events and the company's future performance may be considered forward looking statements as defined by the private Securities Litigation Reform Act.
These forward looking statements are based on information available to <unk> management as of today and involve risks and uncertainties, including those noted in this afternoon's press release and our filings with the SEC.
Such forward looking statements are not guarantees of future performance actual results may differ materially from those projected in the forward looking statements.
<unk>, specifically disclaims any intent or obligation to update these forward looking statements, except as required by law.
During this call we refer to non-GAAP measures such as adjusted EBITDA for a reconciliation of adjusted EBITDA to net income or loss. Please see the tables at the end of our press release.
A webcast of this call will be available for 30 days on our website <unk> dot com for the benefit of those who maybe listening to the replay or archived webcast.
This call was held and recorded on March 30th 2022 .
Since then RVO may have made announcements related to the topics discussed. So please reference the company's most recent press releases and SEC filings.
With that I'll turn the call over to Rvs CEO Brian markets.
Yeah.
Thanks, Lisa and good afternoon, and thank you for joining our call.
<unk> 2021 is in the rearview mirror I believe it is important to look back at a few major milestones.
First we completely reshaped our company from a mix of branded and generic specialty pharma company to a growth story focused and ocular medicine in Periocular rejuvenation.
Our flagship product of league indicated for the treatment of acquired ptosis or Droopy eyelid was introduced during the height of the pandemic and throughout last year. Our eye care team has built a market for a new treatment.
Can improve vision and lift one's islands.
<unk> surgery, there was no effective treatment for ptosis and it was rarely discussed between the patient and provider due to the fact that there was no solution.
With the introduction of uptake that situation has changed.
Over the last year, we've established safety and efficacy and we have grown the brand every month and every quarter.
Now we are poised to embrace the aesthetic market, we launched in February with a team of 50 experienced territory business managers and we're off to a great start.
If you have seen the headlines in our press release, we expect first quarter sales to range between five and a half to $6 million.
Which is a meaningful step up from our fourth quarter last year.
We are also reaffirming our guidance for the fourth quarter of this year.
Which we previously stated would be between 20 and $25 million.
It is also noteworthy to mention our expanding relationship with Santana as they take on more territory beyond the major markets that are already under our license agreement.
And have bought out the approval milestones for Japan, China and the EU.
They have been a terrific partner.
And our obviously fully committed to developing the brand.
Now I'd like to turn the call over to Andy who will cover our financial results in greater detail Andrew.
Thank you, Brian I'll begin by providing commentary on our quarterly results of continuing operations specific to the fourth quarter of 2021.
A reminder, that our quarterly information and highlights can be found in today's earnings press release.
With respect to our full year 2021 results.
Our release and our annual report on Form 10-K filed with the SEC earlier this afternoon.
As mentioned on our previous calls our 2021 operating results do not break out the results of our legacy business. Our continuing operations generally consist of revenues and expenses related to up knee and include the general and administrative expenses of running our business. While 2020 results include osmolarity.
Which what we divested in January of 2021.
Net product sales in the 2021 fourth quarter were $3 $1 million up $2 $1 million or 224% versus Q4 of 2020 and up $900000 or approximately 39% over the third quarter of 2021.
Q4, 2020 also included half a million dollars of Boswell X net product sales.
Total revenues for the fourth quarter of 2021 increased $1 $7 million over the fourth quarter of 2020 to $2 $9 million, primarily due to the year over year increase in <unk> product sales, partially offset by a true up of accrued royalties.
Our total cost of goods sold decreased $400000 to $1 $1 million in the fourth quarter of 2021 versus Q4, 2020, primarily driven by the absence of Boswell X.
Selling general and administrative expenses increased $4 9 million to $23 $7 million in the fourth quarter of 'twenty. One versus 2020. This increase was the result of our expansion of our sales force higher marketing spend associated with the expanded launch of up Nique, partially offset by.
Lower Securities litigation costs, which we accrued in 2020.
Additionally, our fourth quarter 2021, SG&A included onetime expenses of $3 $3 million associated with the issuance of new debt and equity in October of last year.
Going forward, we expect a bleak promotional expenses a significant component of our SG&A expense to increase as we continue our targeted efforts in the eye care market and initiate our launch into the medical aesthetics channel.
R&D expenses decreased by $3 million to $1 $1 million in the fourth quarter of 2021 versus 2020, primarily reflecting lower spending on our baclofen and from lower head count costs.
There were no asset impairment in the fourth quarter of 2021, however in the fourth quarter of 2020, we took an impairment charge of $28 $9 million due to a delay in the anticipated launch of our baclofen.
Total other non operating activities were a source of net income of $3 $3 million in the fourth quarter of 2021, largely reflecting a $5 $6 million gain from the change in the fair value of warrants issued in October of 2021 from the equity raise and that was offset by a change in.
The fair value of the notes we issued in October 2021.
These non operating adjustments on both our long term debt and our warrants result from accounting determinations and elections that require us to measure and re measure the fair value of these instruments each quarterly reporting period for more information regarding the accounting for these instruments. Please refer to our 2021 Andy.
I'll report on Form 10-K .
In the fourth quarter of 2020, the total loss from other non operating activities was $300000.
Our net loss from continuing operations in Q4, 2021 was $19 $7 million compared to a net loss of $51 $8 million in 2020.
Our adjusted EBITDA loss was $15 $2 million in the fourth quarter of 2021 compared to an adjusted EBITDA loss of $18 million in the fourth quarter of 2020.
Before I conclude my remarks, I'd like to turn briefly to our balance sheet and liquidity.
At December 31, 2021, we finished the year with cash on hand of $44 million in the aggregate principal amount of our long term and short term obligations was $57 $4 million, which includes an aggregate principal amount of long term debt of 55 million.
The principal maturities of which do not commence until March 2024, and extend through October 2026, our long term debt is reflected on our balance sheet at fair value of $46 2 million.
During the first quarter of 2022, we received an aggregate of $5 million from contingent milestone payments related to our legacy business divestiture.
As Brian mentioned, we amended our license agreement with Santana Pharmaceuticals to expand territories covered in the license and allow sand tend to buy out certain regulatory milestones.
Will result in an additional $15 $5 million to be received in the second quarter of 2022.
Importantly, under our note purchase agreement subject to the satisfaction of certain conditions, including a minimum net product sales target for up Nique, we can draw up to an additional $20 million of notes.
With that I'd like to turn the call over to J D.
Thank you Andy and good afternoon, everyone.
Today, we'd like to update you on recent highlights from our expanding launch of up Nique and provide additional details on trends and market insights.
First I'd like to recognize the sales teams on tremendous acceleration through the first quarter of the year more impressive when you consider how challenging the first few weeks of the year had been amidst the COVID-19 resurgence.
Within the eye care segment, we have continued to see momentum build.
As of this past Friday 12746 physicians have written a paid prescription for up Nique an.
An increase in our total prescriber base of almost 2200 prescribers since year end 2021.
Additionally in February we launched the virtual up program and adaptation of our plus program for clinicians in states that do not allow physician dispensing of pharmaceutical products, notably, Texas and New York.
Appropriate clinicians in these states can now partner directly with us leveraging our pharmacy as a dispensing partner.
Similarly through this past Friday, we now have just about 1000 eye care practices as direct or virtual up plus partners across the country.
Moving forward our efforts in eye care, we will remain focus on building depth in our practices.
All helping to establish daily prescribing habits, and reinforcing the functional impact that acquired ptosis can have on vision.
Moving now to our aesthetic launch, which is about eight weeks Nu.
That team hit the field in February and as the Q1 revenue estimate highlights is off to an incredible start.
I'll touch on a couple of early data points to help frame, where we are through eight weeks.
As of this past Friday, we have activated just over 1000 aesthetic practices, which does include about 50 practices who participated in the early ambassador program in late December and January of this year.
The receptivity has been tremendous and the team has done an equally impressive job of balancing new account opening with the importance of education and integration.
The average order size is between two to three cases of product again, each case represents 12 45 count boxes.
And all over 10% of these practices have already placed a reorder in some cases multiple reorders.
This all highlights the robust response to this product in the aesthetic channel and the huge opportunity. We continue to believe exists for up Nique.
It is important to note that unlike the rest of the aesthetic industry, hoping for some conversion and penetration of 40000 plus aesthetic practices. We are not encumbered by a competitive market basket. The entire aesthetic market is open to us and we are barely scratching the surface at this point.
With product in about 1000 locations.
As we move forward remember we're building a new market. So unlike most new product introductions. This involves the commitment on our part to helping aesthetic physicians understand the condition what to look for how to talk about it and most importantly, integrate something new into already busy.
Mrs.
We will be focused on continuing to balance the need to add new accounts with the time and energy to engage deeply with existing practices around education and integration.
In short we continue to see this as a tremendous opportunity in aesthetics. There is nothing else like it for the is the business model fits perfectly with the profile of these practices and the product provides an almost instantaneous result, with no downtime, providing astatic clinicians with industry.
Leading margin per minute for the diagnosis and treatment with incredible potential for repeat purchases.
In closing we have built a strong foundation, which has us poised to deliver continued growth on par with the expectations we have set.
We look forward to keeping our head down and just executing on the plan and continuing to provide updates in the months and quarters ahead.
Thanks JD clear.
Clearly, we're off and running.
And before we turn to Q&A I'd like to point out that.
When considering the non dilutive cash committed and received to date that Andy mentioned.
And the expectation that we will meet the performance hurdle to pull down the $20 million tranche from a theory them.
We believe we now have the cash runway to execute our strategy.
And are now in the driver's seat for F. <unk>.
And when we go back to the capital markets.
So with that operator, let's open the call for questions.
It's time to ask a question. Please press star one on your telephone to withdraw your question just press the pound key once again Thats star one for questions one more for questions.
Our first question comes from the line of Louis Chen from Cantor Fitzgerald.
Begin.
Congratulations on all the progress this quarter and thanks for taking my questions here. So I had two for you first one is could you help us understand that ramp from your first quarter at 2022 sales guidance of five $5 million to $6 million.
To that fourth quarter 2022 sales of 20 to 25 million and then second question is if you could talk about where you expect your mix of optometrists and ophthalmologists to shake out and why that's important to you. Thank you.
Yeah, no. Thanks for the call and I think with I'll answer the first part and then turn it over to J D. But.
Starting with the mix in ophthalmology optometry.
Right now optometry is about 62% of the total eyecare scripts ophthalmology, obviously the balance 38%.
It is important but we've said from the very beginning that optometry would probably.
Be the major driver in eye care for Us and also from a numbers perspective, they clearly.
Outnumber ophthalmology and this is also a product that's very easy for them to get their hands around it.
And also if they'd like to make a little bit of margin as well. So it's been relatively stable that those percentages for the last three months.
And I think that's probably where it will shake out as we go forward in time I would.
Now on the ramp question I'll have Jay Dee pop in and then we'll tag team it if we need to.
Yes, Thanks, Brian .
Well I think number one obviously, some really strong acceleration coming out of last year.
And I think when we look at the.
The first quarter and the next three quarters one of the things that I think is also relevant to the first quarter is thats just two months of <unk>.
Static sales from field activity, so it's not even yet a full quarter and so as we think about our ability to continue to accelerate as we move from Q1 into Q2, and then obviously the back half of the year I think we feel good about how that shakes out.
Moving into the second quarter, what are the drivers of continued acceleration well, we've talked about points of sale.
When you look at both sides of the business, we're still only in a very small fraction of potential accounts.
And I think that's going to continue to be a driver of not just growth, but also accelerating growth as we move through the year and then consumption at a per practice level. Obviously is a new market. There is there is no analog this isn't something that any of these.
Clinicians on both the aesthetic in eyecare side are doing each and every day in terms of assessing eyes in lids and.
In treating with with a simple solution like up Nique acquired ptosis patients and I think as we continue to ramp awareness and a new channel raise the noise level continue to drive enduring educational content and really get physicians comfortable that this is.
A safe product, it's okay to use how to speak the language and confidence in using it and ultimately what we've seen is a tremendous patient response the products sort of stands on its own from that standpoint that that's going to also drive continued consumption on a per practice level. So hopefully.
That gives you a good feel for what we're seeing and how we expect it to translate.
From the first quarter through through year end.
Thank you very much.
Thanks Louise.
Our next question comes from the line of Douglas Tsao from H C. Wainwright. Your line is open.
Hi, good afternoon, and congrats on all the progress guys.
It's a starting point I think J D said that you have activated 1000 practices so far in aesthetics.
In terms of.
I guess I have two questions in terms of where youre seeing orders are those largely from those ambassador practices. Initially obviously, we've really not seen those initially activated practices start to translate into revenues and then just maybe some perspective that 1000 that you'd activate it what's.
What's the number or sort of your target number of activated practices by the fourth quarter. Thank you.
Yeah, I'll start and then Brian feel free to fill in.
So I think number one go into the ambassadors, yes, I think they've had an extra.
Six weeks on average.
With the product. So we are seeing some really strong momentum in those practices in terms of early utilization and increasing consumption.
And I think that's obviously something we're paying close attention to as we move through newly activated points of sale with the field beginning their activities in February and through the month of March which we still have a couple of days left.
The big the big bulk of accounts that have been opened through the course of February and March they are revenue generating in the sense that they have been opened or activated and they purchased their first <unk>.
Cases for the practice, but I think you know as a function of are they starting to use it and are they comfortable with it.
That really is a variable that is dependent upon how the team is scheduling and planning the in service the lunch and learns and the time to educate and get practitioners be it injectors staff and DS.
And up to speed, providing the early education, and really getting them going and I think that's something where look you can think about it like over the last maybe it's 500 accounts in February and about 500 accounts in March.
On average each of those accounts has maybe had product in the practice for a total of 10 days. So again, it's really early but I think what's most encouraging Doug is the.
The receptivity right. So we're taking a product into a new channel, where we obviously have a strong foundation and continued momentum being eye care and introducing it to a group of clinicians that have never really used something like this before and we're not hearing none.
And I think that speaks to the growing awareness and enthusiasm for the opportunity to add a new category to the aesthetic practice around lid position lid height opening the eyes and what that can mean to a meaningful number of patients in that practice setting.
Okay, and then just in terms of that that the universe of targeted the number of accounts that youll be targeting by year end and aesthetics.
Yep.
So we're targeting about 4000.
But I think the way that we're looking at kind of our progression is heavily dependent on the field and I think one of the things that has started to happen as we've gotten out there with the team in the aesthetic channel is the noise has raised significantly.
And it's a very connected channel and so what that has done is it's begun to generate.
Quite an increasing influx of white space or even accounts in geographies, where we have BD and <unk>.
Promoting the product who are hearing about it wanting to learn about it and bring the product into their practice and that's not something that we've really contemplated as we think about the forecast and moving through the year, but it is something that could put us on an even higher trajectory from a total of.
Static account standpoint, and Doug the other thing to keep in mind.
J D mentioned, we're introducing a brand new product, it's not an established category. If you will which is what we love because we don't have competition. However.
Our team needs to be in the account they need to in service the complete account.
And we need to develop a cadence with the practice for use and then reorder and for the early accounts and our ambassador program that had the product an extra month.
We've already seen some very healthy reorders and some practices that integrated more quickly that where the product is intuitive.
We're already beginning to reorder as well so.
Think theirs.
A little bit of caution on our side to make sure that we just don't open to many accounts that we can't get to and in service. However, as again as J D mentioned, we are getting inundated with demand. So I think it's a really good problem to have.
Okay, Great that's really helpful.
Thanks, Doug.
And as a reminder, that star one for a question star one.
Our next question will come from the line of Greg Fraser from tourist Securities. Your line is open.
Good afternoon, guys. Thanks for taking the questions.
I was wondering if you could comment on how you expect the mix of sales between aesthetics and eye care to evolve this year and maybe you can comment on the anticipated mix and the 20 to 25 million of sales in Q4.
Yeah, Ed So Greg it's a great question and.
We hope to be able to give a lot more color as the year goes on.
I believe that esthetics will certainly outstripped by care by the end of the year.
I think.
You know look going forward in time, I would expect the aesthetics to be very meaningfully.
More of a contributor to the revenue line than I care simply when you look at the uptake we're already receiving <unk>.
In aesthetics, and the fact that we've barely hit 1000 accounts.
And we're not limited by a predefined market, let's say a filler and toxin. So the entire aesthetic universe is open to us.
I would like to be more specific and as you know we have a forecast internally, but it's too new to give you any real precision around the ultimate mix, but I would say by the end of the year, we could be looking at a 70 30 aesthetic to eye care mix.
And then going forward probably we.
We will see aesthetics inch up above 70 30.
And again, that's very rough in its very early goings, but.
We're happy to keep updating this as we go because we know we're the only ones that have the data.
Yeah, that's really helpful. Thank you and then.
I'm curious if you expect different <unk>.
Average utilization for aesthetics versus medical patients.
Yeah, Great question, and I wish I had a crystal ball this because in eye care.
The average age of our patient today is 60 years roughly.
As we.
Fly into aesthetics.
Gonna be grabbing a lot of millennials and we think the utilization pattern with millennials.
Is going to be very different than it is with this averaged 60 year old.
We're getting great persistency better than we thought early on in eye care and were just too new in aesthetics I can tell you, though that the few millennials that we have spoken to that have tried the product and have had it now for at least a month. They use it every day I don't expect that to be the norm.
But it certainly is encouraging.
Got it thanks, very much and congrats on the progress.
Thank you.
Yeah.
And once again thats.
Sorry, one quick question start one.
For questions.
Okay.
And I'm not showing any further questions in the queue.
Turn the call back over to Brian <unk> for any closing remarks.
Well thanks, everyone for joining the call. We're very excited here at RVO Pharmaceuticals and stay.
Stay tuned a lot more to come thank you.
Yeah.
And this will conclude today's conference call. Thank you for participating you may now disconnect everyone have a great day.
<unk>.
Yes.
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