Q2 2022 Alimera Sciences Inc Earnings Call
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Operator: Good morning and welcome to the Alimera
Operator: Sciences second quarter 2022 financial results and corporate updates conference call. At this time, all participants are in a listen-only mode.
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Operator: through October 27, 2022.
I will now like to turn the call over a chess Cod garden of core IR the comedy is in Boston.
Please go ahead Sir.
Operator: I would now like to turn the call over to Scott Gordon of
Thank you Maria.
Good morning, and thank you for participating in today's conference call joining.
Scott Gordon: CORE-IR, the company's investor resolution firm.
Joining me from Allomap with leadership team are Rick I've worked president and Chief Executive Officer and Phil.
Phil Jones, Chief Financial Officer.
During this call management will be making forward looking statements, including statements that address Ala marriage expectations for future performance or operational results.
Forward looking statements involve risks and other factors that may cause actual results to differ materially from those statements for.
For more information about these risks please refer to the risk factors described in Allen hours. Most recently filed periodic reports on Form 10-K and Form 10-Q.
The form 8-K filed with the SEC today and all the merits press release that accompanies this call, particularly the cautionary statements in it.
Today's conference call includes adjusted EBITDA, a non-GAAP financial measures.
Well the definition of these non-GAAP financial measure and a reconciliation to net loss its most directly comparable GAAP financial measure. Please see the reconciliation table located in Allen earnings press release.
Contents of this call contains time sensitive information that is accurate only as of today July 27 2022.
Except as required by law Allomap disclaims any obligation to publicly update or revise any information to reflect debenture circumstances that occur after this call.
Scott Gordon: Please go ahead, sir.
It is now my pleasure to turn the call over to Rick <unk>. Rick. Please go ahead.
Scott Gordon: Thank you, Maria.
Okay.
Thanks, Scott and good morning to everyone on the call.
Scott Gordon: Good morning and thank you for participating in today's conference call.
We are excited to share our second quarter results, having set new records for end user demand in both our U S and international segments.
Scott Gordon: Joining me from Alimera's leadership team are Rick Eyesworth, president and chief executive officer, and Phil Jones, chief financial officer.
End user demand represents units purchased by physicians and pharmacies from our distributors.
Scott Gordon: During this call, management will be making forward-looking statements, including statements that address Alimera's expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements.
Scott Gordon: For more information about these risks, please refer to the risk factors described in Alimera's most recently filed periodic reports on Form 10-K and Form 10-Q, the Form 8-K filed with the SEC today, and Alimera's press release that accompanies this call, particularly the cautionary statements in it.
On a GAAP basis, we reported $14 $6 million and global consolidated net product sales for the second quarter of 2022.
Scott Gordon: Today's conference call includes adjusted EBITDA, a non-GAAP financial measure. For the definition of this non-GAAP financial measure and a reconciliation to net loss, its most directly comparable GAAP financial measure, please see the reconciliation table located in Alimera's earnings press release.
A 36% increase over the same period last year.
Scott Gordon: The content of this call contains time-sensitive information, but it's accurate only as of today, July 27, 2022. Except as required by law, Alimera disclaims any obligation to publicly update or revise any information to reflect
With these results the first six months of 2022 exhibited the strongest first half sales performance in Alamitos history.
Scott Gordon: events or circumstances that occur after this call.
Scott Gordon: It is now my pleasure to turn the call over to Rick Eisner.
Rick Eisner: Rick, please go ahead.
But just because that gets us back to prior business levels and we believe back to the growth that we were generating before the pandemic.
Rick Eisner: Thanks, Scott, and good morning to everyone on the call.
In the U S segment second quarter product revenue was $8 $9 million up.
53% over the second quarter of 2021.
Rick Eisner: We are excited to share our second-quarter results, having set new records for end-user demand in both our U.S. and international segments. End-user demand represents units purchased by physicians and pharmacies from our distributors.
This was driven by second quarter end user demand growth of 45% compared to the same period in 2021.
Rick Eisner: On a GAAP basis, we are reporting $14.6 million in global consolidated net product sales, for the second quarter of 2022, a 36 percent increase over the same period last year. With these results, the first six months of 2022 exhibited the strongest first-half sales, performance in Alimera's history, which gets us back to prior business levels and we believe back to the growth that we were generating before the pandemic. In the U.S. segment, second quarter product revenue was $8.9 million, up 53% over the second quarter of 2021.
Further end user demand was also up 16% sequentially over the first quarter of this year.
These positive results were fueled by an improvement in face to face interactions with our customers both inside and outside of the clinic as access improves significantly from 2021 and from the first quarter of this year.
In addition, with our recently published Paladin study results. We've had an increase in podium time at several recent conferences, which we believe will continue to drive a paradigm shift to earlier utilization, believing in the treatment of TMA.
For the last couple of years, we've been working to change the view of D me and the way it is treated highlighting the importance of treating inflammation more broadly.
And the value of treating disease more consistently to reduce the waxing and waning of edema protect the retina and provide better visual acuity results.
At the recent annual meeting of the American Society of retina specialists to well known key opinion leaders, Dr. Christopher Riemann and Dr. Victor Gonzales presented abstracts from our recently published Paladin study.
Dr. Raymond President presentation reported data on the Libyans ability to reduce retinal fix it thickness variability.
The extent of fluctuation of retinal thickness over time.
Importantly, Dr. <unk> presentation emphasize the correlation between improved disease control with ILUVIEN and improve visual outcomes are key component of our positioning.
Dr. <unk> presentation highlighted that is with baseline visual acuity of 2040 or better.
<unk> superior visual anatomical and treatment burden outcomes with ILUVIEN supporting our view that a leave and should be used earlier in the treatment paradigm before significant visual loss.
We believe these abstracts and data strongly support the hypothesis of our new day study to demonstrate the benefits of the use of ILUVIEN as baseline therapy in newly diagnosed patients with D.
As a reminder, the new day study is the first head to head comparison of corticosteroid therapy, and anti VEGF therapy. The multibillion dollar standards of care in this type of patient.
Over 45000 eyes have been treated with ILUVIEN, giving us significant real world experience and understanding of how our drug works, which contributed to the new day study design.
This experience.
And the result of the Paladin study and other post marketing studies give us great confidence that we can achieve a successful outcome from this trial.
And drive a significant shift in utilization of ILUVIEN I'm pleased to report that this study is now close to two thirds enrolled.
In the U S. Our direct to patient or DTP marketing campaign that we launched earlier in the year continues to deliver strong metrics.
Campaign consists of streaming video and display ads on social and other digital media and 10 regional markets.
For the first six months, we have exceeded our goals with close to 40 million impressions and over 2 million views of our video ads.
We believe that our D. T P campaigns effectively messaging that ILUVIEN allows patients to see less injections less doctor visits and fewer waiting rooms, and actually see more of the things they want to see.
We believe that this campaign and the data from the Paladin study will help US continue the recent sales momentum in our U S business by reminding patients and their physicians I believe its benefits, namely the ability to see better longer with fewer injections.
Our international business, we're reporting $5 $7 million in product revenues during the second quarter, which was up over 16% from the same period last year.
As Phil will explain the growth center interesting National segment was strong, but muted by the deterioration of the exchange rate, which reduced our reported international revenue by approximately 10%.
Importantly end user demand in our international segment grew by over 21% compared to Q2 of 2021 and was up 9% sequentially over the first quarter of this year.
This demonstrates recovery from the pandemic and the positive impact of renewed commercial support.
Additionally, we are excited about the opportunity to drive further growth in the international markets as availability of ILUVIEN for the treatment of non infectious uveitis affecting the pushed your segment of the eye increases.
So far this year, we've announced the receipt of pricing and reimbursement approval for this indication in Spain, Italy and France.
Our Spanish partner Brill pharma launch this indication in the second quarter.
Partners in France, and Italy are expected to launch the uveitis indication in these territories in September after the summer holidays.
We believe the uveitis indication in all of these markets will support growth over the remainder of 2022 and in 2023 of particular note. We are excited about the launch in France, as our French distributor Horus pharma launched the D. M. D indications in 2019 and quickly made France, our second largest market measured by any instrument.
I'll now turn the call over to Phil to review, our financial results for the first quarter.
Thanks, Rick and Hello, everyone as I take you through the second quarter financials is important to remember that consolidated net revenue in Q2 2021 included $11 million at license revenue generated from the out licensing of rights to ILUVIEN for the Western Pacific.
Reason I will give you a comparative figures, both with and without this licensing revenue.
During the second quarter of 2022, our consolidated net revenue decreased 33% from approximately $21 $7 million for Q2, 2021 to $14 $6 million for Q2 2022.
More importantly, consolidated net product revenues increased 36% to approximately $14 $6 million compared to $10 $7 million for Q2, 2021, showing continued momentum in our sales growth.
U S net revenue.
Was $8 $9 million for the second quarter of 2022, an increase of 53% from.
From the $5 $8 million reported in the 2021 period.
Rick Eisner: This was driven by second quarter end-user demand growth of 45% compared to the same period in 2021.
Rick shared and I want to reemphasize U S end user demand increased 45% in the second quarter of 2022 to 1063 units compared to 731 units in the second quarter of 2021 as.
Rick Eisner: Further, end-user demand was also up 16% sequentially over the first quarter of this year. These positive results were fueled by an improvement in face-to-face interactions with our customers, both inside and outside of the clinic, as access improved significantly from 2021 and from the first quarter of this year.
Rick Eisner: In addition, with our recently published pallet and study results, we've had an increase in podium time at several recent conferences, which we believe will continue to drive a paradigm shift to earlier utilization of olivine in the treatment of DME.
Rick Eisner: For the last couple of years, we've been working to change the view of DME and the way it is treated, highlighting the importance of treating inflammation more broadly and the value of treating disease more consistently to reduce the waxing and waning of edema, protect the retina, and provide better visual acuity results.
Rick Eisner: At the recent annual meeting of the American Society of Retina Specialists, two well-known key opinion leaders, Dr. Christopher Rehman and Dr. Victor Gonzalez, presented abstracts from our recently published pallet and study. Dr. Rehman's presentation reported data on olivine's ability to reduce retinal thickness variability, a measure of the extent of fluctuation of retinal thickness over time.
Rick Eisner: Importantly, Dr. Rehman's presentation emphasized the correlation between improved disease control with olivine and improved visual outcomes, a key component of our positioning.
Rick Eisner: Dr. Gonzalez's presentation highlighted that eyes with baseline visual acuity of 2040 or better achieve superior visual, anatomical, and treatment burden outcomes with olivine, supporting our view that olivine should be used earlier in the treatment paradigm before significant visual loss.
Rick Eisner: We believe these abstracts and data strongly support the hypothesis of our New Day study to demonstrate the benefits of the use of olivine as baseline therapy in newly diagnosed patients with DME.
Rick Eisner: As a reminder, the New Day study is the first head-to-head comparison of corticosteroid therapy and antiVEGF therapy, the multibillion-dollar standard of care in this type of patient.
Rick Eisner: I'm pleased to report that the study is now close to two-thirds enrolled.
Rick Eisner: Over 45,000 eyes have been treated with olivine, giving a significant real-world experience and understanding of how our drug works, which contributed to the New Day study design.
Rick Eisner: This experience and the results of the Paladin study and other post-marketing studies give us great confidence that we can achieve a successful outcome from this trial and drive a significant shift in utilization of olivine.
As we have previously shared our GAAP revenues in the U S do not always correlate with end user demand due to the timing of purchases by our specialty distributors and this results in dissimilar growth rates in the second quarter of 2022, Ala mirrors U S distributors sold approximately 3% fewer units to end users than they purchased <unk>.
Rick Eisner: In the U.S., our direct-to-patient, or DPP, marketing campaign that we launched earlier in the year continues to deliver strong metrics. The campaign consists of streaming video and display ads on social and other digital media in 10 regional markets. For the first six months, we have exceeded our goals with close to 40 million impressions, and over 2 million views of our video ads.
Rick Eisner: We believe that our DTP campaign is effectively messaging that Alluvion allows patients to, see less injections, less doctor visits, and fewer waiting rooms, and actually see more of the things they want to see.
Rick Eisner: We believe that this campaign and the data from the Paladin study will help us continue, the recent sales momentum in our U.S. business by reminding patients and their physicians of Alluvion's benefits, namely the ability to see better longer with fewer injections.
Mirror.
On Q2 2021, our distributors purchased approximately the same number of units they sold to end users.
Net revenue from our international segment in the second quarter of 2022 decreased 64% compared to Q2 'twenty 'twenty. One however, again focusing on product revenues, we saw a 16% increase international segment to approximately $5 $7 million for Q2 2022 compare.
Rick Eisner: Our international business, we are reporting $5.7 million in product revenues during the, second quarter, which is up over 16% from the same period last year. As Phil will explain, the growth in our international segment was strong, but muted by the deterioration, in the exchange rate, which reduced our reported international revenue by approximately 10%.
The approximately $4 $9 million for Q2 2021, we achieved this increase despite the negative impact of the weaker euro and British pound Sterling, which we estimate reduced our revenue by approximately 10% or $590000.
Rick Eisner: Importantly, end-user demand in our international segment grew by over 21% compared to Q2 of, 2021, and was up 9% sequentially over the first quarter of this year. This demonstrates recovery from the pandemic and the positive impact of renewed commercial, support.
Importantly end use demand improved in our international segment by approximately 21% from 1006 units in Q2, 2021 to 220 units in Q2 2022. This makes Q2 2022, the strongest second quarter for international segment end user demand.
In our history.
Turning to expenses.
Consolidated operating expenses were $14 $4 million in the second quarter of 2022, an increase of 12% compared to the 12 point now $9 reported in the second quarter of 2021, when travel and engagement with physicians to several of our key markets. We're still limited.
Higher operating expenses resulted from an increase in promotional and medical program investments to accelerate growth as we enter customers expect COVID-19 to become better manage globally in the second half of 2022.
As we discussed on the first quarter call, we have restructured some of our international operations.
And curtailed other investments to rightsize, our efforts and manage our cash usage.
Adjustments are being implemented over the next few months once in place we expect the total annual let's say annualized savings will be approximately $3 million.
We reported an adjusted EBITDA loss of just under $1 million in the second quarter of 2022 compared to positive adjusted EBITDA of $7 $9 million in Q2 2021.
For the three months ended June 32022, we reported a net loss of $3 $1 million compared to net income of $7 $6 million for the three months ended June 32021.
Basic and diluted net loss per share for the second quarter of 2022 was 45 cents per share on approximately 7 million weighted average shares outstanding this.
This compares to basic and diluted net income per share for the second quarter of 2021 of $1 <unk> per share on approximately $7 4 million participating weighted average shares outstanding.
Adjusted EBITDA net income and net income per share for Q2 2021 included the positive impact of $11 million in license revenue, we recognized from the Aki mentioned transaction.
And the acceleration of $1 billion in deferred product revenue associated with the termination of a Canadian distribution agreement with Knight Therapeutics, Inc.
The impact of these licensing revenues Q2, 2022 would have demonstrated improvement across these three metrics.
June 32022, we had cash and cash equivalents of $7 $9 million.
Moving forward, our target each quarter and the remainder of 'twenty to 'twenty two will be to achieve positive adjusted EBITDA and to begin generating positive cash flow in 2023.
With that I'll turn the call back over to Rick.
Thank you Phil.
Rick Eisner: Additionally, we are excited about the opportunity to drive further growth in the international, markets as availability of Alluvion for the treatment of non-infectious uveitis affecting the posterior segment of the eye increases.
In closing we are very pleased with these second quarter results and our return to growth on a global basis in the first half of the year as.
Rick Eisner: So far this year, we have announced the receipt of pricing and reimbursement approval for, this syndication in Spain, Italy, and France. Our Spanish partner, Brill Pharma, launched the syndication in the second quarter. Partners in France and Italy are expected to launch the uveitis syndication in these, territories in September after the summer holidays.
As I shared the first half of 2022 has been a record year for Allen Mayer for both GAAP product revenue and end user demand.
This has been driven primarily by growth in the U S market over the last 12 months as our trailing 12 month end user demand is now a 24% through the end of June .
There are international markets have struggled with a slower emergence of the pandemic. They too have returned to growth over the last six months and now have the opportunity to expand the utilization of believe in with uveitis indication in the coming months.
With this sales momentum the availability of the uveitis indication in additional markets the compelling data from the Paladin study and increasing interest in our New day study. We believe we are well positioned to complete 2022 and record fashion and continue growing in 2023 at levels, we anticipated prior to the pandemic. This.
Rick Eisner: We believe the uveitis syndication in all of these markets will support growth over, the remainder of 2022 and in 2023.
Rick Eisner: Of particular note, we are excited about the launch in France, as our French distributor, Horace Pharma, launched the DMA indication in 2019 and quickly made France our second
Rick Eisner: largest market measured by end-user demand.
This concludes our prepared remarks, I'll now turn the call over to the operator for questions.
Rick Eisner: I'll now turn the call over to Phil to review our financial results for the first quarter.
Ladies and gentlemen, if you wish to ask a question on today's call you will need to press. The Star then the number one on your telephone. If your question has been answered and be Alicia is Jaya request you may do so by pressing Star then the number two is there he is a nice sneaker song.
Copy our handset before answering I request and speaking on the call one moment. Please for the first question.
Our first question comes from Alex Nowak with Craig Hallum Capital. Please go ahead.
Phil Jones: Thanks, Rick, and hello, everyone.
Great. Good morning, everyone I was hoping that we could start off with maybe describe the recovery you're seeing in procedure volumes throughout the quarter just the cadence of sales throughout the period, how that trended into July and just how you're thinking about growing sequentially off the very strong results in the Q3 Q4.
Phil Jones: As I take you through the second quarter financials, it is important to remember that consolidated, net revenue in Q2 2021 included $11 million of license revenue generated from the outlicensing of rights to Alluvion for the Western Pacific. For this reason, I will give you comparative figures both with and without this licensing, revenue.
Yeah. Good morning, Alex So you know the sales have been fairly consistent over the last three or four months, but that's nothing to be unexpected because you do see a little bit of a slowdown as you hit the you know late June and July .
Phil Jones: As we discussed on the first quarter call, we have restructured some of our international, operations and curtailed other investments to right-size our efforts and manage our cash usage. These adjustments are being implemented over the next few months. Once in place, we expect the total annualized savings will be approximately $3 million.
Phil Jones: During the second quarter of 2022, our consolidated net revenue decreased 33% from approximately, $21.7 million for Q2 2021 to $14.6 million for Q2 2022.
Phil Jones: We reported an adjusted EBITDA loss of just under $1 million in the second quarter of, 2022 compared to positive adjusted EBITDA of $7.9 million in Q2 2021. For the three months ending June 30, 2022, we reported a net loss of $3.1 million compared, to net income of $7.6 million for the three months ended June 30, 2021. Basic and diluted net loss per share for the second quarter of 2022 was $0.45 per share, on approximately 7 million weighted average shares outstanding.
Phil Jones: More importantly, consolidated net product revenue increased 36% to approximately $14.6, million compared to $10.7 million for Q2 2021, showing continued momentum in our sales growth. U.S. net revenue was $8.9 million for the second quarter of 2022, an increase of 53% from the $5.8 million reported in the 2021 period.
Phil Jones: This compares to basic and diluted net income per share for the second quarter of 2021 of, $1.03 per share on approximately 7.4 million participating weighted average shares outstanding. Adjusted EBITDA net income and net income per share for Q2 2021 included the positive, impact of the $11 million in license revenue we recognized from the Occumention transaction and the acceleration of $1 million in deferred product revenue associated with the termination of our Canadian distribution agreement with Knight Therapeutics.
Phil Jones: As Rick shared, and I want to reemphasize, U.S. end-user demand increased 45% in the, second quarter of 2022 to 1,063 units compared to 731 units in the second quarter of 2021.
Phil Jones: Excluding the impact of these licensing revenues, Q2 2022 would have demonstrated improvement, across these three metrics.
Phil Jones: As we have previously shared, our gap revenues in the U.S. do not always correlate with end, user demand due to the timing of purchases by our specialty distributors, and this results in dissimilar growth rates. In the second quarter of 2022, Alimera's U.S. distributors sold approximately 3% fewer, units to end users than they purchased from Alimera.
Phil Jones: June 30, 2022, we had cash and cash equivalents of $7.9 million. Moving forward, our target each quarter and the remainder of 2022 will be to achieve positive, adjusted EBITDA and to begin generating positive cash flow in 2023.
Phil Jones: On Q2 2021, our distributors purchased approximately the same number of units they sold to end, users.
Phil Jones: And with that, I'll turn the call back over to Rick.
Phil Jones: Net revenue from our international segment in the second quarter of 2022 decreased 64% compared to Q2 2021.
Phil Jones: However, again focusing on product revenue, we saw a 16% increase in our international, segment to approximately $5.7 million for Q2 2022 compared to approximately $4.9 million for Q2 2021. We achieved this increase despite the negative impact of the weaker Euro and British Pound, Sterling, which we estimate reduced our revenue by approximately 10% or $590,000.
Phil Jones: Importantly, end user demand improved in our international segment by approximately 21% from 1,006 units in Q2 2021 to 1,220 units in Q2 2022. This makes Q2 2022 the strongest second quarter for international segment end user demand, in our history.
Rick Eisner: Thank you, Phil.
Phil Jones: Turning to expenses, total consolidated operating expenses were $14.4 million in the second, quarter of 2022, an increase of 12% compared to the $12.9 million reported in the second quarter of 2021, when travel and engagement with physicians in several of our key markets was still limited. Higher operating expenses resulted from an increase in promotional and medical program, investment to accelerate growth as we and our customers expect COVID-19 to become better managed globally in the second half of 2022.
Rick Eisner: In closing, we are very pleased with these second quarter results and our return to growth, on a global basis in the first half of the year.
Rick Eisner: As I shared, the first half of 2022 has been a record year for Alimera for both gap product, revenue and end-user demand. This has been driven primarily by growth in the U.S. market over the last 12 months as, our trailing 12-month end-user demand is now up 24% through the end of June.
Rick Eisner: Although our international markets have struggled with a slower emergence of the pandemic, they, too have returned to growth over the last six months and now have the opportunity to expand the utilization of alluvium with uveitis indication in the coming months.
In August because of the summer holidays, and then seeing its always pick up in September and as you know you know September is usually you know one of our strongest months of the year and then transitions into the fourth quarter and fourth quarter is usually always our strongest quarter of the year. So we feel pretty good that we'll continue to still grow sequentially.
Rick Eisner: With this sales momentum, the availability of the uveitis indication in additional markets, the compelling data from the Paladin study, and increasing interest in our New Day study, we believe we are well-positioned to complete 2022 in record fashion and continue growing in 2023 at levels we anticipated prior to the pandemic.
Rick Eisner: This concludes our prepared remarks.
Operator: One moment, please, for the first question.
Operator: I'll now turn the call over to the operator for questions.
Operator: Ladies and gentlemen, if you wish to ask a question on today's call, you will need to, press the star then the number 1 on your telephone.
Operator: Our first question comes from Alex Novak with Crank Helen Capital.
Operator: If your question has been answered and you wish to withdraw your request, you may do, so by pressing star then the number 2.
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Alex Novak: Please go ahead.
Alex Novak: Great.
Alex Novak: Good morning, everyone.
Alex Novak: I was hoping that we could start off with maybe describing the recovery that you're, seeing in procedure volume throughout the quarter, just the cadence of sales throughout the period, how that trended into July, and just how you're thinking about growing sequentially off the very strong results in the Q3, Q4.
From second quarter to third and then obviously ended the fourth quarter as well.
Rick Eisner: Yeah, good morning, Alex.
No that's good and maybe we talked about this a little bit last quarter, but you are making these new investments in the U S business, we talked on the Paladin study the direct marketing, but also we're seeing COVID-19 beginning to wane. So just as you go through your metrics internally. How are you kind of I'm sorry for this I frame if the ROI.
Of sales is coming from Covid fading or directly from these new investments.
Rick Eisner: So, you know, the sales have been, you know, fairly consistent over the last three or four, months, but that's nothing to be unexpected because you do see a little bit of a slow down as you hit, you know, late June and July and August because of the summer holidays and then things always pick up in September.
Rick Eisner: And as you know, you know, September is usually, you know, one of our strongest months, of the year and then transitions into the fourth quarter and fourth quarter is usually always our strongest quarter of the year.
Rick Eisner: So, you know, we feel pretty good that we will continue to still grow sequentially from, second quarter to third and then obviously into the fourth quarter as well.
You know, Alex it's really hard to come up with a specific reason you know one for any one doctor you know, we do look at the programs and where we're spending the money and the doctors that are involved in those programs you know to see if theres growth in those markets and that's how we evaluate the success of them, but I'm sure that it is a combination of.
Alex Novak: Now, that's good.
Alex Novak: And maybe we talked about this a little bit last quarter, but you're making these new, investments in the U.S, business.
You know all of those factors right you know, we actually we know that they were awareness of ILUVIEN was down you know during the pandemic and there was that was because of a lack of face to face time and so we spent the money to make sure we were getting in front of the Doctor. So I'm sure. It's an emergence of COVID-19 more patients coming back and we know that's happening but also you know we've been in front of the doctors a lot.
Alex Novak: We talked on the Paladin study, the direct marketing, but also we're seeing, COVID beginning to wane.
More to make sure there are remembering ILUVIEN in you know with the availability of its true DMA.
Yes, that's perfect.
And just to confirm you Havent made any operating expense cuts for the European business, Yeah, That's gonna, becoming it sounds like in Q3, and just how to think about what that's gonna do to end user demand in Europe . If we should expect a little bit of a being more muted volume in Q3 because of those cuts.
Yes, I don't.
So we we made some of those cuts you're right at the end of June , but because of some notice periods and and and severance payments or redundancy payments in the European markets, you won't really start to see the impact of those until the fourth quarter and then you'll see more significant impact in in 2023 most of those jobs are.
Customer facing jobs Theyre more support jobs out of the hub and we just decided to provide a little bit more leadership and direction out of the U S market for those activities.
Really to.
Reduce our cost, but also to continue to get more consistency in the messaging because the messaging and the positioning in the U S market seems to be working in some of the programs. We're doing here of working as well. So I don't think it'll have a negative impact on sales you know frankly, I think over time, it'll it'll actually have a positive impact because we'll get more consistent you know with the stronger message that we've been pushing in the U S.
Okay, that's great plus you've got the easy ice watches in there as well one thing that we haven't talked that's correct is the retreat, but yeah. One thing we haven't talked about is through treatment population. Just how are you thinking about that now sufficient, especially with COVID-19 waning here.
Alex Novak: So just as you go through your metrics internally, how are you kind of deciphering if, the growth of sales is coming from COVID fading or directly from these new investments?
Rick Eisner: You know, Alex, it's really hard to come up with a specific reason, you know, for any, one doctor.
Rick Eisner: You know, we do look at the programs and where we're spending the money and the doctors that, are involved in those programs, you know, to see if there's growth in those markets and that's how we evaluate the success of them.
Rick Eisner: But I'm sure that it is a combination of, you know, all of those factors, right?
Yeah, I think we're definitely seeing more re treatments I still think it is you know somewhere in the probably the 10% to 20% range at this point of patients being retreated had some of our senior sales leadership in here from the U S yesterday and as they as they go out and try to find them.
Rick Eisner: You know, we actually, we know that the awareness of oblivion was down, you know, during the, pandemic and that was because of a lack of, you know, face-to-face time.
Rick Eisner: And so we spent the money to, you know, make sure we were getting in front of the doctor.
Rick Eisner: So I'm sure it's an emergence of COVID, more patients coming back in.
Rick Eisner: We know that's happening, but also, you know, we've been in front of the doctors a lot more, to make sure they are remembering oblivion and, you know, with the availability of it to treat DME.
Patients will be recruited push re treatment a lot of times, they're finding that the patients you know we're no longer round they've passed away because of other comorbidities because of deep diabetes or something like that at the age I think that is a factor of the patients who are being treated three years ago. You know we're still.
Alex Novak: Yes, that's perfect.
Pretty far advanced in their disease State you know more of the more the worst patients, whereas we're trying to get earlier in the treatment paradigm. So we think that that that amount of re treatment will continue to improve.
As we treat patients earlier in the treatment paradigm and we see the value of that stable control the disease and healthier patients.
Understood and then just last question I noticed on the balance sheet. It looks like Theres now a 13 million note payable listed as a current liability just is there a plan to pay that back in the next 12 months or was there some sort of covenant that was there and then actually maybe speak to the ability to increase the accounts receivable conversion looks like there's a pretty nice.
Alex Novak: And just to confirm, you haven't made any operating expense cuts for the European business, yet.
Alex Novak: That's coming, sounds like in Q3.
There that can be used for cash.
Yeah. So so on the on the debt that is the amortization of the current solar debt facility with solar capital R. S L or capital that starts amortizing in January of next year.
Alex Novak: And just how to think about what that's going to do to end-user demand in Europe if we should, expect a little bit of a, be more muted volume in Q3 because of those cuts?
We stated on our first quarter call. We expected the results from Q2 to be pretty strong, which we believe they are and the plan was to work on refinancing that debt facility in the second half of the year, we have a a good relationship with solar so I think that's very possible and certainly I think we're a stronger company than we were three years ago in that facility.
Rick Eisner: Yeah, I don't, so we made some of those cuts right at the end of June, but because of some, notice periods and severance payments or redundancy payments in the European markets, you know, we won't really start to see the impact of those until the fourth quarter.
Rick Eisner: And then you'll see more significant impact in 2023.
Rick Eisner: Most of those jobs are not customer-facing jobs.
Rick Eisner: They're more support jobs out of the hub.
He's put in place we believe we'll have options based on conversations we've had in the marketplace.
Rick Eisner: And we just decided to provide a little bit more leadership and direction out of the U.S, market for those activities, really to reduce our costs, but also to continue to get more consistency in the messaging because the messaging and the positioning in the U.S. market, you know, seems to be working and some of the programs we're doing here are working as well.
On the accounts receivable question, Alex just just recall that in the U S, which is where we've seen a large part of the growth or our terms. Our net 120 days. Therefore as that business grows naturally those accounts receivable numbers are going to get bigger over time. So in essence you know.
Rick Eisner: So I don't think it'll have a negative impact on sales.
Rick Eisner: You know, frankly, I think over time it'll actually have a positive impact because we'll, get more consistent, you know, with the stronger message that we've been, you know, pushing in the U.S.
Alex Novak: Okay.
Alex Novak: No, that's great.
Alex Novak: Plus, you got the UVIS launches in there as well.
Alex Novak: One thing that we haven't talked about is the retreatment, yeah, one thing we haven't, talked about is the retreatment population.
The U S business over the first quarter accounted for about 65% of that of the overall business of the company as a whole that number is essentially getting bigger because of that.
Those terms that we have in place.
I see understood makes sense I appreciate all the commentary thank you.
Thanks, Alex.
Rick Eisner: Just how are you thinking about that now, especially with COVID waning here?
Our next question comes from Chad Leap H C. Wainwright. Please go ahead.
Well. Thank you for taking my questions. My first question is would.
Rick Eisner: Yeah, I think we're definitely seeing more retreatments.
Would you be able to comment on the.
Ah patient flow in Spain, Italy, and France for posting.
And how do you.
Spec that.
These patient flow to contribute to the end user demand grows compared to the current end user demand grows for D. M. D M B a.
European markets. Thanks.
Rick Eisner: I still think it is, you know, somewhere in the probably the 10 to 20 percent range at, this point of patients being retreated.
Yeah, So we estimate than in the European markets that tend to the size of the patient population for uveitis is probably 10% to 15% of the DMD population. So theoretically it would be a small add accept them. You know, we do think you'll get a faster acceleration out of the gate because you don't have the headwind.
Rick Eisner: You know, I had some of our senior sales leadership in here from the U.S. yesterday, and, you, know, as they go out and try to, you know, find these patients to be retreated or push retreatment, a lot of times they're finding that the patients, you know, are no longer around. They've passed away because of other comorbidities, because of diabetes or something like that.
Rick Eisner: At the age, I think that is a factor of, you know, the patients who were being treated, three years ago, you know, were still pretty far advanced in their disease state, you know, more the worse patients, whereas we're trying to get earlier in the treatment paradigm.
Rick Eisner: So, we think that that amount of retreatment will continue to improve as we treat patients, earlier in the treatment paradigm, and, you know, we see the value of that stable control of the disease in healthier patients.
Alex Novak: Understood.
Of anti VEGF therapy for that disease State you know similar to that too we saw pretty good uptake in the fourth quarter of 2019 in the first couple of months of 2020, and the U K and Germany win that you guys syndication was first launch. So we do think there'll be there's probably a bolus of patients out there and then over time, it probably contributes 10% to 15% of the.
Alex Novak: And then just last question.
Alex Novak: I noticed on the balance sheet, it looks like there's now a $15 million note payable listed, as a current liability.
Alex Novak: Just, is there a plan to pay that back in the next 12 months, or was there some sort, of covenant that was stripped there?
Alex Novak: And then actually maybe speak to the ability to increase the accounts receivable conversion.
Alex Novak: Looks like there's a pretty nice balance there that could be used for cash.
Phil Jones: Yes, so on the debt, that is the amortization of the current debt facility with solar capital, or SLR capital that starts amortizing in January of next year.
Revenue.
Got it and do you expect to secure pricing and reimbursement for uveitis.
European countries in the coming months.
Or partner in a in the Benelux territories is working on reimbursement there and we're working on in the Nordic countries as well.
Thank you and now that your.
Quarterly run rate is getting back to the pre <unk> pre pandemic rates would you be able to provide top line guidance at some point in the near term.
Phil Jones: As we stated on our first quarter call, we expected the results in Q2 to be pretty strong, which we believe they are. And the plan was to work on refinancing that debt facility in the second half of the year.
Phil Jones: We have a good relationship with solar, so I think that's very possible.
Near term, we won't do that you know I'm going to stay consistent with what I've said in the past that I expect.
Phil Jones: And certainly, I think we're a stronger company than we were three years ago when that facility was put in place.
Phil Jones: We believe we'll have options based on conversations we've had in the marketplace.
Phil Jones: And on the accounts receivable question now, let's just recall that in the U.S., which is where we've seen a large part of the growth, our terms are net 120 days. And therefore, as that business grows, naturally, those accounts receivable numbers are going to get bigger over time. And since the U.S. business over the first quarter accounted for about 65% of the overall business of the company as a whole, that number is essentially getting bigger because of those terms that we have in place.
To be able to grow in the mid to high teens and there are certain years, depending on what launches we are able to do with uveitis or timing of pricing reimbursement that you may see it exceed 20%.
And lastly could you comment on the trend of your R&D expenses going forward.
Yeah, the trend at the R&D expenses going forward you know you get a large part of the R&D expense currently.
Is associated with the new date study and through 2024, those numbers are going to stay fairly consistent with where they are now however, after that we will reevaluate our those dollars in the stand and see where we may reinvest that or what we may repurpose that that those funds for.
Yeah.
Alright, thank you.
Alex Novak: I see.
We have no further questions now I would like to turn the call over a chair rake ice class for closing remarks. Please go ahead.
Alex Novak: Understood.
Alex Novak: Makes sense.
Alex Novak: Appreciate all the commentary.
Alex Novak: Thank you.
Well. Thank you all for participating on today's call and for your interest in and out of the marrow.
Rick Eisner: Thanks, Alex.
Operator: Our next question comes from Yi Chen with HSC Wainwright.
Yi Chen: Please go ahead.
Yi Chen: Thank you for taking my questions.
Rick Eisner: Thank you all for participating on today's call and for your interest in Alimera.
Yi Chen: My first question is, would you be able to comment on the patient flow in Spain, Italy, and France for posterior uveitis?
Rick Eisner: We look forward to sharing our ongoing progress when we report our third quarter results later this year.
Yi Chen: And how do you expect that these patients flow to contribute to the end-user demand growths compared to the current end-user demand growths for DME in the European markets?
We look forward to sharing our ongoing progress when we report our third quarter results. Later this year. Thank you and have a wonderful day.
Rick Eisner: Thanks.
Rick Eisner: Yeah, so, you know, we estimate in the European markets that the size of the patient population for uveitis is probably 10 to 15% of the DME population.
Rick Eisner: So, you know, theoretically, it would be a small add, except, you know, we do think you'll get a faster acceleration out of the gate because you don't have the headwind of anti-VEGF, you know, therapy for that disease state.
Rick Eisner: You know, similar that we saw a pretty good uptake in the fourth quarter of 2019 and the first couple of months of 2020 in the U.K. and Germany when the uveitis syndication was first launched. So, we do think there'll be, there's probably a bolus of patients out there.
Rick Eisner: Thank you and have a wonderful day.
Rick Eisner: And then over time, it probably, you know, contributes 10 to 15% of the revenue.
Yi Chen: Got it.
Rick Eisner: Do you expect to secure pricing and reimbursement for uveitis in other European countries in the coming months?
Yi Chen: Our partner in the Benelux territories is working on reimbursement there, and we are working on it in the Nordic countries as well.
Rick Eisner: Thank you.
Operator: The conference is now concluded.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yi Chen: And now that your quarterly growth, our run rate is getting back to the pre-pandemic rates, would you be able to provide top line guidance at some point in the near term?
Operator: Thank you for attending today's presentation.
Rick Eisner: Near term, we won't do that.
Operator: You may now disconnect.
Rick Eisner: You know, I'm going to stay consistent with what I've said in the past, but, you know, I expect us to be able to grow in the mid to high teens.
Yi Chen: And there are certain years, depending on, you know, what launches we're able to do with uveitis or timing and pricing reimbursement that you may see it exceed 20%.
Rick Eisner: And lastly, could you comment on the trend of your R&D expenses going forward? Yeah, the trend of the R&D expenses going forward, you know Yi, a large part of the R&D expense currently is associated with the New Day study.
Rick Eisner: And through 2024, those numbers are going to stay fairly consistent with where they are now.
Rick Eisner: However, after that, we will reevaluate those dollars in the spend and see where we may reinvest that or what we may repurpose those funds for.
Yi Chen: All right, thank you.
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Operator: We have no further questions.
Operator: Now I would like to turn the call over to Rick Eiswirth for closing remarks.
Rick Eisner: Please go ahead.
Okay.
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Operator: [music]
Yeah.
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Yeah.
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Yes.
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Sure.
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Okay.