Q3 2022 Acorda Therapeutics Inc Earnings Call
Okay.
[music].
Welcome to the quarter Therapeutics second quarter, 2022 financial and business update.
At this time all participants are in a listen only mode.
That will be a question and answer session to follow.
Please be advised that this call is being recorded at the company's request.
I will now introduce your host for today's call Gianni second quarter Jenny. Please go ahead.
Thank you Harry and good afternoon, everyone. Before we begin let me remind you that our presentation will contain forward looking statements detailed disclosures can be found in our SEC filings, which are public and we encourage you to refer to those filings.
During the Q&A today.
Take calls from our analysts and then we may take questions from that other investors have written an when they registered for the call I'll now pass the call over to our CEO Ron Cohen.
Alright, Sterne Agee and.
Welcome to everyone.
I'll just start with a quick overview of today's call on our agenda.
We'll be presenting the Q3 highlights and focus it could be a lot and breeze and Peter Rob.
I'm also going to provide some summary of the long term business plan to high level summary of the plan that we released in detail last week.
Mike Gasser, our CFO will cover the financials and guidance and I'll touch at the end on our upcoming special meeting of stockholders. This Friday.
So starting with embrasure embrasure net sales for the third quarter of 2022 were $785 million, that's a 1% increase over Q3, 2021, and 104% increase over the first quarter of this year.
Recall, our Q1 sales this year, which severely reduced by both the omicron surge and the extra by an extra large buy in in the fourth quarter of 2021.
Pleased to have seen sales rebound substantially through the through the third quarter.
And this gives you an additional you you can see here in region net sales total prescriptions and dispense quarters in the first three quarters of 2022 and the circles at the bottom show you the percentage comparisons with B.
Related 2021 periods now note the dramatic decline in Q1 2022 net sales percentage wise versus 2021. However, all of these metrics improved dramatically across the subsequent two quarters of this year and thats, providing momentum as we.
We implement our new strategies and tactics to accelerate and pleased and bridges trajectory further and I am going to touch on that.
A bit later Rob.
Regarding embrasure ex U S sales recall that in June we recorded $1 $9 million in sales from our survey for the initial launch launch shipments for Germany, and we received an additional $960000 in the third quarter for Germany.
As February reports high receptivity by patients and physicians in Germany, and expect to launch in Spain in the first quarter of 2023.
<unk> bio path is continuing to work toward launches of embrasure and the nine largest Latin American markets, including Mexico and Brazil.
We're also in continued discussions for Guizhou partnerships in additional territories around the world, including in Asia, and the other EU territories.
So moving to <unk> and.
<unk> net sales for the third quarter were $21 $1 million that was a 5% increase over Q3 2021.
Our rate of sales decline versus generics has slowed and we expect it to continue to moderate and we're reiterating our guidance for 2022 net sales of between 68 and $78 million.
And on this slide you see illustrated the continuing leveling of the decline in <unk> sales year over year.
Since loss of exclusivity.
With regard to <unk> ex U S revenue.
Okay.
We received royalties of $2 $6 million from Biogen, which markets fab tiara, which is the ex U S name of Empire.
So we received $2 6 million in the third quarter. These are double digit tiered royalties.
And we're also pleased that Biogen launch pad here in China in May.
I will now follow up with.
Highlights of the key elements of our long term business plan to increase the value of the company.
You see here an overview our plan is based on the key outcomes that you see here first we expect to be able to accelerate <unk> growth in the U S. And we're also on track to expand into additional ex U S markets.
We'll talk about that a little more detail in upcoming slides and while we expected and PURA will continue to decline the rate of decline has slowed over time and we expect it to continue to stabilize still providing meaningful revenue over the next five years and beyond I'll touch on that in additional slides.
And especially with our quarters recent arbitration reward.
Award from Alkermes, we're well capitalized to execute this plan and we expect to be cash flow positive in 2023.
Finally at the end I will touch on the need for shareholder approval of the company's reverse stock split proposal that will be key to ensuring that the company has not been listed by NASDAQ and December .
So beginning with our plans for embrasure.
Commercial team has done an excellent job.
Establishing an <unk> as the preferred on demand treatment for people with Parkinson's disease.
Off periods and independent report shows that each of them now has two thirds of the market for on demand therapies in Parkinson's and our market research shows that healthcare professionals are hcp's are more comfortable with levodopa based treatments, which embryo is and this is against the.
Two other competitors in the market.
But the key here.
Is that only about 2% of the addressable population now which is about 380 <unk> people with Parkinson's who.
Levodopa and experience off periods only about 2% are currently receiving any on demand.
This represents a substantial opportunity for us to expand the market and you can see that even a modest increase in penetration will result in significant value creation.
Okay here are some of the new tactics that we're employing to achieve those.
First we'll be launching a new brand campaign this month.
The sizing the emotional impact of off periods on everyday activities for patients and their care partners.
These are.
Very under appreciated by many of the health care providers in the field and we will be making that much more clear to them and we will also be educating on the need for greater use of on demand treatment and thats going to be aided by three recently published peer reviewed papers.
And I'll show you those references on the next slide.
We're also increasing our investment in digital promotion.
Featuring a library of patient videos that personalize the impact of off periods on the person with Parkinson's.
And they also show the difference in people in an off period and then as soon as 10 minutes after they inhale embrasure.
For those of you.
Who would be interested in seeing them.
I will give you some coordinates later about how you can see those.
We've also introduced an E prescribing platform. This reduces friction in the prescribing process. So the prescriber can use whichever platform they prefer rather than the more time consuming prescription request forms that have to be factored in and.
In the last few months that we have implemented this we've already found that fulfillment rates and which is the percentage of prescriptions that are actually resulting in drug being delivered to the patient had increased by about 30% using the E. Prescribing options. So we're making those.
None to every prescriber that the visit in contact.
And we're also continuing to work on improving patient access.
We're now adding a cash payment option for example for uninsured and underinsured patients.
So these are the first pages of the three references I mentioned.
Interestingly, they've all come out in the last year or so each is authored by a group of leaders in the Parkinson's field, but they are independent papers and yet all three.
Clued, but there is a need for the field to adopt on demand treatment substantially more than they are already and we're making prescribers aware of these papers.
This slide shows you still shocks of two of the videos that we have one is Jimmy on the left and Rachel on the right.
<unk>.
I think one of the most.
Powerful tools that we're now employing.
They include these identical seems left and right on the left you'll see the person with Parkinson's during an off period and then on the.
Excuse me on the left and then on the right 10 minutes after they've been hailed and brita.
The platform for this investor call doesn't allow for us to play video. So I encourage you to view these AD in breach of Dot com.
B R J, a dot com or if you're a health care professional you can also view them at embrasure Dash HCP Dot com.
Now we're also including these videos on Facebook feeds this is a new program in the last.
Few months now.
This is specifically showing on the feeds of people with Parkinson's or an interest in Parkinson's and the videos run automatically as soon as the person scrolls down to them. They start running so you don't have to click on anything they've already been seen by tens of thousands of viewers.
Now regarding and Purion and independent study reported that Empiric currently holds about 15% of the total dalfampridine market thats more than four years after it became available generically.
Sales are at about 13% of our sales in 2017, which was the last full year before and pure loss of exclusivity.
We believe that <unk> sales over the next five years will level off at approximately 10% of the 2017 sales through 2020.
Very interestingly note that about 200 doctors have already written prescriptions for branded and PURA in 2022, who had not written since the medication went generic in 2018.
Now we believe that this is due to a number of factors. The whole performance is due to a number of factors first.
<unk> patient brand loyalty and we're continuing to hear from both the healthcare providers and patients who value. The support that we've always provided and we're continuing to provide for branded and PURA that includes our first step program, which gives the initial two months of empirically.
For commercially insured payment patients and we're mitigating down commercially insured.
Co pays to no more than $10 a month.
Which is often lower than what they would pay for generics and we're also continuing to provide physician and patient reimbursement support.
Access also remains high for <unk> of about 70% of covered lives can get access to the medication.
And our field team is continuing to call on MF specialists to ensure that they are aware of the various support programs that were continuing to provide for the brand.
Now our CFO , Mike <unk> will now review the financials Mike.
Yeah.
Thank you Ron and.
<unk> net revenue was up over Q2 Q3 2014.
<unk> thousand 14, 1%, including outside the U S sales.
Just the U S. <unk> region net revenue is up about 1% compared to Q3 2021 and two.
<unk> revenue was up over Q3 2021 by five 5%.
SG&A was down from Q3 2021 by 22, 3% as a result of our continued spending management efforts.
Cash of $34 $2 million is aligned with our expectations.
But I'd like to point out does not include the cash from our settlement with Alkermes that cash was received in October .
Last month, an arbitration panel issued the final decision of the dispute between a quarter now comments regarding licensing royalties related to <unk>.
The panel decision in the quarter was awarded a $15 million.
Plus a prejudgment interest of $1 5 million as I said were received in October .
In addition, a quarter will no longer have to pay alkermes any royalties on net sales for license and supply of <unk>.
We are free to use alternative sources for supply and we have already secured those sources.
This award will allow us to obtain more competitive market rates for the supply of impairing significantly reduces our cost of goods going forward.
Therefore, increasing the products value to the company.
And increasing that value meaningfully.
We expect savings of $10 million to $12 million to the reduced cost of goods sold for <unk> in 2023, depending on volume and net savings depending on volume.
Can you in the future.
As we released on October 27th quarter, as providing financial guidance on many elements of the business. In addition to the pure net revenue and Opex that we have in the past.
As Ron noted we are holding our previous guidance for <unk> and we're also holding our previous comments on Opex.
As we previously announced the ending cash balance cash flow for 2022 includes the settlement for alkermes, a $16 $5 million.
In addition, we will not pay the December 2022 note interest in shares as we've announced.
The cash a forecast going forward assumes that we pay the interest in cash.
We continue to work on expanding our outside the U S. In breach of sales and that is also reflected here.
Although it appeared net revenue continues to decline with face of generic competition as Ron said, we believe that that curve is flattening and the decline is lessening.
The fan pier, a royalty, which now we receive a 100% of the cash run since June .
That outlook is based on information from our partner Biogen.
The Opex outlook as a result of our continued management of expenses and shows an approximate $20 million from our 2022 guidance to our 2023 guidance along the lines of the actions we took in the past that we've been talking about.
The cash guidance as a result of growing net revenue the favorable impact of <unk> cost of goods sold from the academic settlement.
And continued Opex cost management.
Andre.
Thanks, Mike.
So to summarize on our business plan and long term focus we're continuing to focus on building long term value through execution on the key goals, we've discussed and that you see summarized here accelerating and breezes growth maintaining in periods of strength.
<unk> financial discipline and also leveraging the ARCUS platform as we have discussed in the past.
Before we go to your Q&A I'll touch on the special meeting of stockholders that is taking place this coming Friday November 4th.
In order to provide us with the runway that we need to allow us to execute on the business plan.
We have a key proposal on the ballot for this meeting proposal to give the board the ability to implement a reverse split of our quarter stock as needed. Now. This is critical to ensure that we don't become delisted from NASDAQ in December because if that were to happen we could be in default to our bondholders.
That would make it quite difficult to execute the long term business plan that we've shared and we are asking shareholders to vote for proposal two to ensure that we're not delisted from Nasdaq.
Three major proxy advisory firms of all recommended voting for these proposals and in any case.
In case any shareholders, who are eligible would like to vote, we're going to put up a slide with the ways you can vote, while we open the call for your questions.
Operator.
Thank you we will now open for Q&A.
We have a question here from the line of Ram <unk> of H C. Wainwright Ram. Please go ahead.
Hi, Thanks, very much for taking my question.
Why don't we focus first of all on the long term revenue guidance.
I wanted to better understand.
Some of the.
Principal drivers of your confidence in the longer term outlook for and periodic revenue, particularly in the years from 2025 to 2027, and the extent to which you believe there could be variance risks to those numbers.
Okay.
Mike do you want to do you want to take that.
Yes.
Sure.
Yes.
We will continue to point out that forward looking statements have do have risk of variability in the farther out you go there is inherently that variability risks. However, I will say this about it it has been a rather.
Well performing drug in a well forecasted drug over the years.
What we find is that the.
The reduction of people who are on our drug typically.
Do a cliff fall you could say between the end of one year and the beginning of another as they are moved off of our product onto a generic or forced off our product to the generic.
And what we've seen is that that drops slowing down as I said earlier I think the what we've done is we've analyzed that curve. We've analyzed how we believe this drug will continue to perform as that curve flattens and we reach.
The parity that you see in many many many markets where a generic is competing against a branded drug the generics light branded drugs in the market because it sets the price.
We are very conscious about our patients that take our drug and their need for our drug as opposed to generics.
And we're fairly confident on on this rate the ranges that we provided you they do increase.
Did contain a normal price increase from year to year and they do include a reduction in our are taking population year to year.
Thank you Ram.
And as a follow on to that can you maybe elaborate.
Also the <unk>.
Make up of the prescribers, who resumed prescribing <unk> and what might have factored into those decisions.
I don't have that.
Available for you, Rob, but I will tell you that.
As part of our affirmative strategy and tactics, we have been having the sales force call on more of the EMS prescribers because it became apparent that there are many out there it's Phil who were actually not aware that we're still supporting the product and that has been a bit.
Incentive for them to prescribe the brand versus the generic.
They.
I think you know, we built up a huge amount of goodwill and loyalty.
With all of the behaviors and programs that we had when it was branded.
This was very appreciated by the field very appreciate it on behalf of their patients and when we tell them when we alert them that actually yes. We are still doing first step, we're still providing reimbursement support and so forth, we're still paying down co pays.
This goes a long way to encouraging them to start.
Specifying D a W for the brand.
And also by the way to pushing back on insurance companies that they believe.
For whatever reasons that they prefer to have the brand for their patients.
Last question on <unk> in the 2025% to 2000 2007 timeframe.
Could you just give us a sense of how many generic competitors.
That segment, you expect to be on the market.
Responding.
From revenue projections.
Youre talking about how many generics would be in the market.
During that period of time.
Yes, I can.
Closure of a range.
Okay.
Right now I believe we have five to six I don't have the exact number in my head, but I believe there are about six that are active in the market now.
I don't know that we expect that to change dramatically, but again thats.
That's difficult to project because that's a matter for each generic company to decide whether they want to stay in the market or not but right now as far as we can tell.
We don't we don't see it changing dramatically.
By the way I do want to say that in addition to the reps.
<unk> to visit MFS.
Ms docks more.
Have increased media outreach as well as social media outreach and so on so we are quite quite active there in promoting it and what we've found is that.
When the doctors are made aware that we are still very much active.
Importing them supporting the brand.
This goes a long way with them.
Okay with respect to <unk>.
I was just wondering if you could just describe a little bit more in detail some of the barriers to prescribing E prescribing approach overcome.
Sure.
So.
The traditional way for prescribing.
Specialty drugs and certainly in breach.
And even in PURA.
Has been to have specialty pharmacies.
Then you have.
Principal forms that are we call them prescription request forms.
Service requests for Prs <unk>.
And those have to be filled in and theyre more time intensive than a regular prescription would be.
And then there are actually faxed in to a hub then sends it to the specialty pharmacy or directly to a specialty pharmacy. So right away. It's a departure from most of the prescriptions that the doctor or people in the office nurse practitioners.
As a writing so it adds friction right there.
In addition, there is a more affirmative process going on here.
In the system that we have set up we're collaborating with an outside outside organization.
That includes not just the E prescribing software and platform, but a specialty pharmacy that is specifically geared to this kind of activity.
If we're going to one of the big major specialty pharmacies, we don't get a lot.
Out of it other than data and then obviously fulfillment, but here you have the extra step where the specialty pharmacy itself is aware of the drug they are aware of the prior authorization requirements of each given insurance company.
And in many cases, they're able to address those prior authorizations without bothering the doctor's office further or if it's the prior offs are such that they need the physician's office to to do something they will call them or the contact them and say hey.
I need you to do such and such so that reduces friction because without that it should.
Just kind of swirling all over the place it's a busy practice and they don't really have.
The office doesn't necessarily have the time to focus on these individual details. So we so this system in our particular E. Prescribing system helps and you can see the results will be about 30% improvement in fulfillment rates.
Great also one last question with respect to the possibility of effecting a reverse stock split I am assuming that at this time a quarter has made no determination regarding the nature of the ratio split ratio is that correct.
That is correct that is something that the board would have to take that.
Thank you.
Thank you, Rob and by the way I just wanted to.
Just sort of roll back.
And clarify something just to make sure everyone understands that with respect to the Alkermes Arbitration award that was not I want to make sure everyone understands it wasn't a settlement it was a binding arbitration process and the arbitrators made their decision and the award as Mike.
<unk>.
As Mike articulated it.
Yeah.
Thank you I will now pass the call back over to Tony <unk> for any additional remarks.
Okay.
A few questions that were written in my shareholders when they registered and I'll just read them out first.
First one is I've been an investor for the last three years I have a lot of confidence in the management team and the key chemical company. There is no doubt.
Thanks again.
The company now with an injection of another $16 5 million and the fact that there is a delisting why doesn't the management declaring a buy plan or the amount we've taken the award.
In this case you can immediately get the price to go.
Mark and Bob.
We made in the west and deep data.
Well I appreciate the support of comment.
And I will say on the personal professional.
Professional basis in general I think stock buybacks are a.
Very useful tool, so I'm sympathetic to that.
Unfortunately in our current case, we are not able to do share buybacks under the terms of our agreements with our bondholders. So.
Hopefully at some point in the future that all gets resolved, but right now we're just not able to do it.
Okay.
The next question is what are you doing to lower cost.
Yes, let me take this wrong.
Sure thing quick things.
Yes, we're currently feeling the full effect of our actions over the last year by reducing opex by $20 million year over year from 'twenty to 'twenty three is I talked about.
And that's our continued platform to work against.
Specifically, we moved out of our <unk> 200000 square foot facility and arguably to a 20000 square foot facility at Pearl River.
That full effect will be felt in 'twenty, three and as reflected in the numbers going forward. However, let me let me talk about a couple of specific things.
We're actively working on becoming more efficient in our internal processes.
Significantly changing our structure and platform to a more modern cloud based approach to reduce cost and improve performance that is going to be a significant reduction of cost for us.
We're maximizing the value of investment on our marketing programs, ensuring that a thoughtful and targeted approach to outreach will have.
From the effects of both reducing out of pocket for those as well as increasing revenue.
We've continued to outsource several departments maintain service levels, while saving costs and.
Finally, we're leveraging our existing capacity of both people and systems to support our outside the U S activity in both business development as well as support.
Supported delivery, that's increasing our economies of scale, but it is also increasing our economies of scale as we've been able to add that revenue stream with no significant additional operating expense costs.
This is one of those answers as a finance guy could probably talk all day, but.
I don't want to I don't want to take away from some other questions and I hope that answered your inquiry journey.
Okay. The next question is in Friday's video Q&A, you mentioned on demand is a fairly new modality and in the past year papers have been published in peer reviewed journals.
Concluding that this new modality is there any point in the Parkinson's disease that is currently under utilized can you direct us to the <unk> article.
Slash journals for further reading.
So yeah, I don't know how to do that on the phone but.
I will suggest to you if you just write to or E mail to investor relations at quarter Dot Com.
No punctuation, it's just like one more at Investor Relations.
<unk> dot com and asked and they will send you. The citations now we're not able to send the actual papers out because of copyright restrictions, but we can give you. The citation. So that you can look them up.
Okay.
Yeah.
Okay. The next question is any plan to split in the near future as Gil reversal plan.
Any plan to split in the near future after reverse split.
<unk>.
So well I guess.
I guess the answer to that is that the urgent immediate need is for the reverse split or at least the authority for the board to do it so that we don't get to be listed in December .
Now looking ahead longer term, what we would like to do what we want to do with the time that that would buy us is to execute on the business plan that we've just discussed and that we put out in more detail last week.
And we.
We believe that if we execute on that we should build substantial value back in the company and then the board will look at the fact patterns as we go forward and make decisions on whether.
Whether and when.
A split would be.
Would be.
Benefit to shareholders right now I have to emphasize that the immediate issue is not the split but a reverse split and that in the future certainly something that the board would continue to consider as part of its overall responsibilities.
Okay.
Question is hence they are cash flow positive with retailers who are home.
<unk> no more dilution than you thought is now and if you are going to be cash flow positive and no more dilution in 2020.
Okay. So.
The leaves that we.
<unk> covered this during the presentation and I'll repeat it just to make sure.
First of all we expect to be cash flow positive in 2023 based on the plans that we discuss today and also last week.
With respect to dilution, we have said already publicly that we do not that we will not pay the upcoming interest payment on the debt in stock. The one that's coming up this December .
I believe Mike in the financials, you had a comment about what what the financials or the <unk>.
Actual projections encompassed there right.
Yes.
Financial projections assume that we're going to pay.
Of note interest.
In cash.
Right now not ours, but they only tell us.
The only caveat I'll put on that is that obviously the board has to make decisions in real time, depending on what is happening at the time from.
From where we are right now.
We certainly hope that we don't.
Pay it in cash in the future.
Excuse me in stock sorry, but we don't pay it in stock in the future and we can definitely say that right now based on our assessment of where we are in our projections, we will not be paying it in stock for this coming payments.
Great and my last question is when will the reverse tasteful.
That is something that the.
Is that the board's discretion. So the proposal two on the proxy is to authorize the board to effect the reverse split as needed in the board's judgment. So the board is going to take.
Account, where we are but bear in mind that our timeline is fairly immediate because we will we will.
Sure.
Let me put it this way if the stock price is not above $1 for 10 consecutive trading days, then we will have run out the clock on the listing on the NASDAQ in December .
And we would be facing delisting at that time. So between now and then the board will be assessing where we are what the issues are.
And if needed and they have the authority given by proposal two they would decide at that time, whether to do the split or not a reverse split them or not.
Okay is that that is the end of the questions from shareholders.
Very helpful.
Alright, well, we appreciate youre, joining us everyone banks and we'll see you for the next one.
Good evening.
This concludes the accrual therapeutics second quarter 2022 financial and business update. Thank you for your participation.
Okay.
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