Impel Pharmaceuticals Fourth Quarter 2022 Earnings Call

Speaker 2: Good morning, ladies and gentlemen, and welcome to impale pharmaceuticals 4th quarter and full year 2022 earnings and business update conference call at this time. All participants are now listen only mode later in the call. Question and answer session will be conducted and instructions on how to participate will be given at that time.

Speaker 2: As a reminder, today's conference is being recorded. I would now like to turn the conference over to IMPEL's Chairman and Chief Executive Officer, Mr. Adrian Adams. Please go ahead, sir. Alright.

Speaker 3: Thank you, operator, and good morning, everyone.

Speaker 3: We are delighted that you could join us today for ImPEL Pharmaceuticals Earnings Conference call to review our fourth quarter and full year 2022 commercial and financial results, as well as to provide a general business update.

Speaker 3: Joining me from Impel this morning is Lem Perilot, our Chief Commercial Officer, and Regimeen, our Controller and Interim Chief Financial Officer.

Speaker 3: Before we begin, I would like to remind everyone that we have a slide presentation to accompany our conference call this morning, which can be viewed at our website at www.impelfarmer.com.

Speaker 3: If you are listening to this call on your telephone, you may access a synchronised slide deck on our website by choosing the link on our webcast page that says click here to listen.

Speaker 3: I would also like to remind you that during this call the company will be making forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ from the results discussed in the forward-looking statements.

Speaker 3: During the call this morning, I will provide an overview of the commercial performance of Doudessa in 2022, our first full year of commercialisation.

Speaker 3: in addition to covering some early positive performance indicators in 2023.

Speaker 3: I will then briefly review the financial results for the fourth quarter and full year 2022 before summarising and highlighting impel's core priorities for 2023.

Speaker 3: With this said, let's now turn to slide number 4 to begin our commercial performance review with Tradesa.

Speaker 3: On the left-hand side of this slide you will note the sustained growth in prescriptions throughout 2022, with almost 20,000 normalised prescriptions written in Quarter 4 alone. This represents a 52% increase versus

Speaker 3: the second quarter, or last quarter before we expanded our sales force from 60 to 90 sales professionals.

Speaker 3: This was also a 19% increase versus Q3.

Speaker 3: Moving to the right hand side of this slide, this consistent quarter over quarter growth delivered over 58,000 normalised prescriptions in 2022. Very pleasing since this was the first full year of commercialisation with Tradesc.

Speaker 3: Turning now to our next slide, slide number 5. As I have mentioned in previous calls, given our targeted and disciplined approach to commercialization, we believe the most appropriate way of measuring our success over time is by market share evolution with our targeted group of physicians.

Speaker 3: We are delighted, therefore, to see continued market share evolution already reaching 4.3% share among prescribers of Tradesa in the fourth quarter of 2022, just five quarters into the launch.

Speaker 3: Driving depth of prescribing amongst our high-value prescribers, a larger proportion of human neurologists, is a critical success factor for continued growth in 2023.

Speaker 3: According to a report from Spherics Research, neurologists predict a 12% peak share for Tradesa, reinforcing the positive experience of both physicians and patients, and of course the value creation opportunity.

Speaker 3: Please now refer to our next slide, slide number 6, where we will take a closer look at the important leading indicators of Tradesa growth and early progress in the first quarter of 2023.

Speaker 3: The increase in new patient starts illustrated on this slide reinforces the impact of our expanded sales force as growth accelerated in the third and fourth quarters with 23% and 24% growth respectively versus the previous quarter.

Speaker 3: You will also note that our quarter 1 2023 new patient starts are on pace to surpass our quarter 4 number and continue the robust growth we have seen post expansion of our sales force.

Speaker 3: As expected, Q1 normalized total prescriptions are slightly down from Q4 as deductible and prior authorization resets slowdown refills.

Speaker 3: Additionally, we have taken steps to tighten off Green Goods Program, leading to predictive pressure on non-reimbursed refills.

Speaker 3: However, as you will see on the next slide, these changes are having the desired effect on the business.

Speaker 3: With this in mind, please refer to our next slide, slide number 7.

Speaker 3: You remember that we secured key pharmacy benefit managers and payer contracts quickly after launch in 2021, securing 80% of commercial lives on the contracts in the first quarter of launch.

Speaker 3: This enabled consistent improvements in the percent of prescriptions reimbursed over the course of 2022, peaking at 60% in Q4.

Speaker 3: Now, in 2023, with established pair policies, we are taking steps to tighten the business rules associated with our Free Goods programme and have seen the percent of prescriptions reimbursed jump from 60% in Q4 to 71% and 73% in January and February respectively.

Speaker 3: both linked to their special needs. Importantly, a

Speaker 3: in every quarter since launch have remained consistent and solid in the low 60% range.

Speaker 3: The increasing reimbursement and high refill rates provide a solid foundation for meaningful revenue growth in 2023.

Speaker 3: Turning now to our final commercial slide, slide number 8.

Speaker 3: We continue to monitor the favorable market dynamics and source of business for Tradesa.

Speaker 3: SYNTHONY data continues to show that a very high percentage of patients, around 60% on G-PANTS, specifically Neurotech and UBELVI, drop off or switch away from these products at some point in therapy.

Speaker 3: Given the tolerability of these products, it is our contention that the primary reason for this continued churn over with G-PANTS is that prescribers and indeed patients are not finding the rapid, sustained and consistent efficacy they are looking for in acute migraine treatment.

Speaker 3: This turnover in the market opens up a large pool of eligible patients and more specifically a significant ongoing opportunity for Tradesa. The source of business for Tradesa remains diverse with approximately half of new Tradesa patients coming from a Triptan and half from a GPA.

Speaker 3: We also note that Tradesa is most often added to existing therapy as an efficacious, reliable and non-oral option.

Speaker 3: We are pleased with all these market dynamics and the momentum we are seeing with Tradesa in 2023 already.

Speaker 3: I would now like to provide a brief overview of our financial results for the 4th quarter and full year 2022.

Speaker 3: Please refer to our next slide, slide number 9. The net product revenue for the fourth quarter of 2022 was $5 million versus $0.6 million for the same period in 2021.

Speaker 3: For the year ending 31st December 2022 and 2021, Coudessa reported net product revenues of $12.7 million and $0.7 million respectively.

Speaker 3: As mentioned on Pascals, initial shipments of Tradesa to specialty pharmacists began in September 2021, ahead of the October 21 commercial launch.

Speaker 3: Research and development expenses for the fourth quarter of 2022 were $0.7 million versus $4.5 million for the same period of 2021.

Speaker 3: For the years ended December 31, 2022 and 2021, research and development expenses were $11.5 million and $20.6 million respectively.

Speaker 3: The decrease in research and development expenses during 2022 is primarily due to reduction in Tradesa clinical expenses as the Phase 3 Stop 301 study was closed in 2021, and due to a return of the $2.9 million New Drug Application Free from the FDA received in Q4 2022 related to Tradesa.

Speaker 3: These decreases were partially offset by an increase in spending for the clinical development of IMP 105. Selling, general and administrative expenses for the 4th quarter of 2022 were $20.3 million, which compares with $19.9 million the same period in 2021.

Speaker 3: For the years added December 31st 2022 and 2021, SGA and Expenses were $77.9m and $50.9m respectively.

Speaker 3: The increase in SGN expenses during 2022 is primarily due to the ramp-up in spending to support the commercialization activities with Tradesa.

Speaker 3: For the fourth quarter of 2022, Impel reported a net loss of $23 million, or 0.97 cents per common share compared to a net loss of $24.7 million, or $1.07 per common share for the same period in 2021.

Speaker 3: For the year ending December 31st 2022, ImPEL reported a net loss of $106.3m, or $4.53 per share, compared to a net loss of $76.7m, or $5.25 per common share, for the same period in 2021.

Speaker 3: And finally, as of December 31st 2022, the company had cash and cash equivalents of $60.7 million.

Speaker 3: With that, I would like to close with our final slide, slide number 10, which provides a summary of Tradesa's performance in 2022 in addition to outlining our business priorities in 2023.

Speaker 3: We are pleased with the overall performance of Tradesium, what was its first full year of commercialization.

Speaker 3: The overall revenue and prescription performance, together with continued momentum across all lead indicators, provide a solid foundation for growth in 2023.

Speaker 3: With regard to IMPEL's core priorities in 2023, the focus is on accelerating prescription and shear gain amongst our target positions.

Speaker 3: Evolving net price and resulting positive impact on revenue growth.

Speaker 3: securing additional financing in a disciplined way, and finally, aggressive and opportunistic business development.

Speaker 3: And finally, I would like to share our prescription guidance for Tradesa for 2023. We anticipate delivering prescriptions in the range of 80-110,000, the mid-point of which would represent a 64% growth over 2022.

Speaker 3: Thank you and we will now open the line up to your value questions. Operator, can you please give the instructions?

Speaker 2: Thank you, Mr. Adams. As a reminder, to ask a question, you'll need to press star 1-1 on your telephone. To withdraw your question, please press star 1-1 again. Please wait for your name to be announced. Please stand by while we compile the Q&A roster.

Speaker 2: The moment for our first question.

Speaker 2: Our first question comes from the line of Stacey Koo with Cal-1. Your line is now open.

Speaker 4: Hi there. Good morning. Thanks for taking our questions and congratulations on the progress. So we have a few questions. First,

Speaker 4: To get right down to business, what are your expectations for 2023 consensus? Right now we're seeing roughly 33 million, maybe 34. As we think about the prescription guidance that you're providing.

Speaker 4: Can you talk about how you think the year might go in terms of net pricing? Just since you feel good about the consensus for 2023, it does assume a nice step up from Q4. So just help us understand what the net pricing might look like this year as well as your thoughts on consensus. That's the first question. Can you talk about how you think the year might go in terms of net pricing?

Speaker 4: And then a second question, I know you've talked about the Salesforce addition and what you're seeing so far, but can you just talk about some learnings, what's being adjusted, what approach is most successful, any updated goals in terms of clinician reach this year? So that's our second question. And then the last is, how should we think about, now that you've had some experience with Trigesta, how should we be thinking about the seasonality?ame

Speaker 4: as we think about the year. Is there any seasonality? Is there seasonality with visits from patients, prescribing habits, any additional color would be appreciated. Thank you so much. Thank you very much for those very clear and obviously appropriate questions. I think on your first.

Speaker 3: question as it relates to consensus. I think we're clearly aware of the consensus that is out there at this particular point in time and I would say that the kind of consensus that we've seen, we are comfortable with that consensus. And clearly, in giving a kind of a range of prescriptions.

Speaker 3: as it relates to net price evolution. Len, maybe you can comment on that.

Speaker 1: participant.

Speaker 3: Len, can you hear? Are you on mute?

Speaker 5: I am not on mute. I should be able to be heard. Okay, we can hear you now. Okay. As you saw through the first quarter, we've seen a nice increase in the percent of prescriptions that have been approved, and that is almost a one-to-one right to the bottom line of our net price.

Speaker 5: The rest of our gross net levers are very stable. The copay mitigation line item will steadily improve throughout the year. We feel pretty good about the progress that we'll make throughout 2023 to get to around that $500 net price per prescription.

Speaker 3: Thank you, Len. On your third question, I'll come back to your second one in a moment, on your third question on seasonality, I think as you obviously know, I think if one looks and tracks back over the years within the migraine market, it is not necessarily a seasonal marketplace. That said, as you'll recall, we did see a lot of changes in the market.

Speaker 3: some softening in the kind of May, June , July period last year which was not explainable but obviously impacted all products, the market and all products within the marketplace and obviously impacted Tradesa to a much lesser extent but certainly we saw that. We do not feel.

Speaker 3: that that was a seasonal trend, it almost seemed to be a one-off. But clearly, going back to the range of prescriptions that we have given, whilst we are not expecting any seasonality, we try to put a range in which gives that kind of broad uncertainty, recognizing that again, that we are comfortable with the kind of...

Speaker 3: Clearly when we launched with 60 sales professionals, I think we accessed around about 8,000 physicians which gives access to around about 35% of the overall marketplace. Very focused, very disciplined targeted approach with a strong consensus towards neurologists and high prescribing primitives.

Speaker 3: The additional 30 allowed us with much more efficient and smaller territories to be able to drive higher levels of productivity amongst those target positions as well as to increase that target position base to around about 11,000 which gives access to around about 40 percent.

Speaker 3: the market. We were delighted obviously as both reps which we put in place at the end of July of last year, as we got into the fourth quarter of the year, we started to see some significant productivity gains in terms of efficiency, depth of prescribing and very importantly the overall growth.

Speaker 3: relation to prescribers and new prescriptions and those lead indicators and the productivity benefit of that we're continuing to see as we've moved into the first quarter of this year. So all of our assumptions that went into that increase in size of Salesforce were actually manifesting.

Speaker 5: in the marketplace. And, Alen, I'm sure you want to add some additional color as well. Yes, so I think to add on to that, you've got the frequency that we've been able to increase to our key targets. As Adrian mentioned, we saw growth, not only in existing territories, but in new territories. And that's because our reps have smaller geographies and are able to visit.

Speaker 5: these accounts significantly more and that helps keep the brand top of mind. I mean, general awareness is still one of the battles that we fight with the 90-person sales force. And so frequency is a major part of ensuring that clinicians keep Trudessa top of mind as they're treating their patients as well as providing a very specific place in therapy.

Speaker 5: I think you can see our source of business is diverse. However, you can see that patients are getting a lot of value from Tradesa, both because of the efficacy, but also because it could be taken late into an attack. One of the very unique and important virtues of DHE is that it can reverse. –

Speaker 5: central sensitization even when taken late into an attack. So it's a very valuable tool to healthcare professionals and to patients. And really being specific in that messaging, having that pulled through in consistent peer-to-peer education meetings, which we continue to do at a very good clip in the first quarter, will be important to continue to see the prescription evolution.

Speaker 3: Thank you, Leonard. And clearly Stacey, what else to point out? You did touch a little bit on incentive aspects etc. I think obviously having the right disciplined incentive schemes to drive the appropriate compliance activity with the sales force is very, very important.

Speaker 3: All of the incentive schemes that we've got in place for our quality sales professionals are all driving those lead indicators of new prescribers and new prescriptions very much in the right direction and we are very pleased with what's going on at the moment. Stay safe.

Speaker 6: Okay, wonderful. Thank you so much. Thank you for your questions.

Speaker 2: Thank you. One moment for our next question.

Speaker 2: Our next question comes from the line of Eddie Hickman with Guggenheim Partners. Your line is now open. Your line is now open.

Speaker 7: Hi, good morning and congrats on all the progress. Thanks for taking my questions, Adrian. Can you provide like a bit more color on the assumptions that are going into the guidance that you gave specifically like in terms of Salesforce targets and what you would need to see to get to the higher end of that range and what might need to happen over the year if you were to come in on the lower end of that range and do you anticipate any inflection at all over the year or?

Speaker 3: steady cadence and then I have a follow up. Yeah, thanks Eddie. Nice to see you on the call again Alec. And clearly as it relates to the overall kind of guidance range that we've put in place, I think what we've seen over the course of the fourth quarter of last year and moving into...

Speaker 3: into this year to the last point we just made I think is we've seen that enhanced productivity from the newer sales professionals so clearly I think we do see that that kind of productivity build that with a significant part of which we still yet to see from the additional 30 reps I think will start to manifest in terms of impact on that.

Speaker 3: that we see any aspects that are outside our control happening that obviously gives us that breathing room within the the overall guidance range but we feel we feel good about that range and clear our ability to be able to to meet that. And clearly I think if one looks at the trends over the course of 2022 on those quarterly trends in particularly where we saw that

Speaker 3: consistent, steady growth as we went through the course of 2022. The additional 30 sales professionals which came in and started to have an impact in the fourth quarter, we feel that based on the data that we're already seeing in quarter one and as we go through the course of the year should lead to that kind of enhanced productivity.

Speaker 3: not just of all legacy target positions, but the additional target positions we're seeing at the moment. And it's that particular dynamic I think that will have an impact in relation to where we end and how we evolve during that range of guidance that we see.

Speaker 5: I'll come back to one of your other points, but Len, would you like to add anything else at this point? I think as we look through 23, the consistency in the refill rate, which has been rock solid throughout 22, is an important metric to watch. Our pods per prescription on reimbursed fills is also an important lever in that forecast, and that has been very, very consistent. Those two levers we feel very confident in.

Speaker 5: If you look at our new patient start growth, which is that leading indicator, we are growing new patient starts in Q1 over Q4, which is a good sign because Q1 is typically a bit softer. And if the refill rates and positive prescriptions stay consistent, you'll continue to see building momentum. But the things to look for certainly increases in the number of prescribers.

Speaker 5: We've shared with you previously that our prescribers are rather sticky, meaning once they prescribe one very rarely do they lapse? Meaning go more than eight weeks without prescribing another and the So that's the depth that we have to drive as well So if the the additional new prescribers and then when we get them, we feel very confident that we'll be able to drive depth among them

Speaker 3: Yeah and Eddie to your point on the what-if scenarios you know what what happens if we're if things aren't going quite as well as we anticipated first of all we don't anticipate that but clearly I think what we've demonstrated over the course of time is that a key part

Speaker 3: of our targeted focus and investments in this marketplace is discipline. Commercial and financial discipline all with a focus on execution. So in the event, what we consider to be the unlikely event that we start to see a lack of kind of feedback from our productivity then clearly we will...

Speaker 3: look at the dynamics in this market where all of the growth is being driven by the non-Trypton segments of the market, and that's the market in which we are operating. That together with the kind of continued turnover in the, with the G-PANs, which leads to that strong source of business that we're starting to see, all give us kind of optimism in relation to the execution moving forward.

Speaker 3: Again, one of the things that's always been a core philosophy from my perspective, a business philosophy, is for every dollar that we spend, we want to be able to monitor and see the impact of that spend. And clearly I think the way in which we have a handle on all the different parameters of the P&L means that we can react accordingly, both on the upside and on the downside in the event.

Speaker 7: patients getting around six.

Speaker 7: per prescription or that number going to shift over the year as well? No, you should expect that to stay consistent at six.

Speaker 7: or that number going to shift over the year as well? No, you should expect that to stay consistent at 6.2.

Speaker 8: Great, thank you.

Speaker 2: Thank you. One moment for our next question.

Speaker 2: Our next question comes from the line of Laura Tico with Wedbush. Your line is open.

Speaker 9: Good morning, thanks very much for taking the questions. I guess following up on the last.

Speaker 9: I'm wondering if you could comment a little bit further on cash runway. What are the current strategies to extend that? You also mentioned the CRIX data on peak share estimates. I'm wondering if you could comment as to your expectations and what is the level of data that you have measured with B analysis?

Speaker 3: revenue needed for breakeven. Thank you. On the cash runway, as we've articulated and what's clear is that we finished the year with $60.7 million cash equivalent. So that, as we mentioned in our press release this morning, gets us into the third quarter.

Speaker 3: of this year. So clearly I think we are looking and have ongoing discussions in relation to financing strategies that will allow us to enhance that cash runway moving forward. So we've got activities going on in the background in relation to that.

Speaker 3: And clearly I think that will be important as we build and continue to invest into this opportunity moving forward. I think as it relates to breakeven, I think Reeve maybe you can just make some comments on that.

Speaker 3: Sure, Adrian. So in terms of getting to a breakeven point, I think we need to be at a range of around a hundred to a hundred and twenty million in revenue, net revenue.

Speaker 3: And then as it relates to your comments on...

Speaker 3: on Sparex, where they have a projected 12% share. And again, just stepping back to some comments we've made, Laura, and I know you're very familiar with these in relation to the key measure that we see of our success is the market share evolution amongst the acute branded market with prescribers and...

Speaker 3: and it's that 4.3% number that we've already achieved that we're very pleased with. And whilst we've not obviously given guidance in terms of peak sales potential, what I've always mentioned is that in this marketplace, if one looks at all those patients in that post Trypton.

Speaker 3: segment of the market close to 2 million patients. So, and that's the market we're operating in competitive with the the G-Pants. If based on the kind of price evolution that we see, if we just got a 5% share of that, just a 5% share of that overall market, that would lead to kind of peak sales revenue potential in excess of 4.

Speaker 3: change with this market. First is the continued turnover that will create ongoing opportunities for Tradesa. Secondly, the consistent tolerability and efficacy profile we see with Tradesa and it's that that's going to drive the overall market share evolution towards those

Speaker 3: towards that kind of peak projected revenue potential. So it's that that gives us that very nice optimism for the future and as with all things you know as you know I think the most important thing is execution and having incentive schemes and strategies and tactics to make sure that you invest into that opportunity appropriately.

Speaker 3: and drive that market share. So again I think we're very pleased with the evolution we've seen to date and we'll look forward to further increasing and enhancing that this year and into the future towards that peak sales potential.

Speaker 6: Thanks very much. Thank you, Laura. Thank you.

Speaker 2: One moment for our next question. This question comes from the line of Sean Kim with Jones Trading. Your line is now open.

Speaker 6: Hi, thank you for taking my questions. I got just one quick question on the gross net discount. So I noticed that there has been some improvement in growth quarter in terms of gross net. Just wondering what the trend might be in the first quarter of this year and the rest of the year. Thank you. Okay, Len do you want to touch on that?

Speaker 5: Sure, yes, there was certainly improvement in the fourth quarter. That's a result of both. The improvement in the percent of our prescriptions that were approved by payers versus quick start as well as much less pressure on the copay card, copay mitigation for approved patients. As you move through a year, patients often hit their out of pocket maximum and the.

Speaker 5: the burden on the copay card begins to go down providing some benefits on gross to net that does reset in Q1. So while we have seen our percent approved jumps, we did see a bit more pressure on the copay card. That being said, our percent approved is going to continue to escalate throughout 2023. And as in previous years and across most brands.

Speaker 5: the pressure on the copay card is going to begin to diminish. So we should see very good net price evolution throughout the course of 23. Our managed care contracts and government business, which is the other levers or distribution schemes, which again is a lever of our gross to net are all very stable.

Speaker 3: Thank you. I would now like to hand the conference back over to Mr Adrian Adams for closing remarks. Thank you Norma and thank you all for joining us this morning. We are looking forward to updating you on our continued progress during what will be our first quarter call in May.

Speaker 1: I you.