Q2 2023 Alimera Sciences Inc Earnings Call
Ladies and gentlemen, thank you for standing by good morning, and welcome to the Alamo Sciences' second quarter 2020, Chief Financial results Conference call.
At this time all participants are in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question. You May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.
It's been sort of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes.
Cast replay of the call will be available approximately one hour. After the end of the call through November 10, 2023, I would now like to turn the call over to Scott Gordon of core IR, The company's Investor Relations firm. Please go ahead Sir.
Thank you good morning, and thank you all for participating in today's conference call.
Turning me from Alan Eric leadership team are Rick is worth President and Chief Executive Officer, and Russell Skips, the Chief Financial Officer.
During this call management will be making forward looking statements, including statements that address <unk> 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.
Information about these risks please refer to the risk factors described in our marriage. Most recently filed periodic reports on Form 10-K, and Form 10-Q, as well as Alabama press release that accompanies this call, particularly the cautionary statements in it.
Today's conference call includes adjusted EBITDA, and adjusted net product revenue non-GAAP financial measures that Alan there I believe can be useful in evaluating its performance we.
You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP.
For a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures. Please see the reconciliation table located in Albemarle earnings press release. The content of this call contains time sensitive information that is accurate only as of today August 10 2023.
Except as required by law, All America disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur. After this call.
It is now my pleasure to turn the call over to Rick Iceberg, Rick. Please go ahead.
Thank you Scott and good morning to everyone on the call. The second quarter has been full of exciting developments in strong performance for all of America.
I'm encouraged by the foundation, we are building to transform allam area into the place to be in treating retinal disease.
As you probably know we made a transformative transaction during the second quarter.
To acquire the commercial rights you Chi from my point Pharmaceuticals.
This brings together the only two approved long term interventional therapies that help patients maintain vision longer fewer injections by delivering continuous micro dosing to reduce the recurrence of retinal disease.
Importantly, this transaction has allowed us to leverage our U S commercial infrastructure with a second indication as we already have in our international markets.
And it provides a critical mass of revenue to help ensure the long term stability of Allomap.
The second half of Q2, primarily focused on incorporating boutique into our operations and cross training our teams to sell boats, believing any cheap.
Our expanded team now covering 35 territories across six regions.
From 29 territories in the first half of the year with fully trained and in the field selling but leaving any cheap beginning the week of July 24th.
We have also expanded our thought leader liaisons medical science liaison and reimbursed reimbursement support teams in the field.
I want to thank everyone at <unk> for the significant effort that went into achieving this important milestone in less than 10 weeks since the closing of the transaction.
Despite some distractions created by this process the acquisition to have an immediate positive impact on Alan there, allowing us to deliver positive adjusted EBITDA in the second quarter, Despite only having the product in our portfolio for six weeks during the quarter.
Our global business continues to grow as we saw record quarterly global ILUVIEN end user demand of 1600, one units up 13, 5% over Q2 of 2022.
Including outstanding growth in our international segment, which was up 25% over the second quarter of last year.
And since the acquisition, we added another 440 units of Utica and user demand during the quarter, bringing total demand over 2000 units for which they don't want to sit in that franchise.
Based on numbers reported by I point boutique end user demand for the full quarter was 1001 units up 11% over the second quarter of 2022.
That demand drove record quarterly revenue of $17 $5 million.
We are pleased with this result, but we believe revenue could have been even higher during the quarter as a result of some aspects of planning for the acquisition of cheap and the incorporation of <unk> into our commercial infrastructure.
Prior to the transaction, we had some turnover in our field team, especially with the new commercial entrants and retina, who are building their sales teams and.
And we maintain those vacancies longer into Q2 than we normally would in order to sort out the new territory alignment with your take on board.
We also invested time out of the steel for the legacy ILUVIEN Salesforce to learn about your teeth and chronic non infectious uveitis affecting the post to your segment.
Further we had distributors reducing inventory on hand to boutique.
Just shifting timing of stepped pretty with our international distribution partners as we combined it into our supply chain.
In the second half of the year, we not only expect this to correct itself, but we also believe that further incorporating your teeth into our commercial structure will yield further revenue growth and increased adjusted EBITDA for the second half of the year.
Now that both products are merged together, we expect to have a broader presence with our customers and industry meetings.
Recently at the American Society of retinal surgeons, we showcased both products at the Booth and we're pleased with the feedback we receive from physicians on having the products combined in our company.
We were also able to hold our first Utica advisory boards at that meeting.
And with that I'll now turn the call over to Russell, who will review our financials in more detail.
Thanks, Rick.
Product revenue was up 20% to approximately $17 $5 million for the for the second quarter of 2023 compared to about $14 6 million for Q2 'twenty two there.
The increase was primarily due to the addition of U T into the U S portfolio midway through the quarter.
U S product revenue increased 34% to approximately $11 $9 million for the second quarter 23, compared to U S product revenue of $8 $9 million for the same period in 2022.
This included approximately $3 million and you take revenue from the date of acquisition, which was may 17th.
As Rick mentioned, we believe the revenue could have been higher without turnover related to the new commercial entrants and our need and the need for our field teams to spend time training for both products.
Further as we worked to transfer the distribution of your tier two hour vendors distributors reduced the inventory on hand purchasing 18% fewer you teak units from us than they sold to end users.
We recently completed the transition to our supply chain vendors and expect this difference to be rectified this quarter.
International net product revenue remained flat at approximately $5 $7 million in Q2, 'twenty three and keep.
Which was the same for Q2 'twenty two.
As Rick said end user demand was outstanding in our international segment was up 25% over the second quarter last year.
But we experienced shipping timing discrepancy with our international distribution partners, who sold 21% more units to end users and we were able to ship to them. During the second quarter. We expect this to be corrected in the second half of this year.
Total operating expenses were approximately $16 $3 million for Q2.
In 23 compared to approximately $14 $4 million in the same period last year.
The increase was primarily due to approximately 600.
$30000 in bad debt expense.
And approximately $1.2 million in amortization of the new intangible asset related to the unique transactions.
As of June 30th 20, twenty-three Alan Mirror had cash and cash equivalents of approximately $18 $8 million compared to $13 1 million at March 31 2023.
On May 17.
In conjunction with the closing of the U T transaction, we completed the second tranche of the financing from the first quarter, which added $69 million in equity.
Plus we raised an additional $20 million in term debt.
The tranche two equity was comprised of about $2.4 million in common stock and $66 $6 million in series B preferred.
On August 1st our shareholders approved the issuance of shares of common stock upon the conversion of the series B preferred which triggered the mandatory conversion of the series b into common stock and pre funded warrants to purchase common stock.
The conversion will be completed on August 15th where the series B preferred from both tranche, one and tranche two will be converted into approximately 45 million shares of common stock and common stock equivalents for approximately 2 million shares.
Rick will now give us his closing comments.
Thank you Russell.
We're well on our way towards our goal to grow our married to a company uniquely focused on retina specialists and their patients.
Do you teach our Portland portfolio makes us one of very few companies to have multiple commercial products focused in the retina space.
It also significantly transformed our financial outlook and stability for.
For the remainder of the year, we expect to continue looking at ways to bring you can leave them together in our commercial and medical activities.
The leverage of our infrastructure to drive improved financial performance positioning Alan there for a strong 2024.
As we said following the transaction, we expect to generate more than 100 million in revenue and 20 million of EBITDA in 2024.
Before I turn the call over to the operator questions. I also want to highlight that we completed enrollment in our landmark New day study.
Remember this is a head to head comparison of ILUVIEN and the leading anti VEGF naive or near naive patients suffering from diabetic macular edema or do you mean from.
From this trial, we expect paradigm shifting data in early 2025 that will facilitate much earlier usage of ILUVIEN in the treatment of D me to help patients see better longer fewer injections.
And with that I will turn the call over the operator for questions. Thank you.
Ladies and gentlemen, if you wish to ask a question on today's call you will need to press Star then the number one on your telephone keypad. If your question has been addressed and you wish to withdraw. Your question you may do so by pressing the pankey, if you're using a speakerphone. Please pick up you had said before.
And taking your question speaking on the call.
One moment please for the first question.
Our first question.
Comes from Alex Nowak with Craig Hallum. Please go ahead.
Okay, great. Good morning, everyone and congrats on getting the acquisition, obviously close but also integrated here throughout this quarter. You know as you know are integrated with the sales team. How is the initial traction been with a single unified sales team going out and selling about ILUVIEN and you'd say maybe in the last couple of weeks here.
Yeah.
Yeah, So Alex I think I mean, we're obviously only about three weeks into having the teams out there on a combined basis, but I would say early feedback is good you know I talked to quite a few physicians that a S. R. S last week and all are.
Frankly, similar to what we hear from an investors and others Oh, It's about time. These two products together and I think it provides a great opportunity to talk to a physician that is already using ILUVIEN about using your teeth, you know for <unk> indications and vice versa right. It's a it's an easy door opener for somebody that may not have been using one of the products to say look.
We're already using a long term low dose steroid in the syndication why not think about it in you know an expanded utilization.
So it provides a great opportunity for the reps I think the reps are pretty excited about it and what I'm hearing from the field is good already and where we're seeing a little bit of an uptick in utilization, but it's a little bit too early to conclude on what that means for the whole quarter.
That's great to hear and yeah.
And you'd say on.
On the sales in Q2, it didn't look like ILUVIEN was a little bit more flat than maybe others thought.
Anything in particular going on there maybe this is just the disruption with the sales force with them the territory sitting out there longer than expected.
Yeah, I think I mean, yeah, we did have some territories open because we held some of those positions open you know thinking that there would be.
Some people to bring over from from my point experienced in those territories and we did that and we did that and then you know obviously it took us a little bit longer to get the transaction close we had some positions open as I said you know I do think there was a small impact in in May as you know a palace made a big effort to push the launch of <unk> out there and.
Get the attention of doctors, we're trying to figure out how to integrate <unk> into their practices and because explaining of lubin to your patient just takes a little bit longer they strayed away from some of those conversations. So we might have seen a little bit of that in may but I think more of it is related to just you know slightly less presence on the street over the course of the second.
<unk>, both because if somebody open positions, but then we did take people out of the field you know whether it was for training at home or even brought them into you know Atlanta for training on the products that reduce some of the the availability and the feel of a little bit.
Okay understood and then expenses going into Q3 here if I look at your Opex, you've probably been around 15 billion herself for Q2, what's the sort of the step up to Q3 and then the follow up question to that is Q3 kind of the run rate on expenses from there or any additional expenses that go.
Into Q4.
If if I'm.
This is Russell if I'm if I'm understanding. The question is can you help understand are expenses going forward I mean, the nice part about this transaction is that we're able to fit you teak indoor existing infrastructure. So theres not as really a very large amount of additional expenses that we're adding.
But the incremental expenses, we do have.
I think are primarily related to the commercial side of things.
And I think what you'll see in Q3, it's probably I wouldnt expect it to go much above where we were looking at in terms of cash expenses.
So yes, I think if you make those if you make those.
Math adjustments I think I think you're probably in that in the ballpark.
Okay Perfect and then there's a last question is just the next steps on new day.
The expected timeline for readout now they have the last patient enrolled.
Yeah. So the last patient was.
The last patient was enrolled in in early June . So we would expect you know last patient last visit in December of 2024, and then you know some early readouts in the first quarter of 2025.
Excellent all right well congrats on all the progress here thanks for the update.
Thanks, Alex I appreciate it.
Our next question comes from James Molloy with Alliance Global Partners. Please go ahead.
Hey, good morning, Thank you for taking my questions on.
On the on the OTT guys I apologize I missed it earlier in the causing trouble logging in did you break out what the of the U S sales of 11.85 U S sales what was your teeth.
Liam.
Yes, it was roughly roughly about $3 million of that was a pick up from your tea.
Yeah.
Okay, great. Thank you and then I always just mentioned earlier.
The sort of the the turnover related to the acquisition of the ramps how many reps do you guys have currently if you can walk you spend a little bit I was what maybe I misunderstood what that meant was there where the reps leading or or you walk us through that please.
Yeah, So well Jim is as of today, we have we expanded from we had 29 territories historically at island marrow supporting ILUVIEN, we've expanded a 35 territories. So now we have 35 territories across six regions supporting both products and all 35 of those reps are cross trained on both products as of.
And out in the field as of July 24th.
The turnover that we referenced was as you know there are there was one geographic atrophy product approved earlier. This year. One just recently approved you know last week and those two companies had been building their commercial teams. We lost a few reps to those those entrants into the market and.
In the first half of the year and you know I made the decision to sort of leave those open because we were you know looking at some of the team you know from my point that had been supporting U E. T. We wanted to bring that expertise on board and so we left those roles open until the close of the transaction.
Excellent.
Brad ceiling getting.
The EBITDA positive income from ops should.
Just take a couple of the noncash things are positive in the quarter long been a goal.
I thought you that the Oh, the Cogs came down pretty you know pretty good at least in the quarters that sort of is that related in any way because that just sort of just fluctuations has kind of happened quarter to quarter.
I'm going to say it's it's.
Just natural fluctuation quarter to quarter, Yeah, Yeah, I was going to say, Jim you get fluctuation quarter to quarter, but based on the extent that goes to the distributor partners. So when we sell to our partners in France, or Italy, or Spain. Since we have a lesser share of the revenue and the Cogs as you know is higher in those quarters and as we said we had some shipments.
That were deferred into the second half of the year to those partners.
Okay, Great understood. Thank you and then maybe last question on the on a big picture I'll bring it in bringing the debt up by about.
$20 million or so.
From the first quarter and tripling it from last year is what's the thinking on on bringing bringing in that verse versus equity I know would certainly perhaps lower cost of capital at risk you know it goes bankrupt from too much liquidity.
Yes, so I mean as we've said you know we're we're very excited about the leverage that this transaction creates for US you know we've given guidance on.
In the last few calls that we were pretty comfortable very comfortable with you know more than 100 million in revenue next year and 20 million in EBITDA. So 20 million in EBITDA. It generates a substantial amount of cash for us and as that continues to grow we think we'll be in a position to service that debt as it starts to amortize.
Well it actually well thank you very much for taking the questions. Congrats on a good quarter absolutely.
Yep.
Yes.
As a reminder, if you have a question. Please press star then want to be joining the queue.
Next question comes from <unk>, Chen with H C. Wainwright. Please go ahead.
And thank you for taking my questions. My first question is going forward do you think you'd take will serve us as the main driver for top line growth or do you think ILUVIEN provides a pretty solid gross as well.
So that's a great question you know we are where.
We our goal is to drive top line revenue and utilization of the franchise. The low dose. Please send letters that night asset I do think there are there are some aspects about your cheek that make it easier to adopt and if that is the way into certain accounts. We will certainly leverage that I think we're going to look at the mix of our promotional activities you know in 'twenty.
24 across both brands and an indications based on what we see over the next couple of months as we're planning for 2024. So I certainly think that's a possibility that we try to leverage.
Utica and <unk> and are able to grow it faster than ILUVIEN, but we need to learn a little bit more get a little more experience in the field first.
Got it got it.
And do you think the fact that you know a market you take in the U S will have a positive.
The impact on your international sales of ILUVIEN for both indications.
Uh huh.
Probably a little bit too early to tell on that as well, although I will tell you. There are some some learnings and some strategies about the way I point I've been taking you take the market and then in the U S that we can certainly learn from right and try to adopt in Europe , as well and we intend to do that I think you know one of the big advantages of bringing the products together is there was some.
Things that we're working really well with ILUVIEN. Some things are working really well with your teak and on the flip side, maybe some things that weren't working so well with both brands and we can try to create best practices across both which we will try to do across our global markets.
Okay.
Last question do you believe that our adjusted EBITDA will be positive for the second half of year.
Yes, I do yes, I do.
Okay. Thank you and I think I think I think you'll continue to see improvements in the EBITDA line. Obviously, we we frankly, we were very pleased to see positive EBITDA in the second quarter, because we had planned a lot of the work around the integration of the two products together and bringing them into the same sales force and so we're pleased to see.
See what $900000 of adjusted EBITDA now I think you'll see you know significant improvements of that in third and fourth quarter, plus we only had to take for us the quarter that's right.
Got it thank you.
Yeah.
That's great well I want to thank everybody for.
Go ahead I'm sorry.
Sorry, I was just saying this concludes our question and answer session.
And then just turning the call back over to Rick.
Thank you very much I want to thank everyone for participating in today's call and your interest and support of Almere, We do look forward to sharing in a significant progress on bringing these two assets together when we report our third quarter results in November . Thank you very much and have a great day.
The conference has now concluded. Thank you for attending today's presentation you may all now disconnect.