Acorda Therapeutics, Inc. (ACOR) on Q2 2023 Results - Earnings Call Transcript
Operator: Welcome to Acorda Therapeutics Second Quarter 2023 Financial and Business Update. At this time, all participants are in a listen-only mode. There 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, Tierney Saccavino with Acorda. Tierney, please go ahead.
Tierney Saccavino: Thank you, Lauren, and good afternoon, everyone. Before we begin, let me remind everyone 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. Today, during Q&A, we'll take questions from some of the investors have written in. And I'll now pass the call over to our CEO, Ron Cohen. Ron?
Ron Cohen: Thanks, Tierney, and good afternoon everyone. So INBRIJA, U.S. net revenue for the second quarter of 2023 was $8.3 million, that's a 12% increase over the same quarter in 2022. And this shows the pattern of U.S. net sales each quarter since launch. Now recall that we lost substantial business in the first quarter of 2022 due to the Omicron COVID surge. And that effectively set us back by approximately a year. We lost people permanently who had been on INBRIJA that we weren't going to get back. Now we have come back from that set back to the point where the second quarter of 2023 had the highest quarterly net sales of any Q2 since launch. We saw a similar pattern in total prescriptions or TRx. They increased by 11% over the second quarter of 2022, and cartons dispensed to patients increased by 5% over Q2 2022. Now, looking at the first half of 2023 versus the first half of 2022. New prescription requests forms increased 42% over the first half of 2022. And total prescriptions increased 11% and cartons dispensed to patients increased by 9% over the same period. Now, new prescriptions are a key leading indicator of future performance, as patients refill and then increase the base of total prescriptions on a go forward basis. We believe, we're seeing the impact of the new sales and marketing programs that we launched this year, including our streaming television commercial. These have also been enabled by the receiving of the pandemic challenges. We believe that full year INBRIJA 2023 net sales will be lower than our guidance at the beginning of the year, and we're therefore updating our 2023 guidance to between $34 million to $38 from our original guidance range of $38 million to $42 million. Now that still represents substantial net sales growth this year over 2022. And if the growth in new prescription requests that we've seen in the first half continues, we expect to see continued acceleration in net sales going forward. Now, we recently launched a new consumer INBRIJA website and brand campaign. You can see this at inbrija.com. The campaign is called "For the Fighters". It's based on extensive feedback that we've gotten for people with Parkinson's and it recognizes the fighting spirit of the people who have Parkinson's, and encourages them to augment their fight by considering whether an on-demand treatment for OFF period such as INBRIJA is right for them. Now the campaign highlights that the return of symptoms or OFF periods between regular doses of their medications may cause people with Parkinson's to avoid going out or make plans to miss important moments of their lives such as those related to their family or friends, their interest, their exercise. And since the recent withdrawal from the market of Kynmobi, which was one of the only two other on-demand therapies for Parkinson's OFF periods, we believe it's even more important now for us to provide needed education and support to the Parkinson's community regarding the potential benefits of on-demand therapy. This campaign augments the TV commercial that we launched on over 50 streaming channels at the end of March. It's been doing extraordinarily well. It's had about 8 million views in just the four months since launch with widespread reports of patients who have seen it and subsequently have been asking their physicians about INBRIJA. I recall that this commercial is being targeted specifically to be viewed by people who have Parkinson's in the household or healthcare professionals who treat Parkinson's. Speaking of which large numbers of healthcare providers have seen the commercial and 165 have prescribed INBRIJA for the first time in 2023 since either they or their patients saw it. Regarding INBRIJA's performance outside the U.S., the launch in Spain is going very well and ahead of its Esteve's projections. Uptake in Germany has been slower than Esteve's initial projections and Esteve continues to report high levels of enthusiasm to the product in Germany. They've been addressing some issues that are unique to the German market, including deploying nurse educators to help train patients in person and providing smaller boxes of INBRIJA specifically to meet the needs for in-hospital distribution. Now, that's because uniquely in Germany many Parkinson's patients there actually initiate their therapy in a short-term hospital stay and then are sent out to their regular doctors to continue therapy, but the needs for hospital are for smaller packages of INBRIJA and we've been collaborating with Esteve to provide that. Chance Pharma expects to get an update from the Chinese regulatory authorities about the path to approval in late 2023 or early 2024, now that regulatory update will result in a milestone payment from Chance to Acorda of up to $6 million. We also received the upfront payment of $2.5 million in Q2 of this year. Biopas is working on the needed regulatory filings in Latin America with they're telling us the potential now for INBRIJA approval in up to five countries and at least one launch in 2024. We also continue to be in discussions with other companies for agreements in additional countries in the EU and around the world. Moving to AMPYRA. AMPYRA U.S. net revenue for the first quarter was $16.9 million, that's a 7% decline over Q2 of 2022. And here you see, AMPYRA sales performance from the beginning of generic competition in Q4 of 2018, and as you see the slope of the decline has continued to flat into Q2 of 2023. We're reiterating our guidance for 2023 net sales of between $65 million and $70 million and we believe that sales will stabilize at approximately $60 million plus over the next several years based on the patterns to pay. Now we continue to execute effectively on our strategy to maintain the AMPYRA brand against the generic competition. Access remains high for AMPYRA over 65% of covered lives can get access through their insurance. Our field sales team continues to call on MS specialists to ensure that they're aware of the support that we're continuing to provide for the brand. And one of the most encouraging signs for our success in maintaining the brand in the first half of 2023 a 159 physicians prescribed branded AMPYRA who had not prescribed it all in 2022 and they wrote a 195, and they wrote 195 new prescription requests for the brand. Now I'll turn the call over to our CFO, Mike Gesser, who will review the financials.
Michael Gesser: Thank you, Ron. Net global INBRIJA revenue was essentially flat to Q2 2022. Last year, in Q2 2022, recall that we made the initial shipment of Esteve Germany of $1.8 million. Net AMPYRA revenue decreased $1.3 million or 7% from Q2 2022. SG&A decreased $8.3 million from Q2 2022 at $12.7 million in the first half of 2023 from the first half of 2022. Cash decreased $10 million from Q2 2022. In addition to our U.S. revenue, we recorded $800,000 in INBRIJA ex U.S. sales; $2.9 million in FAMPYRA royalties; and $800,000 in Neurelis royalties, for a total of $4.5 million of additional ex U.S. revenue for the second quarter. As Ron noted, we are updating our financial guidance for 2023. We expect INBRIJA U.S. net revenue of between $34 million and $38 million versus the original $38 million to $42 million. We are reiterating our AMPYRA U.S. net revenue of between $65 million and $70 million. Adjusted operating expense guidance will be tightened to between $93 million and $98 million, an improvement from our original guidance of $93 million to $103 million. We now expect our ending cash balance to be between $39 million and $42 million versus the original $43 million to $47 million. Although we were able to mitigate some of the INBRIJA net revenue mix through improved SG&A and other balance sheet items, we do not expect to be cash flow neutral in 2023. And now, I'll turn the call back over to Ron.
Ron Cohen: Thanks, Mike. So before summarizing our priorities moving forward, I want to acknowledge that we all would have preferred not to have a lower INBRIJA guidance for the year, which in turn has necessitated lowering our cash flow projection somewhat. That's a miss, and we own it. Now that said, we believe that the trends in the first half of the year have been highly positive. Our new INBRIJA guidance still represents significant growth from last year, and we've been successfully accelerating INBRIJA's U.S. trajectory, taking advantage of the new post-COVID environment with our new TV commercial and brand campaigns that I discussed earlier. We believe that this have gained a lot of traction since the beginning of the year. But we've seen it especially in the increase in INBRIJA new prescription requests in the first half, 42% over the first half of last year, and in the number of physicians who prescribed for the first time in 2023. But we believe that these are key indicators for future growth. We're also maintaining the AMPYRA brand, as we said, with continued flattening of the attrition curve and we're exercising fiscal discipline. As Mike said, we're adjusting our guidance on OpEx for the year to $93 million to $98 million, down from $93 million to $103 million, and we're aiming to lower our costs further and implement additional efficiencies. Now importantly, we continue to have open communications with Acorda's convertible debt holders so that we can arrive at collaborative approaches to servicing the company's debt, which is due at the end of next year. And finally, with respect to our ARCUS technology, our team has shown the ability to create shelf-stable mRNA formulations now, as well as various proteins and peptides in addition to small molecules, and we're continuing to evaluate collaborations for creating important new inhaled therapies. And I'm going to turn this back to Mike for just a couple of seconds, because I believe he needs to correct one of the numbers he mentioned.
Michael Gesser: Yes. Thank you, Ron. I misstated a number that's clear on the tab -- or on the slide. Our ending cash balance is expected to be between $39 million and $44 million. I said $42 million. My mistake.
Ron Cohen: Thank you, Mike. All right. Thank you all, and we'll now open the call to your questions.
A - Tierney Saccavino: Thanks, Ron. If there are people on the call who wish submit a question, they should do so. At this time we have a couple of questions already. And the first question is, so you say you're encouraged about the trajectory of INBRIJA going forward, and that you think sales will accelerate. But you just reduced your sales guidance downward, and the increases that you report in new prescription requests for the first half of the year are not reflected in your total prescriptions net sales or cartons. So why do you expect the brand to grow?
Ron Cohen: Okay. Let me unpack that a little bit. So as I said, yes, we did -- we have taken our guidance down. And even with the new guidance, we're still -- that still represents a very nice increase over last year's sales. So we are seeing growth. It's just -- the timing is such that it's not as aggressive as our projections had it originally. And as I said, we have to own our projections, and we have to continue to improve on that, and that's where we are. Now in terms of the prescription request forms, the total prescriptions, which reflect -- which are ultimately reflected in our net revenue, total prescriptions, the vast majority of that is made up of refills, not of new prescriptions. New prescriptions make up a small minority of the total prescriptions that we see over time. So when we see a bump first half of this year over first half of last year by 42%, that's quite gratifying. It means that we are getting our messages across. More physicians are prescribing it, expanding their view of who could benefit from the drug, and more patients are asking for it and so on. So that's real progress, given especially what we were working with and the challenges during the pandemic. It takes time for those new prescriptions to be totally reflected in the growth of the product and the growth of revenues, because it starts out being a minority. But then as a sizable portion of those new patients begin to refill, then those refills now grow the total prescriptions that we see over time. So that's why I mentioned that the new prescriptions are a leading indicator. We're already seeing that come into net revenue because we are increasing net revenue. We expect that if this trend continues with our new prescriptions, that we're going to see the totals in net revenue and total prescriptions accelerating from this point forward.
Tierney Saccavino: Thank you. And the next question is, are you looking to expand INBRIJA in Canada? And can you provide an update for further expansion in other European countries?
Ron Cohen: I guess what I would say to that is that we're not breaking out specific countries, except to say that we are in discussions for other territories outside the U.S. around the world. And I think we'll leave it at that, because we're in the middle of discussions, and we have said this before. And that when we have a new deal ready, obviously, we will publish it immediately, and we'll put that out immediately.
Tierney Saccavino: Okay. Thank you. We don't have any other questions at this time. So Ron, I'll turn it back over to you to wrap it up.
Ron Cohen: All right. Well, thanks, Tierney, and thank you again, everyone, for joining us. We're looking forward to give you the follow-up in the next quarter and beyond. Have a good evening, everyone.
Tierney Saccavino: Thank you.
Operator: Thank you. This concludes the Acorda Therapeutics' Second Quarter 2023 Financial Business Update. Thank you for your participation.
