Jerry McLaughlin, CEO van Neos Therapeutics, Inc. (NEOS) over de resultaten van het vierde kwartaal van 2019 – Transcript van de inkomstenopro

Jerry McLaughlin, CEO van Neos Therapeutics, Inc. (NEOS) over de resultaten van het vierde kwartaal van 2019 – Transcript van de inkomstenopro

maart 13, 2020 0 Door admin

Translating…


CBD Olie kan helpen bij ADHD. Lees hoe op MHBioShop.com


Huile de CBD peut aider avec TDAH. Visite HuileCBD.be


 

Neos Therapeutics, Inc. (NASDAQ:NEOS) Q4 2019 Earnings Conference Call March 13, 2020 8:30 AM ET

Company Participants

Richard Eisenstadt – Chief Financial Officer

Jerry McLaughlin – Chief Executive Officer

Conference Call Participants

Louise Chen – Cantor

Ken Cacciatore – Cowen and Company

Jason Butler – JMP Securities

Rafay Sardar – BMO Capital Markets

Operator

Good morning, and welcome to the Neos Therapeutics Fourth Quarter and Full Year 2019 Financial Results Conference Call. Today’s call is being recorded. At this time, all participants are in a listen-only mode. There will be a question-and-answer session to follow.

For introductory and opening remarks, I’m turning the call over to Richard Eisenstadt, CFO of Neos Therapeutics. Please go ahead.

Richard Eisenstadt

Thank you. Good morning, everyone, and welcome to our fourth quarter and full year 2019 financial results conference call. This morning, we issued our financial results and corporate highlights press release, which is available on our website at www.neostx.com. I’m joined on today’s call by Jerry McLaughlin, our CEO.

Before we begin, I’d like to read the following regarding forward-looking statements. During this call, we will make statements related to our business that may be considered forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 including statements concerning the commercialization of Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER oral suspension; financial results of and outlook for our business including with respect to net revenue per pack; script volumes and market share; the intended benefits of our commercial strategy; our expectations regarding the brand exclusivity for our ADHD products; our patient support program Neos RxConnect; the capabilities of our technology and our research development activities including the timing and progress of our product candidates; future expansion of our product pipeline through business development activities; and our current and future financial position.

Forward-looking statements may often be indicated with words such as we expect, we anticipate, upcoming or similar indications of future expectations. These statements reflect our views only as of today and should not be reflected upon as representing our views as of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations, including but not limited to the inherent risks associated with development and commercialization of our products and product candidates that we may not realize the intended benefits of our new commercialization strategy and that the preliminary or early indicators of performance may not reflect the actual results of operations for any period.

For a discussion of material risks and other important factors that could affect our actual results, please refer to those contained in our most recent SEC filings.

I will now turn the call over to Jerry.

Jerry McLaughlin

Thank you, Rich, and welcome everyone. 2019 was transformative for Neos. We entered the year with a new commercial strategy focused on increasing net revenue per pack and improving patient access to our multi-brand ADHD portfolio, all with the goal of driving the company closer to operating profitability. At the same time, we were optimizing our commercial strategy and organization. We were also committed to advancing NT0502, our lead development program and met our goal of filing an IND as well as commencing a Phase 1 pilot PK study in 2019.

For our commercial business, I’m so proud of what we were able to achieve and what this means for the future of Neos. First, we improved our net revenue per pack by approximately 28% compared to 2018 and reduced sales and marketing expenses by $16 million compared to 2018, which were key drivers in our ability to realize a more than $33 million improvement in our operating loss in 2019 compared to 2018.

Second, we were able to build an entirely new best-in-class patient support program Neos RxConnect. And by the end of the year, we had approximately 500 pharmacies in the network and as of today, I’m pleased to report, we have now reached 750 pharmacies.

Third, despite a smaller sales force and significantly lower sales and marketing expenses, we were able to successfully increase net sales of our products in 2019 by 29% compared to 2018. And finally, we were able to hold total prescriptions for our ADHD products in 2019 constant with 2018. This is a tremendous achievement considering our smaller sales force and decision to abandon unprofitable programs and contracts that drove a meaningful portion of our 2018 prescription. These accomplishments have set a strong financial foundation for Neos as we entered 2020.

We continue to believe and are now seeing evidence that Neos RxConnect is and can be a significant driver for our business. This best-in-class Neos-sponsored patient support program is designed to create greater predictability in the lowest possible co-pay for commercially insured patients, regardless of their individual insurance plan.

Neos RxConnect was created in early 2019 following in-depth research and feedback from health care professionals, otherwise known as HCPs about their frustrations in prescribing what they believe to be the most appropriate medications for their patients.

Too often medications are not available for patients at the pharmacy or the co-pay is widely variable and unpredictable resulting in patient complaints and callbacks to their HCP which leads to frustration, as well as an additional work and hassle for the HCP and their office staff. For these reasons, we created a Neos RxConnect and then rapidly scaled it up throughout the year.

We believe Neos RxConnect truly differentiates both Neos and our ADHD brands from the competition and presents a high barrier for others to replicate. Most importantly, we believe this program offers tremendous value and convenience to our customers. We are committed to continuing to invest in this program, and recently added an internal regional account manager team that is dedicated to supporting our efforts to expand and increase adoption of Neos RxConnect by working with both pharmacists and with our sales – field sales team.

As I mentioned at the end of 2019, there were approximately 500 pharmacies in the network, including H-E-B a regional grocery and pharmacy chain in key areas across Texas, with an unsurpassed reputation for customer service and loyalty and more than 270 stores that it have a pharmacy. H-E-B became active within the Neos RxConnect network in mid-December, and the early results from this partnership are promising.

In January 2020, Neos ADHD prescriptions grew 4.2% nationwide over December 2019. However in the state of Texas, Neos prescriptions in January more than doubled our national growth percentage increasing 10.2% over December 2019. More recently, we finalized the partnership with another regional pharmacy chain that has just increased the total number of pharmacies in the Neos RxConnect network by 50% this week through the addition of these 250 pharmacies that are spread across key markets across the mid-western region in the United States. In fact, the pharmacies went live just this week and we held the launch meeting with our sales force yesterday.

Finally, we are in various stages of discussions with additional regional chains that align with our sales force footprint and expect to continue to expand the Neos RxConnect throughout 2020. These early results from our H-E-B relationship and the addition of an interest from additional regional chains bolster our belief that Neos RxConnect can be an engine of growth for our business.

As many of you know, we have deployed a specialty sales force of approximately 75 territory specialists that are operating with enhanced targeting tools and resources with a focus on accounts where we believe we can continue to increase the breadth and depth of prescribing. We use net revenue per pack as a key commercial performance metric and a measure of the overall quality of the prescription volume we generate.

For Adzenys XR-ODT, net revenue per pack for the fourth quarter of 2019 was $128, a 32% increase over the same quarter in 2018. And for Cotempla XR-ODT, net revenue per pack was $126, a 33% increase over the same quarter one year ago. This continued growth reflects the significant strides we made in 2019 to shift our business towards operational profitability, as we saw net revenue per pack increased by approximately 28% from $95 in 2018 to $120 in 2019.

Turning now to our development pipeline. We believe that NT0502, our lead development candidate is a tremendous asset with the potential to address a high unmet need for the treatment of chronic sialorrhea, a condition where more than one-third of the patients with neurological conditions such as Parkinson’s disease, cerebral palsy, ALS and mental retardation, exhibit excessive drooling due to an inability to sufficiently swallow saliva.

Approximately 1.4 million patients in the United States experience this condition on an annual basis and physicians report that they reserve treatment for only the most severe patients due to treatment-limiting side effects and complex dosing regimens associated with currently available treatments. This results in too many patients being left to suffer with the challenges associated with this condition, both medically and socially.

NT0502 offers the promise of a new treatment option to many of these millions of patients and their caregivers with the potential for both an improved tolerability profile and dosing regimen. In our Phase I pilot study evaluating the pharmacokinetic profile of multiple formulations of NT0502 in 30 healthy adult volunteers, we met all of the study objectives and the NT0502 formulations we tested successfully demonstrated the key product attributes that give us the confidence to advance NT0502 into further clinical development. We plan to develop NT0502 as an orally administered formulation that is likely to be dosed only once or twice daily.

The next step for this program is to initiate a Phase I clinical trial in the second half of 2020. The Phase I study will enroll normal healthy volunteers. This multi-part study will include single ascending and multiple ascending dose cohorts and allow us to compare oral bioavailability and plasma concentrations to the parent compound.

In addition, we also continue to seek opportunities, where we can leverage our existing commercial model with additional product opportunities, as we are confident that the Neos RxConnect and our advanced analytics platform has applicability well beyond our ADHD franchise. These opportunities would complement our existing portfolio, with a focus on CNS, as we believe there is a large opportunity to address symptoms associated with neurological disorders that exacerbate overall disease burden.

Before my closing remarks, I wanted to take a moment to discuss the ongoing coronavirus or COVID-19 threat. We are like everyone actively monitoring what is obviously a very fluid situation. We’ll be examining all aspects of our business from supply chain to our manufacturing plant to our field sales force to understand and plan for as best as possible for a further deterioration of the situation. At this time, we believe based upon an audit of our suppliers, as well as theirs that we have a reliable supply chain.

From an inventory standpoint, we believe that we have on average approximately four months on hand with additional inventory that is located in wholesalers and in the retail chain. We are seeking to further build our inventory levels to help protect against future disruption.

With respect to our field-based sales force, the health and safety of our employees, our customers and their patients is of highest concern. We are instructing our sales representatives to monitor, understand and respect the policies of our customers and local government and health authorities. Ultimately, in some geography, this may result in restrictions to customer access for our representatives for some period of time.

In conclusion, before I turn it over to Rich, I want to touch on our vision here at Neos. With a focus on patients, we want to ensure that our current products as well as future treatments are readily accessible to not only the patients that may benefit from them, but also health care professionals seeking to improve the lives of their patients. We are off to a great start with our ADHD business in 2020 and NT0502 is poised to advance into the next stage of clinical development.

Thank you for your time and interest today and we look forward to updating you on our progress soon. Turn it over to Rich.

Richard Eisenstadt

Thank you Jerry. As of December 31, 2019, we held $24.9 million in cash and cash equivalents and short-term investments. We had no draw on our $25 million AR credit line as of December 31, 2019.

Total product revenues were $64.6 million for the year ended December 31, 2019, up from $50 million for 2018 and $27.1 million for 2017. Total product revenues for the three months ended December 31, 2019 were $16.8 million compared to $15.4 million for the same period in 2018.

Total product revenues for our ADHD portfolio for fiscal year 2019 was $57.7 million, compared to $45.6 million for fiscal year 2018. Total ADHD portfolio product revenues were $14.9 million for the three months ended December 31, 2019, compared to $14.2 million in ADHD product revenue in the same period in 2018.

Full year net product revenues for our generic Tussionex were $7 million as compared to fiscal year 2018 product revenues of $4.4 million. Net product revenue continued to increase reaching $1.9 million in the fourth quarter of 2019, as compared to $1.4 million in the same period in 2018, a 40% increase.

Gross profit for the year ended December 31, 2019 was $39.5 million, compared to $23.1 million for the same period in 2018. For the three months ended December 31, 2019, gross profit was $9.7 million, compared to $7.6 million for the same period in 2018. Gross margin as a percentage of net product sales was 57% in the three months ended December 31, 2019, as compared to 50% in the three months ended December 31, 2018.

R&D expenses for the fiscal year ended December 31, 2019 were $8.6 million, compared to $8.5 million for the year ended December 31, 2018. R&D expenses for the three months ended December 31, 2019 were $1.8 million, compared to $2.4 million for the same period in 2018.

Selling and marketing expenses for the year ended December 31, 2019 were $28.1 million, compared to $44.1 million for fiscal year 2018. Selling and marketing expenses were $6.7 million for the three months ended December 31, 2019, compared to $9.1 million for the same period in 2018. The reduction is primarily attributed to the smaller sales force we deployed in January 2019.

G&A expenses were $13.2 million for the year ended December 31, 2019, as compared to $13.9 million in the year ended December 31, 2018. G&A expenses for the three months ended December 31, 2019 were $2.9 million, compared to $3.3 million for the same period in 2018.

Loss from operations was $1.7 million for the three months ended December 31, 2019, an improvement of $5.5 million, compared to $7.2 million operating loss reported for the same period last year. For the full year of 2019, we brought down operating loss by $33.1 million to $10.4 million versus $43.5 million for 2018.

For the 2019 fiscal year, our net loss was $16.9 million or $0.34 per share compared to $51.7 million or $1.60 per share for 2018. Net loss for the three months ended December 31, 2019 was $3.5 million or $0.07 per share compared to $9.3 million or $0.23 per share for the same period in 2018.

With that we’d like to now turn to the Q&A portion of the call. Operator?

Question-and-Answer Session

Operator

We will now take any questions you may have. [Operator Instructions] The first question comes from Louise Chen from Cantor. Please go ahead.

Louise Chen

Hi. Thanks for taking my questions here. I had a few questions. So first one here is how do we think about the net revenue per pack throughout the remainder of 2020? And I know you didn’t give sales guidance and – but I was just curious, how we should think about the progression into 2020 from 2019?

And then when should we expect the SAD/MAD Phase I data for NT0502? And basically how did you choose these doses that you’re going to explore going forward? And what are those if you’re willing to disclose? Thank you.

Jerry McLaughlin

Louise, I’ll take number one and number three and I’ll – net revenue per pack and then Rich can comment on revenue and then I can handle the 502 question. Our net revenue per pack as we’ve discussed in the past that was a major initiative for us heading into 2019. And we’re really focused on driving increase on the quality of our prescriptions, right and trying to remove and get out of the programs and contracts that were creating negative revenue. And you saw the substantial increase year-over-year in net revenue per pack.

As we go forward, we could see some incremental increases in net revenue per pack but that is not the primary focus. We believe like we’ve achieved the lion’s share of that. As we move forward through 2020, it’s about getting back to prescription growth at these much higher net revenues per pack. So hopefully that addresses your question there and then Rich can talk about revenue.

Richard Eisenstadt

Yes. So I think taking that forward Louise, we haven’t provided guidance for 2020. But most of our growth last year in 2019 versus 2018 was due to the significant growth in our net revenue per pack, which we don’t expect to repeat that this coming year, it will be as Jerry said, more incremental.

We will return to or expect will return to prescription growth, where last year it was pretty flat year-over-year. So we expect that that will be more of a contributor to growth. We did grow our revenues by over 29% in 2019. I don’t think it’s realistic to expect to continue to see that repeat performance since it was driven so much by our pricing changes.

Jerry McLaughlin

Okay. And Louise your question about NT0502. We would expect the SAD/MAD results in the first half of 2021. We’re confident based upon the modeling work and the pilot PK results that we can head down a path. We’re not ready to discuss final dosing. That as time goes on we’ll give more clarity on dosing. But we’re very confident that we have at least a twice a day and potentially a once-a-day formulation and – but the ultimate decision may actually be driven by the market and what market desires.

Louise Chen

Okay. Great. Thank you.

Operator

The next question comes from Ken Cacciatore from Cowen and Company. Please go ahead.

Ken Cacciatore

Hey, guys. Just a few questions. Just wondering what’s the percentage of prescriptions now that are going through Neos Connect? And looking for you to just talk about is it driving more profitability per prescription? Or is it just a smoother product experience, a smoother experience for both the clinician and the caregiver? Can you just talk about anecdotally and maybe quantitatively the difference? And where do we think we’re going to end the year in terms of potential pharmacies?

And then second question is, obviously, the sales force could probably use another product. So wondering, from a co-promotion standpoint, are we close to putting another product in the bag for your sales force? It just seems we’re right on the tipping point of getting a lot of leverage. So just wondering there.

Then also on corona demand. Obviously, folks like you are probably right at the tip of the spear in terms of these closures of schools. Just wondering, if we’re going to see a little bit of corona demand-driven issues as we work through these next few months? Thanks so much.

Jerry McLaughlin

All right, Ken. Thanks for your questions and I’ll handle the RxConnect question then the BD question on product opportunities and then coronavirus. With Neos RxConnect, we continue to grow a percent of our business that’s being funneled through Neos RxConnect. We’re now above 30%.

And with the addition of a new pharmacy chain this week, it’s Meijer in the Midwest we decided on 250 more pharmacies, they just went live yesterday on the neosrxconnect.com. So we expect to see that number increase. We’re not giving a guidance or have a final prediction.

I will tell you though, we are in active discussions with multiple additional regional chains that would give us coverage over our target geographies and those are in various stages of discussions, some more advanced than others. But we’re confident that we’ll be able to add — continue to add throughout 2020 to the network.

And in my prepared remarks you heard, we’re very excited about the early results with H-E-B. The growth just in the first month in Texas, both through the network and outside the network, just overall volume in Texas grew more than double the nation. So we’re very excited about it. We think it’s a key strategic driver.

Now as far as the economics. In some cases we actually have better economics. In some cases, we have slightly worse economics. So in the end, it’s pretty much a wash. But really what this is, it’s to your point about this creates and facilitates a much easier transaction for both the healthcare professional, including their staff and the patient, with the confidence that the product’s going to be there and they’re going to be able to get it.

The claim is going to be adjudicated correctly and they’re going to have a predictable and affordable co-pay that’s never going to be more than $35, even during high-deductible season, which we’re living through right now. And I can tell you the reports we get back, it’s the most unbelievable that during high deductible that they’re able to only pay $35 for the prescriptions.

We hear time and time again that generics, during the high-deductible season, can be $100 $150 or even $200 per prescription. So we think this will continue to be a driver, it’s going to continue to get larger and we’ll keep you up-to-date as we add additional regional chains.

Now with regard to business development. Part of our strategy, our commercial strategy in building the infrastructure, building the Neos RxConnect, building an advanced analytics platform, is to build the commercial engine where we can readily add additional products. So we’re actively looking for product opportunities to fit into “into our bag.”

And while we call on primarily pediatricians and psyches, we may be willing to give a little feel to that, because once again, we believe the big value driver and the competitive advantage that we have is through Neos RxConnect. So those discussions are ongoing Ken. It is a goal of ours, the stated goal. And so, some are in various stages. As you know these can go fast or slow and we’ll continue to keep you updated on that.

With regard to coronavirus, we think we’re in really good shape here in our plant, with the supply we have on hand and with our materials. We conducted a very intense audit, as most companies have done, to understand if there were any vulnerabilities and we don’t see any right now.

Now with regard to our sales force, sure there may be some disruption. And we’re advising our sales force that in areas of the country with local governments or even if it’s state if they issue guidance, mitigation strategies to avoid contact, we will oblige those. It’s the right thing to do right now.

As far as predicting any interruption to our business, that’s pretty unclear. What I can let you know is this week we just — with the weekly data that came out today, we had our highest week in prescriptions since mid-February 2019. And during that time in 2019, we were still unwinding some of the unfavorable contracts that we still had some poor — negative revenue generating prescriptions in the system. So we’re really confident in most recent performance as we move along here in 2020. But I can only speculate and really — we don’t really have a good handle if there will be an impact at all due to coronavirus.

Ken Cacciatore

Okay. Thanks so much.

Operator

The next question comes from Jason Butler from JMP Securities. Please go ahead.

Jason Butler

Hi, thanks for taking the question. Just in terms of field force size, any thoughts on potential either increases or additional decreases that you could make this year? And then just broadly, how you think about investing in the field force size versus continuing to build the RxConnect network? Thanks.

Jerry McLaughlin

Yeah, Jason the two are inextricably linked right? So we constantly examine. We have approximately 75 territory specialists. We constantly evaluate opportunities to tinker with size, structure up a couple down a couple depending upon business opportunity. That’s been the focus of ours and we’ll continue to strategically look at our sales force and where and how they’re deployed. And why I say they’re inextricably linked, we’ve seen such a good early response with H-E-B in Texas and now as we add Meijer in Midwest those additions kind of — can help shape how we view our business opportunity.

So we’ll continue to look at that both with the existing partnerships we have and as we add additional partnerships with regional chains going forward. So it’s something we’ve talked about since we made the first initial change and we’ll continue to examine this going forward.

Jason Butler

Okay, great. Thanks for taking the question.

Operator

The next question comes from Gary Nachman with BMO Capital Markets. Please go ahead.

Rafay Sardar

Hi, good morning. It’s Rafay on for Gary. Can you comment on some of the insights that you’ve gotten from your performance analytics platform and how the sales force is leveraging that data? And then second, what percentage of commercial lives are currently covered? Or are there any changes in coverage starting in 2020? And lastly how should we be thinking about operating expenses for 2020 relative to 2019? Thank you.

Jerry McLaughlin

Yeah, so I’ll handle that. So, I’ll handle the insights and adopters on the analytics and then any changes to coverage and talk about coverage. So the insights from analytics what we’re able to do is give our territory specialists ability to segment their physician database. And what it does is, it allows them to quickly follow up on physicians who will show propensity to adopt, it shows quick follow-up on physicians who have ample headroom.

So it’s making us much more efficient with our — where we deploy our — the fixed resource of our sales representatives’ time. So making the choice of where to spend the business — spend the time with, which account to drive the business. So this is done — the representatives get this on a daily basis, weekly basis. They have access to our head of sales operations to educate them on how and where to target. There’s a real focus now on increasing our number of our adopters, which is having a meaningful impact on our business we believe.

And as we look at the data there’s significant headroom. It’s about being focused and really keep an eye on understanding how the data can drive your business going forward.

Now as far as reimbursement coverage, this Neos RxConnect basically is coverage to 100% of commercially insured patients. Regardless of your plan, a physician can prescribe our product and a patient regardless of coverage will pay no more than $35. We believe we have sufficient coverage. Each calendar year there are always  enkele veranderingen. En we hadden een bescheiden verandering in, geloof ik, een of twee plannen die echt een minimaal effect hadden op onze algehele activiteiten. Dus in de toekomst is het echt – we richten ons op voor de commercieel verzekerde patiënten. We bieden ze allemaal.

Richard Eisenstadt

Wat betreft onkostenbegeleiding. We verwachten dus dat onze brutomarges blijven stijgen. We denken dat dat in 2020 halverwege de 60 is. Het zou nog 70 resten te zien zijn, maar van midden tot boven 60 zijn we redelijk comfortabel mee. Het beweegt van kwartaal tot kwartaal op en neer, afhankelijk van ons gebruik in de fabriek en – het is natuurlijk een trend volgens onze netto-inkomsten per pakket.

Wat de bedrijfskosten betreft, verwachten we dat ze over het algemeen jaar na jaar relatief vlak zullen blijven. Dus, R & D, we verwachten dat het zal doorgaan in het bereik van $ 8 miljoen tot $ 10 miljoen, verkoop- en marketingkosten in het midden tot de hogere jaren 20 en G & A in de tienerjaren. Ik wil u er wel aan herinneren dat ongeveer 6 tot 7 miljoen dollar van deze kosten niet-contante uitgaven zijn.

Jerry McLaughlin

En nog een laatste opmerking over hoe we onze analyses gebruiken, ik denk dat het een veelbetekenend signaal is. Ondanks dat we onze verkoop- en marketingkosten met 36% hebben verlaagd, inclusief een afname van ongeveer 40% in salesforce, hadden we, als je kijkt naar het vierde kwartaal van 2019 versus het vierde kwartaal van 2018, slechts een daling van 1,8% in het totale aantal voorschrijvers en we nog steeds bijna 11.000 voorschrijvers in het vierde kwartaal van 2019. En het wijst echt terug op deze analyses die onze territoriumspecialisten helpen bij het helpen van de regionale verkoopmanagers om echt een bedrijfsplan op te stellen over waar en hoe ze zich moeten richten en met welke frequentie.

Rafay Sardar

Geweldig. Bedankt.

En ik toon op dit moment geen verdere vragen in de wachtrij.

Dames en heren, bedankt voor uw deelname aan de conferentie van vandaag. Dit beëindigt uw programma en u kunt nu de verbinding verbreken. Iedereen een fijne dag.

CBD Olie kan helpen bij ADHD. Lees hoe op MHBioShop.com a >

Huile de CBD peut aider met TDAH. Bezoek HuileCBD.be h3 >

Lees meer