Alimera Sciences, Inc.
Q4 2019 Earnings Call Transcript

Published: 27 Feb 2020

[Operator:]

Good morning, and welcome to the Alimera Sciences Fourth Quarter and Full Year 2019 Financial Results and Corporate Update Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.I would now like to turn the conference over to Jules Abraham, CORE IR. Please go ahead.

[Jules Abraham:]

Good morning. And thank you for participating in today's conference call. Joining me today from Alimera's leadership team are Rick Eiswirth, President and Chief Executive Officer; and Phil Jones, Chief Financial Officer.During this call, management will be making forward-looking statements, including statements that address Alimera's 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.For more information about these risks, please refer to the risk factors described in Alimera's most recently filed periodic reports on Form 10-K and Form 10-Q, the Form 8-K filed with the SEC today and Alimera's press release that accompanies this call, particularly the cautionary statements in it.Today's conference call includes adjusted EBITDA and non-GAAP financial measure that Alimera believes can be useful in evaluating its performance. You should not consider this additional information in isolation or as substitute for results prepared in accordance with GAAP. For a reconciliation of this non-GAAP financial measure, to net loss its most directly comparable GAAP financial measure, please see the reconciliation table located in Alimera's earnings press release.The content of this call contains time-sensitive information that's accurate only as of today, February 27, 2020. Except as required by law, Alimera disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call.It's now my pleasure to turn the call over to Rick Eiswirth. Rick?

[Rick Eiswirth:]

Thank you, Jules, and good morning to everyone on the call. I'm really pleased to share that we reported strong results to finish out the 2019 calendar year with sales in the fourth quarter of $17.3 million, our best quarter ever for revenue generation.Revenue growth for the full year of 2019 was approximately 16%, as we delivered nearly $54 million in total revenue for the year. We closed out 2019 with strong growth over the fourth quarter of 2018, which was also a strong quarter for us.You may recall that our results in the fourth quarter of 2018 were positively impacted in Europe by a shortage of Ozurdex, providing an estimated incremental $2.4 million in onetime revenue.I'm particularly pleased that the fourth quarter of 2019 surpassed last year's fourth quarter, and grew 15% year-over-year despite the loss of that onetime revenue. We are also pleased that our fourth quarter demonstrated the strength of our business in both the U.S. and our international segments.We indicated on our third quarter call that our objective was to return the U.S. segment to growth as our field force continues to gain experience. I'm very happy to report that we met this objective, realizing a record quarterly end-user demand for ILUVIEN, a 14% increase in end-user demand units over the fourth quarter of 2018 and a 9% sequential increase over the third quarter of 2019.Our strengthened U.S. sales team is performing solidly behind the ILUVIEN brand promise, as this is resonating with our physician customers. That message is strong and clear

[Phil Jones:]

Thanks, Rick and hello everyone. During the fourth quarter of 2019 our consolidated net revenue grew approximately 15% to $17.3 million compared to $15.1 million in the fourth quarter of 2018. U.S. net revenue was approximately $9.5 million for the fourth quarter of 2019, up approximately 7% from $8.9 million for the same period of 2018. U.S. end-user demand, which represents units purchased by physicians and pharmacies from our distributors, was up 14% in the fourth quarter of 2019 increasing to 1,164 units compared to 1,019 units for the fourth quarter of 2018.As we have previously shared, our GAAP revenues in the U.S. do not always correlate with end-user demand due to the timing of purchases by our specialty distributors. Net revenue from international segment increased 26% to approximately $7.8 million for the fourth quarter of 2019 compared to approximately $6.2 million for the same period, last year.This was driven by growth, in our European DME business as well as the launches of ILUVIEN's, uveitis indication, in Germany and the U.K. Research, development and medical affairs expenses, decreased by approximately 7% to $2.7 million, in the fourth quarter of 2019, compared to $2.9 million in the fourth quarter of 2018.General and administrative expenses decreased by approximately 5% to $3.8 million for the fourth quarter of 2019, compared to approximately $4 million, in the fourth quarter of 2018.Sales and marketing expenses, during the fourth quarter of 2019, were approximately $6.5 million up, 7% to $6.1 million for the fourth quarter of 2018. The increase was primarily attributable to increases in marketing costs, associated with the launch of our direct-to-patient advertising program.Total operating expenses were approximately $13.6 million, for the fourth quarter of 2019 compared to $13.7 million for the three months, ended December 31 2018. In the fourth quarter of 2019, we reported adjusted EBITDA of $2.6 million, compared to $2.4 million in the fourth quarter of 2018.The growth in both our U.S. and international segment, along with our containing expenses, primarily drove the increase in our adjusted EBITDA. For the fourth quarter of 2019, we generated net income of approximately $500,000, compared to net loss of approximately $1.2 million for the fourth quarter of 2018.Before we get into any EPS discussions, it should be noted that all EPS calculations reflect, our 1-for-15 reverse stock split.Basic and diluted net income per share for the fourth quarter of 2019 was $0.08 per share, on approximately 6.2 million weighted average shares outstanding. This compares to basic and diluted net loss per share for the fourth quarter of 2018 of $0.27 per share, on approximately 4.8 million weighted average shares outstanding.Turning to our results for the full year, revenues for 2019 were $53.9 million, up 16% compared to approximately $46.6 million, for 2018. Research, development and medical affairs expenses, decreased by approximately $300,000 or 3% to $11 million, compared to $11.3 million, in 2018.The decrease was primarily attributable to decreases in clinical studies and scientific communications. General and administrative expenses decreased by approximately $500,000 or 3% to $14 million, compared to $14.5 million, for 2018.The decrease was primarily attributable to a one-time severance expense incurred, in 2018. Sales and marketing expenses increased by approximately $1.5 million or 6% to $25 million, compared to $23.5 million in 2018.The increases were mainly attributable to the launch of our direct-to-patient advertising pilot program, in the United States. And market access costs associated with uveitis, in the European area.Total expenses in 2019 were $52.6 million, compared to $52 million in 2018. Net loss for the full year of 2019 was $10.4 million, compared to a net loss of approximately $16.4 million for the full year of 2018.Our earnings per share calculation in 2018, was impacted by our preferred stock exchange, which resulted in a $38.3 million gain, attributable to our common shareholders.Therefore, net income available to shareholders in 2018, was approximately $21.9 million. Basic and diluted net loss per share, for 2019 was $2.19 per share, on approximately 4.9 million, weighted average shares outstanding.This compares to basic net income per share of $3.74, on approximately 5.9 million weighted average shares outstanding, and diluted net income per share of 3 -- $3.71 per share on approximately 5.9 million weighted average shares outstanding for 2018.On December 31 2019, we had cash and cash equivalents of approximately $9.4 million. As Rick mentioned, on December 31 last year, we refinanced our debt with Solar Capital, extending our interest-only period, through December 2022.We announced this past Monday that we achieved a revenue milestone stipulated in our new agreement with Solar, which enabled us to draw down an additional $2.5 million to strengthen our balance sheet.As a result, we believe that we are in good financial position to fund the growth of our business going forward without further dilution to our shareholders. And have no plans to issue equity, at this time.In addition, to the out of stock situation, Rick described earlier. And the recent uncertainties, associated with the coronavirus that we are monitoring, I want to remind everyone of the seasonality of our business. The first quarter tends to be considerably lighter than other quarters due to change in the calendar year and the impact of patient insurance approvals and deductibles.In the U.S., physician practices will reverify patient insurance plans in the first quarter, which typically slows down the time for ILUVIEN injections. In Europe, many hospitals restart their annual budget leading to a delay in patient acceptance for ILUVIEN injections.And with that, I'll now turn the call back over to Rick to wrap up our prepared remarks. Rick?

[Rick Eiswirth:]

Thank you Phil. As I said earlier, we are very pleased with our fourth quarter and full year results. Looking back on my first year as CEO, I believe we have accomplished much of what we set out to do at the beginning of the year. We continue to grow ILUVIEN organically, increasing the usage of ILUVIEN for DME in our existing markets. We expanded geographically, launching ILUVIEN in France with our distributor Horse Pharmaceuticals. We obtained approval for ILUVIEN for a new indication for uveitis patients in Europe and we are able to commercialize ILUVIEN for uveitis patients before the end of the year.As a result approximately 7,900 eyes were treated with ILUVIEN globally in 2019, compared to approximately 6,000 units in 2018. That's growth in global demand of 32%, which enabled us to report record revenues for the year and more importantly achieve financial independence.As Phil indicated, we believe our cash on hand is sufficient to fund the continued growth of ILUVIEN without the infusion of additional capital. We have accomplished a lot of Alimera this past year. But as I always tell our team, we are just getting started. I and we continue to believe that we have a better mouse trap, a better way to treat DME and uveitis because of ILUVIEN's unique continuous microdosing, making it the only drug that can help patients see better longer with fewer injections.The opportunity for additional utilization is significant. In 2020, we intend to continue to grow ILUVIEN organically in our existing markets, make ILUVIEN available for uveitis patients in more markets and continue to expand geographically.And with that overview, we are now ready to take questions. Operator?

[Operator:]

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Andrew J. D'Silva of B. Riley FBR. Please go ahead.

[Andrew D’Silva:]

Yes, good morning. Congrats on the very strong close to 2019. I just have a few quick questions. Could you please just discuss the current status of the sales force? Maybe a little bit of context where they were when you maybe started the fourth quarter and where they are today that will give us a little bit of a reference point?

[Rick Eiswirth:]

Yeah, sure Andy. I mean, I think the sales team continues to strengthen. We have 30 sales territories right now. I believe, we have one opening in a new territory that we – sorry -- not a new territory, we do have one opening in the New York City market right now. The staff was full at the beginning of the quarter. We did have some turnover in December. We turned over, I believe three or four reps. But honestly they were the underperforming territories. And I expect that to be the normal going forward, so nothing out of the normal course there.Just had our national sales meeting in the U.S. and we had a similar in Europe. And I will tell you that the enthusiasm of the sales team both in the U.S. and in Europe is at an all-time high. So I feel really good about where they are and I think we can continue to get better. But to give you some perspective, we ended 2019 in the U.S. with our largest end user to month ever in December.

[Andrew D’Silva:]

Okay, okay, that's good context. Thank you. And then as far as the fourth quarter goes internationally, do you have insight on stocking orders either new regions or -- because of uveitis becoming relevant in the U.K. and Germany. Just curious, if there was a bolus of ILUVIEN sales that seem maybe unusual to you? And maybe you could be likely attribute it to the label expansion?

[Rick Eiswirth:]

Yeah. So Andy it's a great question. And I think the growth in the fourth quarter comes from a couple of places. One, if you recall during the third quarter call, I talked about an outstanding presence that we had at the Euretina conference in Europe, right? And we had symposes for both uveitis and DME. And frankly Professor Bandello from Italy stood on the podium and talked about ILUVIEN being the best way to treat DME as a disease. So I think there was some carryforward of that in Europe.We also did launch the uveitis indication in Germany and the U.K. at the end of September. And we know that we've gotten some very quick and rapid uptake in a few hospitals. I do have a little bit of -- I don't want to say concern, but we want to continue to monitor the situation. We don't know how much of the uveitis that we're seeing in the fourth quarter and even right now is bolus patients and what the steady run rate will be. But at the same time I don't think it's been broadly accepted across a large number of hospitals yet in either Germany and the UK. So I think we've got the ability to continue to expand into more hospitals with that uveitis indication even if we've absorbed the bolus in some of the early hospital or early adopters.

[Andrew D'Silva:]

And excluding just stocking -- not the stocking but the out of stock that took place in the first quarter.

[Rick Eiswirth:]

Yeah.

[Andrew D'Silva:]

Are you leasing a trend -- adjusting for seasonality carryover in Europe as it relates to maybe hospitals that weren't using ILUVIEN prior to the uveitis launch still using it and ordering or trying to order now that we're into the first quarter?

[Rick Eiswirth:]

We've two separate issues there. So the short period of stock out was in the U.S. only I'll come back to that in just a moment. With respect to uveitis, we are seeing that usage continue in the quarter. I'll give you one example though. Moorefield Hospital in London is a hospital that's used very limited amounts for the DME indication over time, but I believe in the first two or three months treated about 70 patients with uveitis. So big uptake in a couple of limited hospitals. We've seen the same thing at the university hospital in Munich Germany. So it's being received well.And I will tell you one of the great things and I've always said that we thought there could be some overhang longer term. As you see a lot of uveitis physicians and KOLs talking to their peers saying this is so obvious as it reduces the recurrence of the disease and uveitis you guys need to smarten up and use it more often in DME. So we think that there will continue to be overhang as more of the uveitis physicians use the drug as well.The stock out was isolated to the U.S. and as I've said we had product last week end of last week that we shipped out to the distributors. We've shipped out more than -- those distributors I'm sorry have shipped out more than 300 units to the end users in the U.S. which candidly 300 units was more than we did in a month at times last year. So we feel really good about the rebound from that. And at the rate -- the reps were selling in November and December, we don't anticipate there being any material impact. But obviously, we're three days back in stock right now so we'll have to see. But we feel pretty good about it.

[Andrew D'Silva:]

Okay. And I'll lump my last two questions together. Just any insight into how the DC programs are going as far as outreach to consumers and patients? And then any update on Canada. I know that it's not going to be a large market for you but you obviously have substantial contribution margins. So just interested to see if there's been any updates on the reimbursement side there?

[Rick Eiswirth:]

Yes sure. So with respect to the direct-to-consumer programs we just got some early data in the past couple of weeks on that because the program ran through the end of the year. It was very, very promising. I will tell you that the program was very well-received the message seemed to resonate with the patients. And we certainly saw an uptick in usage in the markets and the benefit of investigations are being submitted in those markets.Right now we're trying to, sort of, work through that data and try to figure out which pieces of the program were the most effective whether it was social media or Pandora or some of the printed materials and things like that. So over the next couple of months we will be sitting down with the doctors and trying to evaluate what had an impact. And if they indeed were responding to the patients and look at how we might broaden that later. But right now, we've got programs sort of on hold while we evaluate all that data. It was really good data and we felt like we got a great response from it.With respect to Canada, unfortunately in Canada our partner there is struggling a little bit with the pricing and reimbursement. And I think they're having to resubmit right now. So we don't really have great insight into when that might be resolved at this point in time. But again as I've said although Canada is certainly a nice add-on for us as we continue to expand geographically, we did never -- we did not ever expect it to be a huge material part of what we're doing.

[Andrew D'Silva:]

Okay. Great. Great. Congrats on the progress and continued momentum in 2020.

[Rick Eiswirth:]

Thanks, Andy. We appreciate your support.

[Operator:]

The next question comes from Alex Nowak of Craig-Hallum Capital Group. Please go ahead.

[Alex Nowak:]

Great. Good morning, everyone and congrats on the solid finish to the year here. Just wanted to follow-up on Andy's question around the stock out. Just can you explain more exactly what happened with that stock out. Was this an issue with your CMO just unable to make ILUVIEN? Or was this just you experienced the higher sell-through at the end Q4 and just ran out of stock?

[Rick Eiswirth:]

Yes, I think, we were selling a lot more in the fourth quarter than we expected. And candidly right around the Christmas holidays, they had one piece of equipment broke that had to be repaired. And just because of the Christmas holidays, it took a little bit longer than we expected it to or would have in the normal course of business.So just slowed us down. But I would tell you Alex, our team and frankly the doctors responded phenomenally to this. We prepared the market for it. We talk to doctors. Our team talk to the doctors about rescheduling patients and holding them out and we've seen the rebound in the sales and the deliveries this week.And candidly my sales reps, my MSLs, my reimbursement team, everybody in the field and including the doctors said from the very beginning, hey this is manageable. We've dealt with much longer stock-outs in the past. As long as we know, we're getting product back, we'll be able to handle it.And that was echoed by the physician. So I think we're fine and we're out of the woods with it. It was unfortunate but it was a combination like a set of volume and then that one issue with the manufacturing happening during the Christmas holidays.

[Alex Nowak:]

Okay, understood. And then for U.S. growth I mean, it was a little bit varied in 2019 just because you have the sales force transition. And as we reach through Q4, the growth has slowly incrementally gotten better and better. So as you're going here into 2020, do you think high single-digit or more like teens growth is achievable here? What's the right number we should be thinking about?

[Richard Eiswirth:]

Yes, we're still targeting mid- to high-teens growth. That's where we believe we can end up – we got back to what 14% in the fourth quarter and we still think there's room for the team to improve. If you go back to 2018, we grew about 17% end-user demand, when we had consistency in the field. So we're hoping we can get back to mid- to high teens.

[Alex Nowak:]

Okay, excellent. And then just going over to international that ended at about $7 million in the quarter. You mentioned the seasonality element so we hear that loud and clear. But what is the right number to kind of build off in 2020? Because if we look in 2019, the normalized run rate per quarter has been about $3 million, I think you're going to be well above that number starting in 2020. So just maybe help us out there, so we can model this appropriately.

[Richard Eiswirth:]

Yes. I mean I think the seven is a little bit high. But at the same time we ended the year closer to what a $24 million run rate there. And I think that's a good place to start off within Europe.

[Alex Nowak:]

Got it. Okay. That sounds good. And then just last question for me. Just your current thoughts on M&A. Last quarter there was a thought there would be potentially some M&A in the future. I think your commentary has changed since last quarter and you said, you're just kind of rolling around ILUVIEN, which I think makes sense. But just your current thoughts there?

[Richard Eiswirth:]

Yes. So I mean look Alex, we think we've got a pretty valuable platform here. We think as a small company, especially value where we are. We're pretty unique and then we've got a retina presence both in the U.S. and in Europe. And there's – and making money – or excuse me, generating a little bit of EBITDA and hopefully a little bit more cash next year.We have a platform that can be leveraged. Because the moment we drop something else in the bag, it should for the most part go straight to the bottom line. That said, we think we're in a pretty enviable place as a small company too in that we are going to be generating cash next year. And we don't have to do anything to change our story, right?We can focus on ILUVIEN, continue to grow and be opportunistic. So we're going to continue to look. But the reality is, if we just continue to execute the story the way it is, we should increase shareholder value. And we'll look for the right thing at the right time for us. So we're going to be looking but we're not in any rush to do anything. We don't want to do the wrong transaction if there's something out there.

[Alex Nowak:]

No, that’s good to hear. Appreciate. Thank you.

[Operator:]

The next question comes from James Molloy of Alliance Global Partners. Please go ahead.

[James Molloy:]

Hey, guys. Thanks for taking my question. And it looks like a pretty good quarter in the fourth quarter. I know you mentioned the first quarter typically is weaker. You look at the fourth quarter is that should typically be stronger going forward every year? Is it how we should have shaped the quarters going forward?

[Richard Eiswirth:]

We expect the fourth – yes, the fourth quarter is typically a stronger quarter for us. And the reason for that is even though there's a lot of subsidization of co-pays and things like that, a lot of people seem to try to push these higher-priced products into the fourth quarter, right? And we always seem to see an uptake in the U.S., specifically of usage in the fourth quarter as people are trying to get these procedures done before the insurance year runs out.

[James Molloy:]

Got it. Thank you. And I know one of the questions has always been the retreatment, three years going up and every – I'm sorry call we see that we asked about it is there – have you seen it? Is there a way to say how many maybe retreatments coming through? Or is there that impact that could be happening here?

[Richard Eiswirth:]

Yeah. So, Jim, I -- there definitely is an impact of it, right, and it's a positive impact. It's a very hard one to triangulate because of the -- just because of the HIPAA rules and things like that. But what we can tell is that about 10% of the patients that were treated back in 2016 came through for repeat benefit investigations. So where we help provide, looking at the insurance, understand what the co-pays are for the doctor, making sure pre-authorization is not required, all those types of things, about 10% of those patients from 2019 came back through.Now that's always an accurate measurement, because sometimes the patient has moved to a different office, comes through with the different numbers, something like that, or a physician's office has stopped using that system. But we know they're coming back there and physicians are looking at those.And I know that, our new VP of Sales, Andy Young that joined us in the middle of this year is really, really focused team with the U.S. specifically looking at the data on where the business came from three years ago and where the business came from in the first half of the year to make sure we're getting better repeat business.Any doctor that's already made the decision to use ILUVIEN is the best one to get to continue to use it. So, we're really focused on that. I know it's coming through, but it's very hard to quantify.

[James Molloy:]

Understood. I know it's always been a challenge to figure out those numbers out. Have you guys seen any ability to take pricing? And now it's been unit growth. Has there been any pricing group to anticipate there will be any pricing growth at any point?

[Rick Eiswirth:]

No, no. There's not -- we have not taken any price increases. And at this point, we really don't perceive there being any opportunity to increase price. If you look across in the ophthalmology space and specifically retina drugs, we're not aware of any retina drugs that have been able to take a price increase. And it's -- a lot of it has to do with the fact that most of these drugs are reimbursed through buy-and-bill.And so, the doctors are getting reimbursed based on sort of an average sales price looking back over six months historically. So if you raise price, they are going to be under reimbursed for a few months at a time and you have a negative impact on usage. So you just typically don't see it in this space.

[James Molloy:]

Okay. And last couple of questions and thanks for taking in, the anterior uveitis indication in EU, is that -- how much would you attribute to the strong growth in the fourth quarter or the strong growth really throughout the year to that indication?And then the final question, I guess, you touched on it briefly. I know the coronavirus is all over the news, in Italy getting locked down, in China what have you. Any thoughts on potential impact that may have?

[Rick Eiswirth:]

Sure. Sure. So with respect to uveitis again, because it's -- ILUVIEN goes out in a box based on the order regardless of what the indication is, we don't have specific script data in Germany and the U.K. to tell us how much is uveitis and how much is DME. I know there's some DME growth, as I said coming off of continued improvement in our messaging, more alignment with our medical team, what we saw at EURETINA from an advocacy standpoint, but also the launch of uveitis in some of these hospitals. So I think it's a combination of both. And I think the growth in usage in uveitis is going to have a positive impact on DME as well.With respect to the coronavirus, we're continuing to moderate the situation. We either operate directly or through partners. We operate in the U.S., Europe including Italy and the Middle East. None of the ILUVIEN parts or the drug itself are made in China. It's all done in either Mexico or final assembly in the U.S.So we do think we have limited our exposure with respect to China. I do know that in Italy with some of the announcements in Italy, they recently restricted access to some of the hospitals to personnel from pharmaceuticals companies. So if that continues and that spreads throughout Europe and were to make its way in the U.S. that obviously will impact the ability for us to have a presence in front of the doctors. But at the same time, these patients still need to be treated, right? And a lot of them need to be treated fairly often, because they're on these acute therapies.So we're going to continue to monitor the situation. We don't know anything right now. I mean, obviously, there's some risk out there for us like there is any other country. One of the things remote -- company, one of the things we're looking at is doing some e-detailing as well and trying to accelerate that. We were trying to set that up for some remote territories and trying to accelerate the development of that right now in case, this becomes more of an issue.

[James Molloy:]

Great. Thank you for taking the questions.

[Rick Eiswirth:]

Sure.

[Operator:]

The next question comes from Yi Chen of H.C. Wainwright. Please go ahead.

[Yi Chen:]

Thank you for taking my question. First question is, do you expect overall operating expenses to remain relatively at the same level in 2020?

[Rick Eiswirth:]

Yeah. So I think we do expect to increase the operating expenses in line with revenue growth, right? To the extent we can generate cash to pay the interest cost on the debt. As we've always said, we want to continue to grow ILUVIEN. We want to get to the point where we are not relying on raising additional capital. But from that point forward, the expectation is to be sort of cash neutral. And so, the goal is, as we generate more margin above our operating costs and above paying off the debt, that we will take that cash and reinvest it in the business to try to continue to grow the top line.

[Yi Chen:]

Got it. Second question, could you tell us the -- how many common stock is currently outstanding? And whether the 1.3 million participating shares will be added each quarter for calculating the EPS going forward.

[Rick Eiswirth:]

I'm going to ask Phil to answer that.

[Phil Jones:]

Yes. Currently outstanding, we have 4,965,949 shares of common stock outstanding.

[Yi Chen:]

And in calculating the fourth quarter EPS, there is 1.3 million participating shares added. Is that the way going to be for each quarter going forward?

[Phil Jones:]

Yes. That should be -- there's actually no change to that moving forward.

[Yi Chen:]

Okay. And when do you expect to file the 10-K?

[Rick Eiswirth:]

We're typically planning to file the 10-K either this Friday or Monday.

[Yi Chen:]

Got it. Thank you.

[Operator:]

Our next question comes from Ron Chez, a private investor.

[Unidentified Analyst:]

Good morning.

[Rick Eiswirth:]

Good morning, Ron.

[Unidentified Analyst:]

Do you have -- what is your expectation about retaining customers retaining patients that were treated three years ago as you go forward? Do you expect to retreat 100% of them 50%? What's your goal and expectation?

[Rick Eiswirth:]

Yes. So, Ron, as I addressed earlier, we think we're seeing about 10% of the patients right now coming through for benefit investigations in. So the doctors evaluating their insurance coverage for that second ILUVIEN injection. Candidly, the way ILUVIEN works, it works as monotherapy in 50% to 60% of the patients, is what we're seeing. So it works very well by itself.I think, conservatively, we would probably model out ourselves at somewhere in that 30% to 35% repeat range until we have a little bit more experience. And one of the reasons we discount that down is, it is working longer in some circumstances than we expect. And these DME patients have a lot of other comorbidities.So we know from some of our reps -- men out in the field and talking to doctors about retreatments, that we're losing some of these patients to mortality. So, I conservatively say, our goal is to get to 30%. It hopefully can be higher as we learn more. But where we are right now, I think 30% is what I would think about.

[Unidentified Analyst:]

Are you working harder now to get good data in that area?

[Rick Eiswirth:]

Yes. We are. And I think, as I said Andy Young, our new VP of Sales, is really focused on utilizing, frankly, more efficiently than I think we've done in the past, the data on where the business has come from, where the opportunities for those retreatments are, as we're targeting the reps out there in the field.

[Unidentified Analyst:]

You have a goal for new doctors? Or how many doctors do you have now? And how many would you expect to add this year as new doctor customers?

[Rick Eiswirth:]

So, Ron, we don't have great transparency into the exact number of doctors. We know, based on accounts. We typically ship to between 400 and 500 accounts on an annual basis and there's probably 900 to 1,000 retina practices out there. We estimate inside of those accounts that are using the product, there's somewhere between 600 and 800 doctors that are using the product on a regular basis.There is some data out there in the marketplace. It's a limited sample, but at the ASRS meeting last year, a survey amongst the doctors said about 50% of the doctors had not used ILUVIEN yet. So when I say, I think there's significant opportunity out there, it's getting to those doctors and getting greater usage there.I believe and I've said this repeatedly to the team, I mean, I really do believe we've got a better mouse trap. And I'm going to continue to be bullish about that. It's a better way to treat the disease. The patients deserve the opportunity to reduce the recurrence and stop that disease coming back, so that they can see more consistently over time.And I think our message is getting better and we are continuing to get some new doctors on a regular basis. So, that -- when I talk about the big opportunity in front of us, it's to get to more of those doctors and get them using ILUVIEN earlier in the treatment paradigm.

[Unidentified Analyst:]

You have good data tracking that now?

[Rick Eiswirth:]

Well, we have what I'm sharing. We don't have script data. And the reason we don't have script data is because these patients -- excuse me, these physicians use the buy-and-bill model. So, it's bought at the practice level, and you don't have data at the doctor level.

[Unidentified Analyst:]

But I'm talking about good data with respect to number of offices than as opposed to…

[Rick Eiswirth:]

Absolutely. Absolutely. We see that we've got great transparency on the offices and where the product is going on a daily basis with our distributors.

[Unidentified Analyst:]

Your goal for this year in terms of adding doctors?

[Rick Eiswirth:]

Yeah. I'd like to get 100 new practices using the product if I could.

[Unidentified Analyst:]

And you talked about taking it slow with regard to looking for acquisitions bolt-on or whatever which makes sense to me given the circumstances. Are people approaching -- on the other end of this are people approaching you to acquire your company?

[Rick Eiswirth:]

I think we always hear people interested in what we're doing here at Alimera. I think because if you look at the ophthalmology space, we are pretty unique and that we've gotten to the point where we're at $54 million in revenue this year. And we obviously expect to be quite a bit higher next year where other companies in the space are struggling with launches and seem to be quite a bit of ways from profitability.But at this time, there's no transaction that we're pursuing anything like that. I believe you have to build companies as if you're going to run them forever. And if you do that, they become attractive to other parties. And so our goal is to continue to grow ILUVIEN, leverage the platform we have. And if that happens that happens. But it's certainly something that we don't sit around waiting to happen.

[Unidentified Analyst:]

I agree with your commentary completely, but have people extended interest to you on occasion in the last year?

[Rick Eiswirth:]

Ron, even if they could, I couldn't comment on that. I'm sort of restricted under Reg FD to comment on things like that even if it had happened. So, I'm going to have to say no comment on that.

[Unidentified Analyst:]

And one last question and that is the stock price is unpleasant for everyone. Any specific plans to talk to retail brokers or others who may have an interest in the stock?

[Rick Eiswirth:]

Yeah, Ron, we're out on the road quite often. We're planning some non-deal roadshows to get out there and talk to investors both retail and institutional in the coming months. We're presenting at the Oppenheimer Conference in March and at the Wainwright Conference in London in April as well at this point in time. So, we were on the road pretty aggressively in the fall, and our plan is to get out there pretty aggressively in March, April and May as well. We're very bullish on the story. We think we made great progress, and we want to try to get more people in front of us to hear our story.

[Unidentified Analyst:]

Last question, are the officers continuing with the stock purchase plan?

[Rick Eiswirth:]

Well, the stock purchase plan that we all had in place was terminated as of December 31. And we've been in a blackout window since then. But we all participate in and ESE employee stock purchase plan through the company as well on a regular basis too.

[Unidentified Analyst:]

So, are you going to have the same kind of plan going forward as you did last year?

[Rick Eiswirth:]

I'm not sure at this point in time, Ron. I can't comment for the whole executive team, and I haven't made a decision myself on what I'm going to do, but I am participating in the SPP plan right now.

[Unidentified Analyst:]

Okay.

[Rick Eiswirth:]

Thanks, Ron.

[Operator:]

This concludes the question-and-answer session. I would like to turn the conference back over to Rick Eiswirth for closing remarks.

[Rick Eiswirth:]

I want to thank all of you for participating on today's call and for your interest in Alimera Sciences. As I said, I think we had a great year and we appreciate your support and interest in our story. We look forward to sharing our progress on our next quarterly conference call when we report our first quarter results. Thank you and have a great day.

[Operator:]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.