Alimera Sciences, Inc.
Q3 2012 Earnings Call Transcript

Published: 7 Nov 2012

[Operator:]

Welcome, ladies and gentlemen to the Alimera Sciences Third Quarter 2012 Earnings Conference Call. [Operator Instructions] And as a reminder, this call is being recorded. I would now like turn the conference over to Rick Eiswirth, Chief Operating Officer and Chief Financial Officer. Please go ahead.

[Richard S. Eiswirth:]

Thank you. Good afternoon, everyone, and welcome to the Alimera Sciences conference call to discuss our third quarter 2012 financial results. A press release regarding these results was issued earlier today and is available on our website. On the call with me today is Dan Myers, our President and Chief Executive Officer. Before we begin our prepared remarks, I would like to remind you that various statements that we make during this call about the Company’s future results of operations and financial position, business strategy and plans and objectives for Alimera’s future operations are considered forward-looking statements within the meaning of the federal securities laws. Words such as anticipate, believe, estimate, expect, intend, may, plan, contemplate, predict, project, target, likely, potential, continue, will, would, should, could or the negative of those terms and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Our forward-looking statements are based upon current expectations that involve risks, changes and circumstances, assumptions and uncertainties. These risks are described in the Risk Factors and Management’s Discussion and Analysis of Financial Condition in the Results of Operations sections of Alimera’s quarterly report on Form 10-Q for the quarter ended September 30, 2012, and Annual Report on Form 10-K for the fiscal year ended December 31, 2011, both of which are on file with the SEC and available on the SEC’s and Alimera’s websites. We encourage all investors to read these reports and our other SEC filings. All the information we provide on this call is provided only as of today, and we undertake no obligation to update any forward-looking statements we may make on this call or on account of new information, future events or otherwise. Please be advised that today’s call is being recorded and webcast. And with that, I would like to turn the call over to Dan Myers, our President and Chief Executive Officer. Dan?

[Charles Daniel Myers:]

Thanks, Rick. We've made great progress on the launch preparation of ILUVIEN, which as you recall, has received marketing authorization in the United Kingdom, Austria, Portugal, France and Germany and has been recommended for marketing authorization in Italy and Spain for the treatment of chronic diabetic macular edema or DME, considered insufficiently responsive to available therapies. We are on target to begin generating revenue in the first quarter of 2013. We will begin with initial launch in Germany, followed by subsequent launches in the United Kingdom during the second quarter and France in the third quarter of 2013. Our planning for ILUVIEN commercialization at EU is well underway. And I'm pleased to announce that we've identified and hired our European senior management team and have been working closely with our contract sales organization to build out our initial country organizations. As a result, we will have Alimera-dedicated personnel in the field in the fourth quarter preparing the markets for launch. Additionally, we expect to ship 3 commercial batches of ILUVIEN to our European quality testing facility in the United Kingdom this week. We have also been closely working with our third-party logistics provider to establish inventory management, distribution and order to cash capabilities. I look forward to sharing more about these key hires with you in addition to these third-party relationships when we announce them in the coming weeks. Turning to the United States for a moment. We intend to resubmit our NDA for ILUVIEN during the first quarter of 2013. Based on the meeting with the U.S. Food and Drug Administration in June of 2012 to discuss the FDA's November 2011 Complete Response Letter regarding our New Drug Application for ILUVIEN for the treatment of DME, we intend to resubmit our NDA using data from our 2 previously completed pivotal Phase III clinical trials. We will focus on the population of patients with chronic DME, similar to the marketing approval for ILUVIEN granted in various European Union countries. We reinitiated our physician utilization study for the ILUVIEN inserter [ph]. And we are pleased to announce that we have completed enrollment with a total of 121 patients earlier this quarter. We are also encouraged by the interest shown from the U.S. retinal specialists to quickly complete this utilization study. Now I'll turn the call back over to Rick to briefly discuss our third quarter financials.

[Richard S. Eiswirth:]

Thank you, Dan. Turning to our financial results for the third quarter of 2012. Net loss for the quarter ended September 30, 2012 was $5.4 million, or $0.17 per common share. That compares with a net loss of $6.5 million, or $0.21 per common share for the third quarter ended September 30, 2011. Research and development expenses for the third quarter of 2012 were $2.2 million, relatively flat compared to $2.2 million for the third quarter of 2011. General and administrative expenses in the third quarter of 2012 increased slightly to $1.5 million, compared to $1.4 million in the third quarter of 2011. We expect this increase to continue beginning in the fourth quarter this year as we ramp up for the commercialization of ILUVIEN. Marketing expenses in the third quarter of 2012 decreased to $1.5 million, compared $2.6 million for the third quarter of 2011. Marketing expenses were used primarily for developing market awareness and launch plans for ILUVIEN in the U.S. in 2011 and in Europe in the current year. We expect significant increases in our marketing and selling expenses as we hire additional personnel and establish our sales and marketing capabilities in anticipation of the commercialization of ILUVIEN in Germany, the United Kingdom and France. As of September 30, 2012, we had cash, cash equivalents and investments of $17.4 million, compared to $33.1 million as of December 31, 2011. On October 2, 2012, we closed our $40 million Series A Preferred Stock financing with Palo Alto Investors, Sofinnova Ventures, and New Enterprise Associates. Now I'll turn the call back over to Dan for closing comments.

[Charles Daniel Myers:]

Thanks, Rick. We are confident in our financial and strategic positions with regards to the commercial launch of ILUVIEN in Germany, the U.K. and France. We look forward to updating you on the progress of our launch on our next call. And with that, I'll turn it back over to the operator for any questions.

[Operator:]

[Operator Instructions] And our first question is from Michael Faerm of Crédit Suisse.

[Michael Faerm:]

Could you provide us an update on where things stand with NICE? I believe you have had the second Appraisal Committee meeting. Just wondering how that went, and where you see things going from here with the potential final recommendation?

[Charles Daniel Myers:]

Okay. Yes, sure, Mike. This is Dan. Just to reiterate for those who might not have all the history. As you know, we submitted new clinical data that was accepted by the NICE committee from our first meeting to our second. And as a result, they delayed the September 11 scheduled meeting to October 11 to take consideration of that new data. In of itself we thought that as a positive development with NICE. For those who were at the public session of the NICE meeting, we -- the slides in the committee chair's presentation, we felt like that was a positive meeting. Clearly then they go into private session. And I think certainly, we couldn't comment or speculate on what might have transpired there. We do expect to hear the outcome of that meeting sometime by the end of this month. So we should know something here in the next few weeks.

[Michael Faerm:]

Okay. And did you get any sense -- I know you don't know everything that they were deliberating, but did you get a sense as to where things might go from here? What sort of outcome you might have or will this sort of go on beyond November, December?

[Charles Daniel Myers:]

Didn't get necessarily a sense of the timeline and how this might transpire as far as any other negotiations. I think, again, it was public -- it was a public hearing. So for those who were there, I think the presentation, and if someone would look at the slides, it was apparent to us that NICE is considering the subpopulation that we had -- we have put forward. So I think we'll be hearing from them shortly on that. As to the cost benefit, based on that subpopulation data, obviously, we won't know that until we see the final appraisement determination.

[Operator:]

Our next question in queue is from Amit Bhalla of Citi.

[Adam Darity:]

This is actually Adam in for Amit tonight. I just wanted to follow-up with the FDA. Since you're resubmitting data that you've already previously submitted, what's the additional analysis here that the FDA is going to be considering anew, and how is that different from what they were considering the last time?

[Charles Daniel Myers:]

Basically, from the meeting we had in June, we felt like there was an opportunity to resubmit the data from the 2 original FAME trials with data around the benefit-to-risk associated more with chronic patients. When you talk to retinal specialists and certainly some of our advisors, the benefit-to-risk assessment for patients who are chronic patients in nature, who have clearly had other therapies and are now moving into an area where one might look at the benefit to risk a little more broadly in that patient population then perhaps you would with early onset or the data set, if you will, when we first submitted prior to the CRL. So perhaps another way of saying that, is it's just a look at the benefit-to-risk ratio in chronic patients. We believe it could be looked at more broadly than early onset.

[Adam Darity:]

Okay, and from the FDA, they didn't really consider this the last time around?

[Charles Daniel Myers:]

We didn't really get an assessment on where they came out on benefits-to-risk prior to the CRL. And I can't comment on the meetings that we -- the actual content of the meeting. I'm just giving you the basis for why we think we could resubmit.

[Adam Darity:]

Okay. And then have you made any announcements or any new thoughts on pricing in the European markets?

[Charles Daniel Myers:]

Other than the public price in the U.K. that we submitted with our earlier NICE documentation for the U.K. price of GBP 5,500 -- and that is the public price. We will announce the Germany pricing 30 days prior to launch. So we will be coming out with that pricing in the coming months.

[Operator:]

[Operator Instructions] Our next question is from Chris Holterhoff of Oppenheimer and Company.

[Christopher Holterhoff:]

First question, just on the physician utilization study that just completed enrollment. Can you remind us if that's necessary for U.S. submission? And also just kind of when you will report the data and kind of what the significances of that data is going to be?

[Charles Daniel Myers:]

Yes, it was a requirement in the Complete Response Letter. We did address that with FDA in, and then -- I should say our meeting, in clarifying the Complete Response Letter. The FDA reiterated that they wanted 100 patients in the utilization study. Just to remind you, when we got the CRL back in November, we had 63 patients enrolled in that trial on our way to the 100 patients. We suspended the trial at that time until we had further dialogue with the FDA. After that meeting with the FDA that I just sort of reiterated, kind of a part of the content of that, we felt like it was worthwhile to go back to reenrolling in those patient -- into those investigational sites. We did reenroll -- we enrolled in those sites an additional 58 patients. So that got us to the total of 121. So almost kind of half-and-half, we did 63 in the first section of the enrollment and then we finished up, and finished up to 121.

[Christopher Holterhoff:]

Okay, got it thanks. And then just on the 3 commercial batches of ILUVIEN that are going to be shipped, is that going to be enough to supply the markets for 2013? Can you just give us...

[Charles Daniel Myers:]

Yes, I'll let Rick speak to the logistics and supply.

[Richard S. Eiswirth:]

No, those 3 -- first 3 batches that are being shipped are just the initial process validation batches that were completed as we increased the size of the commercial batch. And those will show up in the U.K. at our quality testing facility later on this month and be tested for release. But we are up to speed and continuing to do additional commercial batches now. But that's just the initial shipment.

[Christopher Holterhoff:]

Got it, okay. And would you expect a lot of inventory stocking in the first quarter of 2013 for the launch?

[Richard S. Eiswirth:]

I would not anticipate a significant inventory stocking because of the high dollar value of this product. And then it's really a one-time use product for each of the customer. So we expect to be shipping more on an as-needed basis to the hospital pharmacies.

[Christopher Holterhoff:]

Got it, okay. And just lastly, you mentioned there is going to be a ramp in SG&A expenses ahead of you launching. Kind of just wondering if the majority of that is going to hit in 2013, or would you expect some of that to start hitting the P&L during the fourth quarter?

[Richard S. Eiswirth:]

The majority of that will come in 2013. I would say, a little impact to that in 2012.

[Operator:]

And I'm not showing any further questions in queue. I'd like to turn it back to Dan Myers for any further comments.

[Charles Daniel Myers:]

Thanks for listening to today's call. We look forward to updating you on the progress of the launch of ILUVIEN in the EU on our fourth quarter and fiscal year end earnings call. Operator, this concludes our call.

[Operator:]

Thank you. And again, thank you, ladies and gentlemen for your participation in today's conference. You may now disconnect. Have a great day.