Alimera Sciences, Inc.
Q4 2016 Earnings Call Transcript

Published: 2 Mar 2017

[Operator:]

Greetings and welcome to the Alimera Sciences’ Fourth Quarter 2016 results conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jacob Goldberger. Thank you, Mr. Goldberger. You may now begin.

[Jacob Goldberger:]

Thank you. And thank you all for joining us today for the Alimera Sciences fourth quarter and full year ended 2016 financial results conference call. With me on the call today are Dan Myers, Chief Executive Officer, and Rick Eiswirth, President and Chief Financial Officer. Yesterday the Company issued a press release announcing fourth quarter and year-end 2016 financial results. Today's call is being webcast and a recording will be posted to the Company's website. Following remarks by management, we will open the call up to your questions. During the course of this call, management may make certain forward-looking statements regarding future events and the Company's future expected performance. These forward-looking statements reflect Alimera's current perspective on existing trends and information and can be identified by such words as expect, plan, will, may, anticipate, believe, should, intend, and other words of similar meaning. Any such forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties. These risks are described in the Risk Factors in the Management Discussion and Analysis sections of Alimera's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, which are on file with the Securities and Exchange Commission and available on the SEC's website. Additional factors may also be set forth in those sections of Alimera's Annual Report on Form 10-K for the period ended September 31, 2016, to be filed with the SEC in the first quarter of 2017. You will see in Alimera's press release, the Company is offering non-GAAP financial information. Alimera does so because it believes that such non-GAAP financial information can enhance an overall understanding of the Company's financial performance when considered together with GAAP figures. Non-GAAP adjusted net loss attributable to common stockholders excludes certain non-cash items. These non-GAAP metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for net loss attributable to common stockholders and may not be comparable to similarly titled measures reported by other companies. Non-GAAP financial measures should only be read in conjunction with financial information reported under GAAP when understanding Alimera's operating performance. For a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure, see the table located in Alimera's earnings release from yesterday. In addition, any unaudited or pro forma financial information is preliminary and does not purport to project financial positions or operating results of the Company. Actual results may differ materially. For the benefit of those of you who may be listening to the replay of this call, this call was held and recorded on Thursday, November 3rd at approximately 10 AM Eastern Time. Since then, Alimera may have made additional announcements related to the topics discussed herein. Please reference Alimera's most recent press releases and current filings with the SEC. The forward-looking statements contained in this presentation are expressly qualified by the cautionary statement contained or referred to in this presentation. Alimera cautions investors not to rely too heavily on the forward-looking statements it makes or that are made on its behalf. These forward-looking statements speak only as of the date of this presentation. The Company undertakes no obligation and specifically declines any obligation to publicly update or revise any such forward-looking statements, whether because of new information, future events or otherwise, except as required by applicable law. Now I'd like to turn the call over to Dan Myers, CEO of Alimera.

[Daniel Myers:]

Thank you, Jacob. Good morning everyone and thank you for joining our call. We're pleased to speak with you today about the strong results we had in 2016, which we believe positions us well for the start of 2017. For both the full year of the fourth quarter of 2016 we are reporting record revenues in the United States and in Europe. We strengthen our balance sheet with an equity raise and the refinancing of our deficit with Hercules and we also advanced our partnerships with distributors outside the United States to further the availability of ILUVIEN in 2017. In the fourth quarter of 2016, we recorded revenues of $10.7 million, a new record on a quarterly basis, representing growth of 84% over the quarter fourth quarter from 2015. For the full year 2016, we recognize record revenue $34.3 million, which represents growth of 53% over the $22.4 million recorded for the full year of 2015. This growth in revenue is evidence of continued adoption by physicians of ILUVIEN as they gain better understanding of its fit in their clinical practice. We continue to believe that ILUVIEN is the best product available to treat diabetic macular edema because it is the only drug therapy that enables the physician to treat the disease consistently every day. This consistency for the physician and the patient is not available with the use of bolus injections of anti-VEGF major therapy are shorter duration corticosteroids. The continuous release of ILUVIEN, not only reduces the treatment burden, but also provides more stability for the patient. Our real world data as seen clinic since commercial launch, supports the benefit of continuous every day delivery and reduction treatment burden. As shown in the IRISS and Medisoft studies that have been presented in Europe, ILUVIEN is working in clinical practice as well, if not better and safer than it did in the pivotal same studies, this is not typically seen in our category. During 2016 this real world data in Europe contribute to approximately 100% revenue growth in both Germany and Portugal. Now in 2017, we plan to use this real world data to support increased sales of ILUVIEN in the United States market. We have continued collecting data and are pleased to let you know that at the upcoming Association for Research and Vision in Ophthalmology or ARVO meeting in Baltimore in May, we have had 27 abstracts accepted for presentation, nine of those from the U.S. representing the largest presence of ILUVIEN at any global meeting since its launch. We believe this clinical data and a relentless focus will allow us to continue to build on our momentum from the end of 2016. Looking at our business by geographic segment in the fourth quarter of 2016, we see that in the United States, we’ve recorded revenues of $8.3 million, which represents an increase of 113% over the $3.9 million reported in the fourth quarter of 2015. We were very pleased with the strong conclusion to the year and the growth over the prior periods. Our International segment, we recognized record quarterly revenues of $2.4 million in the fourth quarter of 2016, which is an increase of 26% over the $1.9 million reported in the fourth quarter of 2015. Experience breeds familiarity and we believe that the positive experience of physician in Germany, the U.K. and Portugal have had with ILUVIEN is feeling greater usage and we continue to expect to see growth in our existing markets in Europe in 2017 and we plan to supplement that growth from launches in new markets. First, we expect to launch ILUVIEN directly in both Ireland and Austria in 2017, where we will leverage our existing sales forces in the United Kingdom and Germany, respectively. Secondly, we believe our distributors will provide us additional sales in 2017. Specifically in the Middle East, we recognize revenue in the second half of 2016 from a small number of unit sales to the distributor on a name/patient basis, but we fully expect that to grow in 2017, as the distributor expands its reach. Additionally, we announced recently the receipt of a price and a positive change in reimbursement status by our Italian partner SIFI, who we expect will launch ILUVIEN in Italy in the second quarter of this year. With that, I’d now like to turn the call over to Rick Eiswirth, who will elaborate on some of our plans for 2017 and take us through our financial results for the fourth quarter and full year ended 2016. Rick?

[Richard Eiswirth:]

Thanks Dan. Before we get into the numbers, I want to discuss certain aspects of our business that are important in assessing our growth. Two years into the launch in the United States, it is clear that we will experience seasonality in our business and therefore, we believe quarter-to-quarter, year-over-year comparisons are the most relevant in assessing the growth and success for our business. We do not benefit from their recurring scripts that a daily or shorter duration therapy might and as a result, sales will always be impacted by holidays, vacations and other times that physicians are out of the office. Further, because we have a high priced product that is used once every three years, insurance program renewals, which occur at the beginning of the year will impact in timing of injections earlier in the year. In the U. S., our business can also be affected by our distributor stocking practices. To remind you, our only two customers in the United States are special distributors that sell ILUVIEN downstream to physicians and specialty pharmacies. Our sales to these successful distributors will not always correlate with end user demand sales within a quarter because of their stocking practices, quarter timing and the relative size of our current business. Based on the timing of their orders, we will see fluctuations in our revenues quarter-to-quarter. For example, in the second quarter 2016, our U.S. distributors acquired a net inventory increase. In the third quarter of 2016 they decreased their inventory and in the fourth quarter of 2016, they increased their inventory again. It is clear in our quarterly numbers for 2016 that these swings in distributor inventory levels impacted our reported revenue and any sequential analysis one might do. We expect this to continue, which makes a sequential analysis for our business challenging. However, a quarter-over-quarter comparison of 2016 to 2015 indicates our business grew in each quarter versus the prior year, which we believe speaks to the growth and adoption of ILUVIEN. We expect this trend to continue in 2017 as compared to the prior quarters in 2016. As Dan mentioned we're reporting $34.3 million in global revenue 2016, which represents growth at 53% over the $22.4 million, reported in the prior year. The $34.3 million in 2016 is comprised of approximately $25.8 million in United States and approximately $8.6 million in our International segment. On quarterly perspective consolidated revenue increased by approximately $4.9 million or 84% to approximately $10.7 million for the three months ended December 31, 2016 compared to net revenue of approximately $5.8 million for the three months ended December 31, 2015. This increase was driven by increased sales of ILUVIEN in United States, Germany and Portugal. U.S. net revenue increased by approximately $10.6 million or 70% to approximately $25.8 million for the year ended December 31, 2016 compared to U.S. net revenue of approximately $15.2 million for the year ended December 31, 2015 because of broader acceptance of ILUVIEN in the marketplace and because ILUVIEN was available for sale for the full year ended December 31, 2016. The U.S. growth of 70% year-over-year was driven by increased familiarity of ILUVIEN and the availability of permanent J-code in 2016. U.S. net revenue increased by approximately $4.4 million or 113%, approximately $8.3 million in the fourth quarter of 2016 compared to U.S. revenue of approximately $3.9 million in the fourth quarter of 2015. This increase was driven by increased end user demand for ILUVIEN in the U. S. and timing of certain purchases by the company’s to U.S. distributors as I mentioned earlier. International net revenue increased by approximately $1.3 million or 18% to approximately $8.6 million for the year ended December 31, 2016, compared to approximately $7.3 million for the year ended December 31, 2015. The increase was primarily attributable to higher sales volumes in Portugal and Germany, offset by decreases in sales volume in the United Kingdom. Revenue was further reduced by the decrease in the value of the British pound sterling and the euro. In our International segment, our growth of 18% year-over-year was driven by unit sales more than doubling in both Germany and Portugal in comparison to the prior year. This growth was dampened by downturn early in the year in U.K. because of the availability and reimbursement of Ozurdex or EYLEA as potential alternatives. We believe we absorb the impact of this and expect growth in the U.K. in 2017. International net revenue increased by approximately $500,000 or 26% to approximately $2.4 million for the three months ended December 31, 2016, compared to approximately $1.9 million for the three months ended December 31, 2015. The increase was primarily attributable to higher sales in Germany and Portugal compared to the fourth quarter of 2015 offset by decreases in the value of the British pound sterling and the euro. Consolidated gross profit increased by $4.4 million or 81% to $9.8 million for the three months ended December 31, 2016, compared with $5.4 million for the three months ended December 31, 2015. Gross margin was 92% and 93% for the three months ended December 31, 2016 and 2015, respectively. Consolidated gross profit increased by $11.3 million or 55% to $32 million for the year ended December 31, 2016 compared with $20.7 million for the year ended December 31, 2015. Gross margin was 93% and 92% for the years ended December 31, 2016 and 2015, respectively. In 2017, we are focused on establishing Alimera’s financial independence and driving toward operating profitability. We are focused on continuing our spending to match revenue growth with a goal of delivering revenue in excess of our cash operating expenses by the midpoint of this year. Because our real world safety data has proven to be consistent with or better than the same study, we made some changes to to of our large post-market clinical trials, which will have a positive impact on our spending in 2017 and beyond. In Europe, our registry study was originally designed to include 800 patients studied over five years. Because of positive safety signals, we saw approval from the regulatory authorities to decrease the size of that study to 550 patients. We have been given preliminary approval and expect to receive final approval in the future, but in the meantime we have kept our enrollment. In the U.S., we started our PALADIN study in 2015 to assess the effectiveness of a prior course of corticosteroids in screening our potential high IOP responders to ILUVIEN. Since the start, we have learnt that many of the patients treated in the United Kingdom have received the corticosteroid in connection with previous cataract surgery. With this information, we assessed the U.K. patients and our European registry study and our Medisoft data analysis to determine if an IOP response or the lack of a response were indicative of any IOP response a patient may or may have to ILUVIEN and determine the connection. This supported our belief that the safety profile on these data sets appears to be better than what we saw in the same studies and that our prior course indeed an effective way of screening out potential high side of deck responders to ILUVIEN. As a result, we reassessed the power in the size of the PALADIN study and determine that we would see its enrollment at 157 patients. In addition to cost savings, passing [ph] enrollment provides another operational benefit in 2017. We get an earlier assessment of the data and intent to provide this information of physicians in the U.S. who continue to evaluate the proper course and type of corticosteroid to screen their patients. We expect this data, the first significant analysis of U.S. use in a clinical setting to be available later this year. As we have seen in Europe, we expect this data will benefit our sales efforts in the U.S. Also in the fourth quarter, we made a decision to shut down our operations in France due to the unwillingness of the French regulatory authorities to agree to a reasonable price for ILUVIEN. This shutdown will reduce our expenses in our International segment in 2017. Further in 2017, we will evaluate a distributor option to pursue the commercial availability of ILUVIEN in France. Moving to a discussion of our reported expenses. Consolidated research, development and medical affairs expenses for the fourth quarter of 2016, decreased by approximately $700,000 or 19% to approximately $2.9 million, compared to $3.6 million reported during the fourth quarter of 2015. Consolidated research, development and medical affairs expenses for the fiscal year 2016 increased by approximately $2.4 million or 16% to $12.4 million, compared to $14.8 million reported during fiscal year 2015. The reduction was primarily attributable to decreases in cost paid to third parties related to potential product enhancements, occurred during 2015 and a reduction in medical affairs and scientific communication costs, associated with the U.S. launch in 2015. These costs were offset by increases associated with maintaining the registration of ILUVIEN in the United States and increased pharmacovigilance cost as compared to the fiscal year 2015. Consolidated general and administrative expenses for the fourth quarter of 2016 increased by approximately $500,000 or 14% to $4.2 million, compared the $3.7 million for the fourth quarter of 2015. This increase was attributable to one-time costs related to seeking refinancing and costs associated with our decision to close our operations in France. Consolidated general and administrative expenses for fiscal year 2016 increased $1.1 million or 8% to approximately $15.3 million compared to $14.2 million reported during fiscal year 2015. This increase was related to financing cost and cost incurred with our third party manufacturers of ILUVIEN. Consolidated sales and marketing expenses increased $300,000 or 4% to $7.4 million for the three months ended December 31, 2016, compared to $7.1 million reported for the three months ended December 31, 2015. Consolidated sales and marketing expenses increased $1.3 million or 5% to $29.4 million for the year ended December 31, 2016 compared to $28.1 million reported for the year ended December 31, 2015. The increase was primarily attributable to increases in commissions paid to our sales force associated with increased sales. Alimera’s GAAP net loss for the three months ended December 31, 2016 is approximately $5.9 million compared to approximately $10.7 million for the three months ended December 31, 2015. GAAP basic and diluted net loss per share for the fourth quarter of 2016 was $0.09 per share on 64.8 million weighted average shares outstanding, compared with $0.24 cents per share on 44.6 million weighted average shares outstanding during the fourth quarter of 2015. Alimera’s GAAP net loss for the year ended December 31, 2016 was approximately $33.2 million compared to approximately $30.6 million for the three months ended December 31, 2015. GAAP basic and diluted net loss per share for 2016 was $0.63 per share on a 52.8 million weighted average shares outstanding compared with $0.69 per share or 44.9 million weighted average shares outstanding for 2015. The GAAP net loss and GAAP basic and diluted net loss per share were affected by certain non-cash items including changes in the fair value of the derivative warrant liability and a loss on extra extinguishment of debt. Non-GAAP adjusted net loss for the three months ended December 31, 2016 was $6.8 million compared to a non-GAAP adjusted net loss for the three months ended December 31, 2015 of $10.9 million. Non-GAAP adjusted basic and diluted loss per share for the three months ended December 31, 2016 and 2015 were $0.10 per share and $0.24 cents per share respectively. Net loss per basic and weighted average shares outstanding per share and non-GAAP adjusted net loss per share were based on 64.8 million weighted average shares outstanding for the three months ended December 31, 2016 and 44.6 million weighted average shares outstanding for the three months ended December 31, 2015. Non-GAAP adjusted net loss for the year ended December 31, 2016 was $33.2 million compared to a non-GAAP adjusted net loss for the year ended December 31, 2015 of $43.9 million. Non-GAAP adjusted basic and diluted loss per share for the years ended December 31, 2016 and 2015 were $0.63 per share and $0.99 per share respectively. Net loss for basic and diluted weighted average shares outstanding per share and non-GAAP adjusted net loss per share was based on 52.8 million weighted average shares outstanding for the year-ended December 31, 2016 and 44.5 million weighted average shares outstanding during the year ended December 31, 2015. Turning now to our balance sheet, as of December 31 2016, we had cash and cash equivalents of $31 million. In the third quarter, we closed the public offering where we sold 18.9 million shares of common stock resulting gross proceeds of $26.5 million. In the fourth quarter, we completed an amendment to our term loan with Hercules, which we anticipate gives us sufficient funds to allow us to become cash flow in late 2017. Further, the imminent facility provides us for up to $10 million in additional funds to be drawn down in the future for expansion. With that, I would like to turn the call back over to Dan for closing comments.

[Daniel Myers:]

Thank you, Rick. As said earlier, we’re very pleased with the results of 2016, posting year-over-year revenues gains of 53%. As we look forward in 2017, we anticipate seeing quarter-over-quarter growth impacted by similar seasonality as seen in 2016. We continue to reach more doctors in the U.S. and anticipate the availability of real world data at upcoming meetings we’ll provide further evidence as to the benefits of using ILUVIEN with DME patients. Our international segments continues to strengthen in our existing markets, in addition to the organic growth of our existing markets we anticipate had an incremental sales in Ireland, Austria as well as, from our distributors in Italy and the Middle East. Thank you all for joining us today. I'll now turn the call over to the moderator to begin our Q&A session.

[Operator:]

[Operator Instructions] Our first question comes from a line of Boris Peaker with Cowen. Please proceed with your question.

[Boris Peaker:]

Good morning and congratulations on excellent top line growth certainly. I'd like to probe specifically into that top line growth, can you give us a sense what specifically kind of new drivers that maybe came into play in 2016 versus 2015 outside of the J-code just from a clinical perspective? Also do you have any sense of how many of your patients may be coming from prior Ozurdex treatments?

[Richard Eiswirth:]

Yeah, I think more certainly as you mentioned that J-code did have an impact. I think it simply increased familiarity and getting broader reach with our sales team. We certainly have significantly increased our user base. Our user base probably grew by 30% to 35% over the course of 2016 and we certainly got deep into the accounts that have been using ILUVIEN more because as I said I think that familiarity more use got the more and more comfortable with the side effects and that definitely is what occurred in the U.S. I think in Europe as Dan pointed out is the availability of that real world data and physicians had to see something new about how it's working in clinical practice today, because as we said when we launched our drug both in Europe and the U.S. our data was quite old because of the time it took us to get to the FDA. With respect to your question on Ozurdex, it's hard to put a percentage on that. I would say that the majority of the patients are probably receiving Ozurdex first. However, there is variety out there in physicians are doing. Some physicians use IVTA because they’re not comfortable using Ozurdex. Others will do a topical drop, topical Durezol or topical Pred Forte or something like that for a couple of weeks to do the test. The good thing about closing the PALADIN study early as we've done is we expect to have data later this year from that and that will give us a good feel for what types of tests we’re using and if there's any difference in the effect to those tests. We also are compiling what we're going to call the user database, but it's a database of probably 200 patients to 450 patients from some of the larger practitioners that have been using ILUVIEN. I guess, its four practicers and that should be available later this year to which will give us more insight into that question.

[Boris Peaker:]

Great. And on the PALADIN study, if we stick to that timeline, when do you anticipate kind of publication of presentation of to occur, so you can actually market the results of it to the physicians.

[Richard Eiswirth:]

Yeah, we think there will be some discussions at the ARVO meeting and then fuller analysis will come out over the course of the year. Yeah, we should have, I'm sorry, I'm double checking something right now, but I think we'll have a six month extracts to look at patients through 6 months at ARVO, which occurs in early May and then at the ASRS in August or September we will have a 12 month look at that data.

[Boris Peaker:]

Got you. And my last question is maybe on European operation. So, certainly it is nice to see an update of removing a country if you can't really make it profitable like France. I'm just curious in general on a standalone basis, what is the cash burn of the European operations? When is the past or online for at least the European operations a whole to become cash flow positive?

[Daniel Myers:]

Yeah, we are clear on the cusp of breaking even in Europe right now, and I expect it you will definitely see positive operating income from the European operations in the second quarter this year.

[Boris Peaker:]

Great. Well, congratulations on the progress and thank you for taking my questions.

[Operator:]

Our next question comes from the line of François Brisebois with Laidlaw. Please proceed with your questions.

[François Brisebois:]

Hi, yeah, this is Frank on for Jim. Thanks for taking the questions. The first one is can you give us a little more color on what explains the U.K. rebound in the fourth quarter and how much of this is actually offset by the devaluation in the British pound?

[Richard Eiswirth:]

So in the U.K., they announced reimbursement for EYLEA and Ozurdex in late 2015. And physicians started trying to play around with where those fit in our algorithm. Some physicians switching from Lucentis to EYLEA before they would make a switch to a steroid other physicians using Ozurdex ahead of ILUVIEN and so that's certainly slowed down sales. I think similar to my answer to Boriz, I mean, familiarity breeds growth with our product. As physicians get more and more comfortable with the side effect profile. I think as they have experiment to a switch to an alternative anti-VEGF or different shorter term corticosteroid you know they found that these patients that need a steroid, providing that consistent long-term dose that ILUVIEN provides is the path to go. We’ve certainly seen a change over time as I think that education has sort of grown on those alternative products in the U.K.

[François Brisebois:]

Great. And then how much is great top line growth here in the U.S., how much are the U.S. Can you break down if it's a repeat orders or new sales growth?

[Daniel Myers:]

Well, it's a combination of both. As I said, we grew our user base over the course of 2016 by about 30% to 35%. So we definitely increased the number of accounts that are ordering and using the product over the course of the year. But we did get deeper into all of those accounts as well.

[François Brisebois:]

Okay. Great. And then for 2017 in terms of top line or OpEx EPS positive. What are the expectations there?

[Richard Eiswirth:]

We're not giving specific guidance for the full year, but we do expect as Dan said, we expect to report quarter-over-quarter growth throughout 2017 over the prior year.

[François Brisebois:]

Okay. Great. Now more in terms of the sales reps a little bit. How many of them are currently at breakeven or profitable right now? Any expectations on adding additional reps to drive growth, if so, like how many?

[Daniel Myers:]

Yeah, on a standalone basis very, very – almost all of our reps would be profitable right now because of the high price of ILUVIEN. You don't have to sell that many units to cover your own costs. So, we don't really have any territories that are “losing money right now”. At this point time we have what 27 of our 31 territories are targeted at remain fill [ph] for the first half of the year and as we pick up buy and we get the profitability we’ll probably refill the other four. Some of the core territories that are left open at this point in time simply weren’t producing in line with what your question was and so we’ve decided to keep those vacant and cover them with some existing resources until they start producing some sales.

[François Brisebois:]

Okay, great. And there are very few independent [indiscernible] making companies left in this space. Have you guys been approached by any strategic acquires? Or do you anticipate this being a realistic possibility?

[Daniel Myers:]

We obviously can't comment on anything specific like that. We think ILUVIEN is obviously a very valuable asset. We're building this company as if we're going to have to run it forever, but we certainly think that it would be a strategic asset for somebody else as well.

[François Brisebois:]

Okay, great. And then there’s just one right from Jim, this is more for Dan, but, so Georgia Tech here isn't ranked in any preseason top 25 polls. So should you think yeah that, Paul Johnson should be on the high state?

[Daniel Myers:]

That’s the most interesting question I've ever gotten there, Frank. I'm a big Paul Johnson fan, I think we're always underrated. I like being the underdog. We’ll be fine next year.

[François Brisebois:]

All right. Thank you. That’s it.

[Operator:]

[Operator Instructions] Our next question comes from the line of Laura Engel from Stonegate Capital Partners. Please proceed with your question.

[Laura Engel:]

Good morning and congratulations on the exceptional quarter. I wanted to see just one specific, it looks like in Q4 there is a bump in your cost of goods sold as a percentage of revenues. What’s contributing to that for this last quarter of 2016?

[Richard Eiswirth:]

That would be - we actually did have to make some payments under the profit sharing plan to pSivida in the fourth quarter and the reason we were positive cash flow in the fourth quarter with respect to the calculation is because back in August, you may recall we made a change to our terms of our distributors and shorted the terms by 30 days. So in December, we picked up an extra month of cash collections, which sort of threw us into positive from a cash calculation we had to make some payments to pSivida.

[Laura Engel:]

Okay. And then any thoughts as far as pricing your tiers into, or I guess, post-launch. What’s the feedback you’re getting? What are your thoughts, how you’ve progressed in the past two years as far as acceptance and kind of the change the physicians have to process. What are you hearing and what are your thoughts looking forward on that?

[Daniel Myers:]

I didn't hear the beginning of your question, I’m sorry, Laura, were you asking about pricing or just more general adoption? Pricing?

[Laura Engel:]

Yeah, pricing and still the feedback you’re getting from physicians I know that was a change they had adjusted to? And as far as where you are now, you have the approval codes we’re looking forward. Any changes or will that be a status quo going forward as we model some of these numbers out?

[Richard Eiswirth:]

I think you should probably expect that we would not be taking price increases over the foreseeable quarters going forward in this space on a buy and build model like this, reimbursed primarily by Medicare. It's quite difficult to raise price. As far as your question about the acceptance of price. I think we’ve had good experience in 2016 probably in 2015 in the U.S. there was a little bit of sticker shock for the doctors when they have to pre-purchase roughly $8,800 and wait for the government to reimburse them or the other private insurer. I think now as doctors are beginning as you've heard the word many times, the familiarity of ILUVIEN. They’ve also begin to realize that when you take the amortized costs of ILUVIEN over three years versus anti-VEGF therapies, we are far and away the best economic opportunity for the doctor to patient and the medical payers. So, I think we're comfortable right now that we bring great value over the three year treatment pattern. But I don't think at this point in time you’d see us planning any price increases over the over the foreseeable future.

[Laura Engel:]

Then similarly I know one of the gentlemen asked about acquisitions. As far as expanding your own portfolio where you are now you're obsolete, still continuing with growth and are focusing also on international. But what about our opportunities for expanding through the purchase of additional products or earlier stage candidate?

[Daniel Myers:]

Yeah, so Laura, we continue to look at opportunities out there and we would be opportunistic in that vein like we were when we found ILUVIEN 10 years ago. The challenge we have right now is we think that our stock is significantly undervalued where it is and doesn't provide us the currency to go do this deals that what we think would be a fair price. So, I think right now the focus is to do drive to profitability as I said. Get what we believe the value is for the stock up to where it should be and then we will have currency to evaluate those options going forward.

[Laura Engel:]

Got it. Well I appreciate and again congrats on a quarter. Thanks.

[Daniel Myers:]

Thank you.

[Operator:]

We have a follow-up question from the line of François Brisebois with Laidlaw. Please proceed with your follow-up question.

[François Brisebois:]

Hey, again, it’s Frank on for Jim. Thanks for taken the additional questions. So just wondering, any anecdotal comments from the sales force on the counter detail from Allergan and how they overcome this with doctors?

[Daniel Myers:]

We just happen to have our national sales meeting last month, so we did get some experience in getting more feedback from the sales force and through the customer. I think Allergan primarily is and for the counter-details standpoint is focusing on the safety aspects of corticosteroids, clearly when we provide a longer benefit of three years versus anywhere from most people say three months with Ozurdex, although their label says six months. So I think what our sales force is finding is that to just have doctors experience the fact that as I said earlier. In the real world the incidence of managing IOP, certainly the incidents of IOP surgery is much, much lower than what we saw in the same trial and the data that we had we came out with the launch. So I think that's kind of where the marketing battleground is right now on the idea of product like ILUVIEN, which provides such a benefit that we think is superior to Ozurdex over long-term efficacy. Our reps are trying to battle the fact that in real world doctors are not seeing the IOP signal that we saw on the same data, which I think Allergan is kind of happy to talk about.

[François Brisebois:]

Okay. Thank you. And one very last one here is any thoughts on timing of trials for additional indications for ILUVIEN? Could that start before year end 2017 here?

[Daniel Myers:]

I'm not sure we could start by the end of the year, but as I stated in previous comments publicly. We've had some very encouraging meetings with the FDA around the indication of non-prolific diabetic retinopathy as well as retinal pain inclusion. In both cases the FDA indicated to us that if we wanted to pursue those added indications, we could do so with one trial, which of course, would expedite approval for that added indication and certainly cut the cost tremendously. So, we’re happy about that, encouraged about that discussion with the FDA. I guess I defer back to Rick’s comment about other opportunities for products in the bag and potential acquisitions. We’ll look at which of those or both of those trials we’d want to start on the backside of the year. After we believe we've driven a profitability; we can fund those out of profits versus some of the capital in equity that we've raised. So, I think you'll see us in the back half of the year, began to talk to doctors, maybe look at different protocols. I wouldn’t anticipate that we could enroll patients by that time, but certainly we’ll have a better feel and give you some guidance as to, which of those trials we would be pursuing in 2018.

[François Brisebois:]

All right. Great. Thank you very much.

[Operator:]

There are no further questions in the queue. I’d like to hand the call back over to management for closing comments.

[Daniel Myers:]

Okay, we’d like to thank you for your time today and the questions and the opportunity to give you some insights to where we think we are. Clearly, we are very happy with the way the year ended. We're excited about 2017, as we said earlier we think we’ll continue to see on a seasonal basis, the same kind of growth we saw in 2016 over 2015, we think that'll continue in 2017 and look forward to updating you in the future. Thanks for your time.

[Operator:]

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.