RVL Pharmaceuticals plc
Q1 2021 Earnings Call Transcript

Published: 13 May 2021

[Operator:]

Good day, and thank you for standing by. Welcome to the Osmotica Pharmaceuticals Quarter 1, 2021 Earnings and Business Update Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. . Please be advised that today's conference call is being recorded. I'd now like to hand the conference over to your speaker today, Ms. Lisa Wilson, Investor Relations for Osmotica Pharmaceuticals. Please go ahead.

[Lisa Wilson:]

Thank you, operator. Welcome to Osmotica Pharmaceuticals' first quarter 2021 business update call. This is Lisa Wilson, Investor Relations for Osmotica. With me on today's call are Osmotica's Chief Executive Officer, Brian Markison; Chief Operating Officer, JD Schaub; and Chief Financial Officer, Andy Einhorn.

[Brian Markison:]

Good afternoon, and thank you for joining our call today. We have good news to share, and I'd like to begin with Upneeq. First, paid prescriptions through our exclusive pharmacy continue to ramp. In the first quarter paid Rx grew 74% over Q4, 2020, and April prescriptions grew 17% over March. This is the beginning of a growth trajectory that we can expect as we move forward. Another data point of note is at the end of 2020, we had sampled over 4,000 eye care providers. As of the end of April, we have nearly doubled that number to over 8,000 eye care providers sampled. This is a particular note for two reasons. First, we have worked down our early launch distribution of nearly 12,030 count equivalents. And perhaps more importantly, our trained selling organization has grown steadily through the first quarter, and numbers 77 active territories with another 20 in the pipeline.

[Andy Einhorn:]

Thank you, Brian. Before going into the company's overall performance for the first quarter, I'd like to highlight some additional data points on Upneeq. Since launch, as Brian mentioned, we have sampled over 8,200 eye care professionals, and as of the end of April, nearly 5,000 have prescribed Upneeq at least once. During March, we saw a 76% increase in new to brand prescribers, and we continue to add new prescribers in April to see sequential growth in paid prescriptions month-over-month, with April coming in 17% higher than March.

[Brian Markison:]

Thanks, Andy. Operator, if you don't mind, we'd like to open up the call to questions.

[Operator:]

Our first question comes from the line of Greg Fraser from Truist Securities. You may begin.

[Greg Fraser:]

Thanks. Good afternoon. Firstly, how many prescriptions were there in the quarter, if you can provide that?

[Brian Markison:]

Yes. Let me back up.

[JD Schaub:]

I'm going to give you -- Greg, this is JD. It was about 4,700 for the first quarter.

[Greg Fraser:]

Okay. And can you speak to some of the feedback that you've been hearing from the field on efficacy and tolerability?

[Brian Markison:]

Oh, yeah. This is Brian. Greg, I should let JD pile on, but efficacy and tolerability have all been fantastic. Some of the efficacy stories we're getting are nothing short of spectacular. As far as safety is concerned, there are very, very, very, very few reports of any adverse events whatsoever. So, the drug is as well-tolerated, as we had hoped, in fact, it's quite soothing as an eye drop. And the efficacy is being borne out every single day that we go to work. So, JD?

[JD Schaub:]

Yeah, what I would add, Greg is, it's been what about six weeks since we last gave an update to you guys about things. And if anything, we've just continued to accelerate off of that, new prescribers, starting to see some turn around the depth within prescribers and offices, where every month they start to get more and more comfort and utilization with this product. And I think a lot of that stems from the safety and efficacy we've seen. Remember, this is still one of those, and we think about it, if you go back in time, think about the launch of a product like Restasis, the first to hit the market in dry eye as a prescription treatment. And out of the gate, a lot of that utilization is in Grade 3, Grade 4 dry eye patients, the most severe the train wrecks. And, I think you attribute that just classically to training and education, they're the most obvious, they're the most difficult to treat, and now you've got a solution, you're going to throw it at them. And it took a lot of education on our gains part. And obviously, over 15-plus years they've done a tremendous job of building that, but shifting the continuum. I think, I would like in kind of where we're at and the progress that we're making very similar. I think the difference being the efficacy in the more severely todic population, we're still tracking around 61 on average, in terms of patient age, has been tremendous.

[Greg Fraser:]

Got it. That's very helpful. Question on our backlog , are you planning to fund Phase3 study yourself? And if so, can you comment on how much the study might cost?

[Brian Markison:]

Yeah, the study range that we're looking at right now is anywhere from, say, $7 million to $10 million to complete a new Phase 3 clinical trial. And we're not going to commit it this time until after we talk to the FDA. And we are agreed on the endpoints. So as of now, we're not going to spend a dime on it other than our own sort of thought process. But if we get a green light with the agency in a program that we believe we can be successful with, then we'll either look at it internally or look for it externally.

[Greg Fraser:]

Got it. Okay. And then just question for Andy, how should we think about SG&A spend in the coming quarters as you ramp up the investment behind Upneeq?

[Andy Einhorn:]

Good question, Greg. Thanks. The way to think about that is going into the first quarter -- coming out of last year and going into the first quarter, from there we are increasing the size of the sales force and really starting to invest more significantly in Upneeq. So what we would anticipate seeing over the coming year is an uptick in the selling expense, as well as the uptick in the marketing expense, as we expand the field force and begin to roll out some of the tactics to really grow this brand.

[Greg Fraser:]

Great. Thanks very much. I'll jump back into the queue.

[Brian Markison:]

Okay. Thank you, Greg.

[Operator:]

Our next question comes from the line of Daniel Busby from RBC Capital Markets. You may begin.

[Daniel Busby:]

Hey, good afternoon. A couple questions on Upneeq. First, can you talk about your strategy to further penetrate the mild to moderate patient categories? What needs to happen there to drive greater uptake? And second, how are you thinking about the aesthetics opportunity? I think in the past, you talked about a potential mid-year launch. That's right around the corner. Has that changed? And is that an opportunity that you would look to commercialize yourself? Or, are you likely to seek a partner in that market?

[Brian Markison:]

So, with regard to seeking a partner, not interested. The market potential, we believe is very, very meaningful to us. Don't get me wrong, if someone comes along and wants to help us out, if the terms are, right, we're going do what's best for the shareholders. But, we believe so wholeheartedly in the value proposition for this product, that we don't see a need to trade off the value to a third-party. So JD, mild to moderate?

[JD Schaub:]

Yeah. So, I'll start with kind of an anecdote, Dan, that I think captures exactly what you're getting at. And, we had a doctor, an eye doctor that I've a lot of respect for has been at it for a long time, has been a sounding board, more of a dry eye specialist, big, big practice. And, as we were gearing up to launch this product, it's like interesting. I think you've got a neat little product here. Good luck, I'll be anxious to see how it goes, as you guys go. And more recently, he happened to have a patient who was in his office for dry eye treatment, and she finished treatment, and asked him about Upneeq. And he sort of stopped for a second, and I think process mentally, and then started going through what he knew about the drug and all those things. And she asked, if she could have it. And I talked to him after this occurred and he was very surprised, but it completely shifted his perspective about Upneeq. He said, don't underestimate the power of looking awake. And I think that's the exact process that we're going through and working on strategically to shift this paradigm and behavior, with a new market and a new condition that most eye doctors have paid little attention to beyond the most severe over time. So, hopefully that gives you a perspective.

[Daniel Busby:]

Yeah, got it. Okay. And I guess on the first question, just to clarify. Is aesthetics a near-term launch opportunity? And then I do have another follow-up. Can you talk a little bit more about which products drove the sequential decline in revenue from the fourth quarter to the first quarter? And should we think of that as the new run rate for the base business going forward? And just lastly, on this point, I have to believe that that level of erosion would have some impact on strategic interest in the legacy portfolio. So could you just comment on that?

[Brian Markison:]

Yeah. So we'll start with finishing off the question on Upneeq, and then we'll bounce over to the second part of your question. We're pretty much on track heading into the aesthetic market, but we are fine tuning a bit still, as we're going. I think one of the things that we are perfecting as we go are what type of guidance do we want to give to clinicians in that market that are traditionally not used to or accustomed to giving an eye drop. So on the surface, it seems really simple and obvious. You give a drop, and it lifts the lid, and people look more awake. However, how do you use this in the backdrop of all the other products that are being sold through an aesthetician's office, right. So we have to give them a little more guidance, a little more thoughtfulness there. So, I'd say we're pretty much on track, as our plans evolve. And I really can't tell you much more than that, right now. We've had a number of advisory boards, they were great sessions, a number of aesthetic practices, really want to embrace this product. And if you have already in sort of our test market phase, so it looks very good and very promising. We're pretty much on track, is what I would say. JD, anything to add?

[JD Schaub:]

No, I think important context, though, is we are actively working with some more aesthetic leaning thought leaders, teasing out the total package, if you will, right now. And I think we're seeing everything that you want to see in terms of validation of the opportunity and the market potential within that setting. And it's encouraging, because the intersection of patients and a target demographic for this type of product is frequent, and often in these settings. And so I think, Dan, we are moving as fast as possible, understanding that we are going to continue to be very deliberate and thoughtful to ensure that when we're there, we're launching into the highest orbit possible.

[Andy Einhorn:]

And Dan, just to get to the, I think the first part of your question. The large drivers quarter-over-quarter of the decline were really in -- methyl and venlafaxine were the primary drivers, nitrofurantoin, as well. I think those markets are now very, very crowded, so what we would expect is that this is going to be kind of a steady state for the base business. This has been anticipated by us and it's what forms the basis of anybody who's been taking a look at it.

[Brian Markison:]

Yeah. And just to add to that a little bit, in the strategic process, we have some very well-informed parties looking at it. As you would imagine, we already reflected this trend in our analysis and theirs. So it's a very complete picture. But again, as Andy said, we believe we're pretty much in steady state here, and again, have differentiated ourselves with the quality of our supply chain.

[Daniel Busby:]

Okay. Thanks for all the color, guys.

[Brian Markison:]

Thank you.

[Operator:]

Your next question comes from the line of David Steinberg from Jefferies. You may begin.

[Ed Chung:]

Hi, there. Guys, it's Ed Chung on for Dave. Actually, we've noticed some recent magazine covers and articles about Upneeq. And I don't know if you guys can speak to the impact on the recent prescription trends you're talking about, or is it still too early to see any impact from that?

[Brian Markison:]

No, right. We think we're seeing the impact. It's early. We had a nice article in Vogue, another one in Elle Magazine, the beauty.com and actually a few others as well. And every day there's another influencer on Instagram posting a great before and after picture and a great outcome. It's building, I think it's early. It's organic, we're not paying a whole lot for a whole much of this other than our YouTube ads, which have quite an interesting hit rate. JD, you're a little closer to that aspect of it.

[JD Schaub:]

That's great noise. This is raising the awareness and conscience level, not just in the ECP community, but also spilling over into the aesthetic community, and obviously, the broader consumer base. I can tell you, I think we're seeing more patients coming in asking for it. I think when we look at kind of the continued growth, maybe beyond growth, acceleration in the number of new prescribers every week, we're adding more new prescribers in recent weeks than we had through the first part of launch when we were really in a very controlled setting, Ed. I think those types of things, the Vogue cover, and Elle Magazine, some of the social activity that's going on, and some of the investments that we're also making in that side, certainly contribute, and moreover, allow us to continue to focus on driving depth within the office, getting these doctors comfortable with a protocol change, getting the entire office behind what has to happen to assess and really make this a daily part of everything that they're doing.

[Ed Chung:]

That super helpful. I think Brian alluded to a DTC program that you're looking to roll out. Is that going to coincide with your push into aesthetics? Can you speak a little bit more about the timing that how this might unfold?

[JD Schaub:]

Yeah. So separate, no direct correlation to the push into aesthetics. But the plan right now is to begin piloting some of those efforts through the end or second-half of this quarter. I actually just got a chance to see some of the draft cuts recently, and it's great. Look, this is about raising awareness, educating and elevating the consciousness of both the consumer and the practitioner. And I think it all helps, whether it's the eye care side, or the functional aesthetic and aesthetic side. And the one thing we've learned early here is, this product has broad applicability across a wide range of patients' age, demographic, and also clinician. So I think, when we look at that and how we best kind of build and capture momentum as we go, it's all going to be important.

[Brian Markison:]

Ed, we were also completing a fairly extensive round of consumer market research as well, which is what we're using to feed and inform our DTC pilot. I think we're going to be presenting at your conference in 1st of June. We'll be able to come out with a lot more data, a lot more results from this effort at that June meeting, which we chose to switch to a presentation, rather than a fireside. So, hopefully we will make a big splash at your event.

[Ed Chung:]

Hey, thanks so much for the color. And yeah, definitely looking forward to the presentation coming June.

[Brian Markison:]

Yeah.

[Ed Chung:]

Thanks you.

[Operator:]

I'm not showing any further questions in the queue. I'd like to turn the call back over to Brian for any closing remarks.

[Brian Markison:]

Great. Operator, thank you. And thank you, everybody for listening in today, and taking part in our journey as we continue to advance Upneeq. Thank you.

[Operator:]

This concludes today's conference call. Thank you for participating. You may now disconnect.