Acorda Therapeutics Inc (ACOR) 2019 Q4 法說會逐字稿

Welcome to the Acorda Therapeutics Fourth Quarter 2019 Update. (Operator Instructions)

Please be advised that this call is being taped at the company's request.

I will now introduce your host for today, Tierney Saccavino, Executive Vice President, Corporate Communications at Acorda. Please go ahead.

Thanks, Marcelo. Good morning, everyone. Before we begin, let me remind you that this presentation will contain forward-looking statements. Detailed disclosures can be found in our SEC filings, which are public, and we encourage you to refer to those filings.

I'm going to now pass the call over to our CEO, Ron Cohen.

Thanks, Tierney. Good morning, everyone. Just starting with INBRIJA. As a reminder, INBRIJA is inhaled levodopa. Levodopa is the gold standard therapy for improving symptoms of Parkinson's disease. And INBRIJA is indicated to address the return of symptoms, also known as OFF periods on an as-needed basis when a patient's regular medication regimen stops working during -- at various times during the day.

INBRIJA was approved by FDA in December of 2018, we launched it at the end of February of 2019. And during 2019, we had 2 key goals: educating health care professionals so that they would know how to properly use and prescribe the drug and then also achieving formulary access. We've been successful in increasing physician awareness, with about 75% of physicians now having unaided awareness of INBRIJA in our most recent research. And fully 92% have awareness aided or when given a hint. About 78% of the physicians who are aware of INBRIJA also said that they expect to increase their prescribing.

Regarding patient access, over 2019, we reached agreements with several of the major payers and PBMs. We now have about 72% of commercial lives covered on formulary. That's actually ahead of our internal projections. On Medicare, we have about 25% of covered lives with access. That's about where we expected to be due to the greater restrictions imposed in Medicare part D, and also timing issues related to when we were approved and came to market versus when a request for proposals are due each year. Where we fell short in 2019 was in understanding the important factors in the market that influence prescribing behavior and patient compliance related to insurance and access. What we have learned is that, first, challenges with insurance and access play an even greater role in this market than we anticipated, and they feed into physicians' reluctance to prescribe the drug. Virtually all of the new drug entrants in the last 4 to 5 years in the Parkinson's market have had major restrictions on access. That's extremely time-consuming for physicians and their office staffs. And as a result, they've been conditioned to hold off prescribing any new product on the market for the first 9 months to a year or so after launch because they know it takes at least that long to get access issues worked out. And in fact, early in the launch, we had significant restrictions on access, which improved only toward the latter part of the year.

We also depend on the initial patients coming back and reporting positively to their physicians thus, encouraging them to prescribe for more patients because so few patients receive prescriptions early on and those that did often encountered access issues. This significantly diminished the feedback loops that we expected in the first year. And it usually takes several months for a patient to come back for their next visit. So if you put it all together, you see that this significantly lengthens the time lines for the feedback to occur.

We also learned that we need to teach patients and physicians differently about how to inhale the drug. In our clinical studies, fewer than 2% of participants dropped out due to cough.

In practice, this has turned out to be more of an issue. A number of clinical practices have done a great job in training patients, and we are now sharing those best practices nationally.

So that brings us to what we're doing this year to apply the lessons learned from the first 9 months or so of the launch. We're beginning what we're calling Phase 2 of the launch. As I noted in Phase I, we focused primarily on awareness by health care professionals, also in achieving access. And we're going to continue to do that. But we're shifting our emphasis now to prioritizing patient awareness and to motivate them to ask their physicians about INBRIJA. This phase includes direct-to-patient initiatives digitally and through other means, educational programs as well as patient ambassadors who have had positive experiences with INBRIJA and are eager to communicate this to other people with Parkinson's. We're also looking to expand our patient base by adding focus on markets such as Federal, the VA and potentially long-term care.

Now why is this emphasis on patients important? Physicians tell us consistently that it's challenging for them to prioritize recommending INBRIJA, even though they are excited about it and like it because they're dealing with multiple issues that patients typically come in and report since their last visit. However, if patients ask about it, this prompts the physician to prioritize it. And in fact, in a physicians research that we did on -- with 151 doctors participating they reported on average that about 64% of patients who asked them about INBRIJA received the prescription. So our research continues to indicate, as I said, that health care professionals are enthusiastic about the drug. They believe it's an important new medication and that it will become a standard of care for treating the reemergence of symptoms or OFF periods, and our new emphasis is designed to go to the next logical stage and accelerate that process.

Moving to AMPYRA. Since AMPYRA went generic in September 2018, the tail has remained robust even in the face of generic competition. In 2019, we did about $163 million in net sales, and that was based on -- or having achieved significant brand loyalty among people with MS and their physicians over the years. And also on deliberate strategies that we began to put into place well over a year before we actually went generic, such as encouraging physicians to write Dispense As Written, or DAW, and also continuing our first step free trial program and our physician and reimbursement support. Now all that said, we do expect continued decline over time. Our goal remains to maintain the value of the franchise as much as possible.

So moving to our 2019 financial performance and 2020 guidance. This table outlines key financials for the year, which you'll find addressed in detail in our press release. We ended the year with cash, cash equivalents, investments and restricted cash of approximately $169 million.

For 2020, we're projecting about -- between $35 million to $40 million in INBRIJA sales and $300 million to $500 million in peak sales. The lower ends of those ranges are predicated on only maintaining the average rate of new prescriptions that we saw over the last 6 months of the launch, not increasing them to the extent that our initiatives that we've discussed, increased them. That will push us more toward the upper end of the ranges. We're also projecting AMPYRA sales this year of 85 to -- between $85 million and $100 million, based on our analysis of the existing trends. And we're projecting operating expenses of $170 million to $180 million.

A key priority for us in 2020 is continuing to strengthen our capital structure and to manage operating expenses. In December, we exchanged 80% of our outstanding convertible notes, extending their maturity to the end of 2024. And we're also continuing to work on maximizing cost efficiencies. So our top priorities for 2020 are to accelerate INBRIJA's growth using all of the strategies that we reviewed earlier to continue to support AMPYRA as it continues to generate value and to drive long-term value for shareholders, managing our cost structure and strengthening our balance sheet.

I'll now open the call for your questions. Operator?

(Operator Instructions)

Your first question comes from the line of Michael Yee from Jefferies.

I don't know if it's Michael Yee from Jefferies. But in any case, two questions. Congrats on the -- finishing out the year and getting into the 2020 and thinking about the year, Ron, I just wanted to ask 2 things on INBRIJA. One is, what do you think when you make all these comments. What do you think are the 2 most important things you think are important to accelerating scripts and should be evident intangible as we watch scripts each quarter throughout 2020? Is it reimbursement? Is it the patient education. Maybe just honing on the one or 2 things you think are most important to...

I think -- we think -- thanks, Mike. We think the patient focus is the key this year. All of the research we look at, all of the things that happened last year that we've been able to analyze where we got it right, where we, frankly, got it wrong. It all points to getting the patients more aware and asking their physicians about it. That really seems to be the key. Continuing to get better access and to move that ball forward is important as well. We've already got pretty good commercial access to the extent that we're going to go and extend that in Medicare. That would be important and great. So I'd say those are really the 2 key elements, and we believe that the strongest element of that is really getting the patients up to speed on INBRIJA and getting them in to ask their doctors about it.

Okay. That -- I think that's helpful. Just 1 follow-up for me then. When you think about the peak numbers that you have given out. You had given a peak number then you raised it, and then you're currently at a $300 million to $500 million. Given the 3 things you mentioned are more longer-term kind of factors. What are the one or 2 things that, I guess, drove your thinking into the new peak sales number because some of the things you point to seem to be more just time to get there. So maybe just comment on them.

Yes. The -- we're kind of full circle because when we originally acquired the Civitas and the product, the original number we gave out was that we thought it would be $500 million or more peak sales on the drug. Based on the -- I think not as informed assumptions as they are now that we had prior to now. At some point, we became even more enthusiastic, really because the research was just coming back over and over again, with doctors jumping up and down and saying, we need this. This is every bit as good as you thought. It's really exciting. Please give us the drug. So we really thought that going into the market at launch, even though we knew that there would be reimbursement hurdles and so on, we thought uptake would be significantly higher than it was. I mean really significantly higher than it was. So there was this disconnect. And I think that really is what accounts for. There's this odd disconnect. And many independent surveys have also gone out, independent of us. Various analysts and others who've gone out, and they've gotten very -- or investors, they've gotten very similar feedback to what we get in our market research. So you have this odd disconnect where the physicians, by and large, are quite enthusiastic. And yet, you don't see that reflected in the first year of prescribing behavior. And when we boil it all down, it really is that these doctors have been preconditioned before we even got there. They were preconditioned by the other product launches over the last few years to learn that when they start writing, the more they write, the more of a time sync it is because the insurers keep throwing back the prescriptions, asking for them to write medical exceptions, asking them to get on the phone and talk to their own internal pharmacists and physicians. And you go through enough of that cycle and the doctors say, the more I write, the less time I have to see patients and the less time my office staff has to actually run the practice. So they don't write. And so we -- that was where we really underestimated the impact going in. And that's what we got. So based on -- really, based on where we started, and also -- although, we believe there's quite a long tail on the product with respect to both intellectual property and know-how and the difficulty of developing inhalable therapies. We want to keep the -- our time horizon within sort of normal and customary ideas about when you reach peak sales or not extend that out too far. So taking all that into account is what led us to now pull back on the peak sales range. It's still -- if we can hit that range, it's still a very healthy product, but we want to be what we feel is more realistic given the experience and the data that we've got now.

Your next question comes from the line of Phil Nadeau from Cowen and Company.

Hello?

Your next question comes from the line of Salveen Richter from Goldman Sachs.

This is Andrea on for Salveen. I apologize if this has been asked already, but if you can maybe comment on the ex-U. S. strategy for INBRIJA and where that stands now in terms of those discussions with potential collaborators?

Yes. We've been discussing with potential collaborators for some time, and we're continuing to, there continues to be interest. The European market is highly pressured with respect to reimbursement. And that becomes an issue in figuring out what the most valuable approach is to Europe. So we're working that through in terms of market research, reimbursement research together with potential collaborators. So we very much are in active discussions, but we have not yet come to a point where we're ready to pull the trigger on a deal. So we're continuing to develop that, and we'll update you all as we -- as that develops.

Your next question comes from the line of Phil Nadeau from Cowen and Company.

All right. Marcelo, I think we're having a technical problem.

(Operator Instructions)

There are no further questions at this time. I turn the call back over to the presenters.

All right. Well, thank you all, and we look forward to updating you as we proceed with the initiatives that we talked about. Have a great rest of the week.

This concludes today's conference call. You may now disconnect.