Acorda Therapeutics Inc (ACOR) 2022 Q3 法說會逐字稿

Welcome to Acorda Therapeutics Second (sic) [Third] Quarter 2022 Financial and Business Update. (Operator Instructions) Please be advised that this call is being recorded at the company's request. I will now introduce your host for today's call, Tierney Saccavino at Acorda. Tierney, please go ahead.

Thank you, Harry, and good afternoon, everyone. Before we begin, let me remind you that our 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.

During the Q&A today, we will first take calls from our analysts, and then we may take questions from that other investors have written in when they registered for the call.

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

Thanks, Tierney, and welcome, everyone. I'll just start with a quick overview of today's call on our agenda. We'll be presenting the Q3 highlights and the focus of good deal on INBRIJA and AMPYRA. I'm also going to provide some summary of the long-term business plan, a high-level summary of the plan that we released in detail last week. Mike Gesser, our CFO, will cover the financials and guidance, and I'll touch at the end on our upcoming Special Meeting of Stockholders this Friday.

So starting with INBRIJA. INBRIJA net sales for the third quarter of 2022 were $7.85 million. That's a 1% increase over Q3 2021 and a 104% increase over the first quarter of this year. Recall, our Q1 sales this year were severely reduced by both the Omicron surge and the extra buy-in -- extra-large buy-in, in the fourth quarter 2021. So we're very pleased to have seen sales rebound substantially through the third quarter. And this gives you an additional view.

You can see here, INBRIJA net sales, total prescriptions and dispensed quarters in the first 3 quarters of 2022. And the circles at the bottom show you the percentage comparisons with the related 2021 periods.

Now note, the dramatic decline in Q1 2022 net sales percentage-wise versus 2021. However, all of these metrics improved dramatically across the subsequent 2 quarters of this year, and that's providing momentum as we implement our new strategies and tactics to accelerate INBRIJA's trajectory further, and I'm going to touch on that a bit later on.

Regarding INBRIJA ex-U.S. sales. Recall that in June, we recorded $1.9 million in sales from Esteve for the initial launch shipments for Germany. We received an additional $960,000 in the third quarter for Germany. Esteve reports high receptivity by patients and physicians in Germany. And they expect to launch in Spain in the first quarter of 2023.

In addition, Biopas is continuing to work toward launches of INBRIJA in the 9 largest Latin American markets, including Mexico and Brazil. We're also in continued discussions for INBRIJA partnerships in additional territories around the world, including in Asia and other EU territories.

So moving to AMPYRA. AMPYRA net sales for the third quarter were $21.1 million. That was a 5% increase over Q3 2021. The rate of sales decline versus generics has slowed, and we expect it to continue to moderate. We're reiterating our guidance for 2022 net sales of between $68 million and $78 million.

And on this slide, you see illustrated the continuing leveling of the decline in AMPYRA sales year-over-year since loss of exclusivity.

With regard to AMPYRA ex-U.S. revenue. We received royalties of $2.6 million from Biogen, which markets FAMPYRA, which is the ex-U.S. name of AMPYRA. So we received $2.6 million in the third quarter. These are double-digit tiered royalties. And we're also pleased that Biogen launched FAMPYRA in China in May.

I'll now follow up with highlights of the key elements of our long-term business plan to increase the value of the company.

You see here an overview. Our plan is based on the key outcomes that you see here. First, we expect to be able to accelerate INBRIJA's growth in the U.S. And we're also on track to expand into additional ex-U.S. markets. We'll talk about that in a little more detail in upcoming slides.

And while we expect that AMPYRA will continue to decline, the rate of decline has slowed over time, and we expect it to continue to stabilize, still providing meaningful revenue over the next 5 years and beyond, and I'll touch on that in additional slides.

And especially with Acorda's recent arbitration reward -- award from Alkermes, we're well capitalized to execute this plan, and we expect to be cash flow positive in 2023.

Finally, at the end, I will touch on the need for shareholder approval of the company's reverse stock split proposal. That will be key to ensuring that the company is not delisted by NASDAQ in December.

So beginning with our plans for INBRIJA. Now our commercial team has done an excellent job establishing INBRIJA as the preferred on-demand treatment for people with Parkinson's disease and OFF periods. An independent report shows that INBRIJA now has 2/3 of the market for on-demand therapies in Parkinson's, and our market research shows that health care professionals, or HCPs, are more comfortable with levodopa-based treatments, which INBRIJA is. And this is against the 2 other competitors in the market.

But the key here is that only about 2% of the addressable population now, which is about 380,000 people with Parkinson's who take daily levodopa and experience OFF periods, only about 2% are currently receiving any on-demand therapy. This represents a substantial opportunity for us to expand the market. And you can see that even a modest increase in penetration will result in significant value creation.

Here are some of the new tactics that we're employing to achieve this. First, we'll be launching a new brand campaign this month, emphasizing the emotional impact of OFF periods on everyday activities for patients and their care partners. These are very underappreciated by many of the health care providers in the field, and we will be making that much more clear to them.

But we'll also be educating on the need for greater use of on-demand treatments, and that's going to be aided by 3 recently published peer-review papers, and I'll show you those references on the next slide.

We're also increasing our investment in digital promotion. We're featuring a library of patient videos that personalize the impact of OFF periods on the person with Parkinson's. And they also show the difference in people in an OFF period and then as soon as 10 minutes after they inhale INBRIJA. For those of you who would be interested in seeing them, I will give you some coordinates later about how you can see those.

We've also introduced an e-prescribing platform. This reduces friction in the prescribing process. So the prescriber can use whichever platform they prefer rather than the more time-consuming prescription request forms that have to be faxed in. And in the last few months that we have implemented this, we've already found that the fulfillment rates, and which is the percent of prescriptions that are actually resulting in drug being delivered to the patient, has increased by about 30% using the e-prescribing option. So we're making this known to every prescriber that we visit and contact.

And we're also continuing to work on improving patient access. We're now adding a cash payment option, for example, for uninsured and underinsured patients.

These are the first pages of the 3 references I mentioned. Interestingly, they've all come out in the last year or so. Each is authored by a group of leaders in the Parkinson's field, but they're independent papers, and yet all 3 conclude that there is a need for the field to adopt on-demand treatments substantially more than they are already. And we're making prescribers aware of these papers.

This slide shows you still shots of 2 of the videos that we have. One is Jimmy on the left and Rachel on the right. These are, I think, one of the most powerful tools that we're now employing. They include these identical scenes left and right. On the left, you'll see the person with Parkinson's during an OFF period. And then on the -- excuse me, on the left. And then on the right, 10 minutes after they've inhaled INBRIJA. The platform for this Investor Call doesn't allow for us to play video. So I encourage you to view these at inbrija.com, I-N-B-R-I-J-A dot com. Or if you're a health care professional, you can also view them at inbrija-hcp.com.

Now we're also including these videos on Facebook feeds. This is a new program in the last very few months. Now this is specifically showing on the feeds of people with Parkinson's or an interest in Parkinson's. And the videos run automatically. As soon as the person scrolls down to them, they start running. So you don't have to click on anything. They've already been seen by tens of thousands of viewers.

Now regarding AMPYRA, an independent study reported that AMPYRA currently holds about 15% of the total dalfampridine market. That's more than 4 years after it became available generically. Sales are at about 13% of our sales in 2017, which was the last full year before AMPYRA lost exclusivity.

We believe that AMPYRA sales over the next 5 years will level off at approximately 10% of the 2017 sales through 2027.

Now very interestingly, note that about 200 doctors have already written prescriptions for branded AMPYRA in 2022, who had not written since the medication went generic in 2018. Now we believe that this is due to a number of factors, the whole performance is due to a number of factors. First, physician and patient brand loyalty. And we're continuing to hear from both the health care providers and patients who value the support that we've always provided and we're continuing to provide for branded AMPYRA. That includes our First Step Program, which gives the initial 2 months of AMPYRA free for commercially insured payment -- patients. And we're mitigating down commercially insured co-pays to no more than $10 a month, which is often lower than what they would pay for generics. And we're also continuing to provide physician and patient reimbursement support.

Access also remains high for AMPYRA. About 70% of covered lives can get access to the medication. And our field team is continuing to call on MS specialists to ensure that they're aware of the various support programs that we're continuing to provide for the brand.

Our CFO, Mike Gesser, will now review the financials. Mike?

Thank you, Ron. INBRIJA net revenue was up over Q2 -- pardon me, Q3 2021 by 14.1%, including outside the U.S. sales. Just the U.S., INBRIJA net revenue is up about 1% compared to Q3 2021. AMPYRA revenue was up over Q3 2021 by 5.5%.

SG&A was down from Q3 2021 by 22.3% as a result of our continued spending management efforts. Cash of $34.2 million is aligned with our expectations, but I'd like to point out, does not include the cash from our settlement with Alkermes. That cash was received in October.

Last month, an arbitration panel issued the final decision in a dispute between Acorda and Alkermes regarding the licensing of royalties relating to AMPYRA. A panel's decision, the quarter was awarded $15 million plus a prejudgment interest of $1.5 million, as I said, we'll receive in October.

In addition, Acorda will no longer have to pay Alkermes any royalties on net sales for license and supply of AMPYRA. We are free to use alternative sources for supply, and we have already secured those sources. This award will allow us to obtain more competitive market rates for the supply of AMPYRA and significantly reduces our cost of goods going forward. Therefore, increasing the product value to the company and increasing that value meaningfully.

We expect savings of $10 million to $12 million in reduced cost of goods sold for AMPYRA in 2023 depending on volume. And that savings, depending on volume, continue in the future.

As we released on October 27, Acorda is providing financial guidance on many elements of the business in addition to the AMPYRA net revenue and OpEx that we have in the past. As Ron noted, we are holding our previous guidance for AMPYRA, and we are also holding our previous guidance on OpEx. As we've previously announced, the ending cash balance -- cash flow for 2022 includes the settlement for Alkermes of $16.5 million. In addition, we will not pay the December 2022 note interest in shares as we've announced.

The cash to forecast going forward assumes that we pay the interest in cash. We continue to work on expanding our outside-the-U.S. INBRIJA sales, and that is also reflected here. Although AMPYRA net revenue continues to decline in the face of generic competition, as Ron said, we believe that, that curve is flattening and the decline is lessening.

The FAMPYRA royalty, which now we receive 100% of the cash from since June, that outlook is based on information from our partner, Biogen.

The OpEx outlook is a result of our continued management expenses and shows an approximate $20 million from our 2022 guidance to our 2023 guidance, along the lines of the actions we took in the past that we've been talking about. The cash guidance is a result of growing net revenue, the favorable impact of AMPYRA cost of goods sold from the Alkermes settlement and continued OpEx cost management. Ron?

Thanks, Mike. So to summarize on our business plan and long-term focus, we're continuing to focus on building long-term value through execution on the key goals we've discussed and that you see summarized here, accelerating INBRIJA's growth, maintaining AMPYRA's strength, continued financial discipline and also leveraging the ARCUS platform as we have discussed in the past.

Before we go to your Q&A, I'll touch on the Special Meeting of Stockholders that is taking place this coming Friday, November 4. In order to provide us with a runway that we need to allow us to execute on the business plan, we have a key proposal on the ballot for this meeting, Proposal 2, to give the Board the ability to implement a reverse split of a quarter's stock as needed. Now this is critical to ensure that we don't become delisted from NASDAQ in December. Because if that were to happen, we could be in default to our bondholders. That would make it quite difficult to execute the long-term business plan that we've shared, and we are asking shareholders to vote for Proposal 2 to ensure that we're not delisted from NASDAQ. The 3 major proxy advisory firms have all recommended voting for these proposals. And in any case -- and in case any shareholders who are eligible would like to vote, we're going to put up a slide with the ways you can vote while we open the call for your questions. Operator?

(Operator Instructions) We have a question here from the line of Ram Selvaraju of H.C. Wainwright.

Why don't we focus, first of all, on the long-term revenue guidance? I wanted to better understand some of the principal drivers of your confidence in the longer-term outlook for AMPYRA revenue, particularly in the years from 2025 to 2027 and the extent to which you believe there could be variance risks to those numbers.

Mike, do you want to take that?

Sure. Well, we will continue to point out that, forward-looking statements do have risk of variability. And the further out you go, there is inherently that variability risk. However, I will say this about AMPYRA. It has been a rather well-performing drug and a well-forecasted drug over the years. What we find is that the reduction of people who are on our drug typically do a cliff fall, you could say, between the end of 1 year and the beginning of another, as they're moved off of our product onto a generic or forced off our product to a generic. And what we've seen is that, that drop slowing down, as I said earlier. I think the -- what we've done is we've analyzed that curve. We've analyzed how we believe this drug will continue to perform. As that curve flattens and we reach the parity that you see in many, many, many markets where a generic is competing against a branded drug, the generics light branded drugs in the market, because it sets the price, we are very conscious about our patients that take our drug and their need for our drug as opposed to generics.

And we're fairly confident on this rate, the ranges that we provided you. They do increase -- they contain a normal price increase from year-to-year and they do include a reduction in our taking population year-to-year. Thank you, Ram.

And as a follow-on to that, can you maybe elaborate on also the makeup of the prescribers who resumed prescribing AMPYRA? And what might have factored into those decisions?

I don't have that available for you, Ram. But I will tell you that as part of our affirmative strategy and tactics, we have been having the sales force call on more of the MS prescribers, because it became apparent that there are many out there still who were actually not aware that we're still supporting the product. And that has been a disincentive to them to prescribe the brand versus the generic.

I think you know, we built up a huge amount of goodwill and loyalty with all of the behaviors and programs that we had when it was branded. This was very appreciated by the field, very appreciated on behalf of their patients. And when we tell them, when we alert them that actually, yes, we're still doing first step, we're still providing reimbursement support and so forth, we're still paying down co-pays, this goes a long way to encouraging them to start specifying DAW for the brand.

And also, by the way, to pushing back on insurance companies if they believe, for whatever reasons, that they prefer to have the brand for their patients.

Last question on AMPYRA. In the 2025 to 2027 time frame, could you just give us a sense of how many generic competitors in that segment you expect to be on the market corresponding to those [both] revenue projections?

You're talking about how many generics would be in the market during that period of time?

Yes, approximately, range...

Yes, I mean, I think -- right now, I believe we have 5 to 6, and I don't have the exact number in my head, but I believe there are about 6 that are active in the market now. I don't know that we expect that to change dramatically. But again, that's difficult to project because that's a matter for each generic company to decide whether they want to stay in the market or not. But right now, as far as we can tell, we don't see it changing dramatically.

By the way, I do want to say that in addition to the reps going to visit MS docs more, we had increased media outreach as well, social media outreach and so on. So we are quite active there in promoting it. And what we found is that when the doctors are made aware that we are still very much active from supporting them, supporting the brand, this goes a long way with them.

Okay. With respect to INBRIJA, I was just wondering if you could just describe a little bit more in detail some of the barriers to prescribing that the e-prescribing approach overcomes.

Sure. So the traditional way for prescribing specialty drugs and certainly INBRIJA and even AMPYRA has been to have specialty pharmacies. And then you have principal forms that are -- we call them prescription request forms or service request forms, PRFs. And those have to be filled in, and they are more time-intensive than a regular prescription would be. And then there are actually faxed into a hub that then sends it to the specialty pharmacy or directly to a specialty pharmacy.

So right away, it's a departure from most of the prescriptions that the doctor or people in the office, nurse practitioners, PAs are writing. So it adds friction right there. In addition, there's a more affirmative process going on here.

In the system that we have set up, we're collaborating with an outside organization that includes, not just the e-prescribing software and platform but a specialty pharmacy that is specifically geared to this kind of activity because if we're going to one of the big major specialty pharmacies, we don't get a lot out of it other than data and then obviously fulfillment.

But here, you have the extra step where the specialty pharmacy itself is aware of the drug. They're aware of the prior authorization requirements of each given insurance company. And in many cases, they're able to address those prior authorizations without bothering the doctor's office further. Or if the prior auths are such that they need the physician's office to do something, they will call them or to contact them and say, "Hey, we need you to do such and such." So that reduces friction. Because without that, it's just kind of swirling all over the place. It's a busy practice, and they don't really have the office, doesn't necessarily have the time to focus on these individual details.

So we -- so this system and our particular e-prescribing system helps. And you can see the results with about 30% improvement in fulfillment rates.

Great. Also one last question with respect to the possibility of effecting a reverse stock split. I'm assuming that at this time, Acorda has made no determination regarding the nature of the ratio, the split ratio. Is that correct?

That is correct. That is something that the Board would have to take up. Thank you, Ram.

And by the way, I just wanted to just sort of roll back and clarify something just to make sure everyone understands, that with respect to the Alkermes arbitration award, that was not -- I want to make sure everyone understands. It wasn't a settlement. It was a binding arbitration process, and the arbitrators made their decision and the award, as Mike articulated it.

Thank you. I will now pass the call back over to Tierney Saccavino for any additional remarks.

Okay. We have a few questions that were written in by shareholders when they registered, and I'll just read them out.

The first one is I've been an investor for the last 3 years. I have a lot of confidence in the management team and the future of the company. There is no doubt that the share price doesn't reflect the real value of the company. Now with an injection of another [$16.5] million and the fact that there is a risk of delisting, why doesn't the management declare a buy plan for the amount received in the award? In this case, you can immediately get the price to go much above $1, eliminating the risk of delisting.

Well, I appreciate the supportive comment. And I will say, on a personal professional basis, in general, I think stock buybacks are a very useful tool. So I'm sympathetic to that. Unfortunately, in our current case, we are not able to do share buybacks under the terms of our agreements with our bondholders. So hopefully, at some point in the future, that all gets resolved. But right now, we're just not able to do it.

Okay. The next question is, what are you doing to lower costs?

Yes. Let me take this, Ron.

Sure thing, Mike.

Yes, we're currently feeling the full effect of our actions over the last year by reducing OpEx by $20 million year-over-year from [22 to 23], as I talked about. And that's our continued platform to work against.

Specifically, we moved out of our 200,000-square-foot facility (inaudible) to a 20,000-square-foot facility in Pearl River. That full effect will be felt in '23 and is reflected in the numbers. Going forward; however, let me talk about a couple of specific things.

We're actively working on becoming more efficient in our internal processes, significantly changing our IT structure and platform to a more modern cloud-based approach to reduce cost and improve performance. And that is going to be a significant reduction of cost for us. We're maximizing the value investment on our marketing programs, ensuring that a thoughtful and targeted approach to outreach will have some effects at both reducing out-of-pockets for those as well as increasing revenue.

We've continued to outsource several departments to maintain service levels while saving costs. And finally, we're leveraging our existing capacity of both people and systems to support our outside-the-U.S. activity in both business development as well as support and delivery. That's increasing our economies of scale, but it's also increasing our economies of scale as we've been able to add that revenue stream with no significant additional operating expense costs. This is one of those answers as a finance guy could probably talk all day, but I don't want to take away from some other questions, and I hope that answered your inquiry. Tierney?

Okay. The next question is, inside of video Q&A, you mentioned on-demand is a fairly new modality. And in the past year, 3 papers have been published in peer review journals, all concluding that this new modality is very important to Parkinson's disease, but is currently underutilized. Can you please direct us to the 3 articles you flashed journals for further reading?

So yes, I don't know how to do that on the phone, but I will suggest to you, if you just write to or e-mail to Investor Relations at acorda.com, and no punctuation, it's just one -- like one word, investorrelations@acorda.com and ask and they will send you the citations. Now we're not able to send the actual papers out because of copyright restrictions, but we can give you the citation so that you can look them up.

Okay. The next question is, any plan to split in the near future after a reverse split?

Any plan to split in the near future after reverse split. Well, I guess, the answer to that is that the urgent immediate need is for the reverse split or at least the authority for the Board to do it, so that we don't get delisted in December. Now looking ahead longer term, what we would like to do, what we want to do with the time that, that would buy us is to execute on the business plan that we've just discussed and that we put out in more detail last week. And we believe that if we execute on that, we should build substantial value back in the company. And then the Board will look at the fact patterns as we go forward and make decisions on whether and when a split would be of benefit to shareholders.

Right now, I have to emphasize that the immediate issue is not the split but a reverse split. And that in the future, it's certainly something that the Board would continue to consider as part of its overall responsibilities.

Okay. The next question is, since we are cash flow positive, we retailers are hoping for no more dilution. Please let us know that if you -- if you are going to be cash flow positive and no more dilution in 2023.

Okay. So I believe that we covered this during the presentation, and I'll repeat it, just to make sure. First of all, we expect to be cash flow positive in 2023 based on the plans that we have discussed today and also last week.

With respect to dilution, we have said already publicly that we do not -- that we will not pay the upcoming interest payment on the debt in stock, the one that's coming up this December. I believe, Mike, in the financials, you had a comment about what the financials -- or the financial projections encompass there, right?

Yes. We -- the financial projections assume that we're going to pay the note interest in cash...

Right. Now the only caveat I will put on that is that, obviously, the Board has to make decisions in real time depending on what is happening at the time. From where we are right now, we certainly hope that we don't pay it in cash in the future -- excuse me, in stock, I'm sorry, that we don't pay in stock in the future. And we can definitely say that right now, based on our assessment of where we are and our projections, we will not be paying it in stock for this coming payment.

Great. And the last question is, when will the reverse split take place?

That is something that is at the Board's discretion. So the Proposal 2 on the proxy is to authorize the Board to effect the reverse split as needed in the Board's judgment. So the Board is going to take into account where we are. But bear in mind that our timeline is fairly immediate because we will -- let me put it this way. If the stock price is not above $1 for 10 consecutive trading days, then we will have run out the clock on delisting on the NASDAQ in December, and we would be facing delisting at that time. So between now and then, the Board will be assessing where we are, what the issues are and if needed. And they have the authority given by Proposal 2, they would decide at that time whether to do the split then or not -- a reverse split then or not.

Okay. That is the end of the questions that have been written from shareholders.

All right. Well, we appreciate your joining us, everyone. Thanks, and we'll see you for the next one. Have a good evening.

This concludes the Acorda Therapeutics' Second (sic) [Third] Quarter 2022 Financial and Business Update. Thank you for your participation.