Alimera Sciences Inc (ALIM) 2012 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Alimera Sciences' first-quarter 2012 earnings conference call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, this conference is being recorded.

I would now like to turn the call over to your host, Rick Eiswirth, Chief Operating Officer and Chief Financial Officer. Please go ahead, sir.

Thank you. Good morning, everyone, and welcome to the Alimera Sciences' conference call to discuss our first-quarter 2012 financial results. A press release regarding these results was issued earlier this morning and is available on our website. On the call with me today is Dan Myers, our President and Chief Executive Officer.

Before we begin our prepared remarks, I would like to remind you that various statements that we make during this call about the Company's future results of operations and financial position, business strategy, and plans and objectives from Alimera's future operations, are considered forward-looking statements within the meaning of the federal securities laws. Words such as anticipate, believe, estimate, expect, intend, may, plan, contemplate, predict, project, target, likely, potential, continue, will, would, should, could, or the negative of those terms and similar expressions, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

Our forward-looking statements are based upon current expectations that involve risks, changes, and circumstances, assumptions, and uncertainties. These risks are described in the Risk Factors and Management's Discussion and Analysis of Financial Condition and Results of Operations sections of our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, which is on file with the SEC and available on the SEC's and Alimera's websites. We encourage all investors to read these reports and our other SEC filings.

All the information we provide on this conference call is provided only as of today, and we undertake no obligation to update any forward-looking statements we may make on this call or on account of new information, future events, or otherwise. Please be advised that today's call is being recorded and webcast.

And with that, I would like to turn the call over to Dan Myers. Dan?

Thanks, Rick. During the first quarter, we announced a positive outcome of a decentralized procedure for ILUVIEN in Europe, indicating that ILUVIEN is approvable for the treatment of chronic diabetic macular edema considered insufficiently responsive to available therapies in the seven European countries in which we filed. We're now focused on the national phase of the process, during which labeling in each country's local language is finalized.

In the past few weeks, we received marketing authorization from Austria and the United Kingdom, and expect to receive additional marketing authorizations from France, Germany, Portugal, and Spain in the coming months. In Italy, however, the issues for marketing authorization is dependent upon the completion of the national pricing and reimbursement process, which we expect will not occur until mid-2013.

We believe that the marketing authorizations received to date and the final assessment report of the decentralized procedure will support our pursuit of ILUVIEN approval outside of the initial seven countries through the use of the EU's mutual recognition procedure.

The International Diabetes Federation estimates that in the seven EU countries in which ILUVIEN has been received or has been recommended for marketing authorization, 19.1 million people are currently living with diabetes, and we estimate that 1.1 million of those suffer from vision impairment associated with DME. In the remaining 20 European countries, the IDF estimates that another 11 million people are currently living with diabetes, and we estimate that 600,000 of those patients suffer from vision loss associated with DME.

We will be prioritizing our pursuit of marketing authorizations in the remaining EU countries based upon the size of the available diabetic population, and the ease or complexity of obtaining adequate pricing and reimbursement. For example, we anticipate prioritizing the Netherlands, Belgium, Sweden, Denmark, and Finland over the Eastern European countries. Additionally, we are evaluating opportunities in geographies outside of the EU, where our current and pending market authorizations can be referenced in pursuit of ILUVIEN approval without the requirement of additional clinical trials, including Australia, New Zealand, and Israel, as examples.

I'm pleased that we're on track with our previously stated goals of having ILUVIEN available for a commercial launch in Europe by the end of the year, and providing a potential solution to people suffering from DME. As the global impact of diabetes expands, we believe there is an increasing need for innovative treatments such as ILUVIEN.

Our Board of Directors and management team continue to evaluate the long-term sales and marketing opportunities of ILUVIEN in Europe, which may include strategic partnerships as well as developing our own sales and marketing capabilities. There are many factors involved in the decision-making process as we evaluate these two different strategies, including but not limited to, the execution risk, financing, and working capital requirements if we launch independently, versus the lack of control and reduced margins associated with the partnership.

Although a decision has yet to be made, we are both continuing our discussion with potential partners and preparing for a possible independent commercial launch by media with key opinion leaders in Europe, and preparing submissions for pricing and reimbursement at each EU country in which ILUVIEN has received or has been recommended for marketing authorization. By operating on a dual path, we believe that an independent launch would occur before the end of 2012 in Europe, and if we choose to enter a partnership, and we would be able to transition ILUVIEN to a partner without negatively impacting the timing of the commercial availability in Europe later this year.

We're currently on schedule with the manufacturing of our production batches, and are progressing as planned to have product available for the fourth quarter of 2012. With regard to the regulatory status of ILUVIEN in the US, we expect to meet with the FDA toward the end of the second quarter of 2012 to discuss their November 2011 complete response letter, regarding our new drug application for ILUVIEN in the treatment of DME in the US.

Now I'll turn the call back over to Rick to briefly discuss our financials from the first quarter.

Thank you, Dan. Turning to our financial results for the first quarter of 2012, net loss for the quarter ended March 31, 2012 was $4.4 million or $0.14 per share. That compares with a net loss of $4.7 million or $0.15 per share for the quarter ended March 31, 2011. Net loss per share was based on 31.4 million weighted average shares outstanding for the first quarter of 2012 and 31.3 million weighted average shares outstanding for the first quarter of 2011.

Research and development expenses for the first quarter of 2012 decreased to $1.6 million compared to $1.8 million for the first quarter of 2011. General and administrative expenses in the first quarter of 2012 were $1.4 million compared to $1.5 million in the first quarter of 2011.

Marketing expenses in the first quarter of 2012, as well as the first quarter of 2011, were approximately $1.1 million. We substantially reduced our marketing expenses in the United States in the first quarter of 2012 in comparison to the prior year, due to the cancellation of the previously expected commercial launch of ILUVIEN in the US. However, our marketing expenses remained relatively flat year-over-year as we increased our prelaunch activities in Europe. As of March 31, 2012, we had cash, cash equivalents, and investments of $27.6 million compared to $33.6 million as of December 31, 2011.

Now I will turn the call back over to Dan for closing comments.

Thanks, Rick. In the months ahead, we'll have a meeting with the FDA, and we expect to announce additional marketing authorizations in Europe. In addition, we expect to announce the final commercial decision regarding the marketing of ILUVIEN in the EU.

And with that, I'll turn it back over to the Operator for any questions.

(Operator Instructions). Amit Bhalla, Citi.

Dan, Rick, you mentioned in the past that reimbursement and pricing were some of the key gating issues with the decision for a partnership. Can you just give us the latest thinking on those two in particular?

Yes, good morning, Amit. We -- I think you're right. Those clearly drive a lot of your decisions. And I think the work we've done, which actually would have preceded the first quarter, we started back early last year on this topic, because clearly, even a partner would want to have that work done.

We hired a consulting firm in the EU that have gone out to each of the seven respective countries and done some pricing work for us, and benchmarked where the products that are available. Because, as you know, Lucentis, Posurdex, or just laser therapy, vary by country. And so in each one of those, they've individually gone and looked at the benchmark pricing that's being reimbursed by their respective countries for those products.

And what it's brought back to us is that the pricing band, or the reimbursement that we think we could expect, is around where we thought we would see it when we did our early forecast. So it's not that dissimilar from the pricing band that we've been giving you guys as sort of guidance in the US.

And so with that, I think we feel more bullish probably on pricing and reimbursement today than perhaps we would have prior to having that information. So we think our pricing could hold pretty well in those countries. And clearly, that has driven some of the thinking in the margins and the financials of the EU business.

Secondly, you did say that you're on schedule with the manufacturing of your production batches. If I remember correctly, April, you were supposed to have some production batches beginning in -- that was going to complete in mid-summer. Can you just go back through your timelines for production batches and shipping over to Europe?

Yes. I'll let Rick handle that one.

Yes, we've gone through the production, some of the initial production patches of the inserter itself. We were unable to start the production batches of the actual insert and the finished packaging until we had an actual label. So, we obviously did not want to start with commercial production batches of Austria because it's a smaller market.

But now with the UK label, we can actually start production fairly shortly and we expect to do that this summer. (multiple speakers) We'll be shipping products to Europe in the third quarter, and work with our QP there to have it released for availability in the fourth quarter, as we've said.

Okay. Thank you.

Michael Faerm, Credit Suisse.

Thanks for taking the question. Can you talk about how you think about timing and potential need for additional financing, both in the event of commercializing alone or in the event of a partner?

We're finished on -- the question Rick just answered with -- I mean, we think that the real gating item toward a commercial launch on an independent basis -- well, actually in either scenario -- is availability of product. The marketing authorization approvals that we have received, and the ones we expect in the coming months, should not really give us a problem, as far as having price and reimbursement solidified by the first quarter next year.

So really, all along, the issue has been supply of product. And again, as Rick said, we think we'll have product in early fourth-quarter so we could launch in the first quarter of 2013.

The first countries that would come onboard would be, as Rick said, the UK, where we're now producing labeling product in Germany. How the others would lay out would probably be depending on what we hear in the next few months. But as you can imagine, the big three or four countries would follow on in the first half of 2013. Italy, as we've learned, is going to probably be later on in middle of next year or later in '13, as far as a launch.

So to that point, the launch plan, whether you're in an independent sales and marketing distribution on your own, or a partnership, really doesn't get affected at this point by anything that's happened up-to-date. And we think a partner and those that we've talked with certainly we think can execute the same kind of plan that we have. Certainly, we would think that if we had to go it on our own, we do have enough cash, as Rick said and as we said in the press release, to get to the commercial launch, but we would see a fundraising sometime through the remainder of 2012 to beef up the balance sheet.

As far as a partnership, of course, we expect that upfront would be significant. The use of those funds and what we've have on the balance sheet certainly wouldn't require any other fundraising, and would give us, I think, plenty of capital as far as what we want to do in the US, based on our meeting with Dr. Chambers and the FDA later this quarter, or any other opportunities we see in the US.

In terms of your current spending levels, your R&D spend was up just a bit from last quarter. Can you talk about how you expect R&D spend to unfold going forward? And what are the main drivers of your R&D spend at this point?

Well, keep in mind that there's a lot of regulatory costs in there as well. So as we noted in the -- well, we actually did not have this in the press release, but part of our spending there has been for some consultants that we have engaged to assist us in continuing to pursue the approval in the United States. So, there's both continued work in some of the Phase 3b studies that we've just talked about before in vein occlusion, wet AMD and dry AMD; and then additional regulatory work, as we pursue this approval in the US and the other EU countries.

And just one follow-up on the financing question. In your 10-K, you had talked about you had gotten a letter from your lender asserting the -- or reserving the right to assert impairment. Is there any update on that front?

No. No further developments on that front.

Okay, great. Thank you.

(Operator Instructions). Bret Holley, Oppenheimer.

This is Eric Chang in for Bret. Thanks for taking my question. I was wondering with Austria and the UK having national elections, how does pricing in those two countries influence pricing in the rest of Europe, particularly given that pricing is typically very high in Austria but it can be challenging in the UK?

Yes, I think it's probably more the UK is likely to drive any influence in pricing. We wouldn't expect that Austria would have a strong influence. Austria is kind of a unique market in how you get paid, and it may be more delayed in actually getting the reimbursement, even if you have a price set. So it's a little bit -- we would probably put Austria as a little bit of a one-off.

Clearly, the UK is much more of a driving engine than the EU. And the NICE procedure is well-known, well-documented, and a pretty elaborate procedure to go through. We have done a lot of work in the last three months. And again, using onground consultants there in the UK to develop the models that are required by NICE. As you know, it's very well-organized. It's a template they pretty much want you to follow.

So you sort of know the path; it's just getting it done. We will be having meetings with NICE in the coming months. There's two meetings before we get our final pricing. That will probably come later in the year; somewhere more likely around third or fourth quarter, we'll actually get a price set. And I think the pricing at NICE could have a real positive influence on how we get pricing throughout Europe. And at this point, we think we have a very strong economic model, when you consider the sustained-release aspect of ILUVIEN, one injection being at a price we think is far more economical for the patient and the system than current therapies.

Great. And I just had one last question. For the non-member states, the -- I guess, the 21 countries that you mentioned, can you kind of give us, in broad strokes, I guess, the steps and I guess timeline toward -- to launching in those countries?

Right. One of the key -- this kind of got lost, I guess, this past week around the M.A. from the UK -- I mean, not only, obviously, did we get access to that market and those patients began to get the opportunity to receive the treatment of ILUVIEN, once we get the pricing set, but also, if you'll remember, the UK was our reference member state. And with them now giving us the M.A., we are now able to go into discussions with them on them also serving as the RMS for the mutual recognition procedures. So, we can kind of check that box off.

We will need to get some timeline work out with them, which we have not had yet. But once we understand the timeline with UK working with us as the RMS, we can begin to go to each of the remaining 20 countries, as I've said, prioritized by the reimbursement opportunity and the pricing complexity. And usually it takes a few months to get those procedures into an approval.

So it's really kind of interesting, in some way, if we can move forward with the UK, some of these MRP countries could come onboard actually before the longer processes, like Italy, for example. So, we don't have total transparency into that, but we will clearly start working now with the UK on countries like Benelux, Finland, Norway -- Finland, Denmark, and Sweden. As I said earlier, also Australia recognizes the UK approval. So we think we can really begin moving now on looking at some of those early other countries to come on sometime in 2013.

Great. Thanks a lot, guys.

I'm showing no further questions at this time. I will now turn the call back over to Dan Myers, CEO, for closing remarks.

Thank you for listening to today's call. We look forward to updating you on our discussions with the FDA and the progression of the launch of ILUVIEN in the EU on our second-quarter earnings call. Operator, this concludes our call.

Thank you, ladies and gentlemen. That does conclude today's conference. You may all disconnect and have a wonderful day.