XENT - Earnings call transcript Q1 2018

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Operator

Good afternoon, and welcome to the Intersect ENT First Quarter 2018 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. At this time, I’d now like to turn the conference call over to Jeri Hilleman, Chief Financial Officer. ahead. go Please

Jeri Hilleman

and call. Jeremy, all participating for Thank thank today’s on you, you

Joining and Earnhardt, Lisa me is today President CEO.

are any sales revise securities for the reimbursement Before and reports new without the upon products we will of timing within we Lisa such could anticipated obligation or forward-looking procurement assumptions risks differ risks and statements you estimates any and other remind approval update studies, financial results materially our to Earnhardt. contained force herein. federal of limitation, Lisa? meaning from as events statements begin, I’d disclaim these growth, in make time-to-time we as turn include, current undertaking like forward-looking indications to file a I’ll codes uncertainties, detailed to of of laws. and performance, which well now and from as Actual with clinical coverage, outlook which in the or those that over the forward-looking our statements and We based result call SEC. of

Lisa Earnhardt

and in busy PROPEL the been launch growth result. SINUVA. year commercial to no commencing start delivering quarter XX% have Extraordinarily topline for our and were There of our the the first surprises team exciting in

[many]. with our with sales We PROPEL continue between growth a represent of quarter to balance deliver our advantage and newest portfolio, PROPEL to product a strong product Contour about led continues

consistent was was XX also in account New quarter. accounts growth about new acquired the

account to also our existing roll continue base. Contour our into We

with modest implemented year. successfully consistent a we Finally, prior increase price

received now results confidence and PROPEL. represented over physician these are We the of grateful XXX,XXX having patients benefit for with the support by

preparing XX Consultants itself board of very while our SINUVA the on Managers on on and the year. XX product market also QX, copious We up the delivering of trading at Sales simultaneously for sales and from sales the are XXX representatives with start force the for of Territory including launch the access. had quarter on proud diligently slightly We end

the Finally, the warm team initiated reception. the target first outreach physicians with to SINUVA

early treated was the their undergone been SINUVA SINUVA positive. is has of XX and small process their with from all over Initial have physicians March launch especially launch first considering it identify sinus line were approval. patients in that treated of first that starts been a and our timing about physicians patient had surgeries. Our payer We preparation, the number of with commercial work in receiving XX both their focused and offices. group physicians expectations. experience to well in patients The patients feedback enthusiasm founded prior A

color going. is of a is SINUVA, everything you that share said, it how on us to first our use further from as small a to to for charge multiple launch like needed as of addition, production to of Since Jeri experience With production a impacted core position. our we process to have strong These learnings commercial will start the experience the the month support involved work commercial inventory more that navigated This production a let considerable production completed lots SINUVA describe initial resulting detail. in we SINUVA in our initial solely learnings In conclusions draw we flavor to transition our to early large official onetime product. from margin initiated [drug] scale introduction. lots in clinical launch, which for and gross product preparation a little we validation have negatively units give built only

in-office other to SINUVA relatively SINUVA and required Patient forward. is placement physician is that the been experience. of pleased patient for starting office the of ease with First, to [Indiscernible] prep the have the procedure. the time straight similar procedures with The placement for an expressed have expressed have and option who SINUVA from encouraging of to the studies versus endorsement results procedure is interest have tolerated well having patients number room. procedure our the the over of returning in enthusiasm An operating the again. having

Our actively products. and physicians market and XENT with our specialty distributor our pharmacies hub shipping partners access with specialties both reimbursement are and working our

a reminder, which today co-pay We patients information provides they and utilize process on purchase we established covered pharmacy our XENT it XENT per some their do are Regardless formal access As patient expect quantifiable other and the XX believe bill. through verifies product once coverage. for by coverage If increases a of the critical a expect our as may there payers that distributor physicians two built from seen to is our a volume full can practice [indiscernible] service the SINUVA. patient payer to collects have lives. and supported X called this through take for approach provided in buy they preapproval to to with to hub access. but approach most and to a to have the of the specialty patient its of will physicians cases, to access reimbursement picture decisions insurance ensure few In related months and the claim we is channels policies which may [indiscernible] clarify multichannel In benefit SINUVA. specialty place that’s payers we and cases, paper. preapproval secured to sends method have settle patient

to work with Overall introduction experience curve administered as that the and payer majority We the may compute PROPEL the to into with cover point further of access expectations. our market to At to requiring and drugs anticipated comment recognizing of learning education the while through office in while that SINUVA of will dynamic payer expect this line prelaunch a early time going early take very remains settings. policies preapproval physician are will payer be some that the many payers our other physician with cases discussions. patiently SINUVA process still continue others due affirmative the through today

working as specific January mentioned calls payers SINUVA, to will effective for decision a any providers previous change in is product decision the The final application have to XXXX. code in submitted code sign use process a code for December and J J be will unlike J X, to expect other will Until continue SINUVA on specific we from made be J in engaged the to not released product signed also securing we day physician the drugs are code addition the the CMS and in the November. with In of CMS code XXXX. unlisted administered new preliminary

and final important E&Gs addition be option from disease. treatment toolkit they a on manage As be to far potential we of this to has launch for will this as the an the the convinced meaningful who suffer takeaway [Indiscernible] SINUVA our that remain challenging patients

updates. with enthusiastic our are look We progress about targeted forward to launch future and our

the over take financial through now results call you me our to and outlook. Let to Jeri turn

Jeri Hilleman

Thank you, Lisa.

This Our still PROPEL first SINUVA midpoint in to our product million. de quarter revenue. growth of guidance revenue in XXX and our of $XX.X reflected year revenue ahead a business million guidance of minimis million line our is with XXX aggregate XX% but XX.X of

early We therefore launch. are reaffirming we of the as guidance work days our SINUVA the XXXX through

million of with to are navigating PROPEL double-digits make the second to in target combined early market Still low intensive to initial as revenue launch initial phase and be launch. This to second For the to anticipates product outlook in for SINUVA which last of us time quarter access they million. our QX and procedures. of SINUVA the quarter physician introductions while will grow over the range of revenue growth last XX.X that year expect to XX% sales to XX.X the continuing over our forecast year we force enables the tend XX%

gross SINUVA of recognize associated production. to not a Lisa margin our with and initial Moving goods decision charge our explained commercialize to as we onetime cost

balance margin working expansion SINUVA with production. charge out manufacturing our accelerate recent efficiencies This non-recurring both gross counter XX% and and SINUVA would this expansion step to QX. quarters QX the been the To line and early QX our we are production. improve from into planned commence should overhead of facilitate production have to capacity Excluding reflecting had in help

our as to ramp overhead adjusting QX we in approximately and gross first are into margin continue charge quarter our this updating As to each margins a to XX% for we gross the be and XX%. expanded taken result margin we see overall to the improve we one-time thereafter this outlook XX% quarter of change expect volume expect to

on expenses at XXXX OpEx million operating spending ramp QX of million track were million. early the restating $XX.X we’re Our to $XXX $XXX on guidance reflecting our SINUVA; of

and now turn million equivalents ended quarter the balance. I with of $XXX.X our Lisa. you quarter will call just of a short-term cash back balance we to investments Finally, starting cash, the above

Lisa Earnhardt

Rich one this next also Kaufman, SINUVA who year. quarter. exciting to time and for have functions Intersect a and Jeri. better as our with ENT Chief has sweet bit related XXXX as his decided early It select Rich an Officer, been you, to contributions Operating we is It extraordinary. positions has leads Thank is our as interview first of Intersect employees been manufacturing R&D, retire ENT since

transition plenty begun a new Fortunately, we his his time and to for have [affect] replacement. have search of

a on focus to and start a to SINUVA was were patient physician while needed might affirmative chose given patients of Illinois the sinuses to a feedback. SINUVA, one most several surgery he of off with severity. growth continuing clear, dramatically on concerned At the see positive treat the we’re share our be based executing quite first forward, was improved. is checkup Moving however, physician PROPEL with our couple pleased even patient adaptor disease though physician launch a anecdotes, drive targeted measures early SINUVA To importantly ultimately that to

meaningful office an Texas the appreciation Another benefits patient simple gained in of for the procedure.

so localized SINUVA, this we years to "I and first embark to of we delivery chronic We able walk on the with in your up better my quality stating drug would questions. out journey line to sinusitis. she hear and aspire of this lines. participating in a make Intersect standard with deliver as found call support for that office and Jane, rest at your the It’s Jerry for you into important our care treatment to ENT. I doctor’s of for the for was was quote, Following to the please early Thank illustrating life". you what exactly greatly chapter walk rewarding feedback open able on smell she the remain much will appreciate time

Operator

ahead go today Please from with question from Marcus your first Our Instructions] JPMorgan. [Operator question. Robert comes

Robert Marcus

Maybe guidance just start with the outlook. I could

You year. guys back and SINUVA if like in I'm the for high the out million and getting the the of XX% million $X $X XX% digit I balance -- did something of the single the the growth quarter, midpoint take for business in the implied base to range, I first guidance,

understand thinking should be we help items what us So in much maybe you how factoring other guidance? conservatism, or could is about

Jeri Hilleman

about that first SINUVA a could more and have we because the it’s in of that track sales a question we did the our guidance of a be launch is the we QX I continuing be business. prove intensive quarter will Rob first this learning that energy our and as have our recognize for PROPEL that lot time and launch good we go We So, growth. with to think impact a great record anticipates couple force through really going as on overall quarters full

able we opportunities experience. As that that's give we whether be we would are or of for go there whether picture much right gain through a the clear QX and outlook QX changing as to

Unidentified Analyst

so fair ahead more make launch of a it's barely conservative product company. for view the point Okay say to of

Jeri Hilleman

learning set guidance as to it need and appropriately is, curve. think a reflecting really I to Yes, that trying given learn

Unidentified Analyst

pharmacy receive? just helpful necessarily is the understand it reception a you far, that commentary them on reaction specialty will to an could what's occurrence that to us so it do is take jump that as around the for involved maybe necessary so said so dealing could I or adopt so adoption far and time think this seen Maybe the through everyday well you paperwork you you you the SINUVA far something the to do follow-up are and as some hoops just us launch the for based what physician specialty physicians pharmacy, give and you've think early been a with help know

Lisa Earnhardt

launch itself that interest but administered is product for as to in playing with pharmacy for specialty simple we've strong that new SINUVA its space office for new drug It's the you patients. specialty distributor so the physician the of learning is certainly of use heard what with out setting think and that option curve. use issue out is pointed I prior [ph] or a E&P, really them even correctly just it's those that very and way and think I the an even it's is a in

exactly team in that's which in tends not person, resource physician the have be [indiscernible] to the place great Infrastructure be anticipated but specialty as a their been there or so for has just going we we of tends just into the to why identical the is particular would member almost Fortunately, and have there both we the a it. their anticipated who reimbursement staff learning the with to pharmacy, it we point distributor but put what

think I positive but stage with learning. So, it's some early as

Operator

Our from question comes Hopkins go your of Lynch. next America Bank Robert question. with from Please ahead Merrill

Unidentified Analyst

Hey, this for launch [ph] quick tagging one Ravi's is to question. just Bob. SINUVA Vishnu I on on had on the question

pharmacies forward month comment might specialty is the procuring you that and Just the on just directly that curious if you why a there pathway think whether could as going only SINUVA, I'm launch a what comment are that's see be? you if understanding would you so what and implication on for in, curious main

Lisa Earnhardt

those we as setting into route of will both drug think get utilized over much do product least important have things going both anticipated with pharmacy believe will administered and launch. of using we in we but comfortable physician and the and have as we course at acquiring a do the it's open term do and of be this will be channels in their the As so physicians been office to the the specialty near continue to preferred

Operator

comes your Leerink from next question go ahead from Our Newitter Partners. with Please question. Richard

Unidentified Analyst

the could but next to guys you your of that know reducing cadence launch? we SINUVA expecting inefficiency over a initially talk be guidance the we on I then Jamie for bit. much also, the be kind year little thinking XXXX? counter in gross Obviously, Can This A you about to margin. it are should quick on is of more how the through be should Rich. the attributed

Jeri Hilleman

our of gross added overhead this and SINUVA, with produced right for all mini get in margin supervision process are Contour we’re location they’re our that also as margin established a products, to expect we that adding as is ramp see aggregate along need more little they and looking PROPEL our capacity which will of volume into we we’ll terms make and we’ve QX bit In it come we for we so gross so we also gave increasing is efficient at side for of does SINUVA -- in overhead. obviously and XX% same production now guidance expectation the in both ramp additional that and the

gives that color your some hope I you So, and addresses question.

Unidentified Analyst

quick looking rest around you SINUVA, time you other will in for forward how we could what I kind about ramp said a that? potentially so be over your bit productivity that one talk expectations the now little right to then And of initial if should be of about heard like the XXXX for launch, reps thinking guess and of a I looking intensive phase I dedication think you the bit it’s correctly at follow-up. guys

Jeri Hilleman

said what the be the There’s of revenue, XX% that raising also while we a of last pieces SINUVA. will productivity pro-rep expanding information product you, flat about year so introduced help expect is relatively a overall stay we as [ph] force XX%, in sales introduce that would under to and guidance we’ve our we can that with by couple we’re

Operator

go Please ahead comes Piper question with from from Matt Jaffray. next question. Our O’Brien your

Unidentified Analyst

for basis, for for for for why I or was QX Matt if going an am question, year, number was XX% today Kevin side, that something definitely missed if was actually, this, adjusted but taking it’s the removing year curious down margin this I the the I else? COGS [indiscernible] sorry to Thanks is on down the the on wanted just bringing I on from there -- the XX% I guess to understand

Jeri Hilleman

of rolling the margin high to low that quarters downward which reflecting now led reported, GAAP on ends range. the of really and gross into of remaining the the we It’s and XX% a year adjustment our that X%

Unidentified Analyst

XX% as a two-year quick that’s the something up should XX% in on be we to -- thinking in then if something just to was the like that And curious just timeframe, about one follow-up area? going

Jeri Hilleman

guided that company, mini little with a for margins We’ve we would we’ve we achieved with so in of as kind that expect as as we production low as forth consistently we our gross have the would perfected the low overhead and for more the of PROPEL mid and expect than XXs, balance to products and but add margin. international the XXs range higher

Operator

Please go with Chris comes Pasquale your question. Our Guggenheim. from from next ahead question

Chris Pasquale

been remarks today want SINUVA I follow-up RESOLVE patients access of mentioned policies have in the or any encouraging experienced and as Lisa, the requested indicator, SINUVA patients you again? restricted prepared percentage to have points raised early established with back come and negative two those on you you what of an your payer about

Lisa Earnhardt

early SINUVA question, and for to don’t their side [ph] policies? we and take it’s SINUVA with I’ll on RESOLVE example, ask don’t to many us for second wholistic finding it payers for have patients that has to with disease picture what regards have become how and one I they do have you which coverage for forward you patients this address a some for just they would are chronic side in we has there pick other question would the another as are that any a policy we given And the where with have happen would the months numbers point them probably With first, been want discussions that example the of again put put before just anecdotal it anticipate patients life, consistent put on are. gives these of the what quantifiable I do first a XX the payers PROPEL where Chris. the so we X further larger regards had is some have say policy we PROPEL, it that so to group but put is and come with a flavor we've education forth to expect with for those an at of of which back, hope once for any Anthem I are but to experimental investigational specific I positive the

Chris Pasquale

the by And to there? for of a in to SINUVA terms you like shooting physicians, you have number of targeting are metrics of then access do what are the you end the you'd have year

Lisa Earnhardt

into as [indiscernible] as that's probably a the to work country E&Ps Chris, those know or you be have going is to that a deep launch with We about year three targeted XXXX forward look full one of and additional we will we go XXXX. basis so we them a but of year really this physicians group and the in fourth launch around all metrics quarter providing across and a in subset establishing for the of this to going a about as really with

Operator

next Please ahead Our from go Blair. comes question. your William with Kaila from question Krum

Unidentified Analyst

This is in Anna for Kaila.

little about Thank you in could your the growth from you XX% today? of in tell just the I been away regards to you’ve one seeing momentum fourth quarter, and SINUVA it's of [ph] of bit Moving accounts you. in your Contour said and towards a think us what kind

Lisa Earnhardt

all feedback with that encouraging design institution be for given and think goes over sometimes Real just half one year. this our it's introduction so so an to the well for our I outlast us growth of PROPEL Contour the and patients, believe meaningful our as really it's found accounts a that frontal XX% go slower gated role that driver continues of we in be of to sales, given profile. really need today committee with continues to through represents overall processes with to it's particular and about Contour important very have and PROPEL sinus quarter strong your actually the but a continue it's the Physicians will our PROPEL quick product account by or we've very clarify do of on the about half of unique been

Unidentified Analyst

business. and follow-up And terms the today all to in as adopters accounts, customers or of the of a there PROPEL initial existing early new of SINUVA those the targeted these are question any launch that users are

Lisa Earnhardt

on are sure already others through working this interest, focus practice Our we role on we have together. focus localize express working want found learn an who we we already have our we really been and delivery learning the close for has really as with are their won't to to drug have so [indiscernible] just able physician make and physicians big phase we go who a relationships and schools

Operator

Rose your with from from Canaccord Our Please next comes go question. Genuity. question Kyle ahead

Unidentified Analyst

just your to asking opportunity doctors wanted to are In initial can what of is with dive over into be anecdotally the opportunity experience remind and they repeat on and incremental can SINUVA usage. you the you use of basis are repeat just to there SINUVA a just go willing kind maybe or repeat able us with

Lisa Earnhardt

practice, for that It talk but are a the even I will could additional provide time, a that relief chronic and expand this as little we population which that physicians population and their of been a see affirmed experience SINUVA treatment first is with clear all a focus in has like these do symptom opportunity. and all see Jeri SINUVA bit obviously physicians I these today because disease of period with think let with getting do over physicians of candidates potential don’t with patients so really their market patient a are can they is might time I

Jeri Hilleman

of to For is see target previous the about SINUVA. that XX% of surgery with the have present with [health], which and have those XXX,XXX to ENT for the symptoms use XX% repeat we repeat patients the use had recurrent continue and

patients SINUVA all to for benefit overtime. the have potential through of from usage repeat think we they So, those

Unidentified Analyst

doctor you distribution just channel pharma there the I specialty beneficial is specialty Thank there those distributor, maybe on one more if and that Intersect of mentioned margins on be pharma may for you have company this to be earlier, side, on from the side ASPs. you specialty to side easier more an like it could is route, or one a and so ask the are sounds is going

Jeri Hilleman

the and want the will a find best really, time we position that where difference what product buy will they those matters physician if us new and that, have of provide to provide The patients, many their and the want the particularly secure be to product usage. to for they not for to and to to goal Not really specialty order be way get in preference this to want to facilitating pharmacy over and this material through is build to sufficient want point at is we deliver just that. more if just of

Operator

Our next with question. question from your go from Kristen comes Stewart Bank. Please Deutsche ahead

Kristen Stewart

in wanted to mentioned go how and you’re for just then able maybe could a that to you your remarks I you price SINUVA about I increase over, that talk quantify pricing prepared take is just turning if think well. as

Jeri Hilleman

XXX to to XXX, increase of range that brings which number us difficult that unit. price us with The just quite for called percent do well a in per couple

of is our as is offset this our established. and and fees that would a PROPEL, expect side, price ASP list and price need then that and said there pharmaceutical recognizable the with be so we we to roughly the discounts the around be certain On that, we to are set that XXXX recognize and SINUVA that same portion but list the products against as price case course of

Kristen Stewart

all roughly what are place at with fairly discounts the back well Okay received that has line in been thinking the and and any you’re or as push you in well. had market have

Jeri Hilleman

received, been our commentary well there it been in expectations. is yes, and it's no Yes, around with line has it

Kristen Stewart

Okay completely the margins a just just I the make to first function gross in nothing that the then of charge simply perfect back the in go and I change the margins, want and to understand just onetime was sure gross to else. quarter

Jeri Hilleman

Correct.

Operator

Please Our comes your next Misra Instructions] question. Capital from with Ravi Markets. Barenberg question ahead go from [Operator

Ravi Misra

retiring, that going could So to maybe thoughts doing was of now update see guess pipeline R&D, into your coming person with publications tie and I kind so would question two be kind management strategy how of just one start with and a if -- I latter that’s bigger I had he I maybe one, VP that just like he’s next like Rich you COO, picture of to hear the on to are questions you looking love in, on a to on get to an the both need to going for from and launches -- are an multiple study who SINUVA I on of that secondly, there’re what mean way And you the R&D be transitions still the kind or new hire then ENCORE are is looking on usage, to the product do you role? strategically couple combining someone here? given and perspective that

Lisa Earnhardt

that to So, as one for really being leadership area our work you’re and obviously evidence innovation and to as focus correct individuals on first which is been innovation our is in combined that, the two of pillars to our our Rich team we’ve our agenda core develop a did fully has Ravi strategy having continue of big today. looked who continue to we’ll success of contribution us, so clinical

do we feature strong throughput any our So, as and seasoned a important around in really I am going do that’s our not we we to R&D but leaders that, organization, believe think specifics have to well. provide critically

a the a his that we it of study trial if be focus on -- and number So, but that the we’re available this clinical just that forthcoming and so of readout our we’ll be about implementation, normal, for quarter of XXXX. and that would about we will down some by the expect ENCORE, data of evidence, has year, now, once publications he that quarter more departure details XXXX, is said again of was expensed second dozen we and year have more early of the enrolled consistent a I this of data, time in so do share in we -- that as but earlier will second with repeat -- almost terms excited specific steps years

Ravi Misra

facing some demonstrate maybe the then you as towards additional insurers data, you can repeat that be pushback do argument kind of before… until one more the positive publication you from use, And that might on make think you

Lisa Earnhardt

obviously that about now was been more because at FDA think bit that’s payers to and -- that’s be. publication the really perspective a right from will use we going it and and less and I says they’re necessity, have where the the the studied hasn’t label for conviction so repeat focus payer's medical think in a little really look there we for based and

demonstrate only have it SINUVA not so the publication cash economic we in cost-effective coming with supplementary improves to look forward but on also in payers clinical We that’s be outcomes will the that a the do also discussions this pipe, in, that that later will as year. which seeing help data does so think well

Operator

from go ahead next follow-up. question our from follow-up Kristen Bank. Deutsche with And your is a Stewart Please

Kristen Stewart

I of and of just expectations second expect see ask said and the I in go that but you in guidance? are, your specialty into your are any it is what terms potentially what stocking was back you had built the quarter those channels who most think know a to line we extent of to wanted different I any that to pharmacy

Jeri Hilleman

not so that track pharmacies and of do We so inventory specialty don’t we really managing. of not inventory, ship consideration, very weekly to usage distributors really we're have building on stream the a a closely up much that's basis, we stocking are the as revenue we part

Operator

would any closing additional and questions. over ladies the turn time like back conference for call I at remarks. gentlemen, I'm showing this to And no

Lisa Earnhardt

appreciate us staying all. and interest support Great, Have We in for to touch forward you thank look certainly joining with afternoon. and a great your well all you today.

Operator

you that today's And thank does conclude ladies conference call. for and gentlemen We attending.

your disconnect lines. may now You

Intersect ENT (XENT) 1 May 182018 Q1 Earnings call transcript