XENT - Earnings call transcript Q4 2018

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Operator

Good day. And welcome to the Intersect ENT Fourth Quarter and Full Year 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. to Officer. conference like Hilleman, to now Financial Chief would turn over the Jeri I ahead. go Please

Jeryl Hilleman

Thank you, thank Allison. And call. in today's you for participating

is and Joining Earnhardt, today me Lisa CEO. President

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

Lisa Earnhardt

and meaningful PROPEL. our ready SINUVA to included access experience, believe to XXXX our positioned in with afternoon. field this afternoon. year ramp positive has our product as very XXXX to team. proven the advances SINUVA force the us year And of we joining well sinusitis but the and clinically as therapies suite considerable progress new to and importantly, for access. demonstrated innovative and we key be continue with call remain Highlights market challenges, excited and be as that thank accomplishments also sufferers the was grow and Good prouder of we resilience XXXX enter clinical you adding one adaptability which couldn't for of I We to SINUVA both began balance

favorable. continues patient to be On front, feedback and physician clinical the very

of chronic the steroids. the a we're office is successful dose disease to with patients our product surgery repeat standard high most important aspect needs to this either based launch great care you today or of and with able polyp alternative we're the thrilled As know, sinus a of procedure, simple meet

received that patients XXXX. are We SINUVA pleased in XXXX

XXX our launch, XXX or patients treated these targeted During orders close physicians to almost physicians for placed a with SINUVA. more five having

up continued this to the are of national We well to as payer of continuing trends XX% lives, just representing users, reimbursement, coverage forward as ramps. usage to available early seeing force selected anticipated of only approximately total adding majority our as including and payers initial physicians SINUVA, payers sales to see encourage significantly over product to silent levels large grow Currently, XXX well, our positive translates not the for with regional shorten as than drive XXX pleased prior look covered many physicians usage engagement positive level to is we working and adapt a lives. with are with remaining access we to vast the payers With authorization. The several total enrollment SINUVA are to coverage. regard commercial are being higher of to SINUVA. coverage million This payers but providing to and of new timeframes

coverage targeted are In the JXXXX we able to of submissions a now use population are our to of portion Medicare starting addition, Medicare that small SINUVA while see Code.

submissions, physician termination quality by from offices, now a strong with combination seeing engagement their we seizing improving authorization, of of to to of turnaround also payer weeks. two timeframe reflects more our typically shortened SINUVA, factors, prior the the addition of submission This greatly coverage, progress a team. In familiarity and around are times including

this enables manage as pleased very course, confidence SINUVA predictability. of with greater treatment to this physicians of and are, to We see turnaround level

We and an that input, for buy-and-bill rolled with believe We through having our buy-and-bill as we Reflecting expanded Payment margin. of clinic initiatives the will work under were product move that, program market this continue plus Meeting weeks three bought of buy-and-bill with observe in product of to reimbursement SINUVA appropriate launch will soon our the from of patient clinical year-end. to in broader physicians content a be force through directly SINUVA XXX year. doctors an are Sales with out usage of addition training a physician. to the excluding fourth element important physicians a be launch engaging quarter typically ASP our course a also also offices as customer We we on held continued outreach few be we payer purchased and that feedback over National hospital One coming for in great a out a to purchases. reimbursement and progress and systematic ago by anticipate to in targeted allowable coverage, number rolling broader for to the positive sales making a physician's access with physician will has team. on educational field units

to these We a in and coming SINUVA the expect efforts in impactful be from engagement today. in months these will initiatives patient positive enrollment to that start treatment and see we expanding inflection

by primarily and sales, the PROPEL among at PROPEL. current XXXX. driven up from of In both physicians. of XX%, quarter, to new Revenue expanded Contour total end of comprised sales XX% Contour grew the XX% usage Moving fourth

our XX% the in also focused the we adding bandwidth, reps the XXXX. We by with last growth contract significantly consultants expanded field sales Overall, about during sales majority PROPEL the the force and of four months of added XX sales to year. into

we new feedback do expect only higher growth. spoke remiss their achieve about be our that if experience territories, of would SINUVA. in product reps to us I And gain help bandwidth As regarding PROPEL levels I

disappointing thought PROPEL. told patient us, with breath, our could in had open, but so its her greatly with therefore us PROPEL are business felt our compelled was and with difference consistent us experience patient felt which the the at to years. of that she and guidance. haven't QX our year with Meeting about her year at my third I immediately. is continue patients in well, One recent remains National I so Overall, about almost two We of our actually surgery, my what we well. a and our something was as spoke to nose I This she experience Sales such outlook recovery, view start appreciate tell PROPEL the reiterating treated full

call of and our will you Jeri me milestones. Let call pipeline the take to through outlook, conclude results financial with turn discussion endeavours the now to and over our and the I

Jeryl Hilleman

Thank Lisa. you,

net the in of sales with hospitals, recognized from SINUVA Our their gross well was line and we year the with $XX.XX. on as patterns. XX% over target. progress of guidance line we XX% and revenue plan with reviewed the net with in quarter $XXX from infrastructure price distributed set $XXXX Lisa ASCs in with revenue selling full fourth our to and with price remains ASP about summer a about PROPEL SINUVA and usage were us in-office and last historic percent just both made in product in PROPEL the couple

particularly XX%, expect made We margin. invest the of continue XXXX achieved reflecting therefore XX% with gross to land but the gains to margin we to year. quarter efficiency to throughout the margins manufacturing to between to SINUVA, throughout a in in fourth improve infrastructure, plan XX% continue Moving We also gross scalable year. our efficiencies, to gross

of The XX% During majority about of headcount expanded XXXX, this grew and headcount in support sales SINUVA. million by to OpEx XX to manufacturing $XXX XX% employees. was as growth we in

outlook in OpEx as to in last remaining annualization is reimbursement $XXX our balloon initiatives $XX an to of is further the range about increase to XXXX, The of About this XXXX million For $XX primarily compared is million SINUVA to related and of to $XX as $XXX of million, increase and million the the headcount headcount program, growth, increase drug-coated XX% growth. cover ASCEND R&D. million sales, planned well year.

XXXX, account approximately pipeline XX% R&D total for million million step-up The R&D of spending. our Our expense about from rise about of $XX in will spending to with R&D $XX to XXXX growth continuing XX% in OpEx a program to as driven rise in mainly in sales, additional from attributable and reimbursement. million $XX in as to XXXX, will additional by spending SG&A investment million the ASCEND $XXX marketing is well development. approximately investment to

we Lisa. year start Finally, I'll cash. turn the We I'd essentially to but with continue in like have expect to cash balance million sheet the year, very you, to now cash XXXX. operations. some a call use of even ended back the and investments, $XXX do at to touch to on support $XXX this million strong We with

Lisa Earnhardt

Jeri. Thanks,

specialty, ENT to life critical improve continue line view updates patients. believe continue ENCORE providing discussion are ASCEND we top have for leader to invest of in solutions today, evidence-based PROPEL that advancing pipeline and with quality will to the in We challenges and the innovation To the delivery we in new be the update of the physicians and the for system. trial overcome Study, on of our and an the end, few including you

XX primary the a generate use day received were that study use support repeat the safety SINUVA. approved events labeling, an Patients to data required small they been repeat track was second through designed initial with currently for criteria receive SINUVA of in to FDA studied. this Patients aim adverse of treatment implant-related of incidence the now protocol have treatment First, patient allowed if this repeat evaluate assess to events which study. will then The XX SINUVA to day ENCORE adverse then we completed ENCORE at XXX. the and participating of a open revision and they to study the met implant in placement. was label of order study states hasn't

plan though to this to no both. show to scientific and findings or the will findings study implants pleased, events FDA series are the seek present to the that modification measurement convey period. submit We We adverse conference labeling to a future that related do the of surprised, publication the data in not during study

endoscopic we QX drug-coated in the and the a trial the of our year. to that efficacy Regarding end is assess points. complete enrollment clinical balloon expect patency assess other at XX patient by is and commenced rates multiple by safety a of blinded time with line top a randomized study of This study December compared enrollment and with sinus plain study technology sinus ASCEND results to outcomes will designed balloon. the trial, ASCEND end

prefer further our have PROPEL we sinus. ways would been in system indicated they customers ethmoid product. when have on Many Finally, enhance the working a PROPEL modifying delivery to placing

forward expect customers second product this system have quarter. to with and If the therefore next to available expect new system in we straight file supplement to the year. are delivery We PMA for moving the that approved, early

the a with milestones, believe fee is make to anticipate system commercial sum up to PROPEL main system available customers. strategy separately nominal will usage. Our by delivery our number we this expand delivering received XXXX well on our We and achievements objective this year. of this delivery being for To reinforce be

preliminary For the QX, just we ENCORE have announced results.

await the and QX, in preliminary For expect straight the we the for May. system file CMS PMA J-Code to delivery supplement early decision

Regarding eluting we implant now submit replacement the January application SINUVA. renewed about codes J-Code specific the and medicine optimism a we of officially in planned deleted our with [ph] CPT latter, a retain securing did a for as theory

For from we plan report we line by study end ASCEND enrollment expect QX, results top year to and complete ASCEND. to

In the SINUVA course, PROPEL and we reported on quarterly progress milestones of addition growth. ramp these of to

join build to you the line We remain saying excited opportunities support are We'll questions. these your stakeholder full and now I engagement. Intersect your in value thank to ENT the on have address for and team to

up would open please go and lines. Allison, you the So ahead

Operator

Certainly. And thank you.

[Operator go Instructions] our will And session. come JPMorgan. from of Please We will Robbie question the now first Marcus begin question-and-answer ahead.

Unidentified Analyst

to Hi. Robbie. on I PROPEL actually your was driven the of strength and it in quick recovery Alan comes of When the by PROPEL. I it a is looks for on quarter expected really like just had SINUVA, a guess, better this guidance. mix This question than

should we SINUVA continued look apart how your forward, like when implication should also you about is So you ramp at break can color give of on, specific like as any of think guidance, obvious business? base how stabilization the the look the and kind we you the

Jeryl Hilleman

that and that, build we as we think Yeah. that about forward, benefit so we probably hiring field Hi, to into are starting more also did expect would really with go have the as that through we get part now quarter. lean the do of the see we to of year up next the PROPEL to SINUVA we And meeting in expect the indicated sales that forth, national Alan. and the speed and we latter through in in we as to going year the guidance the revenue continue would so Good our we question.

some about of color the and that to not So year have in report although with idea that PROPEL do each them year, gives anticipation out thinking at continue we are to we of the to you broken we SINUVA of forward separately, quarter. end how the looking with granularity expect

Unidentified Analyst

a it. And guess follow Got then up. I quick

have think times, do the you like is hand ones, the for using indication? you change, data would multiple some kind ENCORE that will So on you of held are off have wait that doctors SINUVA already it to you obviously for multiple it now going who sounds that or times, say have of using that something they your on

Lisa Earnhardt

and having relates do it of report those itself, SINUVA ordered dose about Yeah. the of decision the are We to as spoke are a I safety its see some SINUVA profile believe being and own. the have treating of times, physicians but use repeat impactful given it than for use new on making physicians clarify of anecdotally five just SINUVA. as data same around physicians I de aren't want those the use. though, majority, to actually been We patients or more XXX the of treated. we stands necessarily it's when that patients in don't ENCORE vast patients, for more do majority vast novo has once, the being

Jeryl Hilleman

profile we're use. doesn't want to dosage data provide in hasn't - says for been section safety repeat right This now doing also speak clarity the indication use. update, this And that, The really I section. the dosage on and is repeat to just use this studied repeat to will provide

Unidentified Analyst

guys. you, Thank

Operator

Our from next Bob Bank come question Hopkins go of of Please ahead. will America.

Bob Hopkins

gut expressed questions. your I'd of there some on you so get the were quick kind check to for optimism, just taking the a ones. Thanks A optimism much Hi. obviously expressed couple some J-Code, but love of before.

you So of with made can incrementally J-Code? what this sort that, comment just the you us share driving on

Lisa Earnhardt

the at was think has was that separate year, necessary. of in the determinant and and optimism I or biggest codes with that our to felt Bob, like existence the regards were CMS didn't reason up, CPT given Yeah. end award J-Code last of is XXXX the that that really they sunset a why

decision preliminary in forward sunset following time is So look with November communication of to we between believe those in probably last to in good which May. sort a be the we we're being do and frame, late had codes the rolled the CMS, very their on decision final in moving position forward

Bob Hopkins

have your if just million be don't expectations mismatched that in Okay. That's but don't think, I realize this I I to on break it at next Street out you year, we then SINUVA the and would know point, $XX for the that helpful. it sales to modeling, way is about there? guidance helpful And you want was off think just thought so thinking,

Lisa Earnhardt

of quarter quarter, and you ratable see I as allergies street, of with the course that the could quarter historically should think, we with specific strong order think which but that the year, very we a forth, look ENTs and second a increase so toward don't move for if of at I over want you guidance. magnitude particularly give to the assume align is fourth the level

Bob Hopkins

inflection by intrigued Lisa, your the lastly, as months. SINUVA coming comments then it I was And in - relates to Okay. potential about next

out relative of So with And just sales to little on last little could flush original your expectations. meeting. if provide bit, coming then just maybe us perhaps I a perspective year if something from bit wondering was you that a your

had reflect, really if of what you at, had in some inflection kind months? to of core causing time you've that seeing the was pinpoint about and what's to the potentially you. comment Thank disappointment this driver the coming you make really an Now to

Lisa Earnhardt

like meeting challenging that we perspective was for ingredients because, point, way are will we coverage year. first sort I was element sort to communicated I and are from you most it as I risk patients over a by it Yeah. the all versus back and we're the of this because we we to table have that strong access and coming sales super position we and take if absolutely we to a one of specialty that being strong feel know this we'll of provided the us, product new recipe of time at as make And, are But learning some what fact the fantastic the inflection. route year by for reflect encouraged physicians, did number not the year. the previously I'll option us start for with product with a success was the and lower payer mean, the very really on buy-and-bill. have develop the probably XXXX, this with ramp but for on access is we the patients, course off regards an while pharmacy know, of preferred a a for encouraged think, easier

And have to I'm learning have and reflect clearly I tackling was to as we be this. we the ahead. our year, the put team that think address do right We're encouraged place biggest so, and feel like the about blocking in all doing I the able upon we opportunities but

Bob Hopkins

Great. for Thanks the question. taking

Operator

of next from will Our Please go SVB question ahead. come Leerink. Richard Newitter

Richard Newitter

the here. I taking for couple had Thanks Hi. questions.

to line around on the SINUVA. Just continue of questioning

us have coverage back you and of been number coverage, insurers maybe at a reliant - specifically you than commercial months. allowing to pharmacy it's of in ground lives actually policy how you positive formulary I added and tell you with payers medical all move maybe submissions? respect the XX% covered, for more is from think, know with to on specialty Can you've buy-and-bill be decisions that if seeing those facilitated what greater to You a the away said at you level to doing recent for

Lisa Earnhardt

Yeah. have important it both, how they regardless access that where good it to formulary, a Rich, I payers questions access, that we think some medical required payers have to have of product. others is are there have on just sure patients note do that and some want make policy, to

distributor. I more quarter So potential the pharmacy what XX-XX sort happen of potentially what a the of between Even formulary, specialty bit relates the formulary, for future have or it's specialty you we toward and so comment ours. is will pharmacy, about of of could know, us presence a of seen on of it on much drive remain a if last launch to is a a still two those split in if we buy-and-bill know tailwind even split positive positions the part that premature as it an important - and focus to mean specialty having that very SINUVA the on

have to all excited reimbursement a we're of So, the physicians sales that the make ready sure are XX% access pharmacy have want to we commercial patients fact and both that buy-and-bill. what's positive, covered team for we - over that are and but required and do specialty and team is our lives support

Richard Newitter

is? and any gets that collecting us are data respect data cumulative sense as of with doctors, where positive percentage give and you and building addition And points to of payment actual can that buy-and-bill, to that what on received the the the kind ASP it's you presumably on you collection the by are

Jeryl Hilleman

are EOBs. the we relates The in a buy-and-bill. EOBs, to was number or benefits, feel of called place. it to good like for acquire XX we're payment We last rates We over offices exact which as shared show what the physician explanation continue

be and We really to upon. library robust we that a collect, provides that can relied think but nice sufficient continue is

contracted said, down we average of end So, something been and don't EOBs would have practice. rates more to margin. but have a incorporate level pretty the up think very for would want consistently I a - them rates update and update moving selling launch to as it's up collecting, obviously give but you we physician right would that billing, forward, unlikely specific be been payment that an what sort moving plus any they number and of that what value end this All we it's their reimbursement know, that appropriate they we coming view of some metric into their price, provide to to we something forward. the the numbers, the up

Richard Newitter

to that Thanks. out on reads that? your one And another for trial the to are dictate toward means? pipeline, mean next Lisa, FDA submit the after going And end the the data of maybe maybe help that the able trial that's drug-coated What the just what just you ASCEND whether you. to does steps? balloon. could year? be Does what potentially or you Thank flush will need that, out

Lisa Earnhardt

one things, of those Yeah, it could be Rich. either

randomized this a done today. trial we've potential incremental - it's fashion. of that it. we've first drug-coated we excited trial, So obviously done when randomized said, what's All that's the with first been that really provide talked in about benefit our We're this of it trial about is the available balloon to

And so year it will end of us and in do XXXX by to product. the data cause Otherwise, lead work. additional if the ASCEND clinical positive a to it submission the of could could that's some the have we

in. this on look year you we're So later to we'll which path forward updating certainly

Richard Newitter

Thank you.

Operator

will Please ahead. go come question Matthew Piper next from Our Jaffray. with O'Brien

Matthew O'Brien

Afternoon. the much questions. Thanks taking so for

all on questions. up following SINUVA continuing Just these

continuing to the to really just deeper at that are XXX clinicians XXX you you just think I'm the reading other I the or docs more signal - statement? SINUVA more and Is XXX those as at mentioned were a you're patients. add it much and and least down XXX of last with clinicians trying are quoted buying was five think not XXX, you're five point, was over this bought number that that I treating this go to or doing still business at that products within

Lisa Earnhardt

Yeah.

the and at we had at of we about fourth we the So just had had think physicians physicians patient used quarter, I quarter treated clarify, at call, SINUVA XXX to had the the had the under. about one who that said third product least end just end of XXX

those who have SINUVA at And so five as physicians physicians, ordered times. we XXX look least the are at

whether So and physicians, now more they are patients into with to starting once they've not incorporate started but that routine a part have and we're really but many we visibility they of not how just those use to treated times XXX treated, don't or practice. their multiple encouraged

Matthew O'Brien

SINUVA what that, and it. either Got core core of signaling the think it on a QX like And stack Lisa, through then and and there little signalled in we meaningful it's regardless there kind two-year guidance, than in know was as else Jeri with of it the or something a pretty about business number is lighter here that you expecting was basis I QX? everything I seasonal the you're specifically but business the slowdown in

Jeryl Hilleman

I to start much which very so seasonality. about from guide you with XX% were a look know we it's to And seasonality, you're in in right QX, QX and don't down we that from at ties around absolutely if line as guide the much the signal, seasonality. of it's QX QX, year, we typically where do

with sales to of that, and SINUVA, was before factor Contour, force strong our of our a still before ended doctors year QX really year, launch the touching in the is both having of base quarter. Contour last with we the of very in so other anticipated the up all the first note it quarter launch launch, The we SINUVA were last

also comparison put back year, it's think the apples-and-apples dynamics where more comp, be through also between which we'll the quarter. and I into dynamics will led that really the challenging between did. between move the of type some we guidance But to seasonality us So of of a prior year an

Matthew O'Brien

last one And it. Got me. for

year, we OpEx the year than on Just R&D. and an some the spend expecting, were was were the with investors But is - expecting. think then it year clearly spend for and additions all this it I is year headcount this then the last on investment both higher

bottom be the line. company will this deleveraging the down for at another So year

revenue into about and these that year persisting XXXX line So being do as fall to think start it could growth to again you we growth? deleveraging investments OpEx in we start see a with or continue

Jeryl Hilleman

Yeah.

year the think question we answer anticipate question I of the as rate and very into dependent pace XXXX. SINUVA really that's SINUVA will contribute the to go in to and be at your Now, on later after answer we we see what is growth better the obviously can going we

Matthew O'Brien

Fair enough. you. Thank

Operator

next Weinstein William from Blair. will ahead. of come Please Brian go Our question

Andrew Brackmann

maybe Andrew Hi, on This you the guys questions on granularity year, there be Matt's Brian. and could other bit more SINUVA want pacing seasonality add the little Maybe recognizing But SINUVA. that guide following actually is business Brackmann is good a afternoon. to we you just typical Thanks. ramp and on throughout around should to anything for base up the and besides seasonality contemplating? specific don't

Jeryl Hilleman

Yeah.

with Matt, that, the so SINUVA, the with excited is I it's think traction just what we repeat raised factors resetting the are think to on one as we we about question getting, I SINUVA, also of to add to said that the but deductibles. other we regard talked of quarter with won't we're about we first

of that for as and QX. we guidance be through we'll some we reflect that degree our about think to So tried learning process

Andrew Brackmann

missed XXXX? did then reps number sales the you may And but of have Thank Thanks. to this, I say add plan you you. in

Lisa Earnhardt

We really the latter did heavily not quantify the we of reps. pretty a lead number into of XXXX. think part We at

growth some it last year. modest not as So be will while as pronounced will have as probably we -

Andrew Brackmann

Thanks.

Operator

from Capital Instructions] ahead. next will Please [Operator Our question Berenberg Markets. go of Misra Ravi come

Ravi Misra

question. the taking for Thanks Hi.

then apologize the kind I the right sounds we into repeat jumping I'm there of are XXXX. help days? like can dynamics there? it understand if if you I kind Thanks. one baked SINUVA just pricing between throughout reimbursement you zero around or the for with kind assumptions mean, maybe should of Just Are any the what us placement, ENCORE, quarters that on assumptions, and ramping of sales And be restrictions calls, anticipating wrong, heard I'm I of that? What around

Lisa Earnhardt

Right.

that of terms payers think could an used factor payer yet has we be perspective, except usage, put from a for a have All only may SINUVA major potentially a issue seen that where small one have that have once stipulation. in not on limiting repeat the maybe that year, returning by number and I So only payer of based be covering so a very they we the payers mentioned i.e. payers we other prior hundreds on they I'm surgery, have symptoms call, the aware that that now for SINUVA - as focus if be had SINUVA, encouraged of that patient it, we're indicated polyps, has on potentially indication the we statement, could are of really with the that.

to like data continue do still know treat cost effectiveness of to And with cost the effective other model a throughout supplement if at we budget things will a multiple this. alternative the it's payers, even relative our year, also intact the to were payers patient options. looking they We and and times

ENCORE removed. repeat Jeri that will the a as That have dosage to so, and be our hasn't there. labeling earlier, net just small be think positive really piece use where statement mentioned a it something that section address does studied will that of And is, mentioned to we been

that on over do second is the want was Your of course question? the you to ramping pricing, it to Jeri, SINUVA, going answer about question be year. And

Jeryl Hilleman

Yeah. in We don't anticipate the shifting really any pricing.

is and government-mandated to take between in channel bit, a which some pricing feeds list fees of price net a our paid partners of for to revenue little certain you just $XX.XX. of that list a given discounts difference clarify of revenue have a available customers. We against implant are and roughly XXXX what indication in the into combination that price the the And we

Ravi Misra

Thank much. very Great. you

Operator

turn any Ladies conclude the this to and remarks. Lisa this session. At time, over gentlemen, I'd like back for question-and-answer our to Earnhardt closing will conference

Lisa Earnhardt

certainly us for appreciate evening. you support. We a Have Bye-bye. Thank today. so wonderful your joining interest Great. much and

Operator

you has We presentation. thank The now conference attending for today's concluded.

your now disconnect You may lines.

Intersect ENT (XENT) 25 Feb 192018 Q4 Earnings call transcript