ECOR - Earnings call transcript Q3 2019

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Operator

Greetings. Welcome to electroCore Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.

the of to LifeSci turn Vitzthum, host, now Director Managing Advisors. will conference your over Hans I Mr. Vitzthum, you may begin.

Hans Vitzthum

Thank you, today’s in for all operator, and call. thank you participating

Officer; Financial Joining copy Brian available of XXXX. is the for electroCore release Medical Chief quarter Dan today, me be available Executive the Earlier company’s results are Officer, will press Posner, Tony website. Officer; on A released Chief Q&A. Fiorino, ended Chief Goldberger, XX, and the for September

remind of you statements of this are statements to should management Securities be Before will of forward-looking the provisions during we like the Safe statements. Any to Securities deemed to begin, of which statements that contained be Litigation call statements make I’d Harbor Laws, pursuant made call within the Reform include forward-looking that the this XXXX. meaning not historical Act in fact Private Federal are that

limitation, our current are of and statements. statements examination operating materially on forward-looking cause including, forward-looking uncertainties and that various and should or estimates you upon place reliance without based not involve assumptions. anticipated to by These implied could trends material All from differ results statements Accordingly, these statements. expectations risks our the these financial actual undue future those company’s

Securities For with and the risks the Exchange a the the filings list associated company’s Commission. and and company’s with uncertainties description of see business, please

XXXX. is or to otherwise. accurate because that disclaims the any except of any law or contains future required projections update November information, broadcast events today, of call as This time-sensitive revise electroCore or intention obligation, XX, live statements, new or financial only by conference forward-looking information whether as

the to Dan. now call And with I’ll turn that, over

Dan Goldberger

here. physicians everyone, And for on take studied by compelling. today. are role. and and to this I Hello, Many and quick, joined be peer-reviewed relief the concluded headache I I’m and gammaCore are well joining by anecdotes established Hans. about received therapy the electroCore us thrilled enthusiastically rigorously company very agreeing you to of that the associated prescribing science you, before Thank effective October their X, debilitating I device and thank from patients.

The spent at few me to and assignments since and my only our and give the had of first we ultimately turnaround weeks great of I that know for be success can physicians gammaCore one including believe them electroCore. benefits channel prescribing partners. confidence our distribution I investors. can build biggest my six company our key getting I’ve disappointing firmly was a stakeholders, therapeutic of opinion leaders, various team that electroCore career. XXXX,

will in $XXX,XXX is detail, Brian of discuss growth the headline the September June but XX, ended quarter XXXX, $XXX,XXX the XX% the XX, numbers XXXX. more sequentially in in from key ended quarter revenue to

systems National health and near-term United the and Service into care in will States Our in DoD VA Health direct sales to the sales. drive UK the the continue

optimistic that our yield workers’ positive in compensation I’m near channel Additionally, the the future. results initiative into will

proceed opportunity alternatives. our as this analysis required with any for XXXX. proposed complete commercial several well seek Board as quarter, revisions our as We benefit, the obtain team States. I’m of that gammaCore to PBM, devote business or efforts continue reliable with for significant a channel in We’ve implementation planned strategy evaluating to enter analysis reimbursement we pharmacy approval that to working and through to top-down any United rigorous perform to the

of development reducing XXXX. program quarterly redeployment announced cost focus and and you to plan the this our near-term burn runway to clinical opportunities, revenue spring, intended current three things; past a extend As our generating streamlining comprehensive reduction know, into cash management our on and cash beginning

success. long-term plan this best us continue for We positions that to believe

at reached approximately least of end one I’m quarter, of had pleased side written of the third our and which, comfort efficacy demonstrates no we physicians to continuation alternatives, safety unlike trends By drug business. This the gammaCore, with positive carries prescription. systemic report physicians’ had growing the who interactions. effects growing drug-drug the in X,XXX or

During months therapy paid of to quarter our lines the grow. be had months all paid for growth in revenue continues the of quarter, electroCore XX% business, in coming second These rising the positive in across X,XXX sequential to channel we demand to third Patient third converted quarter. distribution trends from gammaCore will in X,XXX nearly through months.

and technology most headache announced and opportunities Department focus including potential the a revenue January on the of in and XX, concentrated, current where Veterans Supply field, management Defense payer the Schedule renewed innovative base channels recent contract of covered XXXX. workers’ United are We revenue previously pain for as where effective our cluster Federal prescriber Administration patients gammaCore get for coverage their therapy potential the other to including program award providers. compensation Kingdom, treatment offers paid under

than that represents more out the penetrate. lives the for covered second- X% Veterans market lives. or Approximately, that million therapy total cluster migraine. third-line point of probably for Supply patients addressable which of we Federal headache Department Defense, XXX,XXX me more of XX a than just Let FSS, are Affairs and those or includes Schedule, That’s eligible are covered or beginning both to

third facilities to this see VA a XX the in significant up the the second Revenue for. purchased in that channel second hoped in gaining and to quarter. was we attributed up is the FSS have $XXX,XXX treatment product, from $XXX,XXX from very quarter. opportunity The quarter, it for very To military and had we’re electroCore, XX traction date, pleased

of of our the and we significant quarter, redeployed months XXX XXX increase the VA military and and a representing facilities, sales to treatment function in those shipments to significant months During we third quarter. therapy continue to VA the of portion We’ve the the shipped to second channels. expect DoD accelerate therapy in from facilities, a

revenue the second where from to up quarter. third Kingdom, in the Turning $XXX,XXX generated we’ve XX% of United quarter, approximately now $XXX,XXX in the

on draft As the the previously use cluster evidence headache for published of National treat Health reported, in the case Service. to Health UK’s They adopting Care gammaCore supports headache. guidance cluster NICE, National gammaCore NHS, or Excellence, Institute in concluded that for or

$XXX of improves the addition In approximately use save estimated in in could quality standard-of-care the the with headache reduces guidance, intensity gammaCore treatment as that XX,XXX to therapy in to first that per draft alone. are and life. compared year and care respond UK with frequency of people to to standard gammaCore of highlights attacks It’s the the cluster patient headache NICE likely cluster gammaCore. of

significant August final The X, robust be guidelines December. market. published we for expect believe growth a the in closed that could the We guidelines comment on drive period be important and this catalyst that would to in draft

guidance are among to pleased and included evaluators and NHS most of rigorous the therapeutics draft as We NICE in be technologies. particularly the are new

superior commercial In it’s safety favorably and market, peer-reviewed to science gammaCore’s but noninvasive profile to respond the slow U.S. approach, Level forward. still to move X payers our continue contracts

renewed significant the requirements for as forward fulfillment the you We’re large their our adjudicated regional and that payers. continuing submitted we’re has to paperwork PA of CVS patients, they on our prescribers contractual determinations and are and is look our a burden a effect. approval, contract go on reimbursement updating and national and partners We streamline working being favor. into payer through process. process, coverage claims the to with prior number in Unfortunately, with discussions or PA

personal first This third during patients with mission X, Medical a Doctors further placed is distribution claims. with the of step gammaCore half nVNS to August that we’d injuries to an proprietary significant to validates available and compensation we LLC In their in order entered therapy the Medical to our population. workers’ Doctors broadest injury our announced technology initial XXXX, into agreement look gammaCore and agreement provide to we the quarter, forward make forward possible in XXXX. patient launch and a

those designed and programs, and support to expand advancing clinical our discussions. only our to payer studies label our tightening turning Now focus we’re current

enrolled third year. We continued II patients. date, patients next track the our enroll than enrollment and to study remain To of XXX the one-third during sponsored target company randomized complete of in more PREMIUM We on in quarter. to we’ve a

migraine discuss requested and last track their label XXX(k) We information request a our provide in information on met concerns, the month, extend with early we’re submission about response additional gammaCore’s to agency to Last to week formal FDA the into to prevention. XXXX.

label our our FDA indications. process market for impacting existing we proposed not broadly, could prescriptions ability believe to is expand the the do more gammaCore While

While PREMIUM are trial company of we a in are evaluated studies advancing be is to agencies. continues sponsored largely third-party that the number grants that II technology from currently, only with our investigator-initiated gammaCore funded

We will report in on those future. as read out they the

Brian this our Financial Posner, to call over At Chief financials. Officer, review the Brian? turn I’ll point, the to

Brian Posner

Dan. Thanks,

revenue reflects the were of States For Kingdom. the Net compared to $XXX,XXX sale net quarter the and reported and XXXX. in in XXXX. in quarter quarter the electroCore $XXX,XXX XXXX, sales $XXX,XXX third of ended quarter in the in second of increases $XXX,XXX These approximately first sales the United XX, increased September United

million by for June for $XX.X and million third the $X.X implemented million expenses plan in expenses period reduction the was decrease of quarter primarily were $XX.X XXXX XXXX. due expense, million to third other of the operating in which SG&A XXXX $XX.X the cost from decrease in comparable the quarter Total approximately in reduction declined a XXXX of a primarily approximately to in the consistent third approximately in driven compensation with to compared XXXX. quarter The

costs The third included severance quarter of of $XXX,XXX. XXXX

stock million XX% in loss total from legal and compared statement of loss adjusted $X.X to reconciliation income press expense, EBITDA loss a for net from EBITDA provided release. and when net from other and operations of operation, from stockholders’ expense. from excluding GAAP the has loss the as of period operations loss adjusted $XX.X tax other third related been net compensation non-GAAP adjusted charges, of The to year. severance-related operations the financial income included net operations for same last company to today’s tables Adjusted EBITDA GAAP quarter loss net EBITDA expense, XXXX litigation a in restructuring was fees A million, decrease defines loss

for at approximately totaled that at as September It costs. By of we of was included the into to related forecast, adequate should beginning outflows, burn Cash, Based million to net and was and on burn ended believe XXXX. XX, September current million September $XX.X compared resources, million $XX.X expense cash second revenue in quarter will cash largely XXXX. comparison, burn be quarter resources December $XX.X marketable quarter XXXX. million XXXX. continue the XX of the operations equivalents $XXX,XXX noted quarter XX, severance cash we fund to our $X.X our and have Net cash the to in the that recruitment $XX.X CEO million cash and our first securities

over And call Dan. I’ll the back to turn now

Dan Goldberger

Brian. Thanks,

business. Going we working I’m The expectations. Board expect refine paid with revenue in where of operating our reviewing are intensely and our we for forward, will rightsizing team are more I on our channels reliably and revise strategic realistic be and stakeholders reflect plan from getting forward each expenses on the the I regular focused a any growing strategy to in, line to or and priorities to in current increase with opportunities significant of our in and to $XXX,XXX. future. $XXX,XXX additions quarter our I basis, range revenue changes slightly the look to strategic third in to, the the quarter communicating

earlier, beginning will the into As to Brian be that adequate plan said hand execute we on cash confident of XXXX. are our current

that, operator, call please questions. the with open And for up

Operator

Our this At from question. question-and-answer session. Instructions] Please conducting your Craig will proceed first Fitzgerald. with Bijou, we Cantor a question time, is be [Operator

Craig Bijou

for Thanks afternoon, questions. guys. Good taking the

Dan Goldberger

Craig. Hi,

Craig Bijou

to positive, that some month little me bit in, that of were surprises of analyses potential the the and things you, I you’re only you. at guess, doing I come can any But more more look that changes as on any just you strategy come or are a a you’re there color some the Dan, provide on you detail with know maybe, negative? then to than And – about? what some the of is the could let or job now. start

Dan Goldberger

Sure. the opportunity. Thanks for

company and among surprises, of asked lot surprises got patients respect a done. gammaCore enthusiasm how You the prescribers to pretty and through well-received that and went has therapy with tell the the have of health the our restructuring, lifting and and The I’ve both the already here. substantial been a you is to to team the upside – been heavy about therapy

where system, a course, that’s VA of be We’re started doing opportunity continues in well are all be we’re the And channels to paid. continue very we commercial reliably and in in the are get military facilities. big to payers some Those getting doing we’ve UK, the among the to process. very treatment and traction going well to

got appropriately. so And we’ve allocate to resources

Craig Bijou

Great. some Thanks. following And on on of prevention comments maybe the up your trial. migration

to that respond like for are steps the now with it’s guys for? move discussion. the submit ahead to What to So XXXX? early sounds any color then in on indication based was what it you looking you FDA on worthwhile or taking And

color So plan the on just more any there? of kind

Dan Goldberger

We prevention Sure. with agency and operating we’ll all We of questions with which the filed what FDA. answer submission, sort be to with of the productive a standard with FDA migraine. in We The deadline my the and the extend greater – questions with list standard is to policy had before position experience formal understand, their that meeting precision, well for, of, label of paperwork clarifications, the, again, back they’re in looking to them. came operating a able in a March.

ultimately our they the II will of that. study And expect round PREMIUM event to the says meantime, unlikely FDA after I there’ll in be more the questions want progress another in data. we with continue that

Craig Bijou

us for revenue on any growth? or about you’re revenue one the from And should in the I maybe is provide – your to expect going acceleration XXXX in which not – me. appreciate to about of just, drive revenue last there but potential think way we And that help how the maybe, helpful. and That’s would what segments or or I XXXX think guidance, know transparency color QX. Okay.

Dan Goldberger

– dodge So yet, haven’t and very, really But our gets the guidance Board opportunity but going about XXXX to Board I enthusiastic acceleration, in wait and for business published should promulgated. an both to I’m the I nice apologize, because present the UK have to the very to question approval. plans had I’m when with I

going to Board, very in early contract, forward – I through very, well the once accelerate. business FSS I so the as doing look the can channel we and happen we is approval and year. commercial think We’re process well to go what that And under next sharing with the believe in

Craig Bijou

guys. question, the taking for Thanks Okay.

Operator

Evercore. proceed Our next with question Schimmer, is Josh Please question. from your

Josh Schimmer

the nearly well enough is obvious nice that you’re with is the it taking small questions. you’re is growth your getting off same denominator. XX% that Dan, Thanks and for gammaCore such not just caveat sequential where needs be, to there, it bearings but when a below coming

to We’re acceleration? change going of Do think the accelerated quarter. is changes which you When for the a implementing? you’re that meaningful adoption? not impactful be change time for a look to the fourth most to So in – going that are see frame reasonable

in maybe And reimbursement interpretation? in of pursuing frame. comments contracts on lack reasonable the procuring key then which in needed accurate a analysis cause of some issues only you. contracts last, now, prior communications some assessment potential time a of PBM to your Is the be there suggest were put maybe alternatives an that of confidence that some What Thank quite overcome might technical place? from or to especially sound light did those that in the company, that confident

Dan Goldberger

a me. flow. start things through I’m I’ve how to if think to product in got is as in I good of the pretty please step-up Sorry, already and there optimistic and you’re current and our that remind in and I Josh, our – in see for we year to primarily very them revenue U.S. several are function halfway going questions rightsize the realign next we’re sales our But distribution quarter, quarter all, there, U.S. channel. it, hit a But first distribution certain going don’t feel

expense year, the some roll providers. of as reduction see items into You’re service to half some also our of first next going we rightsize as we

suggested us the want are and and as channel, go a putting leave to the that some Your frankly, players pharmacy and medical in are around of we untapped. that benefit of direction. and lot question to cash, know, benefit through we’ve smaller have I There payers, the the you don’t that channel, time energy invested in continuing

systems. pharmacy So bit any seeing to both, guys that what any those their channel you’re of taking just means by is the a not through little us of in forever are way. abandoning put It’s benefit

Josh Schimmer

do their can or there frame time now? to just And they’re is you accelerate anything own that on

Dan Goldberger

the they’re of aware best caught answer the we’re well. can we is, are anything hard do in back and the – knowledge, I’m to CGRP up my as battle getting short pushing no, on hard not larger PBMs. to antibodies, The back of pushing They that accelerate

Josh Schimmer

Thanks very much.

Operator

[Operator proceed Securities. your question JMP Turkaly, Our David Please with Instructions] next from question. is

Dan Stauder

actually This Hi. is on Yes. Dan for Dave.

how Thanks. XXXX there? on for this forward one like should channel any think shipments. Would full quick again that able they year? come any about Looks internal they the to this sales going and a FSS the doubled into Just quarter. from give then you from And might second and for channel for just us be targets on approximate how over we you color could contributions have

Dan Goldberger

but So crisp you not I’ve forecast, got just guidance with I’m a yet. very sharing any

keep asking. So

As a and and it’s far for we’ve as call contribution, under healthy pricing FSS contract very the efficient very point channel got us.

with partners. We’re channel not sharing revenue a distribution the lot of

very, is business lucrative contribution So that very in model.

Dan Stauder

it. Got

more. one Just

you’ve of of of us reach portion? mentioned how to you You exist? these give an the just Can quickly that you many shipped you higher facilities VA treatment how idea facilities. a XX could And feel

Dan Goldberger

the roughly XXX or treatment that booked VA sales, around there’s country So both. cover or We’ve revenue campuses military had facilities from…

Brian Posner

XX.

Dan Goldberger

in and XX them, field now. we’ve of reps XX got the

reasonable a we Maybe all can good of coverage. number XXX get pretty to them, So it’s but cover. not

Dan Stauder

very much. Great. Thank you

Operator

proceed with Our Ahu question your Noble Markets. Demir, next from is question. Capital Please

Ahu Demir

us to the Hello. third Thank about you My question. term question information you, of for can covered my taking quarter? will give as you some be lives

Dan Goldberger

FSS confusion previously covered what number to are CVS so think of covered XX and contract today – you lot XX that’s covered XX are million mean through we’ve right million we the contract by are we our is lives, which give of So announced. covered I about the a been or created And through million-plus another lives.

Ahu Demir

I or Or any from Script? update First Databank there those Frank the mentioning channels? hold update Is contract. Okay. And there any Express Prime Therapeutics remember on on is

Dan Goldberger

publicly. updates, are we there yes, but So not announced anything have

Ahu Demir

Okay. when migraine follow-up line case prevention. be the for prior the And in do if to what required required be and expect receiving scenario My to last to pipeline data? the data would worst to to think for the from the the be do you would Like, a time case clearance. you PREMIUM you trial, When are complete conduct question range? the receive PREMIUM through will you is data would

Dan Goldberger

or questions are So separate I think they two issues.

get we’re the on have finish about data very can PREMIUM this bit call, today. study, first on enrollment half, we that We’re we that said in the but the to I longer to a The access further extension II take and confident responses one-third enrollment love to we complete enrolled, label and the based and into year. next we’d little it the may think

So to how project have enrollment visibility on and current that very don’t process. crisp rates long I

Ahu Demir

migraine I that position change approval think question, some it recent the Okay. How approval? if gammaCore’s do treatment the have one it differently? you any will okay. label? differently? market you does acute the position any lose – share it’s Do landscape? Does it for does think How in more change – you Do it you with that

Dan Goldberger

I’m I the one drugs new not Are understood question. the approved? been you of asking about sure that’s

Ahu Demir

treatment. yes, the in Correct, acute

Dan Goldberger

that to ahead do one? you and Tony, want go field

Tony Fiorino

how we in on sales Sure. really the I don’t think available changes setting. on not approach market. yet pitch the gammaCore It’s acute it the

I frontline they acute setting. profile. of are that third-party effect because – generics side availability terms some of there In issues payer in be of the mean, the we terms in hurdles will fact coverage the expect that and with facing – in drug of

Ahu Demir

my Okay. you for taking Thank questions.

Operator

for call turn Goldberger end will of the question-and-answer now session. I over have And remarks. the We reached back closing Dan to the

Dan Goldberger

to a our update call, All of everybody, next we year-end and Have you, Bye. right. look our forward great Thank results. evening. joining providing the for

Operator

concludes This conference. today’s

disconnect your you lines Thank participation. this may time. for You your at

electroCore (ECOR) 13 Nov 192019 Q3 Earnings call transcript