Alimera Sciences, Inc. (NASDAQ:ALIM) Q4 2022 Earnings Call Transcript
Alimera Sciences, Inc. (NASDAQ:ALIM) Q4 2022 Earnings Call Transcript March 31, 2023
Operator: Ladies and gentlemen, thank you for standing by. Good morning and welcome to the Alimera Sciences 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately 1 hour after the end of the call through July 1, 2023. I would now like to turn the call over to Scott Gordon of CORE IR, the Company's Investor Relations Firm. Please go ahead, sir.
Scott Gordon: Thank you, Jason, and good morning, everyone and thank you for participating in today's conference call. Joining me from Alimera's leadership team are Rick Eiswirth, President and Chief Executive Officer; and Russell Skibsted, Chief Financial Officer. During this call, management will be making forward-looking statements, including statements that address Alimera's expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in Alimera's most recently filed periodic reports on Form 10-K and Form 10-Q, including the Form 10-K and Form 8-K filed with the SEC today and Alimera's press release that accompanies this call, particularly the cautionary statements in it.
Today's conference call includes adjusted EBITDA and adjusted net product revenue, non-GAAP financial measures that Alimera believes can be useful in evaluating its performance. We should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP. For reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the reconciliation tables located in Alimera's earnings press release. The content of this call contains time-sensitive information that is accurate only as of today, March 31, 2023. Except as required by law, Alimera disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call.
It is now my pleasure to turn the call over to Rick Eiswirth. Rick, please go ahead.
Rick Eiswirth: Thank you, Scott, and good morning to everyone on this call. I'm very pleased to share that our company experienced robust revenue growth this past year in 2022, which was largely driven by significant end user gains in both our U.S and international segments. As a result, we believe we are very well-positioned to continue sustaining this momentum in 2023, having strengthened our balance sheet and amended our extend -- and extended our term loan agreement just recently. We are excited to continue building on this success and remain committed to delivering value to our customers and shareholders. We reported net product revenue for 2022 of $54.1 million, a 13% increase over 2021 driven by record global end user demand growth in both our U.S and international segments with 23% and 21% growth, respectively.
In fact, our global end user demand in 2022 was 17% higher than in 2019 to last year unaffected by the COVID pandemic. So we are very pleased to have returned to pre-pandemic levels of growth. Also of note, our consolidated revenue and growth was materially impacted by the deterioration of the euro and the British pound, which reduced revenue by approximately $2.4 million in comparison to prior. Our adjusted net product revenue, which reflects revenue had foreign exchange rates remain constant over the periods grew 18% year-over-year. Additionally, in 2022, we continued our geographic expansion by gaining approvals for our non-infectious uveitis indication affecting the posterior segment in five additional countries: France, Spain, Italy, Portugal and Ireland, and gained reimbursement approval in the Czech Republic.
We saw strong launches of the uveitis indication in our French and Spanish markets in 2022, and we are excited to see the impact of ILUVIEN being available for physicians and patients in these newly launched markets for a full year in 2023. Importantly, all of our distributors have high expectations in 2023, as we've already received firm purchase orders in excess of $8.8 million for 2023 from these partners, which is already 19% greater than our shipments to distributors in 2022. In 2022, we also achieved significant milestones for our business. We published the primary manuscript for our PALADIN study in the peer reviewed journal ophthalmology. The American Journal of Ophthalmology also published a deeper dive into the value of ILUVIEN and reducing injection treatment burden, which, as you know, continues to be a very hot topic in retina today.
And we also submitted manuscripts to three other peer-reviewed journals in 2022. One of them, an expert consensus on ILUVIEN published this month in OSLI. This paper indicated that a group of prominent retina specialists gain consensus on topics such as chronic low-grade inflammation and its associated cytokines being key drivers of DME, that corticosteroids like ILUVIEN have a broad inflammatory mechanism of action, that ILUVIEN has a stable and manageable safety profile and that ILUVIEN is the only long-acting DME treatment that can reduce retinal thickness variability and treatment burden while significantly improving vision. We also look forward to the potential publication of two additional submissions in the coming months regarding both the manageability of the safety of ILUVIEN and the value of controlling retinal thickness variability.
On the clinical side, we continued our progress in enrolling patients in the landmark NEW DAY study, our ongoing head-to-head clinical trial designed to demonstrate the advantages of ILIVIEN as baseline therapy over repeated anti-VEGF injections in the treatment of naive and near-naive patients suffering from DME. We enrolled an additional 137 patients in 2022. And as of today, the study is 92% enrolled. We expect to complete study recruitment during the second quarter. And we also entered into an agreement with the Job Center for Health and Research Foundation, acting on behalf of the DRCR retina network to support and provide ILUVIEN for a Randomized Clinical Trial evaluating intravitreal faricimab injections or fluocinolone acetonide intravitreal implants versus observation for the prevention of visual acuity loss due to radiation retinopathy.
The study is also known as Protocol AL. When utilized as baseline therapy as it is being used in our NEW DAY study for DME, we believe ILUVIEN's continuous micro dosing delivery will prevent delay and reduce the occurrence of the complication of radiation retinopathy and its consequent vision loss for patients treated with plaque brachytherapy. We anticipate the DRCR are starting this trial in the second quarter. And with that, I'll now turn the call over to Russell, who will review our financial results for the fourth quarter and full year.
Photo by National Cancer Institute on Unsplash
Russell Skibsted: Thanks, Rick. Consolidated net product revenue for 2022 was $54.1 million. This was an increase of approximately 13% from the $48 million that we reported in 2021. Our 2022 revenue was negatively impacted by currency fluctuations of $2.4 million during the year. On a constant currency basis, as Rick mentioned, adjusted net product revenue grew 18% for the year. Recall that our consolidated revenue in 2021 included $11 million in non-product revenue that we received from our license agreement with Ocumension. That $11 million in 2021 was a one-time addition to our revenue and should not be confused with revenue from product sales. U.S. product revenue was up 28% for the full year from $26.7 million in 2021 to $34.2 million in 2022.
This was driven primarily by the 23% increase in end user demand. As we have previously shared, our GAAP revenues in the United States do not always correlate with end user demand due to the timing of purchases by our specialty distributors. In the fourth quarter of '22, Alimera's U.S. distributors purchased approximately 3% more units than were sold to end users. Net product revenue from our International segment decreased 11% from $19.9 million in 2022. This compares to the $21.2 million reported in the same period last year. But keep in mind, the $2.4 million negative currency fluctuation impacted our International segment to revenue recognition. So on a constant currency basis, international revenues would have been $22.3 million or a 5% growth over 2021.
For the fourth quarter of 2021, our consolidated net revenue was approximately $14.1 million, which was flat compared to the fourth quarter of the prior year, but negatively impacted by $600,000 due to the exchange rate deterioration. On a currency adjusted basis, Q4 product revenue was up 4% over Q4 of the prior year. Our U.S. segment revenue for the quarter was $9.4 million, which was up 12% versus a year ago. Our U.S. growth in fourth quarter lagged what we expected and saw in the early quarters of 2023. This was due to some temporary challenges associated with the sampling of faricimab and the temporary unavailability of co-pay funds for all Medicare retina patients due to shortfalls in the chronic disease fund in October. The temporary shortage also impacted other branded drugs in a space like Eylea despite these challenges, however, we still had a strong quarter.
Total operating expenses in 2022 were $57.8 million, an increase of 11% compared to the $52.2 million reported in the prior year. The year-over-year change was primarily due to investments that we initiated in the second half of 2021 to increase our engagement with physicians as we emerge from -- as we emerge from the pandemic. We believe these efforts were successful and contributed to the significant end user demand growth that we saw in 2022. In Q4, we noted that our -- we noted this in our third quarter call, we began tapering our expenses in the fourth quarter to adjust our spending on a go-forward basis to be more in line with pre-pandemic levels. As a result, our Q4 2022 operating expenses were $14 million, which was down 5% from the same quarter of the prior year and down 7% from the prior quarter this -- in 2022.
For the full year 2022, we reported an adjusted EBITDA loss of $7.9 million compared to a gain of $3.6 million in '21. Keep in mind, however, the '21 included the one-time benefit of the $11 million for Ocumension. In Q4, our adjusted EBITDA loss was cut to half when compared to the third quarter, so we are making progress. On December 31, 2022, we had cash and cash equivalents of approximately $5.3 million. This compared to $5.5 million that we reported in September 30th of '22. As we decreased our cash burn, we announced on Monday that we also raised gross proceeds of $12 million in our March 2023 equity financing, and this will bolster our cash position. With that, I will turn it back to Rick.
Rick Eiswirth: Thank you, Russell. As I said earlier, I'm very pleased with the significant global end user demand we saw in 2022, and our return to growth. We believe that we strengthened the company and prepare it for future success with the transactions we completed last week. We believe that the repurchase of our Series A preferred stock returns significant real value to our common shareholders by eliminating the overhang of the $24 million liquidation preference. And as Russell said, the $12 million equity raise and extension of our debt facility, allow us to continue focusing on meaningful growth and the generation of positive EBITDA -- positive adjusted EBITDA and cash flow moving forward. Entering 2023, we believe we have returned to the scale at which we entered 2020 prior to the pandemic and anticipate generating positive adjusted EBITDA in 2023. And with that, I will turn the call over to the operator for questions.
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