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Edited Transcript of ALIM earnings conference call or presentation 30-Jul-19 1:00pm GMT

Q2 2019 Alimera Sciences Inc Earnings Call

ALPHARETTA Aug 3, 2019 (Thomson StreetEvents) -- Edited Transcript of Alimera Sciences Inc earnings conference call or presentation Tuesday, July 30, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* J. Philip Jones

Alimera Sciences, Inc. - CFO

* Richard S. Eiswirth

Alimera Sciences, Inc. - President, CEO & Director

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Conference Call Participants

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* Alexander David Nowak

Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst

* Andrew Jacob D'Silva

B. Riley FBR, Inc., Research Division - Senior Analyst

* François Daniel Brisebois

Laidlaw & Company (UK) Ltd., Research Division - Healthcare Equity Analyst

* James Francis Molloy

Alliance Global Partners, Research Division - MD of Equity Research and Biotechnology & Specialty Pharmaceuticals Equity Research Analyst

* Yi Chen

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst

* Scott Gordon

Core Ir - Co-Founder, President & Editor-In-Chief

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Presentation

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Operator [1]

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Ladies and gentlemen, thank for standing by. Good morning, and welcome to the Alimera Sciences Second Quarter 2019 Financial Results and Corporate Update Conference Call. (Operator Instructions) Participants of this call are advised that the audio of this conference 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 September 13, 2019.

I would now like to turn the call over to Scott Gordon, President of CORE IR, the company's Investor Relations firm. Please go ahead, sir.

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Scott Gordon, Core Ir - Co-Founder, President & Editor-In-Chief [2]

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Thank you, Nancy. Good morning, 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 Phil Jones, 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 10-Q, the 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, a non-GAAP financial measure that Alimera believes can be useful in evaluating its performance. You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP. For a reconciliation of this non-GAAP financial measure to net loss, its most directly comparable GAAP financial measure, please see the reconciliation table located in Alimera's earnings release. The content of this call contains time-sensitive information that is accurate only as of today, July 30, 2019. 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?

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [3]

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Thank you, Scott, and good morning, everyone. Welcome to the call. During the second quarter, we continue to advance our business strategy in many areas, including obtaining a positive outcome from NICE for noninfectious posterior uveitis and launching our pilot direct-to-patient or DTP campaign. We were disappointed, however, in the consolidated net revenues this quarter, but pleased with our international segment growth year-over-year. As we noted in the first quarter call, we had many U.S. sales representatives depart to join other companies that were launching new ophthalmic products. This turnover definitely adversely affected our U.S. sales. We aggressively addressed this issue during the second quarter, and we were fully staffed by early July.

Although there is a learning curve to get each new representative up to speed in his or her territory, we are already seeing some of the recently staffed territories respond quickly to visits by our new reps in physician offices.

I am pleased to announce that during the second quarter, we brought in Andy Young as our new Vice President of Sales to lead the ILUVIEN sales effort in the U.S. Andy has over 25 years of experience as a senior sales leader in companies such as Teva Pharmaceuticals and CooperSurgical. At Cooper, he led the sales team and growing demand for a long-term buy and bill product with great success. And we believe this experience will be beneficial to our business.

Despite the challenges resulting from the U.S. turnover of our U.S. sales team, our consolidated net revenue for the first 6 months of 2019 is up 17% versus the prior year. Now with all U.S. territories filled and with the progress that we are making outside the U.S., including the launch in Europe of ILUVIEN's new indication for noninfectious posterior uveitis, we believe that we are positioned to deliver strong overall growth in the second half of this year. As mentioned, we are pleased with our progress in our international segment. We delivered 21% sales growth for the second quarter of the year compared with the same period last year.

As we have previously noted, international geographic expansion remains a strategic growth initiative, and we are beginning to see strong uptake in recently launched countries like Spain and France, where intraocular steroid use has a greater share than in most other markets. Already in the second quarter, France and Spain ranked first and third in European end-user demand for ILUVIEN. As a result of this early success, we are already receiving orders for those distributors for additional deliveries in the second half of this year.

Taking note of the international performance in DME and with the recent launch of a new posterior uveitis indication in the U.K., and soon in Germany, we believe that our sales growth trends in international markets have potential to sow acceleration in the back half of the year. Our intention is to continue commercial expansion in new territories and execute follow-on launches for the posterior uveitis indication should also fuel growth in the future.

From a cash flow standpoint, as many of you know, we delivered positive adjusted EBITDA and positive cash flow in the fourth quarter of last year as well as the first quarter this year. This quarter, we dipped back in a negative territory. So I want to take the opportunity to emphasize that we intend to get back to positive adjusted EBITDA operations over the next 2 quarters. We will invest in the growth of our business while continuing to keep our operating expense budget well contained relative to the growth potential for ILUVIEN.

I'd now like to highlight some of our key accomplishments in the second quarter of 2019. In early April, we announced the appointment of Dr. Samer Kaba as our Chief Medical Officer. Dr. Kaba's expertise in neuro-ophthalmology is helping us further develop the value proposition for ILUVIEN to accelerate the paradigm change for treating retinal disease. For example, Dr. Kaba is focusing on the potential for ILUVIEN to slow down neurodegeneration in the retina induced by DME and diabetic retinopathy.

In a retrospective study that was published earlier this year in the Journal of Investigative Ophthalmology and Visual Science, patients treated with ILUVIEN had a statistically significant reduction in the rate of thinning in the neurofibrillary in the retina, suggesting a slowing of retinal neurodegeneration. Just last week, we attended the Ophthalmology and Innovation Summit in Chicago at the American Society of Retina Specialists Annual Meeting.

There, several companies addressed the importance of reducing inflammation and providing neuroprotection in retinal disease in the innovation showcase section of the meeting. We believe this underscores the importance of our approach with ILUVIEN already demonstrating the ability to affect inflammation consistently and continuously every day, proving that ILUVIEN can preserve neuronal health in the retina could be game changing, and we believe this could further increase market share as ILUVIEN helps patients see better longer.

There continues to be more discussion of the unique benefits of ILUVIEN among physicians at major medical conferences. In April, we sponsored 15 posters and a podium presentation at the Association for Research in Vision and Ophthalmology, or ARVO, Medical conference in Vancouver. The posters and presentation highlighted data that continue to affirm ILUVIEN's ability to consistently reduce and control retinal thickness and preserve or improve vision in patients with DME and noninfectious posterior uveitis with fewer injections.

We continue to develop the data that we have for both indications and expect to present additional papers and posters at future medical conferences. In fact, today, 4 clinical papers featuring ILUVIEN are being highlighted at the 2019 American Society of Retina Specialists, or ASRS, Annual Meeting in Chicago. In late May, we launched a pilot direct-to-patient, or DTP campaign, in select territories to increase patient awareness of ILUVIEN's benefits. Based on our patient research, the 2 most important features of the DME treatment connect well with ILUVIEN's benefits, seeing better longer with few intraocular injections. We are running digital, radio and in-office marketing campaigns in 4 cities. And while the campaign is in its initial launch phase, we are seeing significant impressions being generated as well as strong social media engagement, indicating that our content appears relevant and engaging to our target audience.

We announced the 3-year clinical trial results for ILUVIEN in the treatment of noninfectious posterior uveitis during the quarter, specifically the results that support our approvals and recent launches for the new indication in Europe.

In this 129-patient trial, the number of recurrences of uveitis was significantly lower in the ILUVIEN arm. The ILUVIEN arm had 1.7 recurrences over 36 months versus the control arm, which had 5.3 recurrences, representing a 68% reduction in the average occurrence of the disease in these patients.

Additionally, the median time to first recurrence of symptoms was 71 days in the control arm compared to 657 days with ILUVIEN, a recurrence-free period more than 9x greater than the control. Both measurements were highly statistically significant with each having a p-value of 0.001.

In addition, ILUVIEN offered improvements in visual acuity from baseline versus the control arm. Noninfectious posterior uveitis can be a devastating condition that affects a younger patient population, with frequent and severe relapses leading to blindness.

Additional treatments such as oral steroids and immunosuppressive agents can have significant side effects and often cannot be used on a long-term basis. We believe that ILUVIEN's entry into this market is a significant opportunity, and our clinical data is gaining attention in Europe. We also believe that this type of data further reinforces the true benefits of ILUVIEN and how different ILUVIEN is from the acute therapies used to treat both uveitis and DME.

We announced in early June that the U.K.'s National Institute for Health and Care Excellence, also known as NICE, issued a positive opinion for reimbursement of ILUVIEN for this indication. To emphasize the importance of ILUVIEN's potential in the posterior uveitis indication, the announcement from NICE included this quote: "Fluocinolone acetonide implant offers a patient a new treatment option that can lead to more consistent disease control with a reduced treatment burden. We are happy to be able to provide people with -- excuse me, with recurrent noninfectious uveitis affecting the posterior segment of the eye with an additional treatment option, particularly one with potentially long-lasting benefits."

And lastly, I want to mention that we recently announced the appointment of John Snisarenko to our Board of Directors. John has served as a commercial executive in the pharmaceutical industry for over 30 years and has substantial experience in the ophthalmology field. He has shown great enthusiasm for ILUVIEN and our vision to become a leader in the treatment of retinal diseases. We are pleased to welcome John to our Board.

We believe that our recent accomplishments provide a strong basis for future growth, and we remain focused on 4 key initiatives to work towards our vision of making Alimera the place to be in retinal health, helping patients see better, longer every day. These initiatives are: one, driving organic growth in new patient starts in ILUVIEN for DME. We intend to do this by continuing to communicate the ILUVIEN difference as the only non-acute therapy for DME and one that we believe can change the paradigm of treatment by reducing the recurrence of retinal edema in patients, maintaining vision longer with fewer injections. The addition of the posterior uveitis indication in Europe further reinforces the benefits of controlling the recurrence of retinal disease due to ILUVIEN's continuous microdosing feature.

Number two, raising awareness with physician practices that patients may need retreatment this year and in the coming years as patients have begun to reach the 3-year anniversary with the therapy.

Number three, rolling out and growing ILUVIEN sales for the treatment of noninfectious posterior uveitis in our direct markets of Germany, the U.K. and Portugal and helping our distributor partners prepare for their launches in 2020.

And number four, expanding our business by supporting the launch of ILUVIEN in other countries where we have distributors with approved labeling for DME as well as seeking opportunities to leverage our commercial infrastructure with potential strategic product acquisitions.

While we are disappointed with our U.S. sales this quarter, we believe that we've addressed the cause and are advancing the business in many other ways. These initiatives provide diversification to offset the ebbs and flows of the different segments of our business. We continue to focus on driving value for patients and for our shareholders as more patients in the U.S. and internationally begin to experience the benefits of ILUVIEN.

I'll now turn the call over to Phil, who will review our financial results for the second quarter. Phil?

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J. Philip Jones, Alimera Sciences, Inc. - CFO [4]

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Thanks, Rick, and hello, everyone. During the second quarter of 2019, our consolidated net revenue was up 2% to $10.9 million compared to $10.7 million in the second quarter of 2018. U.S. net revenue was approximately $7.3 million for the second quarter of 2019, down approximately 6% from $7.8 million for the same period in 2018. U.S. and end-user demand, which represents units purchased by physicians and pharmacies from our distributors, was down 4% in the second quarter of 2019, decreasing to 917 units compared to 955 units from the second quarter of 2018. The decline was primarily attributable to a decrease in end-user demand, which represents units purchased by physicians and pharmacies from our distributors.

As we have previously shared, our GAAP revenues in the U.S. do not always perfectly correlate with end-user demand due to the timing of purchases by our specialty distributors. The discrepancy between GAAP revenue and end-user demand was negligible in 2019 second quarter.

Net revenue from Alimera's international segment increased 21% to approximately $3.5 million for the second quarter of 2019 compared to approximately $2.9 million for the same period last year. Revenue in the international segment will fluctuate from quarter-to-quarter, depending primarily on the timing and size of our international distributor ordering patterns.

For example, our Q1 2019 revenues were significantly higher due to orders related to our expansion into Spain and France as those distributors stock inventory.

Now turning to operating expenses. Research, development and medical affairs expenses were $2.8 million during the second quarters of both 2019 and 2018. General and administrative expenses for 2019 second quarter were approximately $3.7 million compared to approximately $3.2 million for the same period last year. The increase was primarily attributable to professional fees and logistics costs, some of which are attributable to our Brexit preparation.

Sales and marketing expenses during the second quarter of 2019 were approximately $6.1 million, up 3% to $5.9 million for the second quarter of 2018. The increase was primarily attributable to increases in marketing costs associated with the launch of our direct-to-patient advertising program and market access costs.

Total operating expenses increased by $700,000 but -- or 6% to $13.3 million for the 3 months ended June 30, 2019, from $12.6 million for the 3 months ended June 30, 2018. During the second quarter of 2019, we reported an adjusted EBITDA loss of $2.1 million compared to an adjusted EBITDA loss of $980,000 during the second quarter of 2018. As Rick mentioned previously, our objective is to return to generating positive adjusted EBITDA results in the back half of the year, with a long-term goal of remaining sustainably positive on an annual basis.

Net loss for the 3 months ended June 30, 2019, was approximately $5 million, an increase in comparison to the net loss of approximately $4 million for the 3 months ended June 30, 2018.

Our GAAP basic and diluted net loss per share for the 3 months ended June 30, 2019, was $0.07 on approximately 71 million weighted average shares outstanding. This compares to basic and diluted net loss per share of $0.06 on approximately 70 million weighted average shares outstanding for the 3 months ended June 30, 2018. On June 30, 2019, we had cash and cash equivalents of approximately $12.2 million, a decrease from the $13 million in cash and cash equivalents that we reported on December 31, 2018.

With that, I'll now turn the call back over to Rick to wrap up our prepared remarks. Rick?

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [5]

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Thank you, Phil. As I mentioned before, we addressed the turnover in our U.S. sales force from earlier this year and are now fully staffed and focused on returning to growth domestically. We recognize ILUVIEN to be promotionally sensitive and believe that being fully staffed and back in front of physicians in all sales territories will bring us back to our growth potential. We continue to deliver positive results in Europe, with the recent approval of ILUVIEN for noninfectious posterior uveitis in our European markets as well as the launch of ILUVIEN in France, we look forward to increasing share in all markets in the second half of this year. We also intend to continue to pursue our strategy to leverage our global sales infrastructure and build a leading company focused on the treatment of retina diseases.

ILUVIEN's continuous microdosing technology is designed to offer 2 things to the only nonacute therapy to treat DME and posterior uveitis. One is to consistently treat the condition, continuously delivering drug to minimize the edema and inflammation in the retina. The other is to significantly reduce the number of injections a patient must endure. Both our clinical trials and real-world data support these 2 benefits, and these 2 benefits enable physicians to provide patients what they want for their disease management, longer-lasting vision with fewer injections.

We remain steadfast on driving this message into our target physician and patient audiences to continue to grow ILUVIEN's use. We believe that Alimera is well positioned for the next phase of growth and to increase shareholder value as the benefits of ILUVIEN continue to gain appreciation by the ophthalmology and retinal specialist communities.

And with that, we are ready to take questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from Alex Nowak from Craig-Hallum Capital Group.

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Alexander David Nowak, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [2]

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Rick, you have now cited higher sales force turnover here twice as reasons for the depressed U.S. growth. Now can you give us some more color on why the sales team is leaving? How much of your sales force is new within the last 6 months? And how do you plan to remedy the churn going forward? And just maybe any initial changes Andy has begun to implement here? And what is his plan to ultimately fix the U.S. sales problem?

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [3]

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Yes, sure. So I think, Alex, the turnover started occurring in January, and continued out throughout the first quarter and some early into the second quarter. I think there were -- there are a couple of things driving that. I think there's frustration and concern in the sales force that we are a one-trick pony, or have one product like ILUVIEN. And frankly, the stock prices lag where it is, despite what we thought was pretty good performance in 2018.

And I think what happened was, there were 4 or 5 products that were being launched in the ophthalmology space in the first quarter, and those people were ripe for departure. We ended up turning over about half of the sales force. I think on average, we had between 8 and 9 territories opened over the course of the second quarter. So it's definitely a big hit.

I'll tell you that I'm extremely proud of the team that stayed and the team that's on board now. Frankly, with about 1/3 of your sales force being out of place in the U.S. and a product like ILUVIEN that is somewhat device-like and requires us to be in front of the physician on a regular basis, a 4% decline on sales, I'm going to remain proud of what the team's accomplished there because I think they've done a great job, and I've got good people out there working hard.

Andy coming on board is a 25-, 30-year veteran of sales in the ophthalmology space. He sold sort of paradigm-shifting products in the women's health space that are buy and bill products. He's coming in, looking at our compensation structure, help us and address our culture, improving my communication, his communication with the team in the field, and we hope, retaining them. And I think my stated goal of trying to find ways to leverage our commercial infrastructure is something we're continuing to look to do to broaden the portfolio here at Alimera so that our sales team has more than 1 product to sell.

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Alexander David Nowak, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [4]

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Okay. Understood. And then on the Q1 call, you mentioned that $6 million might be -- per quarter might be the new norm here for international sales. Obviously, Q2 had some nice growth, but it did fall short of that $6 million number. So as you know, what is the new norm here for international sales?

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [5]

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No. I think that was misunderstood, and we tried to correct it on the call. I stated that the norm was about $3.1 million from a run rate, and we're obviously up from that this quarter. Revenue over the course of this year, Alex, will continue to be choppy from those distributors because the distributors take load in, in big blocks from us to build their inventory, and then they sell off to the end users.

I will tell you that the second quarter this year, we did extremely well in end-user demand from a global perspective. Between the U.S. and in Europe, we sold over 1,700 units to end users globally, either us or our distributors. So the demand is definitely increasing from a global perspective. But until those distributors get on a more consistent basis, you're going to see some choppiness there, which is what you saw in the first quarter. I noted in my comments earlier that we already have some orders for additional stocking to come in, in the second half of the year. So you'll see some reordering in the second half of the year from those distributors because the launches have gone well.

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Alexander David Nowak, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [6]

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Okay. Got it. And then what are you seeing with retreatments on the U.S. side? We've done some checks out there. It looks like the retreatments have just started, but it's still early. So I'm just curious what you're hearing from the clinics.

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [7]

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Yes. I would love to give you a great answer to that. To be candid with you, it's hard to assess the impact because of the compounding effect of the turnover in the sales force and drop-offs we've seen in some territories there. We do know from our benefit investigation system that their benefit investigation's coming back in for patients that had received no ILUVIEN or at least had been investigated for insurance coverage 2 and 3 years ago, and we have anecdotal evidence from doctors that those retreatments are occurring. But to quantify, that's a little bit challenging at this point in time.

We're getting the same anecdotal evidence you would be in your channel checks, though.

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Alexander David Nowak, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [8]

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Okay. Got it. And just a last question from me, and I'll jump back in the queue. You have a number of real-world studies ongoing right now, and that includes the user in the PALADIN study. Which study, in your opinion, could have the biggest influence here going forward to help get the docs to trust ILUVIEN? And when is the expected readout for those?

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [9]

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Well, I mean, the user studies, we're -- the readouts, done and gone. The PALADIN study, we will be presenting over the course of the remainder of this year, the 2-year data or 24-month data on that. And we expect that to be consistent with what we saw, end user. I guess I would probably say that in the end, the PALADIN study probably will be more impactful because that was a retrospective study versus the user study was -- excuse me. The PALADIN study was a prospective study versus the user study was a retrospective analysis. So you'll see more data coming out from the PALADIN study over the course of the year.

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Operator [10]

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Our next question comes from Andrew J. D'Silva from B. Riley FBR.

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Andrew Jacob D'Silva, B. Riley FBR, Inc., Research Division - Senior Analyst [11]

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A few for you, Bill. A couple of quick bookkeeping ones. Phil, if you could please just let me know what the cash flow from operations and CapEx were for the quarter? And then while you're pulling that, Rick, could you just let me know how much the sales turnover impacted results during the quarter? Or what could sales have looked like in a normalized sales force setting during Q2?

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [12]

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I mean that's obviously hard to say because that's a bit hypothetical. We -- over the course of 2018, when our sales force was fairly stable, we grew end user demand between 16% and 17%. And so I would like to think that, that continues to be a good target. We've often said, expect growth in the mid- to high teens, and we would hope to overperform that. And my expectation would be we can get our U.S. sales team back to that.

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Andrew Jacob D'Silva, B. Riley FBR, Inc., Research Division - Senior Analyst [13]

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Okay. And was there actually like normal double-digit growth in the -- from a consolidated standpoint in the regions that didn't have sales force turnover? Or were those regions also impacted in some way? Basically, I'm just trying to get a sense if there is some systemic issue or not? And if areas that were not impacted by loss reps were performing as expected and growing close to that 20% rate that you've previously mentioned?

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [14]

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Yes. Andy, it's a -- I mean we're not going to get and talk about individual territories. I think that's a little bit granular, but I will tell you, it depends. We don't believe this is a systemics issue at all. As I mentioned, we had an average of between 8 and 9 vacancies over the course of the second quarter, which means almost 1/3 of our sales territories were open, and those doctors are not being visited. And with a product like ILUVIEN that is very device-like, having the rep in the office on a regular basis does matter. And we have found that.

I think overall, the trends in the industry are good. The preferences in trends 2019 survey was presented at ASRS over this weekend. One of the questions was about how doctors were changing their use of ILUVIEN. And in the U.S., 17% of physicians said they were increasing their use of ILUVIEN; 11% said they were decreasing; 20% were about the same. And importantly, 50% of the physicians have said they still aren't trying and haven't used ILUVIEN, right? So we think there's huge opportunity to grow. The physicians that are using ILUVIEN are increasing their usage, and there's still a huge untapped market out there for us to get to the physicians that aren't using it yet.

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Andrew Jacob D'Silva, B. Riley FBR, Inc., Research Division - Senior Analyst [15]

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Okay. Fair enough. And then -- go ahead, Phil.

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J. Philip Jones, Alimera Sciences, Inc. - CFO [16]

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Yes, I was going to say on the operating cash flow, we had a cash burn of about $676,000 in Q2 and CapEx of approximately $39,000.

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Andrew Jacob D'Silva, B. Riley FBR, Inc., Research Division - Senior Analyst [17]

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Okay, perfect. And then last 2 questions for me. First, if you could just give a little bit of color on what Q3 is looking at like right now. Has it rebounded and benefiting from the sales force essentially being replenished and as well as benefiting from the uveitis launch in the U.K.? And then second question, do you still believe that for 2019, you can grow in the high teens, close to 20% rate? Or is that too high of a bar right now considering the Q2 slip?

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [18]

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Yes. So Andy, we -- July is looking pretty good. I would say it's not where we want it to be relative to 2018 yet, but we're seeing sort of a bend in the curve from what we saw in the second quarter as these territories have been filled. So I feel like we are getting some improvement from reflowing those territories and getting them trained and Andy's having a positive impact.

But as we've discussed in the past, it takes 4 to 6 months to get a rep up to speed and trained in some of these territories. So we're expecting to bend the curve in the third quarter. We'll see how it turns out as the quarter plays out. The uveitis indication is getting some early response in the U.K., but the reality is the CCGs over there have 90 days to implement the guidance, so it won't be formally adopted into the guidance in all of the various hospitals until sometime in September, I believe, or early September, but we know that the doctors are using it in some patients already.

Overall, with respect to the year, I'll reiterate what I said in my comments. We're up 17% the first 6 months of 2019 over '18. I still think that mid- to high teens is achievable when these distributors come on board. We certainly need to continue to bend the curve in the U.S. as we get the sales force retrained. And we've got to find a way in the fourth quarter to overcome the OZURDEX impact. But I feel good. We've been growing sales. The global adoption of this product has continued to grow. As I said to Alex a few minutes ago, there were over 1,700 units used from an end-user demand perspective in the second quarter across the globe, which is much higher than we've ever done in any quarter before. So there's certainly some balance in some of these other territories to offset this little setback in the U.S.

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Operator [19]

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Our next question comes from François Brisebois from Laidlaw.

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François Daniel Brisebois, Laidlaw & Company (UK) Ltd., Research Division - Healthcare Equity Analyst [20]

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Just a couple here. I think a lot of people are trying to wrap their heads around the sales force turnover. But can you just help us understand when you mentioned device like, why it is so important for reps to be in the office often and seeing the docs and the impact there? Basically, why you think that is?

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [21]

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Yes. I mean I think it's a big part of this is because ILUVIEN is -- it's a "onetime use." I mean it's used once every 3 years, sort of like a device is used in surgery. You don't get recurring prescriptions. So that patient's not coming back in once a month, once every 2 months getting reinject with ILUVIEN. And the doctors, forget about it, to some extent.

The drawback we have out there in making sure we're in front of the physicians all the time is unlike the anti-VEGFs, that are approved for wet AMD or DME or vein occlusion and even OZURDEX, and it's approved for uveitis and DME and vein occlusion. We're approved for 1 indication. And so we just have to be back in there, reminding them frequently and staying in front of their face.

There are great examples, where we've done a good job of changing the paradigm and getting the doctors to think about ILUVIEN in a different way. There's a retina practice in Atlanta, Georgia that's one of our larger users, that despite having a vacancy here has continued to use the product and continued to order at levels that they did before we had a vacancy, but there are other territories where the usage has dropped off because that frequency isn't there. So it's a little bit of a mixed bag, but that's, when I say device-like, that's what I'm referring to.

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François Daniel Brisebois, Laidlaw & Company (UK) Ltd., Research Division - Healthcare Equity Analyst [22]

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Understood. And a lot of the sales force, you talk about launches of other products. Is it mostly to the front of the eye that they went? And how easy it is for sales force to go from back of the eye specialists to front of the eye? And are you guys still opposed to M&A towards the front of the eye? Are you trying to restrict yourself to the back of the eye, specifically?

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [23]

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Yes. I think certainly, from our perspective, the best rep for us is someone that has retina experience because they know the retina doctors, but I think there is flexibility in ophthalmology. There were departures for 3 or 4 front of the eye products that were launched in the first half of this year for us, and then we lost a couple of reps to EyePoint, that went over to be part of the Yutiq launch for uveitis.

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François Daniel Brisebois, Laidlaw & Company (UK) Ltd., Research Division - Healthcare Equity Analyst [24]

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Understood. Okay. And then just on the sales force. I thought that as of, as the May 1, I believe that was the first quarter call, basically, you had lost 30% to 35%. I thought a lot of it had been kind of filled back. Did reps kind of leave again in the second quarter that surprised you? And you mentioned half, is that half the territories, there's still about 1/3 of the reps. Or can you just -- you have to be very clear on the granularity there with the field reps leaving?

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [25]

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Yes. So the average number of territories that were vacant over the course of the quarter was between 8 and 9. We had an average of like 20-point full-time equivalent heads in the sales force over the course of the quarter, and we've got 29 territories.

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François Daniel Brisebois, Laidlaw & Company (UK) Ltd., Research Division - Healthcare Equity Analyst [26]

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Understood. Okay. And then -- I'm sorry, I have a bunch of questions here, but any thoughts on the anti-VEGFs kind of coming off-patent soon? And does that help you guys kind of transition the treatment paradigm to try to get ILUVIEN first-line ahead of the anti-VEGFs?

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [27]

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I think there's an opportunity there for us related to the economics potentially, right? As you see more competition in the anti-VEGFs space, I think it's logical to conclude that the pricing will come down, probably not as much as you would in the generic space because typically biosimilars don't result in quite as much on price depression as a traditional generic does. But as that occurs, the doctors make money in this space because it's a buy and bill space as a percentage of each one of those drugs. And so as pricing comes down, the monetary incentive for doctors to continue to do anti-VEGF injections probably decreases, and we want to be positioned to take advantage of that. So I think there is an opportunity over the next 2 years as that occurs.

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François Daniel Brisebois, Laidlaw & Company (UK) Ltd., Research Division - Healthcare Equity Analyst [28]

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That's interesting. And then on the adjusted EBITDA, you guys have talked about being positive there for a while. With this slight pullback on the top line, should we expect any adjustments on the OpEx side to remain on the positive adjusted EBITDA? Or should just -- this be more driven by the top line picking up here?

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [29]

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No. It's going to be driven by the top line. We feel pretty good about our expense base, where it is. The shortfall this quarter was all top line related.

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Operator [30]

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Our next question comes from Jim Molloy from Alliance Global Partners.

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James Francis Molloy, Alliance Global Partners, Research Division - MD of Equity Research and Biotechnology & Specialty Pharmaceuticals Equity Research Analyst [31]

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I had a question on -- any guidance on timing of potential acquisitions, bringing additional products in, as this is long, then, do you have any clue they were for a long time, obviously of the one product, one sales force is a challenge and some of that played out with the turnover. Is there any way to put a time frame around on what you're looking at or when something might come in to sort of beef that up?

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [32]

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Nothing I can talk about on this call, Jim. I mean I've said, since I took over as CEO on January 1, I've been looking at trying to change that vision and look for things, that my goal was to try to find something over the first 6 to 18 months. So we're inside of that time window now, and I can assure you that the team is certainly aggressively looking for things to broaden our portfolio.

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James Francis Molloy, Alliance Global Partners, Research Division - MD of Equity Research and Biotechnology & Specialty Pharmaceuticals Equity Research Analyst [33]

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And to the AbbVie/Allergan, the buyout free up any reps for you guys? Are you able to pick off any of their top performers there?

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [34]

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Not yet, not yet, but I certainly think that's a possibility. As you know, change impacts sales teams quite a bit. And I think they're going to have to sort out what their situation is with AbbVie once that transaction closes, but I think that could present some opportunity for us as well, yes.

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James Francis Molloy, Alliance Global Partners, Research Division - MD of Equity Research and Biotechnology & Specialty Pharmaceuticals Equity Research Analyst [35]

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And then maybe the last question, sort of a broader picture. Have you ever -- or have you considered, given the challenge of a single-product sales force, just for selling out, a rival would come up to sign to a third company, to an AbbVie/Allergan perhaps or something like that, where they can fold your product in. Is that -- are those discussions have even occurred?

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [36]

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Jim, if those conversations are occurring, you know I couldn't comment on them on this call. But I, I think the way I approach my job is, I need to build this company as if we're going to run it forever, and we've got to create value for the shareholders as it is, not sit around trying to figure out the way that this company can be bought. I don't think that's productive. I think if we knew the right things to build this company and grow it, make it a more diversified company that's focused on retina, we can create a lot of value that one of those people may recognize 1 day, but that's certainly not anything we think about every night here.

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Operator [37]

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Our next question comes from Yi Chen from H.C. Wainwright.

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Yi Chen, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [38]

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First question is with the new sales force turnover, how should we look at the SG&A expenses for the second half 2019?

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J. Philip Jones, Alimera Sciences, Inc. - CFO [39]

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Yi, the SG&A expenses in the second half of '19 will be similar to what we had in the first half of 2019. We don't plan for dramatic increase over the course of the remainder of the year. Therefore, you should see no real significant change in the pattern.

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Yi Chen, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [40]

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Second question is how effective is the direct-to-patient marketing campaign for DME so far?

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J. Philip Jones, Alimera Sciences, Inc. - CFO [41]

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I'm sorry, can you say that one more time?

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Yi Chen, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [42]

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Okay. How effective is the direct-to-patient marketing campaign for DME?

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [43]

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Yes. So the campaign has been out there for about 2 months. It's a little bit early to track patient impact there. Obviously, our numbers are down. We do know that from metrics, looking at our activity on social media, on click-through rates on search engines, things like that, that the number of impressions is significantly up on ILUVIEN and significantly up in those 4 markets. So we know that the message that we're putting out there is being well received or is garnering interest, but it's a little bit early to see that trickle through to the doctor's office.

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Yi Chen, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [44]

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Got it. Last question is, do you know how much revenue is -- has been generated for the posterior uveitis indication in Europe?

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [45]

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I don't -- I mean, I can say it's got to be approximately nothing because the reality is we launched for uveitis in the U.K. in the last week in June, and as I mentioned in my earlier comments, the guidance for NICE reimbursement isn't officially or isn't required for the trust that disperse those payments for 90 days. So that occurs, occurs around September. We expect the German launch to occur sometime in the third quarter. So it will be the second half of the year when you start to see the impact to uveitis.

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Operator [46]

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Our next question comes from Frank Brisebois from Laidlaw.

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François Daniel Brisebois, Laidlaw & Company (UK) Ltd., Research Division - Healthcare Equity Analyst [47]

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Sorry, just a follow-up on here. I was just wondering, with ASRS in Chicago and OIS at conferences. Is this something -- you mentioned the doctor's incentive, like the anti-VEGFs coming off patent. Is this something that -- is there any buzz around reimbursement going more to a value-based process? Is this just something you guys are hearing at ASRS? Or is that still something that is kind of far down the line, not really a priority at the time being?

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [48]

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It's something that has always been discussed and comes up, I can't say that it's been an elevated topic in any of the industry meetings. I think that the retina specialists, because there's a fairly small contained group and there's only about 2,000 retina specialists in the country, they've really been able to push back against any significant changes in the retina space and the way the drugs are reimbursed or the way they get reimbursed today.

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François Daniel Brisebois, Laidlaw & Company (UK) Ltd., Research Division - Healthcare Equity Analyst [49]

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Understood. And you're not getting from this direct-to-patient campaign that you guys are doing, you're not getting any pushback from that study?

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [50]

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No. No, we have not.

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Operator [51]

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Ladies and gentlemen, this concludes our question-and-answer session. I would now like to turn the conference back over to Mr. Rick, I'm sorry, Rick Eiswirth for any closing remarks. Please go ahead, sir.

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Richard S. Eiswirth, Alimera Sciences, Inc. - President, CEO & Director [52]

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Thank you all for participating on today's call and for your interest on Alimera Sciences. We do look forward to sharing our progress on our next quarterly conference call and hopefully better results when we report our third quarter. Thank you, and have a good day.

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Operator [53]

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The conference has now concluded. Thank you for attending today's presentation. You may now disconnect and enjoy the rest of your day.