Welcome to the Adamas Pharmaceuticals Second Quarter 2020 Financial Results Corporate Update Conference Call. [Operator Instructions] I would now like to turn the call over to Peter Vozzo, Investor Relations representative for Adamas Pharmaceuticals. Please go ahead..

Thank you, Gabriel, and good afternoon, everyone. Before we begin, I would like to remind everyone that this call will contain forward-looking statements, which are subject to risks and uncertainties. Any statements regarding future events, results or expectations are forward-looking statements.

Please note that these forward-looking statements reflect our opinions only as of the date of this call. We undertake no obligation to revise or update these forward-looking statements in light of new information or future events, except as required by law.

Information concerning factors that could cause actual results to differ materially from those contained in or implied by such forward-looking statements are discussed in greater detail in our Form 10-Q filed today with the SEC, especially under the caption Risk Factors. I'll now turn the call over to Neil McFarlane, Chief Executive Officer..

Thank you, Peter. Good afternoon, everyone. And thanks for joining us. I'm pleased to be here with Vijay Shreedhar, our Chief Commercial Officer; and Chris Prentiss, our Chief Financial Officer. Vijay and Chris will discuss the details of our second quarter performance in a moment, before they do, I would like to highlight a few key areas of progress.

During the second quarter of 2020, the Adamas team continued to deliver strong performance and advance the business towards our corporate goals. I am pleased that our colleagues were able to achieve this performance in light of the ongoing challenges posed by the COVID-19 pandemic. And I want to thank them for their dedication and commitment.

As an organization, we've been able to rapidly identify and focus on the things within our control. We have adapted well and continue to see positive results from our new ways of working.

Although we expect the external environment to continue to evolve, I'm confident in our ability to remain focused on delivering solutions to patients who rely on us and on executing our three strategic priorities to grow, GOCOVRI, to raise the urgency to treat, to differentiate to drive adoption; and to improve access and fulfillment.

I am pleased with the continued progress in these priority areas, which are critical to realizing the large addressable opportunity for GOCOVRI. During the second quarter, we achieved two key milestones in our strategy to differentiate GOCOVRI.

First, the FDA accepted for review our supplemental new drug application for GOCOVRI as a treatment option for OFF episodes in Parkinson’s disease patients receiving levodopa-based therapy. The anticipated PDUFA action date is February 1, 2020.

If approved, the amended indication would reflect the full spectrum of GOCOVRI’s therapeutic benefit in PD motor complications and better support physicians to identify appropriate treatments for their patients Second, we received a new patent for GOCOVRI that covers a method of reducing off time and increasing good on time in people with Parkinson's disease being treated with levodopa.

This is a second patent to be issued for GOCOVRI that covers reduction in off time and demonstrates the strength of our IP portfolio. In Q2, we achieved strong growth in product sales driven by patient demand and physician adoption, which Vijay will elaborate on in a moment.

In addition to product sales, our financial results now include royalties from our long standing collaboration with Allergan that began in 2012. Midway through the quarter, we began recognizing royalties for NAMZARIC, a once daily treatment for moderate-to-severe Alzheimer's disease in patients who are taking Donepazil.

These royalties are in addition to the upfront and milestone payments we previously received. We continued to be disciplined with our operating expenses and dynamically investing resources to drive the growth of our business.

With a reduced cash burn, clarity on our near term R&D commitments, available cash on the balance sheet, and confidence in our continued growth of GOCOVRI, we believe we have the resources to execute our near-term strategy. In summary, we made substantial progress during the first half of 2020 on our strategic priorities.

We will continue to monitor the impact of COVID-19 on our business. However, I remain confident in the resilience of our employees and in our ability to achieve our long-term goal of delivering value for patients and shareholders. I will now turn the call over to Vijay.

Vijay?.

a high rate of refills; improvements in fulfillment; as well as new patients to the brand. The high rate of refills was driven by patient persistence, which remains strong and steady at 45% to 50% at 12 months, continuing to highlight the value GOCOVRI is bringing to people with Parkinson's disease.

In Q2, we saw the impact of this persistence with 7,780 recurring paid prescriptions or RRx in the quarter versus the 6,710 RRx we reported in Q1, 2020. In terms of improved fulfillment conversion rates from free trial to paid prescriptions rose to between 55% and 60% into to compare to the 50 to 55%.

We reported in the last two quarters, reflecting the continued positive impact of GOCOVRI care coordinators and other initiatives to improve our fulfillment center processes.

As we shared on our Q1 call, our team rapidly recognized the potential impact of stay at home orders on patients on GOCOVRI and implemented several tactics to mitigate the disruption this might've caused either to patients transitioning from free trial to paid prescriptions or those refilling their prescriptions.

We enhanced communications from GOCOVRI onboard the clinics, as well as to patients and carefully track the status of refill shipments with the purpose of ensuring our current patients did not experience any additional burden in refilling their prescriptions.

We are pleased that strong execution of these initiatives enabled patients on GOCOVRI to continue to stay on and benefit from the treatment. In Q2, we continue to adapt rapidly to minimize the impact of the pandemic on prescribers’ ability to get new patients started on GOCOVRI.

As I mentioned last quarter, there have been a market decline in patient visits to clinics and therefore an impact on new prescriptions for GOCOVRI. Despite this impact there were 370 new paid prescriptions or NRX in the quarter.

Around 75% of the 500 NRX we saw in the previous quarter, which we believe is positive, given the challenges that all stakeholders faced during this time.

In order to drive demand, our salesforce continued their virtual interactions with healthcare providers through HCP engagements, as well as speaker programs delivered by the opinion leaders on our speaker bureau.

Strong execution on this front resulted in our maintaining approximately half of the pre pandemic salesforce activity level throughout the quarter.

We also provided brand information to prescribers through digital campaigns and continue to support them with resources through the GOCOVRI care coordinators to ensure access or logistical issues were not barriers to adoption during this period.

The field access specialist team provided education and case support the prescriber offices navigating the prior authorization process for GOCOVRI. Further, we supplemented our four weeks free trial program, allowing prescribers an additional pathway to initiate a patient.

Starting this quarter, ACPS can begin the free trial during an in office consultation, or as previously requested directions to a patient's home. We have designed both options to be tailor made for a hybrid commercial environment.

We also designed – we also increase our direct-to-consumer communications with targeted virtual programs in collaboration with patient advocacy organizations, seeing robust participation by patients and caregivers.

We believe these activities drove new prescriptions, even through the pandemic lockdowns with physicians utilizing the newly implemented ways of submitting prescriptions for GOCOVRI. The effectiveness of our virtual promotional activities is also highlighted by the continued addition of new prescribers to the brand during the quarter.

Looking forward, we continue to remain focused on our three strategic priorities. First, increasing the urgency to diagnose and treat through disease state education on the functional disruption caused by dyskinesia and off.

Second, effectively communicating the clinical and health economic value to differentiate GOCOVRI and ensure appropriate patients are started on therapy. And third, reducing barriers to access, to enhance the overall customer experience.

As we navigate the early part of Q3, we continue to lean into a fluid, complex situation and are innovating and iterating based on our experience in Q2 in successfully executing on our priorities.

As of now, we see a mix of in-office patient visits and telehealth utilization with NRX, continuing to be impacted since the overall number of patient appointments that remain lower than at the start of the year. We expect that our patient appointments return to pre-pandemic levels NRX growth will do so as well.

In the meantime, we are pleased with the initial success that we've seen with the solutions and tools that we launched in response to the pandemic and are confident that these tactics are durable and sustainable moving forward in the hybrid, commercial environment emerging for the foreseeable future.

We are incredibly proud of our team for nimbly adapting to these uncertainties and continuing to execute effectively with an unwavering focus on serving patients. Lastly, I will reemphasize that our addressable opportunity to remain large, with around 200,000 patients being impacted by dyskinesia and off every day.

We remained focused on addressing this unmet need with GOCOVRI. I will now turn it over to Chris to provide an overview of our financial performance..

Thanks, Vijay. And good afternoon, everyone. Please refer to our press release issued earlier today for a summary of our financial results for the second quarter of 2020.

Total revenues for the second quarter of 2020 were $18.8 million, which includes GOCOVRI product sales of $18 million and royalty revenue of approximately $800,000 earned from NAMZARIC.

Based on our 2012 agreement with Allergan, we began recognizing a low double digit royalty on net sales of NAMZARIC starting May 18, 2020, and will earn quarterly through 2024. As for GOCOVRI, the $18 million of product sales for the second quarter was a 41% increase over the same quarter last year.

This was driven by approximately 32% volume growth year-over-year. The gross to net adjustment was in the mid teens, slightly lower than our expectations at the beginning of the year, reflecting the number of new paid prescriptions in the period.

R&D expenses were $2.6 million for the second quarter of 2020 compared to $8.6 million for the second quarter of 2019.

R&D expenses were focused on completing our development activities for the ADS-5102 for multiple sclerosis patients with walking impairment program, as well as continuing our open-label extension study, which will run through the end of this year.

With clarity around our near term R&D commitments, we've reduced our full year, 2020 R&D expense guidance to be $8 million to $12 million, which includes $1 million of stock based compensation from the prior range of $10 million to $15 million.

During the second quarter 2020 SG&A expenses were $23.2 million compared to $25.2 million in the second quarter of prior year. Our SG&A expenses represent our continued investment in GOCOVRI.

While the decrease from prior year reflects a combination of cost management activities, as well as the slightly lower cost structure as we execute in a hybrid environment.

We are maintaining our 2020 SG&A expense guidance to be $105 million to $115 million, which includes stock based compensation of $7 million, a reduction from our previous estimate of $9 million. Cash and investments as of June 30, 2020 were approximately $103 million.

Overall cash burn for the second quarter was $12, million a decrease from the approximately $17 million in the prior quarter. We believe our cash position reaffirms that we are making the appropriate investments in the strategies and tactics that will make a meaningful impact for our stakeholders. That concludes our prepared remarks.

With that I will now open the line for questions..

Thank you. [Operator Instructions] Our first question will come from the line of Rudy Li of SVB Leerink, please go ahead..

[Indiscernible] on the line from Mark. So first congrats on the second quarter. I have two quick question regarding GOCOVRI in Parkinson's. The first is about the prescribers, can you give us some color about the change of prescribers and how did COVID-19 change the trend of their prescribing in high volume prescribers.

And the second is for R&D SE we have like $2.2 million for GOCOVRI. Just want to get a sense like how much we spend for MS and how much we spend for Parkinson's? Thanks..

Thanks, Rudy. I appreciate the kind words. I'll ask Vijay to touch base in terms of the prescriber, trends in our high volume prescribers. And then I'll ask Chris to talk a little bit about our R&D OpEx. But thank you.

Vijay?.

Sure. Thanks Rudy for the question. We are pleased with what we saw in Q2 in that despite a highly disrupted environment we continue to see a pretty strong execution against our strategic priorities. In terms of prescribers, what I would highlight is that we continue to add new prescribers to brand even during this entire period.

And our prescribers who are current prescribers continue to prescribe for new patients all the way through the third quarter as well. So both of these trends that we see during the quarter are quite encouraging to watch. And that's why we are validating our strategic priorities and are focused on executing versus now. Chris..

Great. So on the R&D side, in terms of delineating between MSW and PD, those are both considered GOCOVRI. So if you look at our 10Q and we break out the various projects, they are both listed under GOCOVRI. So we don't have specific guidance there. Just to remind you that we do have the open-label study that is continuing throughout the year.

And so when we think about R&D guidance, we have the range of $10 million to $12 million for the year. And as we noted, we spent about $5 million so far for the first six months..

Got it. That's very helpful. Thank you..

Your next question will come from the line of Jason Butler of JMP. Please go ahead..

Hi, thanks for taking the questions and congrats on the quarter.

I guess a couple on GOCOVRI, can you talk about the trend of new patient ads throughout the quarter? Did you see a higher growth rate towards the end of the quarter than at the start? And any color that you can give about how you expect that to progress in 3Q? And then to what extent was growth driven by existing prescribers versus new prescribers?.

Hey, Jason, thanks for the kind words as well. Let me maybe take a quick stab at a 30,000 foot level. The trends that we saw in Q2 were really off of the back of the diagnosis of the business back in Q3 of last year, and a lot of the tools we've been implementing and tactics we've been executing on over Q4, Q1 and now into Q2.

So it really is around all three of our strategic areas that drove the performance. And I'll ask Vijay to talk a little bit about the trends that we saw in the quarter.

What are our expectations for Q3 and the growth of existing versus new prescribers?.

Thank you, Jason, for the question. I would say that Q2 all the way through the quarter remained relatively fluid as it remains, as we enter into Q3. The largest proportion of our business was returning scripts as we have reported before. And we saw an impact on NRX – the NRX business part of our business during Q2.

Now this is not surprising given that we've seen an overall reduction in the number of patient visits to physicians, either virtually or in person. And this is not something unique to us. This is an industry wide impact that we have seen. And what we are pleased about is the way that we and our teams have pivoted and navigated well.

And the early success that we've seen with our tools that we have rolled out. I won't get into a particular month-over-month trends within the quarter or what we are seeing in Q3, except to comment on the fact that NRX remains impacted by the COVID pandemic.

And as the broader environment improves and patients return, we are entirely confident that the NRX growth will return as well, because as I always highlight, there is a huge unmet need and a tremendous opportunity to serve patients. There are 200,000 patients out there experiencing dyskinesia and off.

And our tools and resources that we've put into place are proving to be durable and sustainable even beyond what we are seeing in Q3. So we're excited about that. And as Neil pointed out, we see the growth that we saw in Q2 as a validation of our strategic priorities..

Okay, great.

And if I could just add a quick follow-up on NAMZARIC, could you just remind us of the durability of the royalty stream, what we know about that in terms of any relevant generic settlements or ongoing challenges from generics for the products?.

Jason, I'll take a stab at the first part of this and that we are really pleased with the long-term partnership and first course in Allergan and now AbbVie and feel like terms of that partnership is solid.

In regards to the durability of NAMZARIC in our forward-looking statements in that regard, Chris, you want to talk a little bit about that?.

Yes, so we expect to receive a low double digit royalty on net sales of NAMZARIC through 2024, to answer your question, Jason..

Okay, great. Thanks for taking the question..

Your next question comes from the line of David Amsellem with Piper Sandler. Please go ahead..

Hi everyone this is Zack [ph] on for David. Thank you for taking my question. One quick one from me on GOCOVRI. Could you provide any color on where you think GOCOVRI might flat in, in the Parkinson's treatment target time for the management of [indiscernible] especially given that the data is already in the label.

So I guess basically, what is the sense that you think the label expansion will actually be able to drive uptake and usage for the product? Thank you..

Great question. I would highlight that GOCOVRI remains highly differentiated among the treatment options – management options available to physicians today because it's the only pharmaceutical product proven to reduce both dyskinesia and off and thereby increase on time for patients. So it's a highly unique clinical profile.

What the, the additional indication on the label will allow physicians to do is identify patients who are experiencing these much faster, because patients tend to talk more about their off episodes with physicians.

So as the discussion gets into more complications, I think the identification of patients with dyskinesia and off will be, will be simplified further. So we see it remaining its place in terms of the treatment paradigm for – as an adjunctive therapy of choice for patients on levodopa therapy..

Thanks Vijay. I’ll add many be just a little bit more color on that Zack. This is about these three pillars we talk about with GOCOVRI, right. Raising the urgency to treat differentiating and driving adoption, and that last one around improving access and decrease or decreasing the barriers to access and fulfillment or improving them.

This label extension for us really allows us and allows the physicians to best identify appropriate therapies for their patients by raising into the label..

Great. Now, that makes sense. Thank you..

Your next question comes from the line of Tim Lug of William Blair. Please go ahead..

Hi, team. That’s John on for Tim. Thanks for the questions and congrats on the strong quarter; just to from us.

So first, just wondering what kind of color you can give us on how effective your new digital engagement efforts have been in driving new prescriptions? And second, just wondering if you're seeing any regional impacts for new starts around the pandemic and have those been changing over time as outbreaks emergency side? Thanks..

I'll start with the second question first. And I will tell you that what we see in terms of patterns and prescription patterns are really all over the place when we look at the national map.

I think there is no correlation from our analysis to which states are officially open versus closed because we see them being impacted more by local and regional considerations, and which clinics are open and welcoming patients versus not.

So there's not a clear correlation in terms of – if you look at the CDCs’ report on which states are open versus closed, you will not see a correlation to GOCOVRI.

So we see it relatively dependent on what the local conditions are and which clinics are open and functioning and which clinics honestly have adopted telemedicine better than others and are seeing patients. So that's where we see the closer correlation.

In terms of our digital performance, we've had strong execution of digital tactics to get our GOCOVRI messages to increase and enhance awareness of GOCOVRI, of the product option as well as its differentiated clinical profile. We see strong impressions numbers that have been generated. We talked about them a couple of quarters ago.

We're maintaining those levels. We see good engagement among high value physician populations. And most importantly now all of our engagements having turned virtual, we're also seeing encouraging signs of how we're reaching out to patients in collaboration with our advocacy groups.

We've conducted a few programs and the attendance is really quite robust, hundreds of patients and caregivers participating in them, showing us the interest they have in a therapeutic option like GOCOVRI. So we're quite encouraged by that..

All right. Thanks and congrats again..

Okay..

And your next question will come from the line of Ram Selvaraju of H.C. Wainwright. Please go ahead..

Hi, this is Blair [ph] coming on for Ram. A couple of questions from me.

Do you expect to see a catch up period with Rx’s and same thing with new patients Rx do you expect to see catch up there as well, once the economy started open?.

Vijay..

Yes. So, what we entirely expect to see when the economy starts to open and patient visit, start to normalize is that as the broader environment improves, patients will have to make appointments with their physicians one way or another, either a live appointments in person or telemedicine appointments.

And as they make these appointments, we expect the RRx’s as especially the NRx’s as to normalize because those have been the ones impacted by patients not being able to speak with their physicians. But this is, as I said before not unique to us.

It's an industry wide phenomenon and given the kind of demographic that we serve, these patients tend to be the highest risk in terms of the profile of patients vulnerable to the COVID pandemic. So we're not surprised that they're staying home and not making appointments, but when things ease up, we entirely expect things to normalize..

I might add just one thing to that Blair.

The tools that – and as I mentioned previously, the diagnosis of our business and how we best put our resources towards investing in the tactics that are working are really starting to show that durability, right? We started a lot of what Vijay is talking about quarters ago, not this – this wasn't something that we pulled off in Q2.

The diagnosis and the execution, and the continued focus from our people who are – who quite honestly, the team that we have – the management team, as well as our entire employee base, all working through challenging times.

And these folks are stepping up and I have to tell you that I'm grateful for how they've executed, but it gives me more confidence in the three areas that we've identified and are executing against. Give me real competence at the future when people start going back to both to see their positions in a hybrid environment, we will be successful..

Okay, great. I appreciate the color.

And then just lastly for me, can you give us a little color on your discussions that you've had with the FDA regarding the sNDA? And do you expect to change your marketing efforts at all post approval?.

Those discussions are pretty easy, they accepted our files. We got a PDUFA of the 1st of February 2020 – 2021, I’m sorry 2021. And we will – we have in our label today and clinical section of our label, the treatment of off episodes and the clinical data, that's there to go with dyskinesia.

I think it will allow us to be able to ensure that we have EMRs that are appropriately mentioning the indication statement with that fully addresses the full spectrum of motor complications. So we'll double down, but it won't change what we're doing.

I think the messaging around the fact that GOCOVRI is approved and the only product that's out there to treat dyskinesia and off in terms of its clinical benefit will remain..

Okay. Great. Thank you..

We have no further questions at this time. I will now turn the call back over to Mr. Neil McFarlane for closing remarks..

Thank you, Gabriel. In summary, we remain focused on our long-term goals and continue to execute our growth strategy for GOCOVRI. We've been able to quickly adapt and implement new ways of working for the benefit of patients.

And we believe we have both the people and the resources to execute our near-term strategy, to deliver value to patients and shareholders. I want to thank everybody for joining the call and appreciate your time. We look forward to speaking with you again next quarter. Thank you..

This concludes today's conference call. You may now disconnect..