Welcome to the Adamas Pharmaceuticals Third Quarter 2020 Financial Results and Corporate Update Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] I would now like to turn the conference over to Peter Vozzo, Investor Relations representative for Adamas Pharmaceuticals. Please go ahead..

Thank you, Ryan, and good afternoon, everyone. On the call with me are Neil McFarlane, Chief Executive Officer; Vijay Shreedhar, Chief Commercial Officer; and Chris Prentiss, Chief Financial Officer 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..

Thank you, Peter. Good afternoon, everyone. Thanks for joining us today. Vijay and Chris will discuss the details of our third quarter performance in a moment. Before they do, I would like to highlight a few key areas of development.

During the third quarter of 2020, the Adamas team continued to make progress advancing the business in line with our corporate strategy. Our employees have shown resilience, creativity and an extraordinary dedication to our mission during this challenging time.

I would like to personally express my appreciation for their response, which demonstrates a steadfast commitment to the patients we serve. As I reflect on the first three quarters of 2020, our organization has adapted exceptionally well.

I’m proud that we’ve supported our current patients, increased the number of new patients and added new prescribers. This led to a 36% growth in the first nine months of product sales versus the same period in 2019 despite the headwinds of the pandemic.

Patient access to health care providers is still impacted in the Parkinson’s community, affecting total prescriptions in the quarter. The entire team is working tirelessly to adapt to this fluid environment and ensure the highest levels of customer service and patient support.

We continue to realize the benefits of sustained execution of our commercial priorities, and I’m pleased to note that the number of new paid prescriptions in the third quarter increased 16% over the second quarter. We achieved strong growth in product sales in the third quarter, underpinned by continued high levels of patient persistence.

We continue to hear from patients and physicians that GOCOVRI is providing a benefit and meeting a significant unmet need. In addition to product sales, our financial results now include a full quarter of royalties for NAMZARIC. As a result, total revenues increased to $20.2 million in the third quarter, a 45% increase over the same quarter last year.

We presented post hoc data analysis in Q3 at the Movement Disorder Society Congress. These presentations provide further evidence that GOCOVRI reduced OFF time for Parkinson’s patients with dyskinesia, demonstrating prolonged efficacy for at least two years, thereby advancing our strategy to effectively differentiate GOCOVRI.

In the quarter, we bolstered our company leadership with the addition of Dr. Adrian Quartel as Chief Medical Officer, Jill Jene as Head of Corporate Development and expanded our Board with the addition of Anna Richo.

This expansion of operational strength and industry experience will allow us to harness the full potential for GOCOVRI and accelerate our efforts to achieve our long-term corporate goals.

As an important manufacturing achievement, we received FDA approval for our supplemental new drug application for a secondary supplier of active pharmaceutical ingredient for GOCOVRI in a new geography. This approval during the COVID crisis allows us to further diversify our supply chain and continue to provide uninterrupted supply for patients.

As we announced earlier this week, we’ve signed a memorandum of understanding to settle a pending securities class action lawsuit. This settlement agreement, which remains subject to court approval, will be paid entirely by our insurance carrier and avoids potential expense and distraction to management.

We are committed to capital efficiency and have been disciplined with operating expenses as we make strategic investments for future growth. Combined with increased product revenue, this has enabled us to significantly reduce cash burn over the last five quarters.

Given the available cash on the balance sheet and continued growth of GOCOVRI, we remain confident in our long-term outlook. In summary, the fundamentals and potential of our business remain strong as we head towards the end of the year and into 2021.

I believe the investments we are making now will allow us to continue to deliver benefit to patients and value to shareholders. I’ll now turn the call over to Vijay..

first, increasing the urgency to diagnose and treat through education on the functional disruption caused by dyskinesia and OFF; second, communicating the clinical benefit and health economic value that differentiates GOCOVRI, thereby ensuring appropriate patients are started on therapy; and third, reducing barriers to access to enhance the overall customer experience.

To increase the urgency to recognize the impact of dyskinesia and effectively treated without delay, we launched a patient ambassador program in Q3 with Parkinson’s patients who are on GOCOVRI therapy.

These ambassadors participate in speaker programs to educate and answer questions from an audience consisting of physicians, patients, caregivers and patient advocacy group personnel, thereby intensifying our outreach to the Parkinson’s community.

We have seen robust interest in these educational programs from members of local and regional advocacy organizations. This effort complements the disease state educational materials delivered through our sales representatives and multichannel messaging campaign.

Our sales force conducted a mix of virtual and live interactions with health care providers according to their local environment. These consisted of rep details as well as speaker programs delivered by the opinion leaders on our speaker bureaus.

These interactions resulted in achieving a significant proportion of the sales force activity level we had at the beginning of the year, an improvement versus our performance in Q2. We also launched a new streamlined speaker deck to facilitate shorter presentations to adapt further to the new virtual environment.

To more effectively differentiate GOCOVRI and articulate its clinical value, we launched a new patient-focused branded campaign in the quarter. This campaign validated through extensive market research to be effective, relatable and motivational to both physicians and patients highlights the unique efficacy and safety profile of GOCOVRI.

The emotive "GOCOVRI is the difference between getting up and getting out" campaign is being delivered through a multi-channel digital ecosystem to engage the Parkinson’s community. We believe these initiatives steadily increased breadth of adoption in the quarter with new prescribers to the brand.

From an access perspective, we supported HCPs and patients through the GOCOVRI care coordinators and field access specialists to help stakeholders effectively navigate the fulfillment process for GOCOVRI. GOCOVRI care coordinators received high satisfaction scores from our fielded surveys indicating their effectiveness with customers.

We are presenting health economic value information to payers and formulary decision-makers that includes new data highlighting the cost-effectiveness, clinical differentiation and long-term durability of GOCOVRI. As we enter Q4, we see a fluid and complex situation with patient appointments remaining disrupted across the country.

The latest data from the Michael J.

Fox Foundation sponsored patient survey underscores the prolonged impact of the situation this year, which has increased the vulnerability of Parkinson’s disease patients, with 75% of patients reporting a change in health care and nearly 50% reporting cancelled appointments seven months after the first shelter-in-place orders.

Only 40% of patients have engaged in telemedicine based on this survey. We currently see a mix of in-office patient visits and telehealth utilization, and we expect this to continue for the foreseeable future. As patient appointments return to pre-pandemic levels, we expect prescription growth to do so as well.

We are pleased with the initial success we have seen with the solutions and tools we have launched recently and are confident these tactics are durable moving forward in an emerging hybrid commercial environment.

Lastly, with around 200,000 Parkinson’s disease patients in the United States being impacted by dyskinesia and OFF every day, the opportunity for GOCOVRI is large.

We remain focused on addressing their significant unmet need, and we are incredibly proud of our team for adapting seamlessly to the new environment and continuing to execute effectively to drive positive results for patients who are more impacted today than ever before.

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 third quarter 2020.

Total revenues for the third quarter of 2020 were $20.2 million, which includes GOCOVRI product sales of $19.0 million and royalty revenue earned from NAMZARIC of approximately $1.2 million. Product sales of GOCOVRI in the third quarter increased 36% over the same quarter last year.

This was driven by approximately 19% volume growth year-over-year as well as a more favorable gross to net adjustment compared to the same quarter in the prior year, reflecting the number of new paid prescriptions in the period. During the third quarter 2020, R&D expenses were $2.3 million compared to $6.0 million for the third quarter of 2019.

R&D expenses for the current quarter relate to the open-label extension study for the ADS-5102 MS Walking impairment program. This study will complete in the fourth quarter with the final closeout costs for the program to run into the first half of 2021.

We are adjusting our full year 2020 R&D expense guidance to $9 million to $11 million, which includes $1 million of stock-based compensation. SG&A expenses for the third quarter of 2020 were $26.1 million compared to $31.2 million in the prior year quarter.

Our current quarter SG&A expenses represent our continued focus on maximizing the opportunity for GOCOVRI while continuing to implement new tactics to succeed in the current environment and going forward.

As we expect to continue to operate in a hybrid environment due to local rules and physician practices, we are reducing our full year 2020 SG&A expense guidance to be $100 million to $110 million, which includes stock-based compensation of $6 million.

As a reminder, at the beginning of the year, our 2020 total operating expense guidance was $120 million to $135 million compared to our current estimate of $109 million to $121 million, reflecting our proactive management of expenses and ability to prioritize investments.

Cash and investments as of September 30, 2020, were approximately $92.5 million. Overall cash burn for the third quarter was $11 million, a decrease from the approximately $12 million in the second quarter of 2020.

This decrease demonstrates continued progress on the top line as well as thoughtful expense management as our quarterly cash burn continues to diminish quarter-over-quarter and is down from approximately $18 million in the third quarter last year. That concludes our prepared remarks. With that, I will now open the line for questions.

Operator?.

[Operator Instructions] Our first question comes from the line of David Amsellem from Piper Sandler..

Hi, how are you? This is Zack on for David. Congrats on the quarter. I just had a couple on the label expansion in OFF episodes that is coming up.

Where do you think that GOCOVRI will slot in, in the current Parkinson’s treatment paradigm that’s obviously becoming more varied possibly? And then also, do you expect to grow your marketing efforts and invest more in sales and marketing initiatives like DTC if you do end up getting the label expansion? Thank you..

Thanks, Zach. So, as a reminder, GOCOVRI’s clinical profile is well differentiated from all of the other Parkinson’s disease products in that it both affects decreases in dyskinesia as well as decreases OFF episodes. That clinical data is currently in our label today.

We expect by elevating that OFF episodes clinical indication into our indication statement, it will allow us to better allow access for physicians to find and better diagnose and treat those patients. Your other question was in regards to expense and efforts in direct to consumer..

I appreciate the question, Zach. I would say as Neil said, we already have a highly differentiated clinical profile with the clinical data for the OFF in the clinical section of our label already. We expect to continue delivering that message to the same physician targets that we have right now.

So we will have a very responsible plan with respect to expenses when we get that additional label for OFF..

Okay, great. Thanks..

And there are more questions on the line. Our next question comes from the line of Tim Lugo from William Blair..

Hi, guys. This is John on for Tim. Thanks for the question. So, just two from us; first, just wondering if you can provide some color on any initiatives that you’re working on to improve patient persistence and where you see potential for improvement there.

Second, do you have any room – I’m just wondering if you have any room for pricing increases or if you’re considering any price increases in the future? Thanks.

Thanks, John. I’ll ask Vijay to address the persistence question..

We have enhanced our outreach to patients through various initiatives, particularly through the GOCOVRI care coordinators who provide hyper-care for patients in the first three months that they onboard on to GOCOVRI.

The first month is usually through a free trial, the second month is usually when they get to their first paid prescription, and the third month is their first refill.

So in those three months, it’s a critical period where we have provided that hyper-care for patients communicating to them and getting feedback from them to ensure that we optimize their experience with GOCOVRI to the extent possible.

We believe that, that is the largest initiative that is enabling us to maintain the high levels of persistence that we see.

We’ve also initiated direct-to-patient communication through all of our shipments of GOCOVRI, enhancing our ability to communicate the importance of persistence and compliance on the drug as well, which remains very high and we’re very encouraged by. To your second question, we don’t speculate on future price actions in terms of the product.

We believe that GOCOVRI offers incredible value for where it is priced, and that is the message that we’re articulating to all stakeholders to ensure appropriate utilization..

All right. Thank you so much..

And we do have one more question in the queue right now. The question comes from the line of Marc Goodman from SVB Leerink..

Hi, this is Rudy on the line for Mark. So, congrats on a solid quarter, just have two quick questions; first, based on my calculation, it shows that 3Q gross to net estimates to be below double digits.

Can you help me understand the dynamic in the quarter, because you talked about that as related to new paid prescriptions in the quarter? Second is regarding the royalty. We booked only $1.2 million revenue in the quarter.

Is that still based on double-digit royalty rates and that’s for a full quarter?.

Hi, Rudy. Thanks for the questions. I’ll ask Chris to address those..

Thanks. As it relates to gross to net, so the dynamics there really are the same as we saw last year, where from our payer mix, we are heavily influenced by the Part D population. So that’s what influences our liability there.

As people work through their donut hole liability, we really see a higher rate in the first two quarters of the year and then it drops down quite a bit in the back half of the year. So we’ve seen that play out again this year as well, and it’s also driven by really new patient starts.

So having a lower volume of new patient starts relative to the prior year had an impact there as well. And then the second piece of that is related to the royalty for NAMZARIC. I would say the first thing I would go to is that we really appreciated getting to know the team over at AbbVie as they’ve completed the acquisition there last quarter.

As you noted, our royalty with this quarter – first full quarter, it was $1.2 million. You are correct. It’s still a low double-digit royalty. Nothing has changed there. I think what I would note is this is a mature brand. They are also serving a vulnerable population during this time, and this is really the best estimate that we have as we go forward..

Got it. Thanks very helpful. Thank you..

Thank you, Rudy..

Thank you, Rudy..

At this time, no one else is in the queue for questions..

Thank you. I want to thank the entire Adamas team for their dedication and performance this quarter. In summary, we remain focused on execution, we bolstered our leadership team, and we strengthened the foundation of our company to deliver value to patients and to shareholders. Thank you for joining the call. I appreciate your time.

We look forward to speaking with you again next quarter..

And this does conclude our conference today. You may all now disconnect..