Welcome to the Adamas Pharmaceuticals First Quarter 2021 Financial Results and Corporate Update Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to Peter Vozzo, Investor Relations representative for Adamas Pharmaceuticals. Please go ahead..

Thank you, Paul, and good afternoon, everyone. On the call with me today are Neil McFarlane, Chief Executive Officer; Vijay Shreedhar, Chief Commercial Officer; and Chris Prentiss, Chief Financial Officer. We also have Dr. Adrian Quartel, Chief Medical Officer available to answer questions during the Q&A.

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. I will provide an overview of the first quarter. Then I’ll turn it over to Vijay to provide more details on our commercial performance. The first quarter was marked by continued strong execution of our growth strategy by the Adamas team.

We advanced the commercialization of GOCOVRI by increasing the number of patients being treated, expanding the number of prescribing physicians and launching a second indication for OFF episodes following the approval of our SNDA in February.

The expanded label differentiates GOCOVRI as the first and only medication approved to treat dyskinesia in patients with Parkinson’s taking levodopa based therapy and as an adjunctive treatment to levodopa/carbidopa in patients with Parkinson’s experiencing OFF episodes.

The SNDA approval provides Adamas the opportunity to deepen engagement with stakeholders and a broader set of patients with Parkinson’s. In April, we presented data at the American Academy of Neurology’s Annual Meeting highlighting the negative social and emotional impacts of motor complications for people with Parkinson’s and their care partners.

In response to these findings and the widespread prevalence of motor complications, we launched a national disease education program called Picture More Time to raise awareness and understanding of OFF episodes and dyskinesia.

Additionally, we published new GOCOVRI data analysis, this quarter that highlighted GOCOVRI’s availability – sorry, GOCOVRI’s ability to improve on-time without any dyskinesia. These data emphasize GOCOVRI’s role in easing motor complications that often hinder the daily activity of people with Parkinson’s.

As we continue to make progress on the commercial front with GOCOVRI, we took several steps in the quarter to strengthen the foundation of our business. We closed the settlement of our patent litigation with Osmotica and following the subsequent acquisition of OSMOLEX ER, successfully integrated the product into our organization.

While we have transitioned commercialization to Adamas, Osmotica remains a sole manufacturer. As Vijay will discuss in a minute, we plan to expand our commercial footprint beyond Parkinson’s disease. Leveraging OSMOLEX ER to benefit patients with drug induced extrapyramidal reactions.

Further, during the quarter we settled patent litigation with Zydus resolving the first filer and the challenges for both of GOCOVRI’s available strengths and amended certain key terms of our royalty back loan agreement with HealthCare Royalty Partners.

In addition, we took the opportunity to improve our financial flexibility with a successful capital raise to support our growth strategy. Moving on to the pipeline.

You may recall in 2019, we made a decision to defer further investments in ADS-4101, our investigational modified extended release lacosamide capsule for the treatment of partial onset seizures in patients with epilepsy.

Last month, we were issued two new patents for ADS-4101, which we believe will assist us as we continue our efforts to partner or out-license this program.

In summary, our Q1 achievements are aligned with our strategic goals to grow our commercial product portfolio, strengthen the foundation of our business and leverage our operational capabilities to support long-term growth. We’re looking forward to an exciting year. I’ll turn the call over to Vijay to review our commercial progress..

Thank you, Neil, and good afternoon, everyone. I will begin my comments with highlights of our performance in Q1 with particular focus on the progress we have made with the launch of the OFF indication and provide an update on the commercial strategy for OSMOLEX ER. Starting with performance.

Let me begin by highlighting that we continue to achieve significant progress in a fluid and complex environment in which patient appointments remain disrupted in several parts of the country.

To put the strength of our Q1 performance in context, the negative impact of the pandemic on the marketplace was seen through a 21% year-over-year decline in Q1 patient claims data for levodopa/carbidopa the primary drug of choice for treatment of most Parkinson’s disease patients.

We are pleased to report that despite this challenging environment, Q1 total GOCOVRI paid prescriptions or TRx excluding product from the free trial program grew 21% year-over-year versus Q1 2022, to 8,735 with 7% sequential growth versus the prior quarter, There was 18% growth in new pay prescriptions or NRx versus Q1 last year and 16% growth versus the previous quarter to a total of 590 NRx.

This steady growth in numbers of new patients coming after the strong NRx results we reported in Q4 highlights continued momentum for GOCOVRI and reflects our commercial teams sustained execution.

We believe our strong Q1 ***0-7 ***7*** coming after the strong NRx results we reported in Q4, highlights continued momentum for GOCOVRI and reflects our commercial teams sustained execution.

We believe our strong Q1 performance was aided by improved access in offices with live sales force interactions continuing to increase over Q4, and reaching new highs in March, highlighting that our team adapted well to the evolving situation by increasing live interactions with prescribers where possible.

Simultaneously, our digital campaign continued to gain momentum with high engagement from both prescribers and patients. We also saw increasing momentum with vaccinations and encouraging signs of this leading to better access to all stakeholders.

We believe that this led to an increase in in-office patient visits and thereby increasing comfort by physicians in prescribing new medications.

Turning to the authentication, we are excited to be launching this label expansion as it has made GOCOVRI the first and only product indicated both for the treatment of OFF episodes and dyskinesia, the two extremes of the motor complications spectrum.

Thereby helping prescribers avoid the compromises previously necessary in managing their Parkinson's patients. While these are still early days, we believe that we're seeing positive signs at this stage of our product launch.

First, we see a mix of prescriptions spanning the entire movement complications spectrum with patients prescribed GOCOVRI, being diagnosed with dyskinesia, OFF or both. While in Q1 most prescriptions remained for dyskinesia, these are early signs of GOCOVRI expansion into the treatment of OFF episodes.

Second, we have seen a significant increase in demand through prescriptions and a continued increase in new prescribers to the brand. Third, on the reimbursement front payers have been processing and approving prescriptions for GOCOVRI, for patients experiencing OFF episodes using the same criteria and processes that we have seen for dyskinesia.

As part of the 2022 cycle of discussions, we continue to engage with payers and have delivered clinical and health economic value presentations to the formulary decision makers at major health plans.

Meanwhile, we are pleased with the 93% payer approval rate, regardless of GOCOVRI formulary status, which indicates patients are getting access to our drug.

With the addressable population for GOCOVRI expanding from an estimated 200,000 to 400,000 to 500,000 with the approval of the authentication, we feel that quantitative market research in Q1 and this research confirmed the significant market potential for GOCOVRI, due to its differentiated clinical profile.

Our focus is to efficiently unlocking the expanded opportunity by fielding our sales force and multi-channel campaigns to educate stakeholders, to raise the urgency, to treat motor complications, differentiating GOCOVRI to drive demand and ensuring unhindered access to the product.

Transitioning to OSMOLEX, Q1 represented the first quarter of commercialization after the patent settlement and product acquisition. Consistent with Adamas values, the team successfully integrated OSMOLEX ER into our product portfolio with existing patients receiving uninterrupted care and also brought new patients to the brand.

We completed the market assessment of the opportunity for OSMOLEX ER across multiple therapeutic areas. Based on the findings of this analysis, we see opportunity in the indication for the treatment of extrapyramidal reactions in adult patients for a range of conditions, including tardive dyskinesia and dystonia.

Our initial focus is on psychiatrists who are familiar with the specialty pharmacy process due to their current use of branded products and who prescribed amantadine immediate release in their practices. Our analysis identified patients in these practices who could benefit from a once a day IR/ER amantadine option.

Beyond ensuring access to existing patients, we are being disciplined with a gated resource investment plan. As communicated on previous calls, we're maintaining the level of prescriber promotion for OSMOLEX ER with a teledetail team.

We will modulate our approach based on the results that we see in the coming quarters, with GOCOVRI remaining our priority. Q1 continue to present a fluid situation in the marketplace. And we are incredibly proud of our team for remaining focused on our mission to serve patients.

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 summary of our financial results for the first quarter of 2021.

Total revenues for the first quarter of 2021 were $19.3 million, which includes GOCOVRI product sales of $17.7 million, OSMOLEX ER product sales of $300,000 and royalty revenue earned from NAMZARIC of approximately $1.3 million.

Product sales of GOCOVRI in the first quarter increased 22% over the same quarter last year, primarily driven by volume growth. Gross to net for the quarter was approximately 26% which is in line with the guidance range we provided.

Our gross to net expectations for the balance of the year remain at low to mid-20s for the second quarter and declined to the mid-teens for the second half of the year, as patients move through the Medicare Part D coverage gap.

R&D expenses for the first quarter of 2021 were $1.8 million, compared to $2.5 million for the prior year quarter, as we close out the ADS-5102 multiple sclerosis program. Current quarter SG&A expenses were $26.6 million compared to $24.6 million in the prior year quarter.

SG&A expenses for the first quarter of 2021 represent the execution of our GOCOVRI commercialization strategy, as well as integration of OSMOLEX ER. We will continue to be disciplined in our investment in the business with a focus on being accretive in the near term. Cash and investments as of March 31, 2021, we're approximately $127.4 million.

As we have previously discussed during the first quarter, we closed our $7.5 million settlement of patent litigation and acquisition of OSMOLEX ER, as well as raised approximately $66.5 million through a combination of a public equity offering, and at-the-market common stock sales.

Our 2021 expense guidance reflects thoughtful, disciplined investment in the business, as we execute on achieving the full opportunity for GOCOVRI as well as discovering the potential for OSMOLEX ER.

While the environment remains fluid, the team's performance and our strong cash position, give us confidence that we have the right strategy and with our recent expanded label for OFF episodes, great excitement about the opportunity ahead of us. This concludes our prepared remarks. With that, I will open the line for questions.

Operator?.

Thank you. [Operator Instructions] Thank you. Our first question comes from Marc Goodman with SVB Leerink. Please proceed with your question..

Yes. So first of all, I just want to make sure I understand when you mentioned the 4101 product, you got two new patents. So the idea is still not to bring that product internally, right? You're either going to partner it, out license it, you're not going to do it internally.

And maybe you can comment on business development or how you're thinking about things right now in addition? And then, secondly, just back to GOCOVRIs for a second, I do want to ask about the commentary about the payer rates. And I guess how you know that this new indication is really, really helping.

Can you just go through that one more time? Is the access getting better or are you saying that the payer rates, no matter which indication they're going for, whether it's the OFF, the ON, whether it's the dyskinesia you're getting reimbursed now, whereas before you weren't.

So there's – it's clear that this indication is helping you at least from a payer perspective. Thanks..

Thanks, Marc. I'll answer the 41014 questions. And I'll hand it over to Vijay to take care of the access questions for GOCOVRI. So you're absolutely right. We are have been evaluating the potential value of 4101 and exploring partnership opportunities.

These two new issued patents we believe will continue our efforts in moving 4101 to being a partner product. We will not be investing in that internally.

Vijay?.

Sure. Thanks, Marc for the question. I will say from a payer perspective, one of the first things we did with the approval of the authentication was to move rapidly, to make them aware and update their formulary files in terms of our indication for GOCOVRI and the second approval for the OFF indication. So that happened pretty rapidly after approval.

Now, one of the things we've been monitoring since then is, are we getting prescriptions for patients identified as being diagnosed with OFF episodes or with OFF and dyskinesia episodes and are those prescriptions going through and receiving payer approvals? And the good news is that we're seeing those prescriptions and they are going through and they're getting paid for.

The 93% approval rate is what we have seen over the last 12-month period. We're very proud of that fact and it indicates that access is being provided to patients. I think with respect to what is happening with OFF it's a little too soon and we will be monitoring that carefully..

Thanks..

Thank you. Our next question comes from Tim Lugo with William Blair. Please proceed with your question..

This is Lachlan on for Tim. Thanks for taking the questions. You mentioned, you've been saying increasing rights of new prescribers sort of throughout the start of the year.

Can you just help us set our expectations, what kind of growth we should expect that over the balance of the year? And then second of all, yes, as you've been providing the new indication, what's the major like a pushback you've been hearing from the field in terms of conditions that not yet prescribing to patients with all, I realize it daily, but we'd be interested to hear if there's any commentary there..

Thanks, Lachlan. Let me start off by saying, I'm really pleased with the continued strong execution of GOCOVRI. As we mentioned in the prepared remarks on a quarter over a prior year quarter perspective, we saw a decrease of 21% in carbidopa/ levodopa claims, patient claims.

And I think that the continued momentum we had coming out of 2020 is really showing us that our strategies continue to work in a very fluid and complex environment. Also a good start with the launch of OFF, but we've had another very strong performance with 21% year-over-year growth for GOCOVRI that we're quite proud of.

Vijay will talk a little about the OFF have any pushback..

Sure. In terms of the OFF indication, there is an important aspect to remember that there's an established treatment of symptomatic management of these patients with all of the varieties of options that have been available so far.

So it requires education of the connectivity between OFF and dyskinesia and the comprehensive management of patients, and that education will take time.

So the number one pushback we get is, recognizing it's early in launch, we've got to recognize that physician clinical practice will have to change from the symptomatic management of OFF or symptomatic management of dyskinesia to a comprehensive management of patients across the motor complication spectrum.

But having said that, we're extremely pleased with the progress we have seen in the early days and the validated potential, the significant potential we see with the market research and that's where I leave that..

Thanks..

Thank you. Our next question comes from Jason Butler with JMP Securities. Please proceed with your question..

Thanks for taking the questions and congrats on the demand growth in the quarter. A couple from me, first of all, can you, in any way quantify all of the, let me say the NRx number was looked impressive.

Can you, in any way quantify what percentage of those – or what proportions of those patients’ were driven by the new label?.

The majority what we saw, Jason, came from patients were diagnosed with dyskinesia. But what we are pleased with is the fact that we are seeing consistently prescriptions coming in with patients who are diagnosed with dyskinesia, but also OFF or OFF alone.

So that mix of patients that we've started to see consistently is what is giving us great optimism about the growth prospects. And we are continuing to focus on breadth and depth of prescribing as an important strategy for our growth moving forward..

Okay, great. And then you mentioned obviously the pandemic continues to be an uncertainty, to what extent did it impact 1Q in terms of in-person detailing? Obviously, we saw spikes post holiday period.

Was this a headwind at all in the quarter? And if it was, do you expect any improvement as cases are now dropping, and hopefully we see restrictions ease as appropriate?.

It remained ahead win in parts of the country. Access has varied in parts of the country, depending on what the local situation is. But the good news is this. We have been maintaining a sales force level of activity at pre-pandemic levels for a while.

Now it is a mix of both live and virtual calls, but the important aspect of Q1 is we have started to see the increase in live calls as a proportion of the total calls that we've been making with a new high being seen in March, which is encouraging that the – in the momentum with vaccinations is leading to greater access overall..

Okay. Great. And then just last one from me. In terms of OSMOLEX ER, you mentioned that tele detail effort.

Any sense of how promotions sensitive the psychiatrists that you’re targeting might be for the drug and the essentially the value of considering or when to consider in-person detailing and maybe how that ties in also to your plans about publishing the OSMOLEX ER clinical results..

Yes. Jason, thank you. So maybe I’ll start with the latter and then I’ll hand it off to Vijay to be able to talk a little bit about the opportunity we see in the gated investment approach as we try to discover the potential for OSMOLEX ER. In terms of the Phase 3 data for OSMOLEX ER, we are committed to moving that into publication.

We’re analyzing that data today. Adrian is actually on the call with us today, but he and his team are doing a great job of unwinding that and getting it ready for publication. So we hope to get that in the public domain, which again, we hope will further differentiate the products and provide some clarity for physicians..

With respect to OSMOLEX and promotion of OSMOLEX, first off we are quite excited to be expanding beyond Parkinson’s disease and going into the extrapyramidal reactions in adult patients space. And we are going there with a label that’s identical to the amantadine IR immediate release label.

So recognize that we have the indication for it and we have assessed that IR, ER options such as OSMOLEX has potential in that space to serve patients better. However, we are still discovering the full potential for OSMOLEX and we are planning to move forward carefully with a gated investment plan maintaining our focus on GOCOVRI.

And we’ll keep you posted, I’m sure on this forum and many as time goes on..

Great. Sorry, if I could squeeze one last quick one.

Any impact of inventory specifically for GOCOVRI in the quarter?.

Inventory can change by a couple of days between quarters, so no significant shifts there to note..

Great. Appreciate taking all the questions. Thanks again..

Thanks, Jason..

Thank you. Our next question comes from Stacy Ku with Cowen & Co. Please proceed with your question..

Hi. Thanks for taking my questions and congrats on the quarter.

First, looking forward in this current quarter, so Q2, are you seeing an acceleration and the adoption of OFF? And what are your early expectations for the split between dyskinesia versus OFF versus both for the year? And also right now it’s encouraging to see that the authentication is being reimbursed by payers.

So could you clarify if there will be any changes as you negotiate payer contracting in 2022 and the expectations there would be helpful. Thank you..

Yes. Sure. Stacy. I would start with saying, we are pleased with the continued growth we’re seeing building off of the momentum we had in Q4 of last year and that reflects on the strong continued execution of our commercial strategy and a validation that this commercial strategy is proven and is delivering results in a fluid and complex environment.

And I think that is something that makes us feel very good at the end of Q1. As well as the fact that compounded with that, we are seeing a good start to the OFF launch and we’re feeling positive about our footprint, expanding beyond Parkinson’s disease, all of which get us quite excited about our prospects for the year.

In terms of your second question, the conversations with payers have been good. We’ve had multiple clinical presentations with payers and we’re engaging them in conversations. The fact that they have been approving these prescriptions for OFF is a very positive sign and I think we’ll keep monitoring how else to ensure access to patients..

Thanks..

Thank you. Our next question comes from David Amsellem with Piper Sandler. Please proceed with your question..

Hey team, this is Zack on for David. Thanks for taking my questions. Just a couple from me. I was hoping to get your latest thoughts on your plans for the free trial program for GOCOVRI.

For how long do you plan to keep this program going in place after a societal normalization of COVID? And then if you could just remind me, if you expect any sort of additional investment in sales and marketing to support the new indication such as your latest thoughts on your commercial strategy here would be helpful. Thanks..

Yes. Sure, Zach. Let me begin with the free trial program. The free trial program is designed to provide clinical experience to new physicians coming on board or for new patients who want to trial the product. And that is the intent of the program. And we see tremendous opportunity to continue to bring on new physicians and new patients.

And the evidence that we have from Q1 is that it is working and that we have continued to expand our prescriber base and we’re continuing to see new patients coming on board. So as long as we continue the potential for growth there, in terms of new prescribers and new patients to the brand, we will keep the free trial on board.

In terms of our sales force and marketing expense. We will say that from an analysis, as we said in a previous call, because of the additional patients who are diagnosed with OFF being in the same practices, being treated by the same physicians that we call on, we believe that we are right-sized with our sales force to unlock this opportunity.

And we’re clearly hopefully seeing the results of that in the first few months of launch. So we feel good about it..

Okay. Great. Thanks..

Thank you. Our next question comes from Ram Selvaraju with H.C. Wainwright. Please proceed with your question..

Hi, this is [indiscernible] on for Ram Selvaraju. Thanks for taking our questions. I’m wondering if you could provide some granularity on your tandem future marketing’s trustee for GOCOVRI and OSMOLEX ER and what the physician feedback’s been regarding a formulary that might include concomitant treatment with both of these drugs..

I think the first recognition that we’re hearing back from is these are two different products with two clinical data sets, two different indications and an ability to serve two different groups of patients.

And our marketing strategy is to ensure that we educate on just that and bring these two products to the appropriate patient groups that can be addressed with their indicated – with their indications and grow both of them..

Very useful. And a question, if I may on your recent frontiers in neurology paper. You presented a unique analysis whereby you show an increase in on-time without any dyskinesia rather than measuring troublesome and non-troublesome categories.

Are you envisioning that this will become a standard in future PD clinical trials across the board?.

Whether that becomes a new standard, I’m not sure that depends on how the neurology field captures it. I think what’s more important is that we are capturing what is important to patients. So good on-time without any dyskinesia is what’s really meaningful for patients. That’s how we did the analysis.

I think that’s what we showed that GOCOVRI shows significant improvement in on-time..

Okay. Thank you. And a final one if I may just regarding the competitive landscape of the PD levodopa induced dyskinesia.

I was wondering if you’re familiar with Addex Therapeutics and how you’ll viewing their upcoming Phase 2b/3 trial next quarter evaluating their allosteric modulator?.

So we’re familiar. We track all of the competitors in the space both the ones that have been recently approved and the ones in developing along with the ones who have recently discontinued their programs. I really don’t have much to say about the program.

But as we’ve seen these OFF approval, OFF episodes products approved over the last year or so, what we’ve found is that there’s an incredible increase in the education and disease awareness for the community that’s been helpful for products like GOCOVRI..

All right, very useful. Thanks for taking our questions..

Thank you..

There are no further questions at this time. I would like to turn the floor back over to Neil McFarlane for any closing comments..

Thank you, operator. These are exciting days for Adamas. I want to thank our employees for their dedication to our mission, to improve the lives of patients. I appreciate your time and questions and look forward to updating you on future calls. Have a great day..

This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful evening..