Impel Pharmaceuticals Inc. (NASDAQ:IMPL) Q4 2022 Earnings Call Transcript

Impel Pharmaceuticals Inc. (NASDAQ:IMPL) Q4 2022 Earnings Call Transcript March 24, 2023

Operator: Good morning, ladies and gentlemen and welcome to Impel Pharmaceuticals Fourth Quarter and Full Year 2022 Earnings and Business Update Conference Call. As a reminder, today’s conference is being recorded. I would now like to turn the conference over to Impel’s Chairman and Chief Executive Officer, Mr. Adrian Adams. Please go ahead, sir.

Adrian Adams: Thank you, operator and good morning, everyone. We are delighted that you could join us today for Impel Pharmaceuticals’ earnings conference call to review our fourth quarter and full year 2022 commercial and financial results as well as to provide a general business update. Joining me from Impel this morning is Len Paolillo, our Chief Commercial Officer; and Rajiv Amin, our Controller and Interim Chief Financial Officer. Before we begin, I would like to remind everyone that we have a slide presentation to accompany our conference call this morning which can be viewed on our website at www.impelpharma.com. If you are listening to this call on your telephone, you may access a synchronized slide deck on our website by choosing the link on our webcast page that says Click Here to listen.

I would also like to remind you that during this call, the company will be making forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ from the results discussed in the forward-looking statements. During the call this morning, I will provide an overview of the commercial performance of Trudhesa in 2022, our first full year of commercialization in addition to covering some early positive performance indicators in 2023. I will then briefly review the financial results for the fourth quarter and the full year 2022 before summarizing and highlighting Impel’s core priorities for 2023. With this said, let’s now turn to Slide number 4 to begin our commercial performance review with Trudhesa.

On the left-hand side of this slide, you will note the sustained growth in prescriptions throughout 2022 with almost 20,000 normalized prescriptions written in quarter 4 alone. This represents a 52% increase versus the second quarter or last quarter before we expanded our sales force from 60 to 90 sales professionals. This was also a 19% increase versus quarter 3. Moving to the right-hand side of the slide. This consistent quarter-over-quarter growth delivered over 58,000 normalized prescriptions in 2022. Very pleasing since this was the first full year of commercialization with Trudhesa. Turning now to our next slide, Slide number 5. As I’ve mentioned in previous calls, given our targeted and disciplined approach to commercialization, we believe the most appropriate way of measuring our success over time is by market share evolution within our targeted group of physicians.

We are delighted, therefore, to see continued market share evolution already reaching 4.3% share among prescribers of Trudhesa in the fourth quarter of 2022, just 5 quarters into the launch. Driving depth of prescribing amongst our high-value prescribers, a larger proportion of neurologist is a critical success factor for continued growth in 2023. According to a report from Spherix Research, neurologists predict a 12% peak share for Trudhesa, reinforcing the positive experience of both physicians and patients and of course, the value creation opportunity. Please now refer to our next slide, Slide number 6, where we will take a closer look at the important leading indicators of Trudhesa growth and early progress in this, the first quarter of 2023.

The increase in new patient starts illustrated on this slide reinforces the impact of our expanded sales force as growth accelerated in the third and fourth quarters with 23% and 24% growth, respectively, versus the previous quarter. You will also note that our quarter 1 2023 new patient starts are on pace to surpass our quarter 4 number and continue the robust growth we have seen post expansion of our sales force. As expected, quarter 1 normalized total prescriptions are slightly down from quarter 4 as deductible and prior authorization resets slow down refills. Additionally, we have taken steps to tighten our free goods program , leading to predictive pressure on nonreimbursed refills. However, as you will see on the next slide, these changes are having the desired effect on the business.

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With this in mind, please refer to our next slide, Slide number 7. You remember that we secured key pharmacy benefit managers and pair contracts quickly after launch in 2021, securing 80% of commercial lives under contract in the first quarter of launch. This enabled consistent improvement in the percent of prescriptions reimbursed over the course of 2022, peaking at 60% in quarter 4. Now in 2023, with established payer policies, we are taking steps to tighten the business rules associated with our free-goods program and have seen the percent of prescriptions reimbursed jumped from 60% in quarter 4 to 71% and 73% in January and February, respectively. Importantly, our refill rates in every quarter since launch have remained consistent and solid in the low 60% range.

The increasing reimbursement and high refill rates provide a solid foundation for meaningful revenue growth in 2023. Turning now to our final commercial slide, Slide number 8. We continue to monitor the favorable market dynamics and source of business for Trudhesa. Symphony data continues to show that a very high percentage of patients around 60% on gepants, specifically Nurtec and Ubrelvy, drop off or switch away from these products at some point in therapy. Given the tolerability of these products, it is our contention that the primary reason for this continued churn or with gepants is that prescribers and indeed patients are not finding the rapid sustained and consistent efficacy they’re looking for in acute migraine treatments. This churn over in the market opens up a large pool of eligible patients and, more specifically, a significant ongoing opportunity for Trudhesa.

The source of business for Trudhesa remains diverse with approximately half of new Trudhesa patients coming from a triptan and a half from a gepant. We also note that Trudhesa is most often added to existing therapy as an efficacious, reliable and non-oral option. We are pleased with all these market dynamics and the momentum we are seeing with Trudhesa in 2023 already. I would now like to provide a brief overview of our financial results for the fourth quarter and full year 2022. Please refer to our next slide, Slide number 9. The net product revenue for the fourth quarter of 2022 was $5 million versus $0.6 million for the same period in 2021. For the year ended December 31, 2022 and 2021, Trudhesa reported net product revenues of $12.7 million and $0.7 million, respectively.

As mentioned on past calls, initial shipments of Trudhesa to specialty pharmacies began in September of 2021, ahead of the October ’21 of commercial launch. Research and development expenses for the fourth quarter of 2022 were $0.7 million versus $4.5 million for the same period of 2021. For the years ended December 31, 2022 and 2021, research and development expenses were $11.5 million and $20.6 million, respectively. The decrease in research and development expenses during 2022 is primarily due to reduction in Trudhesa clinical expenses as the Phase III STOP 301 study was closed in 2021 and due to a return of the $2.9 million new drug application fee from the FDA received in quarter 4 2022 related to Trudhesa. These decreases were partially offset by an increase in spending for the clinical development of INP105.

Selling, general and administrative expenses for the fourth quarter of 2022 were $20.3 million which compares with $19.9 million the same period in 2021. For the years ended December 31, 2022 and 2021, SG&A expenses were $77.9 million and $50.9 million, respectively. The increase in SG&A expenses during 2022 is primarily due to the ramp-up in spending to support the commercialization activities with Trudhesa. For the fourth quarter of 2022, Impel reported a net loss of $23 million or $0.97 per common share compared to a net loss of $24.7 million or $1.07 per common share for the same period in 2021. For the year ended December 31, 2022, Impel reported a net loss of $106.3 million or $4.53 per share compared to a net loss of $76.7 million or $5.25 per common share for the same period in 2021.

And finally, as of December 31, 2022, the company had cash and cash equivalents of $60.7 million. With that, I would like to close with our final slide, Slide number 10 which provides a summary of Trudhesa’s performance in 2022, in addition to outlining our business priorities in 2023. We are pleased with the overall performance of Trudhesa in what was its first full year of commercialization. The overall revenue and prescription performance together with continued momentum across all lead indicators provide a solid foundation for growth in 2023. With regard to Impel’s core priorities in 2023, the focus is an accelerating prescription and share gain amongst our target physicians, evolving net price and result in positive impact on revenue growth, securing additional financing in a disciplined way and, finally, aggressive and opportunistic business development.

And finally, I would like to share our prescription guidance for Trudhesa for 2023. We anticipate delivering prescriptions in the range of 80,000 to 110,000, the midpoint of which would represent a 64% growth over 2022. Thank you and we will now open the line up to your valued questions. Operator, can you please give the instructions?

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Q&A Session

Operator: Our first question comes from the line of Stacy Ku with Cowen.

Stacy Ku: And congratulations on the progress. So we have a few questions. First, to get right down to business. There — what are your expectations for 2023 consensus? Right now, we’re seeing roughly $33 million, maybe $34 million. As we think about the prescription guidance that you’re providing, can you talk about how you think the year might go in terms of net pricing? Just — since you feel good about the consensus for 2023, it does assume a nice step-up from Q4. So just help us understand what the net pricing might look like this year as well as your thoughts on consensus? That’s the first question. And then a second question, I know you’ve talked about the sales force addition and what you’re seeing so far. But can you just talk about some learnings?

What’s being adjusted? What approach is most successful? Any updated goals in terms of commission reached this year? So that’s our second question. And then the last is, how should we think about now that you’ve had some experience with Trudhesa, how should we be thinking about the seasonality as we think about the year? Is there any seasonality? Is there seasonality of visits from patients, prescribing habits? Any additional color would be appreciated.

Adrian Adams: Thank you very much for those very clear and, obviously, appropriate questions. I think on your first question, as it relates to consensus, I think we’re clearly aware of the consensus that is out there at this particular point in time. And I would say that the kind of consensus that we’ve seen we are comfortable with that consensus. And clearly, in giving a kind of a range of prescriptions, we recognize that, in any one year, there always can be uncertainties, et cetera. We try to build that into our overall revenue range. But again, to reiterate, we are comfortable with the consensus that we are seeing in the marketplace. And as it relates to net price evolution, Len, maybe you can comment on that. Len? Len? Can you hear? Are you on mute?

Leonard Paolillo: I am not on mute. I should be able to be heard.

Adrian Adams: Okay. We can hear you now.

Leonard Paolillo: Okay. As you saw through the first quarter, we’ve seen a nice increase in the percent of prescriptions that have been approved. And that is almost a 1:1 right to the bottom line of our net price. The rest of our gross to net levers are very stable. The co-pay mitigation line item will steadily improve throughout the year. So we feel pretty good about the progress that we’ll make throughout 2023 to get to around that $500 net price per prescription.

Adrian Adams: Thank you, Len. And then on your third question, I’ll come back to your second one in a moment. On your third question on seasonality, I think, as you will — as you obviously know, I think if one looks and tracks back over the years within the migraine market, it is not necessarily a seasonal marketplace. That said, as you’ll recall, we did see some softening in the kind of May, June, July period last year which was not explainable but obviously impacted all products in the market and all products within the marketplace and obviously impacted Trudhesa to a much lesser extent but certainly, we saw that. We do not feel that, that was a seasonal trend. It almost seemed to be a one-off. But clearly, going back to the range of prescriptions that we have given, whilst we are not expecting any seasonality, we tried to put a range in which gives that kind of broad uncertainty recognizing that, again, that we are comfortable with the kind of guidance that we are currently seeing out there in the — amongst analysts.