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Rick Eiswirth; President and Chief Executive Officer; Alimera Sciences Inc.
Elliot Maltz; Cfo; Alimera Sciences Inc.
Scott Gordon; RI; IR CORE
Alex Nowak; Analyst; Craig Hallum
James Molloy; Analyst; Global Alliance Partners
Operator
Ladies and gentlemen, thank you for being here. Hello and welcome to Alimera Sciences’ Q4 & Fiscal Year 2023 Fourth Quarter & Fiscal Year 2023 Business Update & Effects Convention. (Operator’s Instructions) Participants in this call are kindly requested that the audio of this convention be streamed live over the Internet and is also being recorded. for playback. A webcast of the call will be made approximately one hour after the end of the call until June 7, 2024.
Scott Gordon
Thanks, Scott. Good morning and thank you for joining today’s convention call. Joining me from Alimera’s control team are Rick Eiswirth, president and CEO; and Elliot Maltz, chief financial officer; and Todd Wood would be joining us today, President of US Operations, for the Q&A session. During this call, Control will make forward-looking statements, adding statements that address Alimera’s expectations regarding long-term functionality or operational effects, long-term monetary condition, outlook and guidance, and the timeline for achieving a flow of positive money. Forward-looking statements involve threats and other matters that could cause actual effects to differ materially from those statements. For more information on those threats, see the threat points outlined in Alimera’s recently filed peak periodic reports on Form 10-Q and Form 8-K filed today with the SEC, and the forthcoming Form 10-K before the SEC. starting this year. closed December 31, 2023, as well as the Alimera press release accompanying this call, specifically the caveats The itArray Today convention call will come with references to Adjusted EBITDA, which is a non-GAAP monetary measure. Please refer to the explanatory text and reconciliation table found in Alimera’s earnings press release. The content of this call is urgent information that is accurate only as of today, March 7, 2024. Except as required by law, Alimera disclaims any legal responsibility to publicly update or revise any data to reflect occasions or cases that occurred after this call. . Array I now have the excitement of handing it over to Rick Eiswirth. Rick, please come in.
Rick Eiswirth
Thanks, Scott, and hello to everyone who answered the call. 2023 was a fundamental year, where we left 2023 much more powerful than we entered 2023 and achieved many purposes. We completed a strategic and transformative transaction to offload Teak’s advertising rights and expand our product portfolio, strengthening our balance sheet and simplifying our capital structure. We have established the critical mass to generate positive adjusted EBITDA in the future, as well as a constant cash flow in 2024, we have expanded our sales team to drive expansion and use of any of the products. And we have finished recruitment and are going to the phase 4 clinical sites, New Day and Synchronicity, which we hope will lead to increased use of the Lithroughan annuity in the coming years. As we move into 2024, we see the benefits of those transactions coming to fruition in 2023, we acquired UTi to solidify civil rights, we intend to install nine combined technologies in the United States and expand the indications available to care for suffering patients. of RET. and conditions, now that we have Eluvia and any US tick, we believe there is a significant opportunity to develop its use in 2023. We have learned that less than 30% of the previous Iluvien and admission accounts that use any of the products with our expanded version. Sales force the sale of Iluvien NET in the United States and our marketing in any of the indications, because the same low dose technology, delivered constantly and over the long term, is a source of energy that our doctors and patients use today in a product, we think it’s imaginable Allowing doctors to treat a wider diversity of patients is wonderful. We spent the second part of the year integrating UTi into our US business relationships, training our sales team to sell any of the products, and selling any of the indications. We made significant progress in the use of our products in the second part of 2023, an increase of 9% compared to the second part of 2022 on a pro forma basis for the acquisition of UTi and the continued expansion of Iluvien in l Globally, our monetary policy The effects were brought forward, specifically in 2023. In the fourth quarter, our consolidated global net profit increased by 88% compared to the fourth quarter of 2022 to reach 26. 3 million. And for the year, our net profit increased up to 49% for the whole of 2022, reaching 18. 8 million. Importantly, as anticipated, we are generating positive adjusted EBITDA and consistent cash flow now that we have critical mass for the larger portfolio. Our adjusted EBITDA in the fourth quarter was five million, a significant improvement compared to the fourth quarter of 2022, when we achieved an adjusted result. With a full-year 2023 EBITDA loss of 1. 2 million, we generated positive adjusted EBITDA of 8. 7 million compared to a loss of 7. 9 million in 2020. In our US segment, profit net in Q4 2023 increased 104% to 19. 2 million from 9. 4 million in Q4 2023. Q4 2022. This represents a 66% increase in US earnings for the total of 2023, or five 6. 7 million. Us. End-user demand for our products increased 4. 4% in the fourth quarter compared to the previous year and 11% pro forma for the full year. Although we have made wonderful advertising progress with the integration of Teak and the MDS indication, we believe we still have a significant opportunity ahead to maximize the benefits of selling top-of-the-line products to help drive expansion in 2020 as Tognum signs up. . our team in December as president of our US partnerships, adapting this wealth of experience to lucky logos like Botox and Lumacan, who will be entered for us in the Q&A session call. We believe that our foreign alliances with Iluvien in any of the indications under one logo are a wonderful indicator of what is imaginable in the United States. Our external relations experienced significant expansion in the fourth quarter and throughout the year. In the fourth quarter of 2023, overseas net profit generation increased by five 4% to 7. 1 million. And for the full year, net profit generation increased 21%, to $24 million. We are pleased to find end-user demand expanding 16. 7% in the fourth quarter and 11. 8% for the full year in the overseas segment, driven by the development of end-user demand in our global markets. United Kingdom, Portugal, Ireland, Spain and France. Revenue from our distribution partners also increased during the quarter and for the full year. However, due to limited supply capacity, we were unable to meet the full demand of end users in the second part of the year, having recorded an increase of more than 30% until the end of the second quarter. By 2024, we believe we will no longer face those source issues in the fourth quarter. Jason Werner joined our team as Director of Consistent Operations and we have made and continue to make further investments to ensure we have production capacity in the future. As a result, we have made significant shipments to distributors in the fourth quarter of 2023 and plan to meet end-user demand in Europe as soon as possible. Going forward, we expect the foreign business to continue to contribute to our expansion and anticipate increasing use of the uveitis indication in those markets as we introduce some of the positioning we pursued after the ETC acquisition. In the United States, when Jason joined us, I was excited to appoint Dr. Phil Benson, who has been with us for the last 10 years as President of International Oconsistent withations, Phil to give 100 percent of his time . to the execution and expansion of foreign segments, whether in our direct markets of Germany, the United Kingdom, Portugal and Ireland, but also through supporting our distribution partners throughout Europe and the Middle East. In February, we announced that the UK’s National Institute for Health and Care Excellence (NICE) had published final draft rules recommending that patients with chronic diabetic macular edema or DME be given herbal lenses, too. called talking patients, to have access to Lithrougha. Until now, Nice’s reimbursement has been limited to pseudophakic patients, that is, those who have undergone cataract surgery, which is less than a third of the population. We now have the ability to be successful in patients who have progressed to chronic DME for a significant expansion of our targeted user base. We expect the availability of this broader refund to have a positive effect on usage in the UK in the second part of 2024. This limitation has traditionally also affected refunds in other countries, such as Spain and Italy, which take into account the rules NICE as a contributing factor. in refund resolutions. We believe that this resolution through NICE, if followed in other markets, will also expand our potential patient base in those countries. In previous calls, I shared that our goal for 2024 after the transaction was to achieve $100 million in consolidated earnings and a 20% annual EBITDA margin. Following our good fortune in the second part of 2023, we are revising our 2020 financial guidance for earnings to exceed $10. 5 million with an adjusted EBITDA margin of 20% for the year. We expect our business to vary from quarter to quarter. taking into account the seasonality of our activity. Historically, we have seen weak earnings in the first quarter, basically due to the new insurance year with the resetting of patient deductibles, which curbs the use of expensive products such as aluminum, etc. In January and February, traditionally, first quarter earnings have been 10-15% decline from last quarter, and we expect that to have the same effect in the first quarter of this year. Adjusted EBITDA will also vary from quarter to quarter due to this seasonality, but we are confident in our ability to generate 20% margins consistent with the year. We are pleased to have also completed contracting for two Phase 4 studies that we believe will generate vital insights and drive increased physician use in the future. In June, we completed recruitment for our flagship NEW DAY study with 306 patients. The NEW DAY study evaluates the application in women of a main treatment recently used in naive or almost naive patients in a comparative study compared to the main anti-VEGF in the treatment of diabetic macular edema. This study is the first direct comparison between long-term low-dose corticosteroid treatment and anti-VEGF treatment in the treatment of DME. And we believe that, if we are lucky, we will be able to replace the treatment paradigm for DME by passing a long-acting steroid implant to the patient, whose last stop in this study is scheduled for the fourth quarter of this year, and we will be waiting to have early knowledge . 202five. In January, we announced the final touch of recruitment for the Synchronicity study, a prospective, open-label clinical study comparing the protection and efficacy of good-appearing products for the treatment of macular edema related to chronic non-infectious uveitis affecting the posterior segment. of the eye. and related interocular inflammation. The aim of this study is to gain a broader insight into the use of good looks by general retinal specialists in real-world clinical practice, as opposed to those who only practice iGA, specifically in the context of ‘A try’. This is a two-year follow-up study with a six-month interim effectiveness reading expected to occur in the second part of this year. And with that update, I’ll now turn it over to Elliot to review our fourth quarter and fill out the monetary effects for the year in more detail.
Elliot Maltz
Thanks Rick and hello everyone. I am very pleased to have joined Alimera at such an exciting time and look forward to continuing conversations with all of you. I’ll walk you through the numbers and then give you a brief update on the financing. Consolidated net sales in the fourth quarter of 2023 increased 88% to approximately $26. 3 million, compared to $14 million in the fourth quarter of 2022. With respect to our operating segments, net sales in the United States increased 104 % to approximately $19. 2 million in the fourth quarter of 2023, compared to $9. 4 million in the fourth quarter of 2022. Demand in the United States for our fluid silicone implants was 2,065 sets in the Q4 2023, an increase of 4. 5% compared to Q4 2022. On a pro forma basis, foreign net sales growth increased 54% to approximately $7. 1 million from Q4 of 2023, compared to approximately $4. 6 million in the fourth quarter of 2023. Fourth quarter of 2022. The increase was primarily driven by a 17% expansion in end-user demand in our direct markets and inventory shipments to our suppliers, which will more than double our Q4 2022 results. Total end-user request. Our foreign segment was 1,464 devices, a reduction of approximately 6. 5% compared to the fourth quarter of 2022 due to limited stock in our Spanish and French dealer markets during the quarter. However, as Rick pointed out, this was a result of limited supply in the second half. of the year that was approached prospectively. Now, considering the full year 2023, consolidated net profit generation increased by 49% to approximately $80. 8 million, compared to approximately $54. 1 million in 2022. The value accumulation since 2023 is basically attributable to one of among them, the acquisition of a store in the United States in May with strong expansion. expansion throughout the year. In our overseas segment, U. S. net sales increased 66% to $56. 7 million in 2023 from $34. 2 million in 2022 due to the boutique acquisition in MayArray as well as Eluvia’s continued expansion in our segment overseas, net profit increased 21% to approximately $24 million. in 2023, from approximately $19. 9 million in 2022. We saw notable expansion throughout the year in the European markets where we saw Iluvien directly, namely in the United Kingdom, Portugal and Ireland, as well as in Spain and France, where Iluvien is sold all over the world. worldArray distribution spouses. Overall, end-user demand in the overseas segment increased 7% to 5,583 devices from 5,211 devices in 2022. Now, looking at the rest of our profit stream, operating expenses total rates in Q4 2023 were approx. $21. 1 million, compared to approximately $14 million in 2022. Q4 2022. Accrual in Q4 2023 negatively impacted through one-time fees of approximately $1 million for bad debt similar to pre-COVID sales -19. to one of our European suppliers and approximately 0. 5 million in compensation costs. Comparing the fourth quarter of 2023 to last year, there was also another 2. 4 million in intangible asset amortization fees resulting from the UTi acquisition. Total operating expenses for the full year 2023 were approximately $72 million, compared to approximately $58 million in 2022. The accrual is due to the parts I just mentioned, as well as the acquisition of the workforce, take a net loss of approximately $3. 8 million. in the fourth quarter of 2023 and the fourth quarter of 2022, despite additional interest expenses of $3. 1 million in the fourth quarter of 2023. For the full year, the net loss was approximately $20. 1 million in 2023 , compared to a net loss of approximately $18. 1 million in 2022. We are pleased to continue our goal of generating positive quarterly adjusted EBITDA quarterly in the fourth quarter of 2023, we generated approximately $5 million in adjusted EBITDA, compared to a loss of Adjusted EBITDA of approximately $1. 2 million in the fourth quarter of 2022. For the full year, we generated approximately $8. 7 million in Adjusted EBITDA in 2023, compared to an Adjusted EBITDA loss of approximately $1. 2 million in the fourth quarter 2023. EBITDA loss of approximately $7. 9 million In 2022, following the publication of the recommended EBITDA for the full year, we have reached a significant cause on the term loan agreement with our Lfinisher SLR Capital Partners. This will end the interest-only era for 12 months and delay the start of amortization charges until May 2026, as long as you comply with the other terms of the loan facility. As of December 31, 2023, we had cash and cash equivalents of approximately $12. 1 million, compared to $5. 3 million at the end of 2022. In addition to the effects of generating positive adjusted EBITDA this year, our monetary position improved to through Strategic Financing Operations. in 2023 due to this year’s earnings expansion. In December, we generated $1. 3 million in earnings basis milestone fees included in our term loans with SLR and plan to generate the remaining $2. 4 million in 2024 as the sun continues to grow. ‘be the perfect spouse to maintain liquidity for running capital as we continue to increase the use of Iluvien in new teak. Yesterday we extended the duration of our loan facility by another $5 million in cash. This provides us with greater operational flexibility and allows us to address the effect of certain long-term contractual obligations. I now turn it over to Rick to make his final comments.
Rick Eiswirth
And earlier, as I mentioned, 2023 was a pivotal year for Alimera with the acquisition of UTi, providing the critical mass needed to identify our financial capabilities for the future. We believe the second part of 2023 is a wonderful demonstration of our ability to leverage the infrastructure we have built in the retina area in the United States and Europe. However, there is a significant opportunity to increase the unit’s utilization point, peaking in 2024 and beyond. We believe that involving physicians and enabling communications will bring more. We turn to retina specialists, who make remedial decisions. We believe that success and frequency are key to selling boliviano to teca, and we will be able to speak to more doctors in 2024, with our largest sales force fully trained and on the ground for a full year, we believe that using either What What you carry and what you carry in a bag will grow both brands, as we can cross-sell the benefits of long-term delivery for two indications to the same visitor, increasing the likelihood that a visitor will consider using our products on more products. the patients. We believe that the numerous studies we have conducted around the world with Iluvien are a smart indicator that the NEW DAY study will yield a positive result and help the use of the Libyan past in the EMR treatment paradigm. We believe that the Synchronicity study will highlight a refresher application workshop in the general practice of randomized retinal specialists. And for those reasons and more, we are positive about 2024 and our ability to exceed 105 million in profits with a 20% adjusted EBITDA margin for the full year. Thought. That concludes our ready comments, and I will now turn the floor over to the operator for questions.
Operator
(Operator Instructions) Alex Nowak, Craig-Hallum Capital.
Alex Nowak
Hi everyone, and 2023, very transformative than last quarter’s cross-selling, were quoted at 27%. Right now, it’s about less than 30%. Where can this take us in the next few years?And then maybe some other questions for Todd. What do you think about the internal use of existing rental specialists?
Rick Eiswirth
How far can it grow as well? So I guess I’d go into First Data. First of all, Alex, thank you for your supportive feedback. First of all, I can say that when it comes to cross-selling, a hundred percent overlap will never be achieved because there is a population of specialists who treat uveitis. But in fact, I think internally we aspire to increase that number. through more than 50% in the next 12 months, if we can, we can do it to generate revenue. Todd, if you need to comment on the other questions. Hi, Alex, how are you?Thanks for the question?
Elliot Maltz
yes, the crossover, I agree with Rick, right? We’re not going to get it all because there’s a little difference in terms of the concentrate of the specialty and what we’re in, or will be specialists, but we can expand post-surgical inflammation with a store and bring in retinal specialists, in post-surgical inflammation because it’s widespread and there’s a crossover there. So, it’s going to take a bit of work to get there. But I agree with Rick, that 50% turns out to be a smart number. And we’re not going to get it complete, however, there is a crossover option. And in the past, we’ve talked about conducting trials and new drugs in the EMR and probably in the U. S. market as well. U. S.
Rick Eiswirth
What’s the latest news, I guess it can more or less create an environment for DME and uveitis. Yes, I think, Jamie, in this part you see part of the competitive aspect of a new participant in the area. from last year, competing with some other strong rival and you see some samples that took position in the second part of the year. He was quite aggressive. So I think that’s shocked us a little bit, but consistent with what we’ve noticed in the past, every time a new anti-VEGF comes out, even if there’s a test at the end, it turns out it’s still there. having this block of patients passing by. You know, you need a corticosteroid to treat the broader inflammation in the eye, that’s the answer, but I just can’t answer that. So even if we lose patients for a while, perhaps because we search for a more potent anti-VEGF, those patients will eventually come to us. Yes absolutely. And when we can expect the topline data from the NEW DAY study to be released, it will be in early 2025. The last patient visits were in the fourth quarter, so probably towards the end of the first quarter, the beginning of the second quarter of 2020.
Elliot Maltz
Ok, I get it. And then two more questions. The first one is here now that you have the global rights to the product portfolio, the expansion of the R line.
Rick Eiswirth
Look, I think the design, as we talked about in the last call and we said today, we’re proceeding to look for places where we can expand the indications. I think a quarter conservatively using express periods of 40 or 50 years. , you’ve heard me say that before because they’re running on a platform and there are other indications that we have the L. A. protocol. With the Democratic Republic of Congo, that’s where we’re reading radiological retinopathy. And we convened advisory committees made up of physicians who are looking for other possible indications that we might expand as the NEW DAY study of the Synchronicity study develops. We would probably redistribute that capital rather than see a sharp increase in our costs.
Elliot Maltz
It is ok. They gave it to me. And then, in spite of everything, there is a kind of explanation about interests. It seemed that the amount here was quite high for the fourth quarter, which is a general interest expense to take on for 2024. And with the addition of the additional $5 million?Yes, I think we can answer that question. So, we would expect a typical run rate to be roughly, you know, an approximation, say, EPS of 3. 5 million quarterly, but that was adjusted in the fourth quarter. because we reached one of the payment milestones with our loan agreement with SLR. This generated another $1. 3 million in interest expense, and we expect to generate an additional $2. 4 million in additional contingent interest bills over the course of 2024. Therefore, we can expect that in the first six to nine months of the year, interest expense will start to rise again. Ok, I get it.
Rick Eiswirth
I update it.
Elliot Maltz
Thanks.
Rick Eiswirth
And you don’t.
Operator
James Molloy, Global Partners of the Alliance.
James Molloy
Hi, guys. Thank you so much for answering my questions. And I was wondering if I could just write down what message resonated most productively with doctors here in the fourth quarter or didn’t replace it over the course of the year, if at all. Can you tell us how many reps are running lately in other retention spaces throughout the year?
Rick Eiswirth
You also communicate on the account about this. I think it’s a wonderful opportunity for us, especially now that we can communicate about any of the indications, inflammatory diseases, diabetes and AMD. It’s easy for us to treat many patients after those already in any direction, right? Because Texas or Allergan have also opposed diabetes and DME for some time. So there’s a larger patient organization there that we look to and help. I think those conversations are a fruitful opportunity for us as we move forward and will continue to be in 2024, pending the new knowledge and the Synchronicity knowledge that we have, lately we have 35 territories across the country on nuclear energy, we had a kind of wear and tear that I would call normal. We want to expand to other people in our sales force. We haven’t noticed a lot of other people moving on to competitors or anything like that this year because I think we have a pretty strong culture here, however, we are moving to have some turnover on the back end of this sales team. Tom, do you have anything to upload to that? Yes Yes.
Elliot Maltz
I’ll turn it up, Rick. And as Rick said, in our other taxes, the purpose is the ability to move it competitively. And when we look at the message at the end, we look at our customer advocates, they saw the disease a little differently before, some more seriously. And then they associate the effectiveness of our product with preserving vision and reducing the threat of vision loss. So we want to take advantage of any of them and then explain where to place them. Therefore, it is placed previously in the Paradyne treatment. Craig, then maybe you can do a little cleaning. Maybe you’ve already discussed this or in the comments ready. What was the increase in general and administrative expenses in the fourth quarter? So, yes, some items, one-time occasions in the fourth quarter, we recorded approximately 1 million bad debts in the fourth quarter and similar to pre-COVID sales from one of our European distributors. And then there’s another $0. 5 million in severance pricing that we identified in the fourth quarter. Additionally, we had a higher share-based payment expense, which was the result of a stock grant for certain employees in the fourth quarter, which also resulted in a higher general and administrative expense balance when you look at things quarter-over-quarter. quarter, right? There are about $2 million in one-time expenses during the quarter, which is a bit more when you consider general and administrative expenses. But you are in the right direction, that’s great.
Rick Eiswirth
Thank you very much for the questions. Thank you, Jim.
Operator
This concludes the answering session. I’d like to turn it over to Rick Eiswirth for any final comments.
Rick Eiswirth
Thank you and thank you all for participating in today’s call and for your continued interest and that of Alimera. And we look forward to sharing our continued progress when we release first-quarter effects at the end of April. Thank you. Thank you very much and have a glorious day.
Operator
The convention is now over and thank you for attending today’s presentation. You can now log out.