Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Executives

Christine Berni - IR

Jeffrey Davis - President and CEO

Frank Jacobucci - VP of Sales and Marketing

Anthony Mottola - VP, Managed Care & Market Access

Analysts

Peter Malone - Aegis Securities

Henry Peterson - JMP Securities

Access Pharmaceuticals (OTCQB:ACCP) Q4 2012 Earnings Call April 3, 2013 11:00 AM ET

Operator

Greetings, welcome to the Access Pharmaceuticals Incorporated fourth quarter of MuGard business update. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the following presentation. (Operator Instructions). As a reminder, this conference is being recorded. It’s my pleasure to introduce Christine Berni. Thank you Ms. Berni, you may now begin.

Christine Berni

Thank you, good morning to everyone. On the call today are Jeff Davis, CEO of Access Pharmaceuticals; Frank Jacobucci, our VP of Sales and Marketing; and Anthony Mottola, our VP of Managed Care & Market Access. At the end of the call we will open up forward for a brief Q&A session. Please listen to the operator’s instructions on how to get on the line to ask a question. Before I turn the call over to them, I need to remind our listeners that remarks made during this call may contain forward-looking statements and involved risks.

Forward-looking statements on this call made pursuant to the Safe Harbor provision of the Federal Security Laws. Information contained in the forward-looking statements are based on current expectations and is subject to change and result may differ materially from forward-looking statements. Some other factors that could cause results to differ are discussed in our report at the SEC. These documents are available on our website at www.accesspharma.com. Additional info pertaining to MuGard can be found on www.mugard.com.

With that said, it is now my pleasure to introduce Jeffrey Davis. Jeff you have the floor.

Jeffrey Davis

Thank you Christine and I would like to thank everyone for participating in the call today as well as Frank and Anthony for being here today in sort of out of the field to do this conference call. The call similarly to a recent, sort of quarterly call, is to give some highlights on the fourth quarter as referred in the recently filed 10-K as well as other events in the fourth quarter. And we will also be putting on some of the first quarter 2013 events that as well.

So Access continues to be very pleased with continued growth in MuGard option as noted in scrip growth, option (inaudible) payers. Pharmacy benefits for amateurs and obviously in revenues. We recorded record growth revenues from MuGard in the fourth quarter, approximately 1.05 million as reflected in the press release around the time of the K filing. Obviously, a very significant increase quarter-over-quarter and total 2012 revenues were significantly greater than 2011 revenues. I think it is worth noting that, we changed the way we reported revenue a couple of quarters ago, that we talked about and I refer you to file 10-K and Q, the most recently filed 10-K as well as 10-Q to see the difference between gross and net revenues all sort of standard accounting stuff. There's actually a table in Q that shows both the gross MuGard revenues.

I think we're pleased as to the activity that took place in the fourth quarter and the first quarter I think Frank and Anthony you're going to go into some detail as to the growth in our whole distribution network whether it's payers, additional group purchasing, organizations that have signed on additional PBM contracts. We'll provide an update on Premier, an exciting new GPO agreement that was recently signed and they'll take you through that and we can take some questions at the end.

I very often get questions as to when we anticipate seeing clinical data. Frank's going to talk a little bit about that but very shortly is the short answer, we have data on a 120 patients that will be presented at the Oncology Nursing Societies Annual Congress that takes place at the end of this month, where Access will have a MuGard commercial presence there in terms of a booth and what have you, and we will present data on our ongoing Phase 4 clinical trial at the MASC Conference, the Multinational Association of Supportive Care and Cancer. Last year, recall, we presented interim data at the Congress in the end of June in New York City, this congress is in Berlin as I understand it as well in the end of June and we anticipate presenting additional data on our trial at that time, and we will be happy to take some questions on that later on as well.

So I think I'll turn it over at this point to Frank to review some of his activities.

Frank Jacobucci

Great, thank you Jeff and good morning and thank you everyone for being on the call, I am very excited to report to you that we are, as Jeff mentioned, continuing to see large double digit increase this quarter over quarter and this past quarter was no exception. Anthony is going to describe to some of the contracts, some agreements that we've signed that help us get to this place, and I’ll give you some of the blocking and tackling with some of the results, some of the new initiatives and then why we're doing what we're doing and help you kind of monetize the potential of some of the actions and some of the strategies that we're taking.

First of I'll go into the simple from a manufacturing perspective, we have embarked on a very large order for China last month and I’m happy to say that this week we’re wrapping another large order for China as they prepared and ready their market for launch. In the China market, this order should be on the water probably on its way to China by the end of April and we’re actually see this uptake as the need from MuGard in China is large.

We also initiated an order with Accupac to take advantage of this economy of scale with the China order and then we’ll be placing our own larger order sometime in May most likely as our inventory is getting shifted and used that increasingly faster pace as you would know with the increase in sales that we’re seeing right now.

I would like to shift the gears though to some of the finer details of our business and what I would list in important datasets. When you think of the U.S. market potential for MuGard and you come back and forth about you know the potential of this product in the past and then low hanging fruit is head and neck cancer and where we've done our clinical work and the reason it’s low hanging fruit is the 100% of those patients will see mucositis.

Historically and for 2012, we have this dataset now, head and neck was about 50% of our overall sales mix and you know with 50,000 patients 55,000 it ranges annually potential it’s a large market in itself and it probably is in upwards of $80 million if we monetize that with all 100% MuGard scripts, but let me take you where we’re headed now and that’s really as our market mix for head and neck continues to grow we are also getting a lot of use in other solid malignancies outside of head and neck.

So why is that important? You know, there is 1.2 million or 1.3 million depending on the dataset that you look at new cancer patients annually that are going to be at risk for Oral Mucositis and we know that that it was more than a $1 billion marketplace. We talked about that over-and-over again.

What we’re doing now, we’ve shifted priorities and now that we’ve got the head and neck cancer market moving into right direction, we are getting more and more market mix out of the head and neck shooting out of the other solid malignancies like breast, like colorectal, and like lung. They account for about 550,000 patients just those three tumor types. And right now our business has shifted 50% 2012 of head and neck cancer and 50% all other cancers. Now we are at 35% of our mix is in head and neck. And between the top three tumor types, breast, lung and colorectal were close to 35% as well where 34%. Why this is important? If you think about 550,000 patient's potential; the market for just those three tumor types is over 800 million.

And we are starting to see that the doctors are not only using MuGard in this area but seeing great results in this area and then making it standard of care. It's important to note that we are also seeing growth in areas of like, unknown primary GYN cancer patients; skin, pancreatic cancer patients. And in that population, there are 600,000 plus patients in the other tumor types outside of the big three or four plus the liquid tumors like leukemia.

Case in point; Florida Cancer Specialist, you've heard me about this before. They are actually inputting into their EMR system, the Electronic Medical Record System as we speak; all the different Mucositis that the rates of Mucositis for the various chemotherapy regiments that they use for various tumor types. Why is that important? I have talked about this in the past because doctors won't have to make a choice.

If they write for a breast cancer patient, a regimen like AC followed by T which is an anthracycline, cyclophosphamide and taxane; they know that there is a 35 to 50% risk of oral Mucositis and sometimes higher depending on the dose. And it is going to be an automatic dispense for MuGard for these patient types. But they have gone through now and there are completing all the different tumor types that they treat whether it is breast, colorectal, lung, pancreatic, liquid tumors and what have you. And Florida Cancer has increased since October; continue every month double digits in the number of patients that they are putting on MuGard.

As a reminder Florida Cancer has 60 different practices in the state of Florida with a 120 plus doctors and they are growing as we speak acquiring more and more practices. Why is that important because it's standard of care from MuGard in all their patients that are susceptible, who are at risk to develop oral mucositis.

So and then also even more exciting news and it's kind of related to a Florida Cancer type of practice. Anthony and I were very lucky recently to be able to get a deal signed with RainTree Oncology. RainTree is a GPO that contracts with Pharma companies, directs practices, like a Florida Cancer Specialist, on products and shares the pricing discounts throughout their conglomerate of different practices that participate for our members in the GPO and then Anthony is going to go over the specifics about the agreement, but I’m too excited about the potential for this, we just think that April 1st is the push out, the roll out. RainTree represents large practice conglomerates across the United States like Florida cancer or like Texas oncology for those of you who know those types of conglomerate. They have a huge base and represent 575 oncologists in United States with over 250 sites and they are growing. And the best news is from my perspective, they’re going to give us access to these practices that in the past we weren’t gaining a lot of access and now we’ll have the ability to be able to speak directly to the membership and utilize their resources as well.

It’s huge potential for us and with RainTree's help we’ll be doing joint thought leader new development programs, nurse educator projects and many other clinical and marking activities to gain a more rapid uptake. And I anticipate something that’s happened like at Florida Cancer to spread throughout RainTree's membership base of their GPO while those practices as we continue to push this data forward to the membership base.

Before I wrap things up and turn it over to Anthony, I’m also very excited to have kind of touched on the ONS meeting that we’re going be doing in Washington DC at the end of the month. We’re attending the National Conference where 25,000 were there about members of the Oncology Nurses Society will attend meetings throughout a three or four day period and we’re lucky enough to have one of our largest users Ms. Carrie Daley out of Rush University, Cancer Center in Chicago. She submitted an abstract for presentation at ONS and was accepted for the meeting.

So, she is going to be able to present her data and Jeff alluded to this. It’s over 120 patients that have been on MuGard and she is going to present her findings to this particular group of nurses and many of them will attend the Saturday presentation that she is also making in oral mucositis supportive care and the management of oral mucositis which MuGard will also be a big mention as well. And we hope to drive a lot of traffic to our booth via many other marketing activities that we’re going to be having at ONS beginning of the month.

So, I kind of give a very quick look at what’s happening and why sales are increasing and where we’re moving our plans forward. I want to pass it over to Anthony but I’d remind everybody that the excitement continues to grow with doctors, nurses and especially patients as we get more and more new doctors using MuGard on a daily and weekly basis. And I will pass this over to Anthony now so he can give you the board progress as it relates to market access and reimbursement.

Anthony Mottola

Thank you, Frank and good morning everyone and thank you so much for joining us today on this call. I’d like to start off as I usually do on highlighting the various accomplishments that have been made with regards to market access of MuGard over the past several quarters.

So, to start off with our MuGard patient reimbursement and support center or HUB has continually improved patient access to MuGard by facilitating the payment through the patient’s insurance coverage as well as secondary insurance coverage along with product distribution getting it over to our specialty pharmacy partners.

I will say over the past several quarters, we’ve had well over 4,000 referrals being processed which has shown significant growth demonstrating not only the growth but importantly the demand that MuGard is driving out in the marketplace.

The overall commercial reimbursement rate is continually increasing which is what we want and what we want to continue to see. We are continuing to add staff for intake and processing of MuGard referrals as well as handling any prior authorization or appeals that might happen if there is an initial denial of coverage so these prescriptions are worked to the full extent possible to gain coverage for these patients through payers and I am happy to say in working with Frank and his team, we are seeing an increase in physician assistance by helping write letters of medical necessity or reasons why they want these patients on a specific product.

So, they are helping us reach out to payers on the patient’s behalf to ensure that MuGard gets added if it’s a not already added for coverage so this is a real positive sign for the growth and demand of MuGard as we continue to build.

So, moving on, as we establish new reimbursement for MuGard, we have been adding new payers each and every month continually working with our pharmacy benefit manager partners on ways to move MuGard over from an entry level status to more of a preferred status or higher level of tiering which we are in the process of doing with several PBMs and renegotiating our current agreements.

We’ve had hundreds of payers over the past quarters come on board, we're consistently aiding each and every month and I will say too that our clinical data has truly made a significant impact in assisting us in getting access to these payers, not only for contract discussions but as I said just a few moments ago importantly moving MuGard over to them, what we call for preferred status which provides for lower (inaudible) for patients. Ultimately we want to be, would have patients at the lowest out-of-pocket expense to ensure MuGard use.

Some examples, since there are hundreds, but I will give you a couple of examples of some newly inquired payers. We have Blue Cross Blue Shield, Texas, Anthem Blue Cross Blue Shield Pennsylvania, Blue Shield in New York, Colorado; Rocky Mountain Health Plan, Health Design Plus, Group Health Cooperative and it’s just a long list. But as you can see, there is consistency in that growth, quarter-over-quarter.

Moving on, from the reimbursement in dividends from the health perspective; let me talk to you about some of the exciting updates that we have had in some of our contracts. We have talked constantly about Premier; we are very pleased with how the relationship is moving along. Yes, it is moving along slowly because there are a lot of layers within premier. And the fact that they have a fairly new clinical advisory board, so things are taking a little bit longer than anticipated but moving in the right direction.

We have completed our first and second phase of our contract. As I mentioned on earlier calls, we have downloaded the data roll Mucositis incidences, used to identify that condition. We have done an interim analysis. We have presented it to their advisory board. The final phase which is well underway is to finalize the subsection of this contract that will provide your hospital network with not only the access to this data, the information on ordering, stocking, dispensing, all the various distributors that we are working with, that they can get access to it and start loading in into their hospitals.

So, I will continue to update you all as forward progress gets to me. But we are finally seeing the light at the end of the tunnel with this. And we are looking forward to seeing some results to this throughout 2013.

Moving on to the newest group participating organization in GPO contract, Frank had just touched base and it was called Rain Tree Oncology. In addition to this contract, we have signed an agreement with their preferred distributor called Metro Medical Supply. I am happy to say that they have ordered a significant size of order and has shipped. The stock has been received and is now loaded into their systems and in their warehouse, ready to be shipped out to the various prescribers within their network that Frank had earlier discussed. So this is very exciting for us to be able to gain access to this and really start moving market share in a new area for us. So, we're looking forward to that strong relationship with these practices and with the distributor as we continue to move.

Specialty pharmacy, we're continuing to work with our current network CuraScript Community Specialty Pharmacy Network Biologics, we have several other individual specialty pharmacies in select areas that we're working with doing a phenomenal job in various geographic areas. They'll all performing extremely well, we're seeing a rise in refill rates as well because they are doing some nice compliance and adherence measures and really taking on a hands on approach to patient management and therapy management.

So we're very pleased with the activity that we're getting. We have executed two new pharmacy contracts, I believe I mentioned iCore which has been significantly helping us with Emblem Health and some other payers that are involved with iCore's PBM, Pharmacy Benefit Management contract that we have, and also I'm happy to say Walgreens Specialty Pharmacy excuse me, that contract's been executed. We've already finalized the implementation, product has been ordered and shipped and stocked at their facility, now Walgreens is now accepting referrals and starting to manage the MuGard patients and working with outpatient reimbursement support center.

So this is an exciting time for continued growth in the specialty pharmacy area of bringing on significant partners such as Walgreens, iCore as well as the others that we continually work with to build the business and build out MuGard.

Our 3PL wholesale distribution, we’ve had a lot of activity over the past quarter. With that we continue to work with our current 3PL provider CuraScript Specialty distribution, who's been doing a fine job for us on working with our specialty pharmacy partners as well as the hospitals in ensuring that MuGard is available and provided to them in a timely manner.

On our last call I talked about due to the MuGard growth and demand, we've executed a recent contract with McKesson, who is one of the largest wholesalers throughout the US. I am pleased to say that we've added Cardinal Health as well as Amerisourcebergen on board to stock and sell MuGard to our specialty pharmacies, our retail pharmacies who have interest in having MuGard available to patients as well as our hospitals. So we now have the big three as we would say of the U.S. marketplace, on board, fully stocked, contract executed and working with us specialty pharmacies and other partners to ensure MuGard is going out into the marketplace. So this is great news and we’re very excited about working with our partners. So, what’s important about these contracts is driving additional access as I said, usage by our partners and will also aid and penetrating new pharmacies and hospital partners as we go forward.

So in conclusion what is this all mean? It means that I’m pleased as well as all of us here internally with the direction that MuGard is heading. I continue to foresee further growth and expansion not only with third party commercial payers, our PVM partners, our specialty pharmacy and wholesale partners over the next several quarters. Our market access strategy that’s been put in place has moved the long effectively and continually moves along effectively based on the demonstrating success that we’ve talked about and we’re showing based on our reports of growth and reimbursement increase in sales to these distribution outlets which intern translates to increased revenue.

We’re seeing increased revenue quarter-over-quarter and I think we’ve been able to demonstrate that I would say over the past six to seven quarters and we’re very-very pleased with that and do not see this trend declining in anyway.

So, I will say based my efforts and Frank we’re continually to look at additional services that we can offer to support MuGard patients, support our providers and our partners to ensure that we have the right programs in place that dominate the Oral Mucositis marketplace and make MuGard the preferred brand of choice.

So with that set I would like to turn the call back over to Jeff.

Jeffrey Davis

Thank you, Anthony and Frank. I think Christine or we’ll the moderator take a couple of questions.

Question-and-Answer Session

Operator

Thank you. We will now be conducting the question and answer session. (Operator Instructions). Our first question is from the line of Peter Malone of Aegis Securities. Please proceed with your question.

Peter Malone - Aegis Securities

Two questions for you. Can you give us an update on the MuGard trial data, such as one we should expect to see results. Also, I see the revenues continue to grow quarter-over-quarter; is there still a partner in strategy in place?

Jeffrey Davis

I have gotten a lot of questions with respect to the MuGard trial data and I touchdown on that a little bit. We're currently analyzing the data on the 120 patients and I had a longer conversation this week with an investor who was asking, enquiring us, the process or why, what has been the delay or how much time it takes. And what I highlighted to him is unlike some clinical trials, where you take a couple of measurements in tumors, or you are counting number of survival days, or progression for your survival.

Our trial by design was very-very data intensive. In addition to having sort of clinician, periodic clinician reviews, we collected 15-20 data points every day on these patients for what could be 60 -70 - 80 days; so what had to be inputted into the statistical analysis packages, potentially over a 1000 data points per patients and that's kind of what has been sort of being grinded through.

I think with respect to when we anticipate, we follow some abstracts obviously in anticipation of presenting this data. At a few different meetings this year, the abstract of mask which is in the end of June in Berlin this year was accepted and so the data on the ongoing trial will be presented, with a very (inaudible) in the end of June, if not released before that time.

And we have as Frank mentioned additional data on a study that should be presented at the end of this time at the Oncology Nursing Society. So at least in April, May and June, will be a couple different releases of additional clinical data.

In terms of a partnering strategy, we still continue to be in active discussions. We have been in the past. We continue to do that. We obviously are somewhat resource constraint, with respect to our distribution although I think we continue to make very-very good progress as illustrated from Frank and Anthony. Today, that being said, having additional sort of reps and feeding the street behind the product I think would result in additional widespread adoption of MuGard.

When I can say I think which is very positive is quarter-over-quarter the product looks better. And it looks better for potential partners as well and I think that gives us additional opportunities to speak to additional potential marketing partners to be able to continue to grow revenues to grow the payer network, the distribution network, consistently quarter-over-quarter I anticipate the growth in the first quarter to be consistent with the growth in the last couple quarter and we’ll continue throughout the year just with the resources that we have. So, we’ve continued to have sort of active discussions with potential marketing partners and we’ll continue to do so. And I guess it’s about all I probably have to say with respect to partnering the data right now.

Operator

Our next question is from the line of the Henry Peterson of JMP Securities. Please proceed with your question.

Henry Peterson - JMP Securities

Can you share with us what you did to get those additional tumor types that you spoke about? And how that resulted in the change in the mix?

Frank Jacobucci

So, capping on what Jeff said about partnership opportunities, my number one objective in one of the roles that I have is to increase sales and continue to make this product that will be very attractive to any of the partners that we may be talking to at this point. And one of the ways is to increase the reach outside of just head and neck cancer. So, when we look at the broader market of 1.3 million patients take out the 50,000 thereabouts head and neck cancer patients that we know are 1000% applicable for MuGard. We start looking at these other tumor types that have regimens that some of them are very close to the same rate of oral mucositis as head and neck cancer treatment, right? So, you take the mTOR inhibitors for example. A product like a Folotyn that has 70% to 80% rate of oral mucositis across many different tumor types has been used in, well obviously that is something that we think is just as low hanging fruit as head and neck cancer.

So, we look at all the different tumor types and what we put together is probably closer to a hundred different cancer treatment regimens that have a vary degree of oral mucositis and anything you do in sales is all about getting that end-user to be able to see the application of your product, right I don't care if it’s a widget or if it’s a cancer product.

And so education has been the biggest driver of this and it's not just educating the doctors, its educating our reps right, because we know that we use an independent sales force and they are doing a very good job for us and I’d like to thank them but it’s the education process of the reps to talk more about that lung cancer patient getting this specific taxing regimen and doctor you know I know that you treat lung or doctor I know you treat breast. When you see a breast cancer patient and you are giving feg fact, Tic Tac, ACT or whatever these reps are now becoming versed at the rates of oral mucositis and I think this is a long way to the answer but I want you to feel what we are doing and why we are being successful at it that these reps are now talking language of the oncologist.

And any time you can get to that point, you are starting to see a lot more success. So, we are arming the reps with more data and more information as they become and grow out of their comfort zone which was originally head and neck cancer. Doctors have made that leap of faith from head and neck data and now have not only made the leap of faith but now we are using it as a standard of care like for oral cancer. Every breast (inaudible) is going to get it and I think that’s being the biggest driving force, it’s all about education and it’s all about getting that end-user, a doctor or provider to be able to see those patients and let them have a patient in mind of who should be eligible or appropriate for MuGard and our strategy is that there is 1.3 million cancer patients with an average of 37% rate of oral mucositis, 1.3 million patients are applicable for MuGard and that’s kind of the strategy that we're pushing after but we are arming our reps with more data and we are teaching and we are helping them teach physicians why MuGard is the right product of choice. I know that was a long but that’s kind of the skinny on it.

Operator

Thank you. Ladies and gentlemen, we have reached the end of our allotted time for question and answers for this morning. I will now turn the floor back over to Jeff for closing comments.

Jeffrey Davis

Thank you very much. I’d like to thanks all the investors on the call. As we have tried to illustrate in the call today. We are excited about the progress, we continue to make progress quarter-over-quarter. We will see additional sort of clinical data. This quarter as well as growth in all the different commercial aspects that we have continued to talk about, so we encourage investors to continue to contact us with additional outstanding questions and look forward to speaking with you in the future about additional progress that we make. As Frank mentioned, I would also like to take the opportunity to thank the Access team and our extended sort of group of consultants like our clinical research organization camp, our reimbursement team at eMax Health and the HUB, our sales team and other service providers that make up the expanded MuGard distribution system. Thank you very much.

Operator

Thank you. This concludes today’s teleconference. You may disconnect your lines at this time and thank you for your participation.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Access Pharmaceuticals CEO Discusses Q4 2012 Results - Earnings Call Transcript

Check out Seeking Alpha’s new Earnings Center »

This Transcript
All Transcripts