Allos Therapeutics CEO Discusses Q3 2010 Results - Earnings Call Transcript
Allos Therapeutics, Inc. (
)
Q3 2010 Earnings Call
November 4, 2010 4:30 pm ET
Executives
Monique Greer - VP of IR
Paul Berns - President and CEO
Mike Schick - VP, Sales and Marketing
Dr. Charles Morris - CMO
Bruce Goldsmith - VP, Corporate Development
Analysts
Geoff Meacham - J.P. Morgan
Charles Duncan - JMP Securities
Lucy Lu - Citigroup
Brian Skorney - ThinkEquity
Brian Wong - Needham & Company
Josh Schimmer - Leerink Swann
Charles Duncan - JMP Securities
Jason Kantor - RBC Capital Markets
Ling Wang - Brean Murray
Presentation
Operator
Welcome to the Allos Therapeutics third quarter 2010 financial results conference call. (Operators Instructions)
I would know like to turn the conference over to Ms. Monique Greer, Vice President of Investor Relations.
Monique Greer
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Good afternoon, everyone. We thank you for joining us on this conference call to review our third quarter 2010 financial results and other corporate updates.
Following formal remarks by members of management, the conference will be open for questions.
With me today are Paul Berns, President and Chief Executive Officer; Mike Schick, Vice President of Sales and Marketing; Dr. Charles Morris, Chief Medical Officer; and Bruce Goldsmith, Vice President of Corporate Development.
After market close today we issued a press release, a copy of which can be found in Investors Section of our website at allos.com.
Before we begin, please note that during the course of this call, we may make forward-looking statements concerning our company that are not historical facts. Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that may cause actual results to differ materially from those anticipated by the forward-looking statements.
Additional information concerning these risks and uncertainties is contained in the Risk Factors section of our quarterly report on Form 10Q for the quarter ended September 30, 2010 and in the company's other periodic reports, and filings with the Securities and Exchange Commission.
The company cautions investors not to place undue reliance on these forward-looking statements. All forward-looking statements are based on information currently available to the company on the date hereof, and the company undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after the date hereof except as required by law.
I would now like to turn the call over to Paul Berns. Paul.
Paul Berns
Thank you, Monique. Good afternoon everyone, and thank you for joining us today.
During the quarter, we continued to make progress as an emerging commercial organization growing our oncology presence. We had a first to market commercial opportunities for FOLOTYN and relapsed or refractory peripheral T-cell lymphoma, and remain committed to evaluating the potential of FOLOTYN in a number of other indications.
We believe we have established a prioritized product development and commercialization plan that is designed to maximize the potential value of FOLOTYN in the both the near and long term time horizon. With the U.S. commercial launch of FOLOTYN commencing in January, we believe this novel therapeutic has already made an important contribution to patients with relapsed or refractory peripheral T-cell lymphoma and their families.
For healthcare professionals, we were able to provide a new FDA-approved therapeutic option for their patients, where previously there was none. And over the past nine months, our focus has been on driving the trail, use and adoption of FOLOTYN, both in the academic and community setting through disease-state education and brand awareness generating activities.
We are in the early phase of our commercial launch experience, and our leading indicators are trending positive. Our commercial plan of action is focused on incorporating our key learnings to date to optimize sales force effectiveness and drive brand performance.
Our head of sales and marketing, Mike Schick will provide specifics in his commercial overview of the quarter. One of our key objectives for the year is to advance our strategic lifecycle plan for FOLOTYN in both hematologic malignancies and solid tumors. To this end, on October 11, we reported the presentation of favorable survival data from our randomized, Phase 2b study of FOLOTYN in patients with Advanced Non-Small Cell Lung Cancer at the ESMO Congress.
This was the first time these data were presented to the medical oncology community. Charlie will provide an overview of these encouraging results during his clinical update later on in the call.
There remains a high unmet medical need for new therapies, particularly in the second and third lines, and we believe a Phase 3 program is warranted based on the results of this trial.
Given our exclusive worldwide promotional rights to FOLOTYN, we continue to drive our strategic lifecycle development plan with the goal of extending the commercial opportunities and building additional value for our company through potential expanded indications in both the U.S. and abroad.
Now I'd like to turn the call over to David for a review of our financial results for the quarter.
David Clark
Thank you, Paul. For the quarter ended September 30, 2010, we reported a net loss of $18.8 million or $0.18 per share.
Gross product sales were $9.3 million for the third quarter of 2010, an increase from Q2 2010 gross product sales of $9 million. Net product sales were $8.2 million for Q3 2010, which represents a $9.3 million of gross product sales, net of $1 million of gross to net sales adjustments.
Gross to net sales adjustments approximated 11.3% of gross product sales for Q3 and consisted estimated accruals for government rebates and chargebacks and distributor service fees. As we have reviewed in quarters, we sell FOLOTYN to pharmaceutical wholesales distributors who then retail FOLOTYN to patients' healthcare providers.
We currently recognize revenue on the sell-through method, meaning that we defer revenue recognition sales to our distributors and then recognize revenue when the product is sold from our distributors to healthcare providers.
For Q3 2010, sales to our distributors were $9.7 million as compared to the $9.3 million of gross product sales to healthcare providers. Therefore, we saw a $0.4 million increase in deferred revenue for Q3 2010, and deferred revenue as of September 30, 2010 was $1.6 million.
Turning to operating costs and expenses, we continue to prudently manage our OpEx. For the third quarter, OpEx totaled $27 million, slightly lower than OpEx for Q2 of $27.9 million. OpEx for Q3 includes non-cash stock based compensation expense of $2.2 million.
We expect OpEx to increase in Q4 relative to Q3, primarily due to increases in sales and marketing expenses to continue our efforts in growing product sales and increases in R&D expenses primarily related to clinical trial costs, including start-up costs for our post-approval studies.
With that said, we remained focused on prudently managing our OpEx while prioritizing investments to drive our lifecycle development plan for FOLOTYN.
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