Market Overview

Dermira Reports First Quarter 2019 Financial Results and Provides Corporate Update

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  • QBREXZA™ (glycopyrronium) cloth prescriptions increased more than
    50% over fourth quarter 2018
  • First quarter net product sales of $2.5 million
  • Approximately 80% of commercially insured patients have access to
    QBREXZA
  • End-of-Phase 2 FDA meeting scheduled following positive
    lebrikizumab study results
  • Balance sheet strengthened through follow-on equity financing

Dermira, Inc. (NASDAQ:DERM), a biopharmaceutical company dedicated to
bringing biotech ingenuity to medical dermatology by delivering
differentiated, new therapies to the millions of patients living with
chronic skin conditions, today reported financial results for the
quarter ended March 31, 2019, provided a corporate update and issued
2019 financial guidance.

"Positive momentum continued into the first quarter 2019 at Dermira.
Bolstered by significant prescription growth of QBREXZA and the positive
topline efficacy and safety results from our lebrikizumab Phase 2b study
in atopic dermatitis, we've never been in a stronger position," said Tom
Wiggans, chairman and chief executive officer of Dermira. "As we look
ahead to the rest of the year, we are focused on continuing our efforts
to build awareness of QBREXZA to drive prescription demand and sales
growth, initiating the Phase 3 clinical development program for
lebrikizumab following discussions with the U.S. Food and Drug
Administration, exploring lifecycle opportunities for our existing
programs, and maintaining a strong balance sheet. These efforts will
allow us to continue delivering on our commitment to bring innovative,
new therapies to patients with chronic skin conditions."

First Quarter 2019 Financial Results

  • Total revenue for the first quarter was $2.5 million, comprised
    exclusively of QBREXZA product sales, compared with $0.3 million of
    collaboration and license revenue for the comparable quarter in 2018.

    • First quarter 2019 QBREXZA sales were impacted by the company's
      launch-related patient financial assistance program designed to
      broaden patient access, a component of which is being phased out
      beginning in the second quarter of 2019 as a result of the company
      having achieved specific objectives for commercial coverage of
      QBREXZA.
  • Total costs and operating expenses for the quarter ended March 31,
    2019 were $65.2 million compared to $57.2 million for the first
    quarter of 2018.

    • Cost of sales for the first quarter of 2019 was $0.9 million
      related to QBREXZA sales.
    • Research and development (R&D) expenses for the first quarter of
      2019 were $15.6 million compared to $25.6 million for the
      comparable prior-year period. This decrease was primarily due to a
      reduction in activities associated with the company's previous
      acne program and, to a lesser degree, in personnel-related costs
      in research and development functions.
    • Selling, general and administrative (SG&A) expenses for the first
      quarter of 2019 were $48.7 million compared to $30.5 million for
      the comparable prior-year period. This increase was primarily
      driven by higher costs as a result of the October 2018 QBREXZA
      commercial launch, including higher personnel-related costs
      associated with the addition of a sales force and other positions
      within the commercial organization, and patient awareness and
      physician education marketing activities.
  • For the quarter ended March 31, 2019, Dermira reported a net loss of
    $64.8 million compared with a net loss of $59.3 million for the same
    period in 2018.
  • As of March 31, 2019, Dermira had cash and investments of $387.8
    million and 53.6 million common shares outstanding.

Key Operational Highlights

  • In the first quarter of 2019, generated 23,559 prescriptions for
    QBREXZA as reported by Symphony PHAST monthly data and 18,384
    prescriptions as reported by IQVIA monthly data and the company's
    preferred dispensing partner, in each case representing an increase of
    approximately 59% over the fourth quarter of 2018.
  • Launched
    "Life Unfolds," a new direct-to-consumer campaign designed to drive
    consumer awareness of QBREXZA, in March 2019.
  • Secured QBREXZA coverage for approximately 80% of the total U.S.
    commercial lives (calculated based on Dermira data on file) as of May
    1, 2019.
  • Reported
    positive topline results from a Phase 2b dose-ranging study evaluating
    lebrikizumab, an anti-IL-13 monoclonal antibody, in patients with
    moderate-to-severe atopic dermatitis in March 2019.
  • Closed
    an underwritten follow-on public offering in March 2019 which
    generated approximately $140 million in net proceeds.
  • Entered
    into an option and license agreement with Almirall in February 2019,
    under which Almirall acquired an option to exclusively license rights
    to develop lebrikizumab for the treatment or prevention of dermatology
    indications, including but not limited to atopic dermatitis, and
    commercialize lebrikizumab for the treatment or prevention of all
    indications in Europe.
  • Initiated
    a proof-of-concept study to evaluate the efficacy and safety of
    QBREXZA in people living with primary palmar hyperhidrosis, or
    excessive sweating of the hands.

Upcoming Milestones and Expectations

  • Following an end-of-Phase 2 meeting with the U.S. Food and Drug
    Administration, scheduled for midyear, initiate a Phase 3 clinical
    development program for lebrikizumab by the end of 2019.
  • Receive and announce Almirall's decision regarding the potential
    exercise of its option to exclusively license rights to lebrikizumab
    in Europe at the conclusion of its 45-day evaluation period, which is
    expected midyear.
  • For fiscal year 2019:

    • For QBREXZA, management expects prescriptions and net product
      sales to grow quarter-over-quarter over the course of 2019, with
      such growth accelerating in the second half of the year; and the
      gross-to-net discount to improve from 76% in the first quarter of
      2019 to 45-55% in the second quarter and approximately 40% in the
      second half of the year based on changes to the company's patient
      financial assistance programs that became effective April 1, 2019.
    • Management estimates R&D and SG&A expenses for 2019 to be between
      $295 and $315 million, including estimated stock-based
      compensation expense of approximately $35 million. The estimated
      increase in 2019 R&D and SG&A expenses compared to 2018 is
      primarily due to an increase in R&D expenses to prepare for and
      initiate the lebrikizumab Phase 3 program and the annualization of
      SG&A expenses incurred in 2018 related to the QBREXZA launch.
      Management also expects an additional $20 million acquired
      in-process research and development expense related to the
      anticipated milestone payment due to Roche upon the initiation of
      the lebrikizumab Phase 3 trials.
  • Management believes that its existing cash and investments on hand as
    of March 31, 2019 and either (1) the $90.0 million available under its
    credit agreement with Athyrium or, (2) if Almirall exercises its
    option to license the rights to lebrikizumab in Europe, the $50
    million it would receive in connection with the option exercise and
    the $30 million it would receive upon initiation by Dermira of the
    lebrikizumab Phase 3 trials, are sufficient to meet its anticipated
    cash requirements into the first half of 2021 and to enable the
    company to fund its planned Phase 3 clinical program for lebrikizumab
    through receipt of topline results.

Conference Call Details

Dermira will host a conference call to discuss the first quarter
financial results today, May 7, 2019, beginning at 1:30 p.m. Pacific
Time / 4:30 p.m. Eastern Time. The live call can be accessed by phone by
dialing 1-877-359-9508 from the U.S. and Canada or +1-224-357-2393
internationally and using the passcode 3485374. The webcast can be
accessed live on the Investor Relations section of the Company's website
at http://investors.dermira.com.
It will be archived for 30 days following the call.

About Hyperhidrosis

Hyperhidrosis is a condition of sweating beyond what is physiologically
required for normal thermal regulation and affects an estimated 4.8% of
the U.S. population, or approximately 15 million people. Of these, 65
percent, or nearly 10 million people, suffer from sweating localized to
the underarms (axillary disease). Studies have demonstrated that
excessive sweating often impedes normal daily activities and can also
result in occupational, emotional, psychological, social and physical
impairment.

About QBREXZA™ (glycopyrronium) cloth

QBREXZA (pronounced kew brex' zah) is an anticholinergic indicated for
topical treatment of primary axillary hyperhidrosis in adult and
pediatric patients 9 years of age and older. QBREXZA is applied directly
to the skin and is designed to block sweat production by inhibiting
sweat gland activation. For more information visit www.QBREXZA.com.

Important Safety Information

CONTRAINDICATIONS

QBREXZA is contraindicated in patients with medical conditions that can
be exacerbated by the anticholinergic effect of QBREXZA.

WARNINGS AND PRECAUTIONS

Worsening of Urinary Retention: Use with caution in patients with a
history or presence of documented urinary retention.

Control of Body Temperature: In the presence of high ambient
temperature, heat illness (hyperpyrexia and heat stroke due to decreased
sweating) can occur with the use of anticholinergic drugs such as
QBREXZA.

Operating Machinery or an Automobile: Transient blurred vision may occur
with use of QBREXZA. If blurred vision occurs, the patient should
discontinue use until symptoms resolve. Patients should be warned not to
engage in activities that require clear vision such as operating a motor
vehicle or other machinery, or performing hazardous work until the
symptoms have resolved.

ADVERSE REACTIONS

The most common adverse reactions seen in ≥2% of subjects treated with
QBREXZA were dry mouth (24.2%), mydriasis (6.8%), oropharyngeal pain
(5.7%), headache (5.0%), urinary hesitation (3.5%), vision blurred
(3.5%), nasal dryness (2.6%), dry throat (2.6%), dry eye (2.4%), dry
skin (2.2%) and constipation (2.0%). Local skin reactions of erythema
(17.0%), burning/stinging (14.1%) and pruritus (8.1%) were also common.

It is important for patients to understand how to correctly apply
QBREXZA (see Patient Product Information). Instruct patients to wash
their hands with soap and water immediately after discarding the used
cloth.

Please see Full
Prescribing Information

About Atopic Dermatitis

Atopic dermatitis is the most common and severe form of eczema, a
chronic inflammatory condition that can present as early as childhood
and continue into adulthood. A moderate-to-severe form of the disease is
characterized by rashes on the skin that often cover much of the body
and also includes redness, cracking, dryness and intense, persistent
itching. The skin condition can have a negative impact on patients'
mental and physical functioning, limiting their daily activities and
health-related quality of life. Patients with moderate-to-severe atopic
dermatitis have reported a larger impact on quality of life than
patients with psoriasis.

About Lebrikizumab

Lebrikizumab is a novel, injectable, humanized monoclonal antibody
designed to bind IL-13 with very high affinity, specifically preventing
the formation of the IL-13Rα1/IL-4Rα heterodimer complex and subsequent
signaling, thereby inhibiting the biological effects of IL-13 in a
targeted and efficient fashion. IL-13 is believed to be a central
pathogenic mediator that drives multiple aspects of the pathophysiology
of atopic dermatitis by promoting type 2 inflammation and mediating its
effects on tissue, resulting in skin barrier dysfunction, itch, skin
thickening and infection.

About Dermira

Dermira is a biopharmaceutical company dedicated to bringing biotech
ingenuity to medical dermatology by delivering differentiated, new
therapies to the millions of patients living with chronic skin
conditions. Dermira is committed to understanding the needs of both
patients and physicians and using its insight to identify, develop and
commercialize leading-edge medical dermatology products. The company's
approved treatment, QBREXZA™ (glycopyrronium) cloth, is indicated for
adult and pediatric patients (ages 9 and older) with primary axillary
hyperhidrosis (excessive underarm sweating). Please see the QBREXZA prescribing
information
. Dermira is evaluating lebrikizumab for the treatment of
moderate-to-severe atopic dermatitis (a severe form of eczema) and plans
to initiate a Phase 3 clinical development program by the end of 2019,
subject to an end-of-Phase 2 meeting with the U.S. Food and Drug
Administration. Dermira also has early-stage research and development
programs in other areas of dermatology. Dermira is headquartered
in Menlo Park, Calif. For more information, please visit http://www.dermira.com.
Follow Dermira on Twitter,
LinkedIn
and Instagram.

In addition to filings with the Securities and Exchange
Commission (SEC), press releases, public conference calls and
webcasts, Dermira uses its website (www.dermira.com),
LinkedIn page (https://www.linkedin.com/company/dermira-inc-),
corporate Instagram account (https://www.instagram.com/dermira_inc/)
and corporate Twitter account (@DermiraInc) as channels of distribution
of information about its company, product candidates, planned financial
and other announcements, attendance at upcoming investor and industry
conferences and other matters. Such information may be deemed material
information and Dermira may use these channels to comply with its
disclosure obligations under Regulation FD. Therefore, investors should
monitor Dermira's website, LinkedIn page, Instagram and Twitter accounts
in addition to following its SEC filings, news releases, public
conference calls and webcasts.

Forward-Looking Statements

The information in this news release contains forward-looking statements
and information within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended, which are subject to the "safe harbor" created by
those sections. This news release contains forward-looking statements
that involve substantial risks and uncertainties, including statements
with respect to Dermira's goal of bringing biotech ingenuity to medical
dermatology by delivering differentiated, new therapies to the millions
of patients living with chronic skin conditions; Dermira's plans to
build awareness of QBREXZA and drive prescription demand and sales
growth, explore lifecycle opportunities for its existing programs and
maintain a strong balance sheet; the anticipated timing of an
end-of-Phase 2 meeting with the U.S. Food and Drug Administration and
initiation of the Phase 3 clinical development program for lebrikizumab;
the anticipated timing of receipt and announcement of Almirall's
decision regarding the potential exercise of its option to exclusively
license rights to lebrikizumab in Europe; expectations regarding the
growth in QBREXZA prescriptions and net product sales and improvement in
the gross-to-net discount related to such sales over the course of 2019;
estimated R&D, SG&A and stock-based compensation expense for 2019 and
the anticipated milestone payment due Roche upon the initiation of the
lebrikizumab Phase 3 trials; the availability to Dermira of $90.0
million under its credit agreement with Athyrium; the potential receipt
of up to $80 million from Almirall if it exercises its option to license
the rights to lebrikizumab in Europe and in connection with initiation
by Dermira of the lebrikizumab Phase 3 trials; and the belief that
Dermira's existing cash and investments on hand as of March 31, 2019 and
either (1) the $90.0 million available under its credit agreement with
Athyrium or, (2) if Almirall exercises its option to license the rights
to lebrikizumab in Europe, the $50 million it would receive in
connection with the option exercise and the $30 million it would receive
upon initiation by Dermira of the lebrikizumab Phase 3 trials, are
sufficient to meet its anticipated cash requirements into the first half
of 2021 and to enable the company to fund its planned Phase 3 clinical
program for lebrikizumab through receipt of topline results. These
statements deal with future events and involve known and unknown risks,
uncertainties and other factors that may cause actual results,
performance or achievements to be materially different from the
information expressed or implied by these forward-looking statements.
Factors that could cause actual results to differ materially include
risks and uncertainties such as those relating to Dermira's dependence
on third-party clinical research organizations, manufacturers, suppliers
and distributors; the design and implementation of Dermira's clinical
trials; the outcomes of future meetings with regulatory agencies;
Dermira's ability to attract and retain key employees; Dermira's ability
to manage the growth and complexity of its organization; Dermira's
ability to maintain, protect and enhance its intellectual property; and
Dermira's ability to continue to stay in compliance with its material
contractual obligations, applicable laws and regulations. You should
refer to the section entitled "Risk Factors" set forth in Dermira's
Annual Report on Form 10-K, Dermira's Quarterly Reports on Form 10-Q and
other filings Dermira makes with the SEC from time to time for a
discussion of important factors that may cause actual results to differ
materially from those expressed or implied by Dermira's forward-looking
statements. Furthermore, such forward-looking statements speak only as
of the date of this news release. Dermira undertakes no obligation to
publicly update any forward-looking statements or reasons why actual
results might differ, whether as a result of new information, future
events or otherwise, except as required by law.

   
Dermira, Inc.
Selected Consolidated Statement of Operations Data
(in thousands, except per share amounts)
 
 
Three Months Ended
March 31,
2019 2018
 
Product sales $ 2,452 $ -
Collaboration and license revenue   -     299  
Total revenue 2,452 299
 
Costs and operating expenses:
Cost of sales (1) 926 -
Research and development (1) 15,569 25,591
Selling, general and administrative (1) 48,679 30,510
Impairment of intangible assets   -     1,126  
Total costs and operating expenses   65,174     57,227  
 
Loss from operations (62,722 ) (56,928 )
Interest and other income, net 1,551 1,734
Interest expense   (3,661 )   (4,254 )
Loss before taxes (64,832 ) (59,448 )
Benefit for income taxes   -     194  
 
Net loss $ (64,832 ) $ (59,254 )
 
Net loss per share, basic and diluted $ (1.49 ) $ (1.42 )
 
Weighted-average common shares used to compute net loss per share,
basic and diluted
  43,585     41,827  
 
 
(1)Amounts include stock-based compensation expense as follows:
 
Cost of sales $ 15 $ -
Research and development 2,460 2,853
Selling, general and administrative   5,506     4,661  
Total stock-based compensation expense $ 7,981   $ 7,514  
 
 
Dermira, Inc.
Selected Consolidated Balance Sheet Data
(in thousands)
   
 
March 31, December 31,
2019 2018
 
Cash and investments $ 387,830 $ 316,002
Working capital 380,914 296,853
Total assets 461,575 344,321
Term Loan 32,690 32,566
Convertible notes, net 281,684 281,223
Accumulated deficit (809,870 ) (745,038 )
Total stockholders' equity (deficit) 74,594 (9,039 )

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