Despite seeing good growth in 2019, with net sales jumping to almost $2.4 million vs. $993,000 over the previous year, Electrocore Inc. has suspended its guidance due to uncertainty over COVID-19.
CEO Dan Goldberger explained during a March 23 call on fourth-quarter results that the Basking Ridge, N.J.-based company is suspending guidance because it does not know the full impact of the virus across the geographies in which it operates. The company previously said full-year revenue should be in the range of $7 million to $9 million.
This news comes after the Securities and Exchange Commission said on March 4, that is had issued an order giving conditional regulatory relief for certain publicly traded company filing obligations in the wake of the COVID-19 pandemic.
In a note, Ryan Zimmerman, an analyst with BTIG, said his organization was maintaining its neutral rating for the company. He highlighted that Electrocore reported quarterly revenue of $675,000, a figure that was less than the preannouncement of more than $700,000 and BTIG’s estimate of $751,000. But other news caught his eye as well.
“More important to the [fourth-quarter 2019] results were the operational updates [management] outlined which included reductions in cash burn, suspension of the Premium 2 trial,” as well as the guidance suspension, wrote Zimmerman. “That said, [management] also noted that [first-quarter 2020] progress was on track for ~2,000 paid months of therapy (~1,000 in the FSS [Federal Supply Schedule] and ~1,000 in the NHS [National Health Service]) and [management] is seeing relatively healthy prescription numbers each day despite the pandemic.”
The company has been seeking an expanded indication for the use of Gammacore, its noninvasive vagus nerve stimulator, for migraine prevention. In September, the company said the U.S. FDA had requested more information and analysis of the clinical data included in the company’s 510(k) submission.
Goldberger said the company had met with the FDA during the fourth quarter and responded to its information requests. “Our advisers believe that the FDA will be satisfied with the answers we have provided without the need for additional clinical trials,” he added.
He went on to discuss PREMIUM II study, which, by the end of last year, had enrolled just over half of the 400-patient target. “[A]fter a careful review of the enrollment timeline and ongoing costs associated with this trial and in light of our focus on areas immediately impacting revenue-generating channels, we've decided to pause enrollment in PREMIUM II to further conserve cash in the short term.”
Goldberger emphasized that he did not believe its ongoing discussions with the FDA related to the application would be affected by this decision. Rather, the company is looking to conserve its cash and find areas that can be streamlined.
FFS entities, NHS
Also during the call, Goldberger noted that the company substantially has reduced its efforts to reach patients via the commercial channel, instead focusing on two opportunities that ensure it is paid reliably. Specifically, he highlighted the FSS-eligible entities – encompassing the Veterans Administration (VA), Department of Defense (DoD) and the Indian Health Services – as well as the U.K.’s NHS.
During the fourth quarter, Goldberger continued, 54 VA and DoD military facilities purchased Gammacore, up from 48 during the previous quarter. “We launched our 93-day product offering in the fourth quarter at an attractive price per month of therapy compared [with] our 30-day offering. The 93-day configuration fits into the VA workflow much more gracefully and helped drive the growth in paid months of therapy.”
In addition, the company has set itself up to operate with the VA and DoD so those entities can process orders without the need for physical contact. Zimmerman asked about this during the call on results.
“[T]he VA system where we've been focusing in the [U.S.] has been migrating to telehealth solutions for quite a while, especially for, I'll call it, more routine therapies like headache, like recurring migraine, and certainly for cluster headache. In January, we started shipping our product directly to the patient's home. And so during the first quarter, we became fully capable of a physician having a telehealth consult with new patient or a returning patient,” Goldberger said.
In terms of the NHS, the body identified Gammacore as being eligible for the new MedTech Funding Mandate mechanism, which could provide a basis for the long-term reimbursement.
Ahu Demir with Noble Capital helped wrap up the call by returning to COVID-19 and whether the company will have enough inventory in case the lockdown continues. CFO Brian Posner responded that the company has “plenty of inventory.”