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Alimera Sciences Reports Second Quarter 2018 Results

Alimera Sciences Reports Second Quarter 2018 Results

Jul 30, 2018

• Record Net Revenue of $10.9 Million in Q2 2018 
• Record U.S. End User Demand in Q2 2018

ATLANTA, July 30, 2018 -- Alimera Sciences, Inc. (Nasdaq: ALIM) (Alimera), a global pharmaceutical company that specializes in the commercialization and development of prescription ophthalmic pharmaceuticals, today announced financial results for the three months ended June 30, 2018. Alimera will host a conference call on July 31, 2018, at 9:00 a.m. ET to discuss these results.

“We are pleased with our progress in the second quarter of 2018, our highest quarter in both sales and end user demand, and we anticipate continued momentum throughout 2018.  Additionally, we recorded record revenues outside of the U.S. in the second quarter, growing 26% over the second quarter of 2017,” said Dan Myers, Alimera’s Chief Executive Officer.

First Quarter 2018 Financial Results

Consolidated Net Revenue

Consolidated net revenue increased 5% to approximately $10.9 million for the three months ended June 30, 2018, compared to approximately $10.4 million for the three months ended June 30, 2017.

U.S. Net Revenue

U.S. net revenue decreased by 1% to approximately $8.0 million for three months ended June 30, 2018, compared to U.S. net revenue of approximately $8.1 million for the three months ended June 30, 2017. This decrease in net revenue resulted from lower distributor orders compared to the second quarter of 2017, despite growth in U.S. end user demand.

End user demand, which represents units purchased by physicians and pharmacies from Alimera’s distributors, was higher in the second quarter of 2018, increasing 12% to 955 units compared to 850 units in the second quarter of 2017.

The discrepancy between GAAP revenue and end user demand is due to the timing of distributor purchases from quarter to quarter. In the second quarter of 2017, Alimera’s distributors purchased approximately 15% more units than they sold to end users, increasing their stock on hand during that quarter.  In the second quarter of 2018, there was no material difference between the number of units acquired by Alimera’s distributors and end user unit sales by those distributors to physicians and pharmacies.

International Net Revenue

Net revenues from Alimera’s international segment increased by 26% to approximately $2.9 million for the three months ended June 30, 2018, compared to approximately $2.3 million for the three months ended June 30, 2017. The growth was driven primarily by an increase of approximately 19% in the countries in which Alimera sells direct and approximately 82% in sales to international distributors in markets where Alimera sells through distributors.  Revenues from Alimera’s international distributors comprise, depending upon the distribution arrangement, both upfront payments for inventory and a revenue share of the distributors’ sales of product to end users. Revenues from Alimera’s international distributors will fluctuate from quarter to quarter based upon the timing of the distributors’ stocking practices.

Operating Expenses

Research, development and medical affairs expenses for the three months ended June 30, 2018 increased by 27%, to approximately $2.8 million, compared to approximately $2.2 million for the three months ended June 30, 2017. The increase was primarily attributable to one-time cost savings associated with two clinical studies that offset expenses incurred during the three months ended June 30, 2017.

General and administrative expenses for the three months ended June 30, 2018 increased by 7%, to approximately $3.2 million, compared to approximately $3.0 million for the three months ended June 30, 2017.

Sales and marketing expenses increased by 16%, to $5.9 million for the three months ended June 30, 2018, compared to $5.1 million reported for the three months ended June 30, 2017. The increase was primarily attributable to an increase in personnel costs related to the Alimera’s expanded sales force in the U.S. and increased marketing and market access costs.

Total operating expenses were approximately $12.6 million for the three months ended June 30, 2018, compared to approximately $11.0 million for the three months ended June 30, 2017, an increase of 15%. “Adjusted Operating Expenses,” a non-GAAP financial measure defined below, were approximately $10.8 million for the three months ended June 30, 2018, compared to Adjusted Operating Expenses of approximately $9.1 million for the three months ended June 30, 2017, an increase of 19%.

Net Loss

Net loss for the three months ended June 30, 2018 was approximately $4.0 million, compared to a net loss of approximately $2.8 million for the three months ended June 30, 2017.

Basic and diluted net loss per share for the three months ended June 30, 2018 was $(0.06) on 70,022,100 weighted average shares outstanding, compared to basic and diluted net loss per share of $(0.04) on 65,485,106 weighted average shares outstanding during the three months ended June 30, 2017.

Adjusted EBITDA

“Adjusted EBITDA,” a non-GAAP financial measure defined below, was approximately a $980,000 loss for the three months ended June 30, 2018, compared to Adjusted EBITDA of approximately a $500,000 gain for the three months ended June 30, 2017.

Cash and Cash Equivalents; Termination of ATM

As of June 30, 2018, Alimera had cash and cash equivalents of approximately $16.7 million. As previously disclosed, Alimera announced in June it had terminated its “at-the-market” equity program.

Definitions of Non-GAAP Financial Measures

For purposes of this press release, “Adjusted Operating Expenses” is operating expenses minus depreciation, amortization and stock-based compensation expenses. “Adjusted EBITDA” is earnings before interest, taxes, depreciation, amortization, stock-based compensation expenses, net unrealized gains and losses from foreign currency exchange transactions, gains and losses from the change in the fair value of derivative warrant liability and losses on extinguishment of debt. Alimera provides non-GAAP financial information because it believes this information can enhance an overall understanding of its financial performance when considered together with GAAP figures. Refer to the sections of this press release entitled “Non-GAAP Financial Measures” and “Reconciliation of GAAP Measures to Non-GAAP Adjusted Measures,” which includes Adjusted Operating Expenses and Adjusted EBITDA.

Conference Call to be Held July 31, 2018

A conference call will be hosted by Dan Myers, Chief Executive Officer, and Rick Eiswirth, President and Chief Financial Officer, to discuss the results. The call will be held at 9:00 a.m. ET, on July 31, 2018. Please refer to the information below for conference call dial-in information and webcast registration.

Conference date: July 31, 2018, 9:00 AM ET

Conference dial-in: 877-269-7756

International dial-in: 201-689-7817

Conference Call Name: Alimera Sciences Second Quarter 2018 Results Call

Webcast Registration: Click Here

Following the live call, a replay will be available on Alimera’s website, www.alimerasciences.com, under “Investor Relations.”

About Alimera Sciences

Alimera, founded in June 2003, is a pharmaceutical company that specializes in the commercialization and development of prescription ophthalmic pharmaceuticals. Alimera’s focus is on diseases affecting the back of the eye, or retina, because these diseases are not well treated with current therapies and affect millions of people in aging populations. Alimera’s commitment to retina specialists and their patients is manifest in its product portfolio. For more information, please visit www.alimerasciences.com.

Non-GAAP Financial Measures

This press release contains a discussion of non-GAAP financial measures, as defined in Regulation G promulgated under the Securities Exchange Act of 1934, as amended. Alimera reports its financial results in compliance with GAAP but believes that the non-GAAP measures of Adjusted Operating Expenses and Adjusted EBITDA are useful measures in evaluating Alimera’s operating performance. Alimera uses Adjusted Operating Expenses and Adjusted EBITDA in the management of its business. Accordingly, Adjusted Operating Expenses and Adjusted EBITDA for the three months ended June 30, 2018 have been presented in certain instances excluding items identified in the reconciliations provided. For a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, see the tables below.

These non-GAAP financial measures, as presented, may not be comparable to similarly titled measures reported by other companies because not all companies may calculate these measures in an identical manner. Therefore, they are not necessarily an accurate measure of comparison between companies.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for guidance prepared in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant elements required by GAAP to be recorded in Alimera’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management in determining these non-GAAP financial measures. To compensate for these limitations, Alimera presents its non-GAAP financial results in connection with its GAAP results. Investors are encouraged to review the reconciliation of each of our non-GAAP financial measures to its most directly comparable GAAP financial measure.

Forward Looking Statements

This press release contains “forward-looking statements,” within the meaning of the Private Securities Litigation Reform Act of 1995, including that Alimera anticipates continued sales momentum throughout 2018.  Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual results to differ materially from those projected in its forward-looking statements.  Meaningful factors which could cause actual results to differ include, but are not limited to, (a) a slowdown or reduction in Alimera’s sales in the second half of 2018 due to a reduction in end user demand, unanticipated competition, regulatory issues, or other unexpected circumstances (b) other factors discussed in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Alimera’s Annual Report on Form 10-K for the year ended December 31, 2017 and Alimera’s Quarterly Report on Form 10-Q for the three months ended March 31, 2018, which are on file with the Securities and Exchange Commission (SEC) and available on the SEC’s website at http://www.sec.gov.  Additional factors may also be set forth in those sections of Alimera’s Quarterly Report on Form 10-Q for the three months ended June 30, 2018, to be filed with the SEC soon.

Besides the risks described above and in Alimera’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the SEC, other unknown or unpredictable factors could affect Alimera’s results.  There can be no assurance that the actual results or developments anticipated by Alimera will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Alimera.  Therefore, no assurance can be given that the outcomes stated in such forward-looking statements and estimates will be achieved.  All forward-looking statements contained in this press release are expressly qualified by the cautionary statements contained or referred to herein.  Alimera cautions investors not to rely too heavily on the forward-looking statements Alimera makes or that are made on its behalf.  These forward-looking statements speak only as of the date of this press release (unless another date is indicated).  Alimera undertakes no obligation, and specifically declines any obligation, to publicly update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.

ALIMERA SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

June 30,

2018

December 31,

2017

(unaudited)

CURRENT ASSETS:

Cash and cash equivalents

$

16,687

$

24,067

Restricted cash

33

34

Accounts receivable, net

13,419

11,435

Prepaid expenses and other current assets

2,299

2,278

Inventory

2,139

1,508

Total current assets

34,577

39,322

NON-CURRENT ASSETS:

Property and equipment, net

1,542

1,410

Intangible asset, net

17,701

18,664

Deferred tax asset

1,015

528

TOTAL ASSETS

$

54,835

$

59,924

CURRENT LIABILITIES:

Accounts payable

$

6,542

$

5,905

Accrued expenses

2,227

3,582

Capital lease obligations

211

184

Total current liabilities

8,980

9,671

NON-CURRENT LIABILITIES:

Note payable

37,461

34,365

Capital lease obligations — less current portion

338

203

Other non-current liabilities

2,518

766

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY:

Preferred stock:

Series A Convertible Preferred Stock

19,227

19,227

Series B Convertible Preferred Stock

49,568

49,568

Common stock

700

691

Additional paid-in capital

344,022

341,622

Common stock warrants

3,707

3,707

Accumulated deficit

(410,758)

(399,075)

Accumulated other comprehensive loss

(928)

(821)

TOTAL STOCKHOLDERS’ EQUITY

5,538

14,919

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

54,835

$

59,924

ALIMERA SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017

(in thousands, except share and per share data)

Three Months Ended
June 30,

Six Months Ended
June 30,

2018

2017

2018

2017

(Unaudited)

NET REVENUE

$

10,917

$

10,368

$

20,719

$

16,986

COST OF GOODS SOLD, EXCLUDING DEPRECIATION AND AMORTIZATION

(1,113

)

(769

)

(2,389

)

(1,356

)

GROSS PROFIT

9,804

9,599

18,330

15,630

RESEARCH, DEVELOPMENT AND MEDICAL AFFAIRS EXPENSES

2,777

2,238

5,599

4,348

GENERAL AND ADMINISTRATIVE EXPENSES

3,229

3,012

7,084

6,276

SALES AND MARKETING EXPENSES

5,926

5,060

11,895

10,562

DEPRECIATION AND AMORTIZATION

650

667

1,299

1,333

OPERATING EXPENSES

12,582

10,977

25,877

22,519

NET LOSS FROM OPERATIONS

(2,778

)

(1,378

)

(7,547

)

(6,889

)

INTEREST EXPENSE AND OTHER

(1,178

)

(1,384

)

(2,329

)

(2,721

)

UNREALIZED FOREIGN CURRENCY GAIN, NET

32

28

34

CHANGE IN FAIR VALUE OF DERIVATIVE WARRANT LIABILITY

21

188

LOSS ON EARLY EXTINGUISHMENT OF DEBT

(1,766

)

NET LOSS BEFORE TAXES

(3,924

)

(2,713

)

(11,608

)

(9,422

)

PROVISION FOR TAXES

(76

)

(44

)

(76

)

(70

)

NET LOSS

$

(4,000

)

$

(2,757

)

$

(11,684

)

$

(9,492

)

NET LOSS PER SHARE — Basic and diluted

$

(0.06

)

$

(0.04

)

$

(0.17

)

$

(0.15

)

WEIGHTED AVERAGE SHARES OUTSTANDING — Basic and diluted

70,022,100

65,485,106

69,952,940

65,175,724

RECONCILIATION OF GAAP MEASURES TO NON-GAAP ADJUSTED MEASURES

GAAP NET LOSS TO NON-GAAP ADJUSTED EBITDA

(in thousands)

Three Months Ended
June 30,

Six Months Ended
June 30,

2018

2017

2018

2017

(Unaudited)

GAAP NET LOSS

$

(4,000)

$

(2,757)

$

(11,684)

$

(9,492)

   Adjustments to net loss:

      Interest expense and other

1,178

1,384

2,329

2,721

      Provision for taxes

76

44

76

70

      Depreciation and amortization

650

667

1,299

1,333

      Stock-based compensation expenses

1,151

1,233

2,358

2,400

      Unrealized foreign currency exchange gains

(32)

(28)

(34)

      Change in the fair value of derivative warrant liability

(21)

(188)

      Loss on early extinguishment of debt

1,766

NON-GAAP ADJUSTED EBITDA

$

(977)

$

522

$

(3,890)

$

(3,156)

GAAP OPERATING EXPENSES TO NON-GAAP ADJUSTED OPERATING EXPENSES

(in thousands)

Three Months Ended
June 30,

Six Months Ended
June 30,

2018

2017

2018

2017

(Unaudited)

GAAP Operating Expenses

$

12,582

$

10,977

$

25,877

$

22,519

   Adjustments to Operating Expenses:

      Depreciation and Amortization

(650)

(667)

(1,299)

(1,333)

      Stock-based compensation expenses

(1,151)

(1,233)

(2,358)

(2,400)

NON-GAAP Adjusted Operating Expenses

$

10,781

$

9,077

$

22,220

$

18,786

ALIMERA SCIENCES, INC.

CONSOLIDATING STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017

(in thousands)

Three Months Ended
June 30, 2018

Three Months Ended
June 30, 2017

U.S.

International

Other

Consolidated

U.S.

International

Other

Consolidated

(unaudited)

NET REVENUE

$

7,999

$

2,918

$

$

10,917

$

8,056

$

2,312

$

$

10,368

COST OF GOODS SOLD, EXCLUDING DEPRECIATION AND AMORTIZATION

(856

)

(257

)

(1,113

)

(503

)

(266

)

(769

)

GROSS PROFIT

7,143

2,661

9,804

7,553

2,046

9,599

RESEARCH, DEVELOPMENT AND MEDICAL AFFAIRS EXPENSES

1,602

954

221

2,777

1,498

518

222

2,238

GENERAL AND ADMINISTRATIVE EXPENSES

1,866

723

640

3,229

1,828

476

708

3,012

SALES AND MARKETING EXPENSES

4,142

1,493

291

5,926

3,521

1,236

303

5,060

DEPRECIATION AND AMORTIZATION

650

650

667

667

OPERATING EXPENSES

7,610

3,170

1,802

12,582

6,847

2,230

1,900

10,977

SEGMENT (LOSS) GAIN FROM OPERATIONS

(467

)

(509

)

(1,802

)

(2,778

)

706

(184

)

(1,900

)

(1,378

)

OTHER INCOME AND EXPENSES, NET

(1,146

)

(1,146

)

(1,335

)

(1,335

)

NET LOSS BEFORE TAXES

$

(3,924

)

$

(2,713

)

Six Months Ended
June 30, 2018

Six Months Ended
June 30, 2017

U.S.

International

Other

Consolidated

U.S.

International

Other

Consolidated

(unaudited)

NET REVENUE

$

14,976

$

5,743

$

$

20,719

$

12,501

$

4,485

$

$

16,986

COST OF GOODS SOLD, EXCLUDING DEPRECIATION AND AMORTIZATION

(1,741

)

(648

)

(2,389

)

(951

)

(405

)

(1,356

)

GROSS PROFIT

13,235

5,095

18,330

11,550

4,080

15,630

RESEARCH, DEVELOPMENT AND MEDICAL AFFAIRS EXPENSES

3,242

1,904

453

5,599

2,656

1,259

433

4,348

GENERAL AND ADMINISTRATIVE EXPENSES

4,159

1,630

1,295

7,084

3,531

1,395

1,350

6,276

SALES AND MARKETING EXPENSES

8,514

2,771

610

11,895

7,567

2,378

617

10,562

DEPRECIATION AND AMORTIZATION

1,299

1,299

1,333

1,333

OPERATING EXPENSES

15,915

6,305

3,657

25,877

13,754

5,032

3,733

22,519

SEGMENT LOSS FROM OPERATIONS

(2,680

)

(1,210

)

(3,657

)

(7,547

)

(2,204

)

(952

)

(3,733

)

(6,889

)

OTHER INCOME AND EXPENSES, NET

(4,061

)

(4,061

)

(2,533

)

(2,533

)

NET LOSS BEFORE TAXES

$

(11,608

)

$

(9,422

)