INSYS Therapeutics — Proxy Contest (May 2018)
64 slides from INSYS Therapeutics's proxy contest presentation, May 1, 2018
Slide 1: Presentation to Insys Voting Trust May 2018
Nasdaq: INSY Presentation to Insys Voting Trust May 2018 ATTORNEY WORK PRODUCT – FOR SETTLEMENT PURPOSES ONLY – SUBJECT TO FRE 408 AND 410 FOIA EXEMPT BUSINESS CONFIDENTIAL/CONFIDENTIAL COMMERCIAL AND FINANCIAL INFORMATION/ TRADE SECRETS insys therapeutics, inc
Slide 2: Schedule
Schedule Agenda Item Presenter 9:00am – 9:30am Introductions All 9:30am – 11:00am An Overview of Insys Background, New Vision & Strategic Plan Board Reconstitution Business Update Stabilizing Subsys Advancing Pipeline S. Motahari 11:00am – 11:30am Compliance Update S. Emmanuel11:30am – 12:00pmCorpor
Slide 3: Saeed Motahari - President & CEO
Saeed Motahari - President & CEO 26-year veteran of the life sciences industry Over 16 years at Abbott/Abbvie and Bristol-Myers Squibb Abbott/Abbvie: -10 years Led U.S. Specialty Brands – New Launches P&L responsibility for Specialty Franchises in the Renal, Oncology, Endocrinology, Acute Care, Viro
Slide 4: INSYS Background
INSYS Background Specialty pharmaceutical company based in Arizona Founded in 2002 Two FDA-approved products available in U.S.: SUBSYS ® (fentanyl sublingual spray) launched in 2012SYNDROS ® (dronabinol) oral solution launched in 2017 R&D in AZ; state of art manufacturing in TX ~$250M invested over
Slide 5: Strategic Roadmap & Key Priorities
Strategic Roadmap & Key Priorities Our Vision… Improve the quality of patient care by building a specialty pharmaceutical company focused on cannabinoids and novel drug delivery systems that address unmet patient needs. Our Priorities… Resolve Government Investigations & Rebuild Reputation Strengthe
Slide 6: New Vision--Shifted Organizational Focus from Opioids to Cannabinoids
New Vision--Shifted Organizational Focus from Opioids to Cannabinoids 2016 Pipeline- project disease state pre-clinic phase 1 phase 2 phase 3 submit approval Opioid Focused sublingual sprays subsys label expansion opioid naïve and cancer indications dose ranging studies ongoing buprenorphine subling
Slide 7: Our Priorities
1. Our priorities resolve government investigations and rebuild reputation 2. strengthen the foundation & enhance execution 3. stabilize the current business 4. advance and develop diverse pipeline to drive future growth strong culture of compliance Focusing on 2 Key elements: People - position peop
Slide 8: Building A Strong Foundation (cont.)
Building A Strong Foundation (cont.) Finance Replaced Chief Financial Officer, Controller and other key finance positionsAddressed material weaknesses and significant deficiencies (sales allowances and inventory management)Established an Sales and Operations Planning (S&OP) process attended by CEO,
Slide 9: Building A Strong Foundation (cont.): Commercial
Building A Strong Foundation (cont.) Commercial Hired new leaders for every function in commercial Developed processes for gross to net calculation, inventory management, trade contracts, new training protocols, and consolidated commercial operations under one leader Enhanced promotional material re
Slide 10: Recap of Significant Changes in Management and Employee Base
Recap of Significant Changes in Management and Employee Base Roughly 40% of total Insys employees have less tenure than CEO Key New Hires Replaced Chief Financial Officer and Corporate Controller 4 Vice Presidents: Sales, Marketing/ Managed Markets, Clinical Development and Human Resources 3 Sr. Dir
Slide 11: Schedule
Schedule Agenda Item Presenter 9:00am – 9:30am Introductions All 9:30am – 11:00amAn Overview of Insys Background, New Vision & Strategic Plan Board Reconstitution Business Update Stabilizing Subsys Advancing Pipeline S. Motahari11:00am – 11:30amCompliance Update S. Emmanuel 11:30am – 12:00pm Corpora
Slide 12: Re-constitution of Board
In January 2017, Steve Meyer became Chairman of the Board Top two priorities were to oversee the following mission critical initiatives: Appoint new independent board members in order to reconstitute the board with new contributors and perspectives Hire an experienced pharma veteran as CEO who would
Slide 13: Re-constitution of Board (cont.)
Re-constitution of Board (cont.) Board Members Status Steve Meyer Chairman – Board of Directors (Continuing Director) Saeed Motahari – President & CEO New Board Member (April 2017) Rohit Vishnoi New Board Member (May 2017) Vaseem Mahboob New Board Member (February 2018) Trudy Vanhove New Board Membe
Slide 14: Today's Objectives
Today’s Objectives Schedule Agenda Item Presenter 9:00am – 9:30am Introductions All 9:30am – 11:00am An Overview of Insys Background, New Vision & Strategic Plan Board Reconstitution Business Update Stabilizing Subsys Advancing Pipeline S. Motahari 11:00am – 11:30am Compliance Update S. Emmanuel 11:
Slide 15: Subsys and TIRF Performance 2014 – 2017
Resolve Government Investigations & Rebuild Reputation 1 Strengthen the Foundation & Enhance Execution 2 Stabilize the Current Business 3 Advance and Develop Diverse Pipeline to Drive Future Growth 4 Subsys and TIRF Performance 2014 – 2017 Source: IMS ATTORNEY WORK PRODUCT – FOR SETTLEMENT PURPOSES
Slide 16: Subsys Market Share 2014 – 2017
Subsys Market Share 2014 – 2017 Source: IMS Despite share loss, Subsys remains brand leader ATTORNEY WORK PRODUCT – FOR SETTLEMENT PURPOSES ONLY – SUBJECT TO FRE 408 AND 410 FOIA EXEMPT BUSINESS CONFIDENTIAL/CONFIDENTIAL COMMERCIAL AND FINANCIAL INFORMATION/ TRADE SECRETS 2014 2015 2016 2017 Prescri
Slide 17: Negative News Events Continue to Create Challenging Environment
Negative News Events Continue to Create Challenging Environment Q3 ’17 Q4 ’17 Q1 ’18 April Aug 31 2017 Arizona sues INSYS Oct 25, 2017 Founder Indicted – National News Oct 26, 2017 Rhode Isl., Dr. Rosenburg pleads guilty linked to INSYS Dec 21, 2017 North Carolina sues INSYS Feb 26, 2018 Michigan Dr
Slide 18: SUBSYS and TIRF Market Average Weekly TRxs
SUBSYS® and TIRF Market Average Weekly TRxs and SUBSYS® share trend Average TRxs/Week 222 Source: TIRF REMS Source: IMS Average Weekly TRxs Average Weekly Subsys® Market Share Average TRxs/Week 169 Average TRxs/Week 588 Source: IMS Average Weekly TIRF Market TRxs Source: TIRF REMS ATTORNEY WORK PROD
Slide 19: Insys 2017 Revenue by Quarter
Insys 2017 Revenue by Quarter (millions) Key managed care contracts in effect (Jan 18) Sales Force realignment went in effect (Jan 18) Significant Talent upgrade at SSP and DM levels Providing Patient Services Strategy to Stabilize Subsys® and Grow Syndros® ATTORNEY WORK PRODUCT – FOR SETTLEMENT PUR
Slide 20: INSYS Financial Snapshot
INSYS Financial Snapshot Revenue (millions) Adjusted EBITDA (millions) Cash position at end of Q4 2017: $163.9M with no debt Gross margins of 85.3% Optimizing operating expenses while continuing to fund R&D ATTORNEY WORK PRODUCT – FOR SETTLEMENT PURPOSES ONLY – SUBJECT TO FRE 408 AND 410 FOIA EXEMPT
Slide 21: Q4'17 & Full Year 2017 Financial Highlights
Q4’17 & Full Year 2017 Financial Highlights Q4’17 Q4’16 2017 2016 Gross Revenue $46.1M $93.9M $205.1M $407.2M Net Revenue $31.5M $54.9M $140.7M $242.3M Gross Margin 85.4% 82.1% 85.3% 89.5% Sales & Marketing $7.1M $13.5M $48.9M $69.7M Research & Development $16.4M $15.5M $63.0M $73.9M General & Admin
Slide 22: SUBSYS - Use in Context of Overall Opioid Use
SUBSYS® - Use in Context of Overall Opioid Use Year Annual Number of Subsys Patients 1 Estimated Annual Number of Opioid Patients 2 Subsys Patients as % of all Patients on Opioids 2014 9,119 56,356,000 0.016% 2015 9,177 51,923,000 0.018% 2016 5,591 48,706,000 0.011% 2017 2,483 43,742,000 0.006% SOUR
Slide 23: SUBSYS - Patient Count By State in Peak Year of Sales (2015)
SUBSYS® - Patient Count By State in Peak Year of Sales (2015) Nationwide total Subsys patient count of 9,177 which represents an estimate of less than 0.02% of total opioid patients Source: TIRF REMS ATTORNEY WORK PRODUCT – FOR SETTLEMENT PURPOSES ONLY – SUBJECT TO FRE 408 AND 410 FOIA EXEMPT BUSINE
Slide 24: Today's Objectives
Today’s Objectives Schedule Agenda Item Presenter 9:00am – 9:30am Introductions All 9:30am – 11:00am An Overview of Insys Background, New Vision & Strategic Plan Board Reconstitution Business Update Stabilizing Subsys Advancing Pipeline S. Motahari 11:00am – 11:30am Compliance Update S. Emmanuel 11:
Slide 25: Continued Commitment to R&D & Improving Patient Lives
Continued Commitment to R&D & Improving Patient Lives R&D Expense (millions) ~$250 million invested over the past 6 years in R&D pipeline to drive future growth 8 clinical trials completed in 2017 5 ongoing trials as of May 2018 (Epinephrine, Naloxone, CBD for Childhood Absence Epilepsy, Infantile S
Slide 26: Deep and Well Differentiated Pipeline
Deep and Well Differentiated Pipeline (CBD) POC Initiated Phase 3 Initiated POC Initiated PK Study Completed In Dev In Dev In Dev In Dev Phase 3 Completed NDA Accepted Dec 2017 POC Initiated Fast Track Designation Granted Dec 2017 End of Phase II FDA meeting Feb 2018 Disease State ATTORNEY WORK PROD
Slide 27: CBD: Infantile Spasms
CBD: Infantile Spasms Orphan drug status granted: July 2015 Onset age: 1-24 months EEG shows hypsarrhythmia Cost of Trial: $7.8M in 2018 Phase 3 Actively Enrolling 40+ Sites (US and ex-US) ATTORNEY WORK PRODUCT – FOR SETTLEMENT PURPOSES ONLY – SUBJECT TO FRE 408 AND 410 FOIA EXEMPT BUSINESS CONFIDEN
Slide 28: CBD: Childhood Absence Epilepsy
Seizures are usually staring spells during which the child is not aware or responsive Each seizure lasts about 10 to 20 seconds and ends abruptly These types of seizures account for 2% to 8% of people with epilepsy Primarily a genetic disorder 2 out of 3 children with childhood absence seizures resp
Slide 29: CBD: Prader-Willi Syndrome
CBD: Prader-Willi Syndrome Mutation in 15q11-13 (paternal) 25% mortality by age 18 Insatiable appetite Cost of Trial: $5.7 in 2018 Phase 2 Study Currently Enrolling ATTORNEY WORK PRODUCT – FOR SETTLEMENT PURPOSES ONLY – SUBJECT TO FRE 408 AND 410 FOIA EXEMPT BUSINESS CONFIDENTIAL/CONFIDENTIAL COMMER
Slide 30: Epinephrine Nasal Spray
Epinephrine Nasal Spray Anaphylaxis is an acute, life-threatening systemic allergic reaction1 Occurs in about one in 50 pediatric & adult Americans1 Epinephrine is the most important medicine to give during a life-threatening anaphylaxis2 Current epinephrine products are all invasive auto-injectors
Slide 31: Ongoing Insys Clinical Trials
Ongoing Insys Clinical Trials Compound Indication # of Patients 2018 Total Spend Total Cost of Project* CBD Infantile Spasms 190 $8.0M $15.8M CBD Childhood Absence Epilepsy 30 $4.6M $6.6M CBD Prader Willi 66 $5.7M $8.0M CBD Food Effect 24 $600k $600k CBD Refractory Epilepsy Expanded Access 23 Provid
Slide 32: 2017 Was An Exceptional Year for R&D
2017 Was An Exceptional Year for R&D Completed FDA filing of NDA for buprenorphine sublingual spray as investigational treatment for moderate-to-severe acute pain Initiated one Phase 2 and one Phase 3 clinical trial of CBD oral solution as investigational treatment for childhood absence epilepsy and
Slide 33: Insys Pipeline Could Potentially Serve Many Patients
04/27/18 INSYS Therapeutics Initiates Phase 2 Clinical Trial of Cannabidiol (CBD) for Treatment of Prader-Willi Syndrome 04/26/18 INSYS Therapeutics and University of California (UC) San Diego Center for Medicinal Cannabis Research to Collaborate on Clinical Trial for Autism 04/18/18 INSYS Therapeut
Slide 34: Upcoming Data from Clinical Trials
Upcoming Data from Clinical Trials Could Bring Relief to Many Pediatric & Adult Patients Drug Candidate Indication Dispensing Method Most Recent Project Upcoming Milestone Epinephrine Anaphylaxis Nasal Spray Initiated proof-of-concept study Expected data read end of Q2 2018 Naloxone Opioid Overdose
Slide 35: Cannabidiol Clinical Trial Collaborations
Cannabidiol Clinical Trial Collaborations 35 ATTORNEY WORK PRODUCT – FOR SETTLEMENT PURPOSES ONLY – SUBJECT TO FRE 408 AND 410 FOIA EXEMPT BUSINESS CONFIDENTIAL/CONFIDENTIAL COMMERCIAL AND FINANCIAL INFORMATION/ TRADE SECRETS Childhood Schizophrenia/Early Psychosis Orphan Drug Designation Meeting wi
Slide 36: Pipeline Priorities & Valuation
Pipeline Priorities & Valuation CBD Epinephrine THC Inhalation Buprenorphine/Naloxone Buprenorphine Naloxone Rizatriptan Epinephrine* THC Inhalation* CBD* Bup Naloxone* Bup Naloxone Rizatriptan Investment2 High Low Early Late Pipeline Project Assessment1 Development Stage3 Notes: (1) Pipeline assets
Slide 37: Current Clinical Development Priorities
Current Clinical Development Priorities 37 Current Focus Cannabidiol Infantile Spasms Childhood Absence Epilepsy Prader-Willi Syndrome SYNDROS Inhalation Proof of Concept Sprays Naloxone Buprenorphine Acute Epinephrine Additional Focus Cannabidiol Addiction Post Traumatic Stress Disorder (PTSD) SYND
Slide 38: State of the Art Manufacturing Facilities in Texas
State of the Art Manufacturing Facilities in Texas Facilities Paloma Plant – 8,000 square feet for cannabinoid API1 Oakmont Plant – 83,000 square feet for cannabinoid API and finished drug product Spent $14M expanding manufacturing facility in 2017 CBD manufacturing process optimized to improve cost
Slide 39: Summary
Summary The new Vision & Strategy have been operationalized Clarity & alignment around priorities Talent and capabilities have been upgraded across functional areas Structures optimized (Sales Force, Commercial Operations, Finance ) A plan is in place to continue to optimize spending 2018 Operationa
Slide 40: Today's Objectives
Today’s Objectives Schedule Agenda Item Presenter 9:00am – 9:30am Introductions All 9:30am – 11:00am An Overview of Insys Background, New Vision & Strategic Plan Board Reconstitution Business Update Stabilizing Subsys Advancing Pipeline S. Motahari 11:00am – 11:30am Compliance Update S. Emmanuel 11:
Slide 41: Ethical Behavior and Compliance Underpins Our Company Culture
Ethical Behavior and Compliance Underpins Our Company Culture 1 2 3 ATTORNEY WORK PRODUCT – FOR SETTLEMENT PURPOSES ONLY – SUBJECT TO FRE 408 AND 410 FOIA EXEMPT BUSINESS CONFIDENTIAL/CONFIDENTIAL COMMERCIAL AND FINANCIAL INFORMATION/ TRADE SECRETS Set a New Tone and Expectations Reviewed Compliance
Slide 42: Alignment with OIG's Elements Guidance of an Effective Compliance Program
Alignment with OIG’s 7 Elements Guidance of an Effective Compliance Program Compliance Program Structure Written Policies Designating a Compliance Officer & Committee Conducting Effective Training & Education Developing Effective Lines of Communication Conducting Internal Monitoring & Auditing Enfor
Slide 43: Written Policies and Procedures
Written Policies and Procedures INSYS COMPLIANCE-OWNED POLICIES AND PROCEDURES INSYS Code of Conduct Off-Label Information SOP INSYS Speaker Bureau SOP Displays, Exhibits & Medical Booths SOP Investigations SOP Anticorruption & Anti-bribery SOP Discipline & Enforcement SOP Conflict of Interest Polic
Slide 44: INSYS Field Personnel New Hire Training
INSYS Field Personnel New Hire Training Compliance Training Home Study Modules Live Training at Corporate Office Product Label & Certification INSYS Code of Conduct Proper Interactions with HCPs Extensive Products Label Training HIPAA PhRMA Code Standards & Guidelines Proper use of Marketing Materia
Slide 45: Quarterly Training Programs Offered in 2016-17
17 Quarterly Training Programs Offered in 2016-17 Quarter Training Date Assigned Audience 1 2016 On-Label Promotion 1-Mar-16 Sales, Marketing 1 2016 Whistleblowing: Raising Concerns 15-Mar-16 INSYS All 2 2016 HIPAA Privacy & Security for Sales Representatives 1-Jun-16 Sales 2 2016 INSYS Code of Cond
Slide 46: Conducting Effective Training & Education
Conducting Effective Training & Education Mandatory Companywide Annual Compliance Training: Code of Conduct: Best Practices HIPAA Privacy & Security Helpline and Non-Retaliation: Making the Call On-Label Promotion Anti-bribery & Anti-corruption Adverse Event Reporting and Drug Safety Responsible Com
Slide 47: Developing Effective Lines of Communication
Developing Effective Lines of Communication Ethics reporting hotline and web portal available Option to report anonymously Open door policy that is well publicized to the entire company Compliance is involved in every all Salesforce conference calls and periodically attends sales management calls Co
Slide 48: Conducting Internal Monitoring & Auditing: Promotional Practices
Conducting Internal Monitoring & Auditing: Promotional Practices Promotional Speaker Programs & Field Ride-alongs ~20% monitored by INSYS Compliance Department Personnel and/or independent third party vendor. Expense Reporting Audits Accuracy with Sunshine Act Reporting (~20%) Call List Review Perfo
Slide 49: Enforcing Standards Through Well Publicized Disciplinary Guidelines
Enforcing Standards Through Well Publicized Disciplinary Guidelines Company personnel are familiar with expectations of them in their day-to-day business responsibilities The compliance department sends regular reminders regarding specific controls to specific audience for reinforcement purposes Any
Slide 50: Responding Promptly to Detected Problems and Undertaking Corrective Action
Responding Promptly to Detected Problems and Undertaking Corrective Action Potential compliance violations are investigated based on the SOP which governs such issues The protocol is to commence an investigation within 24 hours All identified relevant parties are thoroughly investigated Human Resour
Slide 51: Continual Risk Assessment: Call List Review
Continual Risk Assessment: Call List Review Performed annually or as deemed necessary and in accordance with some State’s Assurances of Voluntary Compliance Agreements Ensures the company is calling on the right specialties Only call on HCPs already treating appropriate patients for the product(s) i
Slide 52: Third Party Compliance Program Validation
Third Party Compliance Program Validation Engaged independent third party to pressure-test compliance controls focusing on: Healthcare professionals (HCP) interactions HCP engagement procedures and protocols INSYS Speaker programs administration and monitoring protocols Protocols governing Fair Mark
Slide 53: Compliance Program Validation
Compliance Program Validation The Process and Outcome: Provided policies, SOPs and supporting documentations for review Visited INSYS to interview live specific individuals from various departments Pressure-tested controls and protocols Process was in two stages Received a final report indicating th
Slide 54: Compliance Summary
Compliance Summary INSYS has incorporated the OIG recommended 7 elements into its corporate compliance program The components provide a strong foundation for the compliance program The compliance program governs all facets of INSYS business activities, from promotional, to non-promotional, to clinic
Slide 55: Today's Objectives
Today’s Objectives Schedule Agenda Item Presenter 9:00am – 9:30am Introductions All 9:30am – 11:00am An Overview of Insys Background, New Vision & Strategic Plan Board Reconstitution Business Update Marketed products Advancing Pipeline S. Motahari 11:00am – 11:30am Compliance Update S. Emmanuel 11:3
Slide 56: Legal Proceedings Update
Legal Proceedings Update Our litigation challenges fall into 6 basic categories*: DOJ/OIG Investigation Two Securities Class Actions and One Derivative Case State AG Investigations 20 total 4 resolved 5 ongoing lawsuits Prescription Opioid Litigation with States, Counties and Cities Over 150 prescri
Slide 57: Board of Directors and Committees
Board of Directors and Committees Board of Directors Staggered Board with seven current members Divided into 3 classes Chairman (Meyer) and CEO (Motahari) roles are separate for good corporate governance Board Committees Five Standing Committees Audit: Meyer (Chair), Mahboob, Tambi and Vishnoi Compe
Slide 58: SEC Reporting Obligations
SEC Reporting Obligations Insys IPO in May 2013 Common stock (Company’s only voting stock) publicly traded on the Nasdaq Stock Exchange (INSY) As a publicly traded company, we have reporting requirements to keep stockholders and the markets informed Reports filed with the Securities and Exchange Com
Slide 59: Overview of Corporate Matters
Overview of Corporate Matters Insys Basic Corporate Structure: Incorporated under the laws of the State of Delaware Currently has four subsidiaries, with the company currently reviewing its corporate structure: Insys Pharma Inc.: Sales and Distribution and Marketing Insys Development Company, Inc.:
Slide 60: Overview of Corporate Matters (cont.)
Overview of Corporate Matters (cont.) Organizational Documents Certificate of Incorporation: Directors’ liability for monetary damages eliminated to the fullest extent under applicable law. Provides for the Company to issue is 110,000,000 shares: 100,000,000 of Common Stock, par value of $0.01 (As o
Slide 61: Recent Adoption of Clawback
Recent Adoption of Clawback In April 2018, our Compensation Committee adopted a comprehensive compensation clawback policy for all employees. Under policy, the Company will review and determine whether to seek recoupment of bonus awards (and other incentive compensation if applicable and appropriate
Slide 62: Today's Objectives
Today’s Objectives Schedule Agenda Item Presenter 9:00am – 9:30am Introductions All 9:30am – 11:00am An Overview of Insys Background, New Vision & Strategic Plan Board Reconstitution Business Update Marketed products Advancing Pipeline S. Motahari 11:00am – 11:30am Compliance Update S. Emmanuel 11:3
Slide 63: Q&A
Q&A ATTORNEY WORK PRODUCT – FOR SETTLEMENT PURPOSES ONLY – SUBJECT TO FRE 408 AND 410 FOIA EXEMPT BUSINESS CONFIDENTIAL/CONFIDENTIAL COMMERCIAL AND FINANCIAL INFORMATION/ TRADE SECRETS
Slide 64: Today's Objectives
Today’s Objectives Schedule Agenda Item Presenter 9:00am – 9:30am Introductions All 9:30am – 11:00am An Overview of Insys Background, New Vision & Strategic Plan Board Reconstitution Business Update Marketed products Advancing Pipeline S. Motahari 11:00am – 11:30am Compliance Update S. Emmanuel 11:3