Q3 2019 Earnings Call
Please standby.
Ladies and gentlemen, welcome to the Kantar as farmer.
Quarter, 2018, operating and financial results Conference call.
Today's recorded presentation, all participants will begin to listen only mode.
After the presentation, there will be an opportunity to ask questions can you be press star one on your telephone keypad at any time to enter the Q.
I'll now hand, the conference call over to Jack Howarth and tourists Vice President of Corporate Affairs. Please go ahead Sir.
Thank you Matt Good morning, everyone earlier today, we announced our third quarter 2019 financial results operating achievements copy the press release in slide presentation for today's conference call are available on the Investor section of the entire as website.
Before we begin I'd like to remind you that some of our statements made during this conference call will contain forward looking statements within the meaning of the safe Harbor provisions of the U.S. Private Securities Litigation Reform Act at 1995.
Examples of forward looking statements include those related to our future financial and operating results, including 2019 financial guidance in catalyst future growth and market share.
Product approvals and launches sales and prescription volumes.
And then other regulatory activities results of ongoing and future clinical trials.
And other product development activities and corporate development efforts.
These forward looking statements are subject to certain risks and uncertainties and actual results could differ materially.
There are identified as described in today's press release any accompanying slide presentation and from time to time in the company's filings with the FCC Form 10-K that is updated and Terras recent periodic filings on Form 10-Q and form 8-K.
In terms is providing this information as of the date of today's conference call. It does not undertake any obligation to update any forward looking statements contained in this conference call as a result of new information future events or circumstances. After the date hereof, except as required by law or otherwise.
The company cautions investors not to place undue reliance on these forward looking statements.
Joining me on the call today, or Bob Apple, President and Chief Executive Officer, and Fred Thompson, Executive Vice President and Chief Financial Officer.
Let's review the agenda for todays call on slide three.
Bob will begin with a high level review of our outstanding third quarter results and provide an update on our commercial business. Fred will go through the detailed financials and above all in the lives for your questions.
I'll now turn the call over to our CEO bought Apple crop.
Thanks, Jack Good morning, everyone on today's conference call and webcast.
Today, we reported historic quarter of financial progress driven in large part by sales of our flagship product size.
Well, a strong demand in growth for Teva generic everything.
Our diverse mix of proprietary and partner products contributed to significant year over year revenue growth for Antares.
Today Im also happy to report that the rapid growth in our top line has produced the company's first quarterly income from operations as well as overall net income.
The strong execution by our commercial team selling both.
Except coupled with the seeing strong execution by our operations team supplying our partners with devices in products has us outperforming street expectations in all aspects of our 2019 business forecast.
As a result, we are once again, raising our full year 2019 revenue guidance.
So let's talk about some of the highlights from the quarter and how our achievements over the past nine months, that's helping the way for why we believe 2019 is a transformational year for the company. Please turn to slide number four.
This morning, we reported $34.3 million total revenue almost double 17.9 reporting in the third quarter last year.
Total revenue grew 21% sequentially from the second quarter.
Product revenue grew 113% versus the same period last year, and importantly grew 20% sequentially from the second quarter.
It is very impressive growth.
Was driven by our key proprietary in partner products, such as I said Otrexup and the generic at B. Penn.
Importantly, as a direct result of the increasing revenue reporting from our partner products royalty revenue grew 126% compared to last year.
Quench Lee grew to 51% moving the recent second quarter.
I'd like now briefly review the two recently launched products, which drove record growth third quarter before turning the call refrain.
I understand our once weekly subcutaneous auto injector of testosterone and anti for men with testosterone deficiency was launched in January 2019 by the entire east specialty sales force of approximately 80 sales representatives.
Over the first nine months, our launch metrics have exceeded street expectations.
We believe that is a significant accomplishment as new product launches historically are difficult with payer and funded physician dynamics, creating significant challenges on product uptake.
Further highlighting the success of the launch is that our sales team is also detailing otrexup, our legacy army product to a totally different audience of rheumatologist.
Not only having maintain your effects of coal plant, you've actually grown otrexup revenue driving strong growth upsized. It.
As you can see on slide number five zeiss that total prescriptions are growing nicely.
More importantly, new patient starts are increasing.
And we feel is a growing a great sign of patient persistence.
Strong therapy persistence means good rates refill, which we believe will lead to continued revenue growth.
Since launch Zioptan has recorded double digit month over month sequential percentage growth in both new and total prescriptions.
In the third quarter alone Symphony Health solutions reported that approximately 20000, Zions say prescriptions were filled which was a 73% sequential increase over to second quarter of 2019.
Through September .
Approximately 35000 prescriptions, having filled since the beginning of year and that number does not account for multiple month refills.
It is important to note sales of Zeiss near to the wholesale distributors continues to be higher than the number prescriptions reported by QVC and Symphony.
We believe much of this growth can be attributed to strong rent performance solid messaging and the work we have done to obtain additional coverage for potential patients.
From a coverage standpoint.
Significant milestone was reached on October Onest, when we contracted with another large pharmacy benefit manager.
Increasing our managed care coverage to approximately 70% of all commercial lives.
Our aggressive goal for 2019 was to achieve two thirds of all commercial lives covered in the first year launch and we have exceeded this goal.
We continue to target all large writers of testosterone products.
3500 different physicians have written prescriptions good morning, 12000 patients since launch.
Colleges and endocrinologists are running approximately half of all prescriptions.
General practitioners nurse practitioners and all others are running the balance.
It's a good diverse blend the prescribers and we believe we formed a solid foundation on which to expand.
Most recent ITD data shows that our prescriptions are being written for a variety of patients who are either muni testosterone therapy for patients who are switching from a gel or generic injectable.
We believe the trends we're seeing in both the number and type of prescriber and the kind of patients using the product needs at desires that product features and messaging are resonating with our target audience.
Please turn to slide number six.
On our last quarterly call, we disclose plans for a new branded social media campaign, which was designed to educate patients and encouraging the answer doctors if zioptan is right for that.
I'm pleased to report since the launch of this digital patient campaign, we have seen new non targeted health care professionals prescribes eyes that.
These were healthcare professionals number not known original call plant.
We believe that our digital campaign is having a direct impact on dryden patients to their doctors to ask resides said, which is a key performance indicator for judging the success the social media campaign.
While this campaign has continued to ramp up we want to make sure we stay in touch with the physicians who writes zeiss. It. So we have a number of marketing initiatives plan, including a full slate of clinical congresses to attend in fact, we just returned from the Twentyth annual fall scientific meeting on the sexual Medicine Society of North America.
Where we hosted a section of key opinion leaders, who discussed physician and patient experiences using sized to treat testosterone deficiency.
I personally heard from physicians and as I say was having a meaningful and positive impact on their patients lives anywhere impressive how pain free and easy it is to ministry as I said.
This ongoing meaning activity and outreach underscores how important we believe it is to stay active in educating patients and health care professionals on the benefits of treating testosterone deficient men we sized it.
In summary, we.
We remain very pleased with the progress made thus far and we're off to a great start.
Instead remains the fastest growing branded product in the testosterone pricing market.
Please turn to slide number seven.
Shifting now generic can't be pain, which remains the fastest growing of our partnered products.
Total launched the adult version of generic at be pain Penn late last year and just this past August launch the at B. Penn Junior.
When you look at the overall epon effort and happy pen market trends for the third quarter. This year, you can see dramatic increase in prescriptions filled.
And an increased market share for to that Teva generic MP pain.
Almost 237000 prescriptions were filled with tevas generic at B pack in the third quarter for a 27% share in year end market.
The timing of the amputation Junior launch in August was important as a third quarter is back to school and allergy season, which happens to be the strongest quarter for the have been aftermarket.
With Cabot now in full commercial launch mode. They have filled almost 400000 prescriptions of two packs year to date, we just under two thirds of those prescriptions filled in the third quarter alone.
We continue tracked heather's rapid progress towards our stated goal of a 50% share of the between market with the most recent monthly symphony prescription data reporting them honing at 31% market share.
Through the first nine months of this year.
First six months being eliminate commercial launch combine product and royalty revenue from the other generic it depend by Teva.
In $23.4 million in revenue for us.
We believe our partnership with Teva on the generic every 10 continues to progress in a very positive direction.
On slide number eight you can see that this has been another breakthrough quarter for Antares and when you look at a revised revenue guidance of 115 million to $120 million for this year.
We had a potential for almost 90% growth in our topline versus last year.
We believe that in targets pharma is when the most compelling growth stories in our sector. As a result, posting substantial increases in revenue reductions in operating losses, and the company's first quarterly income from operations and net income.
Most importantly, we believe we instead of course for additional growth in future quarters.
Now going to turn the call over to Fred for details on our outstanding third quarter. Brent. Thanks, Bob Please turn to slide number nine as Bob said this was another tremendous quarter for Antares with significant sequential and year over year revenue growth and the company's first quarterly income from operations as well as overall net income.
Third quarter was an important quarter for the company with our employees focused on the commercial success of our proprietary products Alstom, they'll transit, which on a combined basis grew 180% versus the third quarter last year.
In addition, our partner price with Teva grew sequentially, 38% during the third quarter compared to the second quarter 2019, while our revenue from Amax Mckenna grew 27% during the same period.
As many of you know our partner Amec recently appeared before FDA Advisory Committee to discuss the findings from a post approval confirmatory trial from Mckenna called prolong study, which failed to meet its co primary endpoint.
While the committee discuss multiple questions on the key question Seven committee members voted to leave the product on the market under accelerated approval and require new confirmatory trial and nine members voted to recommend that the FDA pursue withdrawal of approval for Makena. It's important to remember that the advisory committees boat is not binding.
But the FDA will consider it in making their decision.
Hey, Matt recently stated their belief in the safety and efficacy of Makena and has indicated that they are committed to exploring options on how to gather additional data that would be most informative to physicians and the FDA and at the same time work to ensure that eligible patients continue to have access to makena.
Timing and the outcome of the FDA decision regarding the ongoing availability of Makena is uncertain.
During the FDA decision period, we will continue to supply Mckenna auto injector to aim that for the distribution to physicians and patients.
You start my financial overview by providing a detailed breakdown of our revenues and operating expenses for the third quarter of 2019.
Total revenue was $34.3 million for the three months ended September 32019, compared to $17.9 million in 2018, a 92% increase.
The launches outset continues to go as planned as revenue from the product from 52% sequentially versus the second quarter, while our second commercial product Otrexup grew 8% in the third quarter over the third quarter 2018.
Total revenue from Tevas generic epipen was approximately $11.5 million representing over 33% of our total revenue the combined revenue from disaster.
While still in their respective line launches contributed $18.5 million for more than half of the total third quarter revenue.
Product sales were $24.7 million for the third quarter compared to $11.6 million in the third quarter 2018, 113% increase importantly product revenue as percentage of total revenue continues to grow and accounted for 72% of total third quarter revenue.
Sales of our proprietary commercial products. This out seven otrexup totaled $1.5 million for three months ended September 32019, compared to $4.1 million in 2018.
Partnered product sales totaled $13.2 million in the third quarter 2019, as compared to $7.5 million in 2018. The increase in total product revenue was primarily driven by sales of FP devices to Teva.
Licensing and development revenue for the third quarter was $1.2 million as compared to $2.6 million. The same period 2018 and was primarily driven from.
The repair Tevas, Teriparatide pen and Pfizer rescue pad development programs.
LTE revenue was $8.4 million for the third quarter compared to $3.7 million. This same period in 2018, a 126% increase.
With the entire generic EFI pen franchise now available in pharmacies. Following the August launch of the generic version of the Epic then junior royalty revenue grew sequentially from the second quarter by 51%.
Operating expenses were $19.2 million for the third quarter of 2019 compared to $11.9 million in 2018. The increase in operating expenses in 2019 was primarily attributable to additional sales and marketing expenses associated with the launch of south it.
For the first time in the company's history, we generated quarterly operating income, which totaled $2 million, which compares favorably to the operating loss of $1.4 million for the same period in 2018.
Net income was $1 million for the third quarter 2019, compared to a net loss of $1.9 million. Some 2018 net earnings per share was a penny for the third quarter as compared to a net loss per share of a penny for the quarter ended September Thirtyth 2018.
At the ended the third quarter cash and cash equivalents were $41.9 million compared to $27.9 million at December 31, 2018, and increased $1.7 million from the $40.2 million report at the end of the second quarter 2019.
During the third quarter, we generated $1.7 million in cash from operations as compared to a cash burn from operations of $80000. The same period in 2018.
In October we received the final payment of $2.5 million from faring in connection with the sale of the needle free product line. We previously recorded a gain on the sale the needle free product line in the fourth quarter 2018, the sale of this legacy product front at $15 million in cash over the past two years, which was used in growth.
Our commercial business that concludes my prepared remarks, I'll now turn the call back to Bob Bob Thanks, Brent.
Wrapping up on slide 10.
This is obviously, an exciting time frame targets and for our shareholders. We had an outstanding quarter and we believe their third quarter in year to date results continue should the progress we made in focusing our future growth on increasing the diverse mix of our total revenue.
We are outperforming street expectations and once again revised upward our 2019 revenue guidance to a could be a potential increase of almost 90% over 2018 full year revenue.
And while we are laser focused on driving commercial success. We also remain committed to advancing our internal pipeline in helping our partners complete developing programs, which we believe will translate into future product revenue for our company over time.
Operationally, we are investing in expanding office laboratory manufacturing warehouse space in order to support a rapidly growing business and set the stage for long term growth.
To date 2019 has been a transformational year for Antares and we are proud of the extraordinary efforts and results from our employees, we should provide an exciting future for our company and shareholders.
This concludes my prepared remarks for today operator could you. Please open the lines for the question and answer session.
Yes. Thank you as a reminder, you'd like to ask a question signaled by pressing star one on your telephone keypad using a speaker phone. Please make sure you mean function is turned off to like your signal to reach our equipment.
Your first question will come from Elliot Wilbur with Raymond James.
Thanks, Good morning, and congratulations to.
The team for crossing both the profitability and operating cash flow a threshold.
Reaching positive territory I know Thats something you guys have been striving towards for for long time. So good.
Good job.
Typically couple of questions for.
Your shelf Bob around.
Not surprisingly I guess just kind of upfront.
As.
The fixation on sort of the weekly Rx trends, probably is only going to increase going forward in symphony in Q.
The show a similar trended pattern, but one of them. The services is quite a bit higher than the other just wondering if you could maybe provide a little bit of color commentary in sort of how you guys look at those metrics internally specifically thinking about.
Points of distribution or sales channels that you know the product is moving through that just aren't simply captured by either of those services and whether or not the difference between those two basis at least what you see may just be sampling error or one picks up perhaps part of the channel that the other doesn't but just.
Anything you could have.
Shed light on with respect to sort of how to more accurately gauge how the weekly numbers will be helpful.
Yes. Thanks.
Thanks for all your comments earlier too early.
As far as the.
Anthony Nike via weekly numbers that we will use those for trending.
What's important to US is what gets shipped out of our distributor.
To our distribution partners, such as APC, Cardinal Mckesson and so forth.
And so what we're seeing are positive trends.
Like I mentioned in my prepared remarks.
Our shipments are exceeding both of those services as far as weekly numbers and I think it's a combination we do so.
Direct.
To some large practices. We also obviously you have some business it goes through.
The Deo D. The department of defense as well as.
The Medicare Medicaid business typically doesn't get picked up well by.
Prescription trends and I think also it's still an early it's still in the early part of a launch and mode and both QB and Symphony.
Tend to take a bit more time to get the.
The trends right as a doctor base continues to change and.
On smaller products vis-a-vis that this launch year I think a have a little bit harder time tracking down exactly where all the scripts are coming from all that being said we use in for trending the trends are very positive.
Both from a prescription standpoint as well as.
Shipments and it would be a good day for us when everyone stops looking at recently numbers because quite honestly there. They are not very accurate, but again they are trending in the right direction. I think you can see that based on where our revenue is for the quarter for his eyes to far exceeded street expectations.
Caused the trends are better than.
What the Descript data showing.
Okay. Just wanted to ask a follow up question regarding the.
Current call pattern detailing and source of prescriptions for for sized it looks like about 50% of Rx is coming from into Krenz and urologist guess, what we would expect with kind of the specialty product.
Like this I assume though that you're fairly active in terms of detailing the love the high prescribing GPS and I'm just wondering.
Would it be reasonable to assume that eventually this product kind of moves to more of a sort of a class pattern, where you've got 60% to 70% of prescriptions coming from GPS and only 30% to 40% from from the specialists or is it.
More likely that we're going to continue to see.
Relatively high proportion from from those two specialties, just trying to figure out basically if those are.
Leading indicators for what we May see eventually and GPS or if this is just going to be a product where we see a higher concentration of the Rx is among.
The specialists.
Yes, so from our call plan standpoint, we call on the high prescribing.
Dr and writers, whether endocrinologist urologist or primary dogs, we call on all the top.
Ill Sevens three tenths essentially I think what we're seeing is you know the adoption.
Early on is from the key opinion leaders in the urologists, who are really are leaders in this area.
And the right first they're very comfortable with.
The product and moving forward with it.
So I think what's surprising is we are seeing a lot of endocrinologist, writing, which is a disproportionate share relative to the class and I think thats really a function of against my opinion, it's a function of that the levels that we achieved in the clinical studies are translating into field is from what we're hearing from physicians and I think a light date that the intercountry.
We like that steady state and so to your urologist, but I think endocrinologist focus heavily on hitting certain levels and targets. So we're seeing a really strong uptake more so than any other product in this space from endocrinologists that could continue I think going forward, we'll see the mix started.
Follow the marketplace.
The Big primary care providers will stop we'll start to follow the key opinion leaders is what they're writing and I think overall, we'll see the trend.
Becoming more traditional with the general practitioners being a large piece of the writing and again, we don't call on a lot of those general practitioners because they're in a lower disciples, but they will eventually right potentially based on what they're seeing in the marketplace and so forth. So.
Early on its a little bit different than the classic product in the testosterone space, but I think it will eventually gravitate.
Towards being a heavier primary care general practitioner sexual medicine type Dr. writing.
But again that remains to be seen.
Fair last question.
With respect to the pipeline.
I think theres a.
I believe out there that.
There's quite a bit of value accruing the pipeline that you're not being credited for and lot of its probably based on the fact that a name Rankin serial number a lot of the programs aren't aren't really no and so as we think about 2020 any chance that we're going to get detail in terms of specific molecules with respect to either 17 won the urology.
Product or the Pfizer.
I am just close Pfizer product rescue.
Agent and then.
Quick sub part to that question is that program partnered with.
Meridian platform there was some disclosure and some recent filings that Mylan is negotiating to acquire that business and just wanted to get to some clarity and whether that.
It is tied to another area within Pfizer or if in fact, it is tied to the meridian platform. Thanks Bye.
Yes so.
I agree with everything you said that our pipeline is undervalued and I think a lot of it has to do with the fact that we don't disclose.
Both proprietary and our partnered products and it depends on the partnership obviously with Teva, we have it potato.
Product under an annual review was substantial products were waiting for the FDA approval, along with Teva tell what drives that process, they drive able to file and so were.
We're hoping that that gets approved soon and we can launch a very big important product in any.
Our.
Last year proceeds space.
As far as in the the Pfizer program.
That will from what we understand in from everything we're hearing from Pfizer that is not part of the meridian transaction or the.
The up John transaction. It is is a product that is.
Within Pfizer's branded division.
And that is going to stay there there is no indication whatsoever that thats going with the merger.
Spin out and so.
As far as.
When we may see.
Or when that May get disclosed again, it's really a function of pfizer's.
Timing and desire to disclose that product into the marketplace.
Could become apparent when they start doing some work.
As far as accelerate at work with the FDA and so forth, but until then pfizer's around large organization and.
They probably are in the middle of doing one under program, so whether or not it is to date. They did determine disclose that when he's really up to them and in our own internal program.
You know our.
Our our rescue and in the neurology space I fully expect that will become very apparent.
In the in 2020, as we knew that product into clinical trials.
A lot of related work right now on the devices wells formulation, and we expect to move that into and I. Indeed type setting in 2020, so that will become apparent and again on the other pipeline price that we're working on.
As we progress towards an idea is really when mall.
We will disclose what those products are so we do have a great pipeline.
We also have another product with Teva identified not a huge product, but still a meaningful one for people with diabetes and important one that we're hoping to have approved soon with the FDA again as an anda. So that's our current pipeline as well as we look to continuing to bring in.
Other lines deals.
In the near term too to continue to bolster that pipeline, so hopefully there'll be some.
Additional news in that area.
In the future and we'll be able to get it now the pipeline further bolstered.
And your next question will come from Anthony Petrone with Jefferies.
Adding it probably on you.
Hello.
Yes.
I apologize I was on mute.
Congratulations on a on the strong quarter or maybe just to for me and I can hop back in Q1.
One on on on Xyo Stead, just trying to get a sense of.
Sort of penetration within physician accounts that are prescribing.
How many patients are.
These physicians prescribing xyo stead in lieu of a topical or an intramuscular injections would be the first question.
And then anything you can provide just in terms of.
The a magazine.
FDA panel that you mentioned in your prepared remarks, just sort of how we should be thinking about that as it relates to auto injector purchases going forward. Thanks.
Sure. So thanks Anthony.
As far as your first question on prescribing habits of our writers obviously, it's mixed.
We have some big riders that have adopted as I said and it's probably their first line therapy for most patients.
What we see is that obviously, they're offering it to new patients and we're seeing a really nice.
Number of patients that are new to therapy about 50% of our scripts are patients who have never been on another testosterone therapy, so that shows.
Dr is viewed as a strong first line therapy as well as when a patients given the.
The option.
Between gels.
I am injections or as I said, they're picking these assets. So we're seeing a good mix of patients.
And then other doctors are switching there I am patients again, what we've found is that most doctors will say hey, if the patient dosing complain are not going to offer it but if they're complaining they offer as I've said and ne and se switch they tend to be happy.
But a lot of has also do with with coverage, we're really now at a nice.
Percentage of lives covered.
For his I've said, it but it took us through October to get there and with any any product launch it takes anywhere from six months to a year to get relatively good coverage. If you get it at all and we got 70% of all lives covered so I think we'll start to see the.
The patient demographics, you really changing based on their coverage if they if they weren't covered it was a.
And expensive proposition to change from a generic I am or generic gel to two divested so.
We're seeing all kinds of doctors, we call them internally like gobblers adopters and something else I can't recall exactly what it is but it's I think it's normal in that you have doctors, who are aggressive in looking at new therapies and adopt them and it becomes a big part of their practice and others, who you take time, meaning when a here.
From other doctors and want to hear from patients and so for us. So I can't say that we have one particular.
Dr type of Dr. that rights heavily and ones that don't I think we're seeing a really nice mix of doctors like I said in my prepared script 3500 physicians have written.
As I said, we call on about 12000, probably 10000 on regular basis and so that's a pretty good mix in a very early very short period of time to get that number of doctors writing and then also in patients that are using zeiss debt I think whats important is as we continue to get new patients to persistence has been released.
Overall, and so the refills become more and more important and again I think we're seeing better persistence and what you typically seeing testosterone products and if that trend continues.
We think we'll can you just continue seemingly nice growth with the product.
Your second question.
Hi, Thanks.
The second question on aim AG, so I'm not really going to comment on any mags regulatory plan or.
Process, what I can tell you is that it's it's November so clearly in 2019, I don't think there'll be any impact whatsoever of the AD com votes in talking to.
Bill aid in the doctors are still writing.
Mckenna auto injector.
Our shipments are still strong and so.
For 2019, I really don't see any impact beyond 2019, what we said in the prepared script, it's really it's likely going to being extracted or extended period of time at the FDA gathers all there.
The information that they need amax working with them as they disclosed in their earnings just last week. They are working with the FDA to try to come up with another study too.
Conduct while the product sales in the market, but you know the time that it takes and the outcome is really something I can't predict at this point and we're going to continue to supply the makena auto injector product to to aim AG in.
Like I said it'll at all.
On a go forward basis, we we'll just keep doing what we've been doing the pass which is supplying them in a.
Very nice product that they've been distributed or physicians and patients.
Thanks, I will hop back in the Q.
Thanks anything.
Next we'll hear from Stacy with Cowen and company.
Hi, congratulations on another great quarter and thank you for taking my question.
First on fast Ed can you remind us of plan.
Chris asked that going into next year.
Help me understand what makes the appreciation Paul we could expect for financing an excellent.
And tiny tiny.
Hi, Capella.
Yes, so I'll, let Fred answer the gross then gross to net but on the co pay supports right now it you know our program is.
No co pay supportive up to $125 I think.
For patients have commercial insurance.
And yes, we get we get really good utilization with the co pays for it about 65% of our patients utilize a co pay support.
And as our coverage continues to grow our co pay our co pay system. So we will likely continue to grow.
Looking into 2020 were looking at various.
No.
Changes it could be made.
You know likely to support or will stay the same but we're looking at.
If theres anything we can do in Q1, where.
The with high deductible plans, taking hold in Q1 for all products is there way that we can minimize the effect of those high deductible plans on the prescriptions in Q1, we havent come to conclusion on that but clearly co pay assistance is one of those areas that you can help a patient as are going through that transition.
To cover their medications.
In that first couple of months, where it is.
It's a lot of out of pocket costs for them.
As an individual.
As far as gross now I'll turn it over to Fred sure. Thanks.
Morning safely.
Regarding the gross to net that percentage has been improving during the year at the beginning of the year we.
Discussed our first feel free program prior to us gaining the significant coverage that we have in the market now and that actually brought down our gross to net percentage below where it is right now when we take a look at the third quarter, where in the mid to upper 50%.
That remains in that.
So therefore about.
The lower.
Between 40, and 45% deductions that we have and the biggest ones being the co pay as well as the typical for distributors as well as we have kept the first feel pretty program in place and then the rebates, we expect that percentage to stay steady as well as slightly.
Crease as we go into the end of the year and then as Bob said, we're currently looking at the programs for the first quarter of next year as well as all of next year as to the co pay assistance programs, but as of now we're looking in the mid.
To upper 50% that remains in that in the gross in that calculation.
That's really helpful and also how should we think about the cadence.
Dependent but for now.
Pick on how it might relate to that kind of Mike shared goals.
Potential and the type building and then.
How has your recent quarterly performance 10 tired looking at the end that between 18 and 2020 in terms of fat potential earnings guidance and potential strategic Optionality.
Well I mean, clearly are increasing guidance.
To that is around the B. Penn I mean, we had an outstanding quarter in Q3, which is the historically the best quarter forever.
Net from Marc if it goes back to school analogies and so forth. So we.
We see tevas market share being in.
Anywhere from 31% of 34% or higher depending on the week.
We expect to see that trend continue to improve as they try to restart stated goal 50%.
Market share of the overall at B. Penn market. So.
I think going forward.
So we're being conservative in Q4 in because the Q3 is the strongest quarter for MVP and we don't know what's going to happen in Q4, it's unpredictable for US we know our shipments are strong.
To tab of slide.
What's going out to the trade is really of we don't know until the end of quarter.
So we expect Abby tend to continue to grow we expected to be meaningful part of our.
Our business going forward and we've been very happy with how to have has been producing are performing.
I have over I think I'd say 400000 prescriptions filled.
Launch pretty perspective, remember, we do we sell we make or in a package three auto injectors, it's too to with drug and one with.
One trainer and so its millions of pans that we produced in the and we're really proud of that in that.
So we think we continue to ship Teva and we know that area. They are not building inventory, we know that they are supplying the market and that they are aggressively.
Gaining market share and continue to sell almost everything that we ship so.
We're real happy with that where that programs going in 2020, I really can't predict at this point, it's too early to determine how quickly or if they hit their 50% market share goal. It's a goal and right now the trends are strong and we're really happy with where appia is going and we see that being a.
Long term meaningful product for both organizations.
Hey questions Ken.
Thanks.
Your next question will come from David Amsellem with Piper Jaffray.
Thanks, So had a few first on Zydus the Ana Paula does if I.
I missed this but I wanted to get a sense of the mix the patient mix.
I mean, those who have been on topicals versus those who have been on intramuscular injections versus those who are testosterone.
Naive.
And how you're seeing that evolving.
That's number one number two is.
You've commented on the gross to net.
But I wanted to get a sense from you as to where you think that's going to head.
In 2020 or even longer term.
And then lastly, it had a question on capital deployment I mean, you are profitable.
And you know you're building your cash position. So I wanted to get a sense from you as to how you're thinking about the addition of assets where you can leverage your commercial infrastructure. Thanks.
Sure So David on year on year first question about the mix of.
As I said patients.
Now 50.
Percent or more of our patients are new to therapy, which I think again is an impressive.
Percentage of our patients being naive to testosterone replacement therapy. It shows that the doctors are comfortable with as I've said being a first line therapy, so 50% our new.
On the other side of it I would say that the vast majority the balances from I am injections.
It's hard for me to determine whether how much was gel versus.
I am, but clearly I think the vast majority or I am.
Injection patients, who won a better injection wouldn't get rid of those potentially get rid of those peaks and valleys and they see with time injections and so that's the second biggest component of our.
Of our.
Patient base and then some on gels.
I think longer term.
We'll we'll see more growth in the high end side of the business because I think as doctors move away from that wealth that patients not complaining I'm not going to offer anything too if they see that size debt is really working well for the other patients that may potentially they'll start to offer it to their patients that are on I am and start to get them more swift.
Get more switches going.
But again, our focus really is just giving.
Having as I've said is a choice for patients and.
So far it's been a pretty good.
Mix of patients choosing to go as I've said versus the generics options that are out there. So overall, we're happy with.
The patient reaction design listed as far as the.
Gross and net I'll turn that over to Fred again sure. Thanks, but now with the gross summit.
Those just mentioning we were looking at the improvement of the.
Percentage during the year.
Third quarter, and we believe fourth quarter, we should be in the.
Mid to upper 50% remaining on the net so looking at to.
Gross to net discount in the 40% of 45%, we see that fairly stable in the third and fourth quarter.
Going forward, we would like to boost that number up as we get into 2020 and beyond.
You have to be determined what programs, we're going to be putting in place for the.
Co pay assistance.
As well as the.
Impact of total rebates for all of 2020, but I'd say right now we're comfortable in the mid 50 to.
55% to 60% remaining on the net line or 40% to 45% deduction.
As far as you deployment of capital I mean, it's a bit early to be discussing.
Capital deployment, one is our first quarter of generating cash, but I would say that generally because we had a very productive.
Sales team of approximately 100 people overall when you look at 80, some reps plus 10 district managers and so forth.
We are looking at other.
Products to potentially acquire but there is.
You are not many out there, but we are.
Looking at assets, because that's one area, where we would definitely deploy our our capital to bolster our revenue with a what we think they're very effective resource.
With our sales force they've done a really great job of his eyes dead and Otrexup and we want to potentially get them another product and so thats, where that's the areas that we're really looking at from our capital standpoint, everything else is really being funded by operations. Our internal R&D is being funded by operations our X.
Total R&D with our partners is being funded by them, which brings in additional revenue and profit for us and so.
Our cash.
Growth hopefully going forward will be used to bring in other assets.
Okay. That's helpful.
Thanks.
Thanks.
And once again that is star one if you would like to ask a question.
Next we will go to Matt Kaplan with Ladenburg Thalmann.
Hi, good morning, guys.
Matt.
Congrats on the quarter as well just wanted to dig in a little bit more into the design of said a couple things.
It seems to me or persistence rate should be pretty high given the level of and Rx and refills.
Comparatively can you talk a little bit about what your persistence rate is I guess historically given historically.
Persistence on T.R.T. therapies has been pretty low you know past six months.
And what's yours or 12 months, especially what's your what's your sense now given I guess, although it's early in the launch.
Yes, I think thats.
Clearly still early you know the vast majority of our patients really start didn't start coming on to therapy into late March April when we started to see the trends moving up.
I'll say the persistence looks pretty darn good at this point CNL, we're seeing persistency six seven months.
The patients who started.
The only one that may not be that some of the patients that were not seeing persistence is if they were first fill free and they don't have insurance coverage.
Some of them don't obviously pay for it out of pocket. So that's the one area where you know.
Where we see less persistence because of a financial decision not because the drug decision for the most part. So overall I think we're ahead of where we thought we would be from a persistent standpoint, clearly like you mentioned earlier this therapy is one.
Generally that's wrought with the low persistence, but we seem to be bucking that trend early on but again, it's very early.
But right now.
Things are looking pretty strong in that area.
Hi, Good and then and then terms of your current payer coverage you said you're 70%.
Had a schedule.
With respect to coverage, where do you think you could drive that is that where you kind of plateaued now or do you see that can continue to grow going forward.
Yeah, I think that you were at a very nice level I think 70% for any branded products is a pretty strong coverage percentage. So we're going to have ins and outs were going to add some plans that decide not to cover others that goal that will add on based on.
There.
You know what their with there.
Their customers are saying.
And so I'd say that I don't see a significant increase from this point on.
We will see ins and outs and hopefully, we'll get a little bit more regional coverage lot of the pvms were on the.
They are national formulary, but when you go when you Peel that onion back to the there is some.
Plans that are in there that don't cover that we may when overtime that will increase that number and again, there will be plans and say, hey, I'm, just not covering any testosterone products and they drop out of the universe, but overall I think thats you know, it's a pretty successful I'd number as far as coverage is concerned and.
We'll continue to work on improving that blade I wouldnt.
Expect a large increase of coverage from this point on.
Okay. That's helpful and then.
In terms of happy Pan you talked a little bit about the seasonality, which is absolutely expected kinda back to school in the third quarter.
Can you give us a little bit more detail in terms of the level that seasonality versus you know.
Second quarter.
And first quarter.
Yes, I don't have the numbers in front of me.
And again with they've really been a launch year for us and Teva more so for Teva.
I came to predict what Q4 will be relative to.
Their market penetration at this point, we know that the weekly trends have been good.
But if you look at the overall market in Q4, it's it's been down relative to Q3 not dramatically, but it's been down.
And.
Yeah.
Teva could bump that trend a little bit by just getting more market share, but I think overall the market is going to.
Q4 market, which is historically lower than Q3, I don't know the exact numbers off the top of my head as far as what percentage of how many scripts are written in Q1 through Q4 overall.
But clearly we do look at Q3 and is the strongest quarter for the EPA Netfront market.
And hopefully Ted will continue to grow their market share and we'll see a continued growth with the end product.
Okay, and then last question.
Kind of little bit of a follow up to Elliot's in terms of your pipeline.
You don't disclose what the products are but maybe one thing that could be helpful. For US is if you could help us understand the different products and the current market sizes that you're going after.
And and I guess, specifically for your and your internal product.
For Pfizer and then.
More specifically you know, we know about teriparatide, but what help us understand what the teriparatide opportunities for our entire I specifically.
Well so.
That's a really tough question to answer it.
A lot different products and so we're not prepared at this point to give you a market estimation on.
The overall all the other products actually Pfizer when it's an undisclosed product I think you'd be able to narrow down pretty quickly as to what the product isn't that would kind of defeat the purpose of what Pfizer is trying to do same thing with our other internal program again, I said earlier that will be probably disclosing that product in 2020 as we move into.
90 in clinical trials.
So it's not like we're asking or not it's not going to be that much longer before its disclose on a couple onea programs on the one that is disclosed for tie up I think for Tayo I think last year lilly's product at about $750 million in us about the equivalent amount globally.
So for Teva, it's a large market opportunity, it's obviously bigger than up in that front.
And.
Hopefully when they get the approval its products substitute a bull and if if if if thats up suitable I think we could see potentially.
Seems substitution rate and that we're seeing would that be Pam.
So it's a meaningful product because we get we sell into devices. It's clearly not the volume of devices like that but efron, so much lower volume product, but a much higher dollar value I think the.
Don't quote me on this but I think the for tape has about $3500 of Penn.
And so.
Dollar value is very high and we get out of royalty on that dollar value, we get a high royalty relative to abbey because of that kind.
Kind of changed or mix.
And in dynamics between price and volume so we get a we started out at a high single digit royalty to a mid teen royalty on curtail, which obviously it could be very meaningful for us as an organization anyone of the penetration that Teva gets and so.
Again, I think and in globally. The rest of the market. We get the same economics for Teva with Forteo on the rest of world, but the rest of world pricing as much lower than us, but overall, it's still a meaningful amount.
Amount of potential opportunity for Teva and for us.
So that I would say it that's the only other when I can characterize extended tie which is also you know.
Disclose at the smaller product I think overall the brands around $100 million, it's on a big opportunity, but for for us and cabot's important because it would be one of the first generic.
Products available for people with diabetes and so it's still it's still early.
A viable and important product for both of us so hopefully.
That will get approved and Thats exact same economics from our standpoint as as for Tayo.
Hi single digit royalties to mid teens, and we sell the devices again, not not a ton of devices being sold in that market. So it's more on the dollar value.
Thanks, Bob detail.
Thanks, Matt.
And ladies and gentlemen that does conclude the question and answer session for today I would now like to turn the call back over to Jack Howarth for any additional or closing remarks.
Thanks, Matt and thanks again for joining us on todays conference call. If you haven't follow up questions. You can reach me at six or 935 930 Onesix.
Concludes todays call.
Once again that does conclude the call for the day. Thank you for your participation you may now disconnect.