Q3 2019 Earnings Call

Greetings and welcome to the bio delivery sites is third quarter 2019 earnings conference call.

At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

I'd now like to turn the conference over to your hosts Terry Kaleo.

Chief Financial Officer. Please go ahead.

Thank you and good afternoon, everyone welcome to our third quarter 2019 earnings conference call, leading the call today. Your parents Cook Your Chief Executive Officer, We're joined by Scott <unk>, President and Chief Commercial Officer.

Following our prepared remarks, we will conduct a question and answer session.

Earlier today I believe recently issued a press release announcing its financial results for the third quarter 2019.

A copy of the release can be found on the Investor Relations page of the company's website.

Before we begin I'd like to remind everyone that certain statements may be made during this call which may contain forward looking statements.

Such forward looking statements are based upon current expectations and there can be no assurances that the results contemplated in these statements will be realized.

Actual results may differ materially from such statements due to a number of factors and risks some of which are identified in our press release and our annual quarterly and other reports filed with the FCC.

These forward looking statements are based on information available to Mediasite today November 12, 2019, and the company assumes no obligation to update statements if circumstances change.

In addition to our prepared remarks, there are slides accompanying this call presentation can be viewed on the investor page of our website at www Dot Bts I'd dot com and can be viewed by logging into the webcast.

An audio recording and broadcast replay for today's conference call will also be available online and Investor section of the company's website.

With that I'd like to turn the call it <unk> who care huh.

Thank you very much Terry.

My pleasure to welcome everyone to medium sized third quarter 2019 earnings call.

I'm very pleased to report that we had another very successful quarter immediate thought I highlighted once again by record level scripts and strong brand growth robust financial results and numerous accomplishments across the organization.

This marks the sixth straight quarter exceeding expectations and record level performance, where a company, which is directly attributable to the hard work and dedication of all of our employees.

I would like to thank them for their continued efforts in building your rapidly growing enterprise after the value we bring to patients across the country every day with our clinically differentiated portfolio of products.

Our success during the third quarter was fueled by the continued strong growth momentum of BELBUCA, which once again reached record levels total scripts volume growth market share and numerous other important metrics of the successful brand launch.

As we've stated previously our dashboard is green across the board.

We continue to see very broad and deep utilization of the product with record level you need prescribers, it's steady stream of new prescribers, we continuously expanded access from payers, placing BELBUCA in preferred position.

Very importantly, we also continue to reach record level, new to brand share, which historically has been tightly linked to the long term total peaks your level of brands in the category.

Okay and be Irex share with 7.6 for the third quarter more than two and a half times, our total scripture, indicating a very promising sustained trajectory of growth.

The third quarter also represented the first full quarter of our company promoting some pro it and they deal complement to leverage our efforts on BELBUCA.

I'm very pleased to see the we achieved record level number of scripts for the product growing 39% versus prior year.

Also very importantly, we achieved record number prescribers during the quarter and similar to build buga are continuously adding a steady stream of new prescribers western probe.

During the second half of the quarter. We also saw significant growth in new and total scripts, you're providing momentum to build upon for 2020 and beyond.

As we look forward I expect the current success with these two products to be further enhanced the near term by greater access across payers.

We can theater experience increased depreciation of the clinical differentiation of BELBUCA Ensign program and the therapeutic value they bring to patients in the chronic pain can you.

As we previously announced we finalized an agreement with a major national pharmacy benefit manager, which significantly improved additional insurance coverage for both BELBUCA and some problem with full plant adoption by January 1st 2020.

This provides approximately 14 million additional commercial covered lives with either prefer to preferred exclusive access to our products.

We continue to have very positive discussions with payers for BELBUCA Ensign program and are optimistic of securing additional expanded access for patients moving forward.

In addition, another major catalyst supporting continued growth for BELBUCA is a substantial recognition buprenorphine is receiving from agencies within health and human services for the management of chronic pain.

Beginning with the pain management best practices Interagency Task Force report released in May.

It's called for better coverage in primary use the buprenorphine for chronic pain.

There have been several recent meaningful initiatives divisions within AJ, just on the optimal usage of opioids.

These initiatives include the recent HHS guideline on opioid tapering.

The agency for health care research and quality or our dressed report an opioid treatment for chronic pain.

And the center for Medicare and Medicaid services, or CMS request for information on opioid utilization.

Gather these efforts exemplifying a growing in steady stream of recommendations in efforts help in the medical community more fully understand the significant opportunity that buprenorphine offers in treating patients suffering from chronic pain.

We are encouraged by this level of progressive activity and believe these policy initiatives will provide further clarification of BELBUCA is unique profile versus schedule to opioids and potential benefits to patients.

To summarize the third quarter was once again, mark by very strong record performance across the organization.

We are well poised to sustain this momentum and drive substantial shareholder value in the company has booked a buga ensign probably continue their market penetration.

We are on the cost of a major turning point for the company. We have record brand performance two straight quarters of being EBITDA positive and expect to be operation cash flow positive in the fourth quarter. This year.

Given the strong momentum we are raising 2019 net sales guidance to a new level of $105 million to $110 million previous range of $101 million to $105 million.

In addition, I'm very pleased to provide full year net sales expectations for 2020.

150, $260 million for BELBUCA and $165 million to $175 million the total company.

We have accomplished a great deal in 2019 are poised to finish the year strong and are very enthusiastic for 2020 and beyond with that I'll turn the call over to Scott to provide more details of the operational success during the third quarter Scott.

Thank you harm as highlighted in our commercial team continues to deliver record levels of up you could prescription and revenue during the third quarter and has successfully integrated some park.

Similar to past quarters, we're continuing to meet or exceed every key indicator metric, we're tracking for BELBUCA and terms our commercial execution.

During Q3, three we had another all time high for BELBUCA retail prescriptions of more than 89600.

Exceeding our previous all time high established in Q2 by 12%.

This represents growth of 103% when compared to third quarter 2018, an increase of over 45000, BELBUCA Trx is the largest year over year quarterly volume increase ever experienced.

Additionally, the increase in Trx is from Q2, Q2, Q3, 2019 was 11% higher than from Q2 to Q3, 2018, indicating continued acceleration and growing our flash flagship product.

We firmly established a strong trucker track record of commercial execution product for BELBUCA and remain confident and sustainability of that growth based on a number of key drivers and supportive market dynamics, which I'll now discuss.

First our prescriber base for BELBUCA continues to expand during the quarter. We added 1110, new prescribers, who contribute to a record 6991 total unique prescribers for the quarter. This represents an increase of 47% versus the same period a year ago.

With respect to establish established prescriber base, we're continuing to see a quarter over quarter increase above UCO prescriptions per prescriber across all data files the prescribers.

This is an encouraging indicator of the momentum BELBUCA continued to gain as positioned recognize more and more value that our product can provide for their chronic pain patients.

Another important important indicator of our growth is new patients taking BELBUCA for the first time.

During the third quarter, we increased our new to brand market share to a new high of 7.6% compared to 4.2% a year ago.

Importantly, our new to brand market share with more than double our 3% trx market share for the quarter.

Well compared to all other longing accurate acting opioids, BELBUCA MB Rx market share far exceed the trx share, which is predictable long term growth as historically there has been a convergence of trx and embarek shares overtime.

In addition to Embarek share growth. We also saw both BELBUCA starting antitrypsin does the strength continues to grow during the quarter.

We view the growth of both doses ranges as a positive as healthcare providers look to start patients on BELBUCA.

And then titrate them the lowest possible does the BELBUCA to attain the appropriate level of efficacy.

As we've discussed BELBUCA sales are clearly benefiting from the current paradigm shift in treatment of chronic pain and use of opioids.

The primary use above you got prior to feeling C opioids aligns with the recommendations from the HHS Task Force report.

We believe this is one of the reasons why more than 80%. The overwhelming majority of our patients that were new to BELBUCA are transitioning from short acting opioid regimens.

Oxycodone IR and Hydrocodones IR account for 60% of the loan.

It's also important note that as we are gaining indirect share we're seeing a declining share in current long acting opioid liters more morphine Youre Sentinel and Oxy Khan.

Last quarter, we improved BELBUCA covered by more than 6 million lives and just after the close the third quarter, we announced the formulary win with a major pharmacy benefit manager or PBM.

Covering both BELBUCA anthem product and improving access for approximately 14 million covered lives within commercial plans.

While currently in effect, we expect full adoption of the plan by January 120, 20, whereby BELBUCA will become either the preferred or preferred exclusive you've been working product. It's a product will be the preferred exclusive product within its clos.

This was a major PBM, one for BD, ESI and particularly for some project at this early stage the launch and allow us to gain additional market share more class.

So as we stand now we're heading into 2020 with an additional 20 million covered lives with new or improve access for BELBUCA and $14 million for some product, which we believe establishes a strong foundation to support our growth trajectory.

You can be assured that we're continually engaging with additional health plans and the federal policy initiatives. We described facilitating those conversations.

We're very pleased with our success to date and with those on the horizon and we look forward to provide providing further coverage updates.

Now that we've had another quarter of experience with some product I can provide an update on the watch.

As you know some product as a complimentary product development because that allows us to leverage our high performing salesforce within our target audience a pain specialists.

This allows us to take advantage of our relationships with prescribers in detailing some product and differentiating features.

We're very pleased with how the transition to BD Pdsr has gone and believe we have built a solid foundation for future growth.

For Q3, which was our first full quarter some product promotion prescriptions reached a new high of 15686, representing a 39% increase year over year compared to Q3 2018.

We are encouraged with the acceleration of in anorexic to 9005 over three during the quarter an increase of 7.7% over Q2 2019, while also reaching new highs in the third quarter for both Trx and Nbrx share.

In the third quarter, we successfully reached a new quarterly high 4706 unique prescribers for some product.

While pleased with the progress, we're making and adding new prescribers, there's still significant opportunity to expand utilization across our prescriber base.

Our focus on improving improving some product market access has resulted in a major PBM, making some product the preferred exclusive product over 14 million lives. This new coverage will require patient. The first utilize some product for IC Pro I see which we believe is a clear reflection of the product click clinical differentiate.

Sure.

While some plans and this PBM have already made this formulary formulary update.

Jordi of lives will be added January one 2020.

With the Salesforce is proven track record of pulling through market access coverage. We believe this expanded an improved access will be an important catalyst to some product growth in 2020.

In summary in summary, we are intensely focused on continuing to improve market access across our portfolio expanding our prescriber base growing the number of patients receiving BELBUCA with the first time and building further confidence in differentiating features this approach.

We are confident that our commercial expertise and execution will continue to drive value for media side.

We look forward to future updates.

With that ill turn the call over to Terry to cover the financials in more detail Terry.

Thank you Scott.

Similar to last quarter, our third quarter financial results exceeded the second quarter of 29 team and the prior year quarter.

Total net revenue for the third quarter ended September Thirtyth, 2019 was $30.3 million, an increase of 114% compared to $14.2 million in the third quarter of 2018.

The increase in 2019 is principally driven by BELBUCA growth, which accounted for 88% of total revenue and the addition of some product to our commercial portfolio.

BELBUCA net sales in the third quarter were $26.5 million, an increase of 115% compared to $12.4 million in the third quarter of 2018.

Gross to net reductions of 51.6% remained relatively flat quarter over quarter inline with our expectation.

In public net revenue in the third quarter ended September Thirtyth 20 $19.2 million.

As a reminder, this is the first full quarter of our commercialization of some fairly following the acquisition of the product in April .

In pro in gross sales increased 12.5% versus the second quarter of 2019, mostly driven by the price increase take in July 1st.

<unk> net sales were $1 million below the second quarter, which had benefited from the terms of the distribution agreement, which you know the which was in effect through June Thirtyth.

While third quarter net sales reflect the standard approach to actual an estimated revenue deductions and at 62.9% are in line with our expectations for the brand.

You had a barrel net sales in the third quarter were $937000 a reduction of $468000 compared to the third quarter of 2018, reflecting market trends for that product and our prioritization of our strategic products BELBUCA and can probably.

Royalty revenues for ex us sales of Painkilling breakout totaled $683000 for three months ended September Thirtyth 29 team, an increase of $313000 compared to the third quarter of 2018.

Total gross margin for the quarter was 82% as compared to 73% in the third quarter of 2018.

The year over year increase in gross margins reflect improvements in BELBUCA manufacturing unit costs and the current gross margin percent is in line with our expectation.

Total operating expenses in the quarter ended September Thirtyth, 2019 were $23.4 million compared to $14.2 million in the third quarter 2018.

The year over year increase is primarily driven by the impact of the expanded salesforce and market access team as well as establishment of medical Affairs NFL team together with the introduction of some probably to the portfolio.

GAAP net income for the quarter was $400000 compared to a GAAP net loss of $6.4 million in the third quarter of 2018.

The improvement in net income reflects the overall revenue growth coupled with higher gross margins.

And improved operational efficiencies. In addition to reduced net interest expense some weren't amortization expenses, which are approximately $1.4 million below the ongoing comparable quarterly cost prior to the refinancing of our debt.

As a reminder, the GAAP net loss of $11.1 million for the second quarter of 2019 included the refinancing of our debt in may of this year.

non-GAAP net income for the quarter was $3.5 million and reflects GAAP net income excluding stock based compensation and noncash amortization of intangible assets.

EBITDA in the third quarter of 2019 was $3.5 million or 11.6% of net sales compared to negative EBITDA of $2.3 million in the third quarter 2018.

This is our second consecutive quarter of being EBITDA positive, which highlights our commercial success together with our operational efficiencies.

Operating cash flow in the third quarter was negative $1.5 million inline with expectations and with the prior quarter.

At September Thirtyth, 2019, Bts, I had cash and cash equivalents of approximately $55.9 million.

While the final 10 million dollar installment of the upfront payments. This year will be incorporated relating to the acquisition of some pro it was paid subsequent to the ended the third quarter. We continue to anticipate being operating cash flow positive during the fourth quarter of 2019.

Shifting to our 2019 topline expectations, we are updating our 2019 net sales expectations for the total company to 105 million to $110 million, an increase compared to our prior expectations of $101 million to $105 million.

In addition, given the company's strong performance over the last six consecutive quarters and confidence in the growth momentum of the portfolio. We're now to position to provide our net sales expectations for full year 2020.

For full year 2020, our expectations, our range of $150 million to $160 million for BELBUCA net sales and we expect total company net sales to be in the range of $165 million to $175 million.

Looking forward, we expect continued strong growth momentum and continue to believe the long term combines potential about buca instant probably to be in the range of $425 million to $500 million.

At this point I'd like to turn the call back over to her for some concluding remarks before we open the call for Q inane firm.

Thank you Terry.

As you can see the third quarter was a very successful quarter pdsr highlighted once again by record level scripts and strong brand growth.

Robust financial results and numerous accomplishments across the organization.

We are well poised to finish the year strong have the plan in place some tailwinds for robust growth expectations in 2020.

And are confident of our continued future as a growing enterprise, we will now turn the call over to answer your questions operator.

Thank you at this time will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question Q you May press star to if you'd like to remove your question from acute for participants using speaker equipment, it may be necessary to pick.

Up your handset before pressing the star keys, one moment, please what we poll for questions.

Your first question comes from a line of Oren Livnat with H.C. Wainwright. Please proceed with your question.

Hey, guys I've, a couple of congrats on a yet another great quarter NIAP, some pretty spectacular 2020 guidance I'm on that latter point Thats, a solid 18% at the midpoint above the street. So obviously, we were already expecting gross you're expecting a lot more which presumably includes a lot of volume growth year over year, but can you also just talk to.

Price in terms than what you had to give up or not to get those incremental preferred lives covered should we expect Viper skeptical up down flat next year and also just in terms of the pattern should we expect a big jump in Q1 with these new lives coming on or more of a slow and steady climb and I've a follow up thanks.

Hey aren't its term. Thank you so much for for the accolade greatly appreciated obviously very proud of the entire organization and the trajectory that Ron So we're going to break down a couple of points that you asked there.

One with regard to pricing.

Versus volume in the growth expectations for 2020, I think consistent with what we shared previously we expect net price to be.

Fairly comparable to what we've seen over the last couple of years to be in the mid single digits moving forward. The only thing I would remind folks is obviously, we did take the price increase this year in March.

We anticipate doing an early part of Q1, so we'll have a little bit of a positive impact in Q1 from on the impact from from year over year, but but the rest of that will be volume and I think Scott maybe ill turn it over to you because I mean second question was with the significant access and we've been able to secure how does that really change the rebate profile in.

And the impact on gross to nets, which I think is very positive story as well, yes. Thanks. A question question on it our team continues to do a great job on our Mark market access side, we've opened up obviously a lot of lives, but we've been very thoughtful about how we do that.

We are actually very encouraged bill to add this plan really within the current structure, we have for other rebates. It really really will not take our gross and that's up as a result, so that.

And thats for both products.

We are actually really encouraged.

I do think that one of the reasons, we're able to secure the PBM and actually increased.

There.

[noise] interest was of the HHS.

Task Force.

Recommendations actually in guidelines actually.

We are.

Important catalyst under discussion with them and then the clinical value as well obviously, so so we're encouraged by the rates were paying to to get this win.

As far as coming on board. So just give an idea so with BELBUCA a little bit over 5 million lives. When so fast early in October .

And then the majority of so the remainder another 9 million or so we will actually go into effect in January what we've seen and past wins as it does take a good quarter. So it's really start ramping up.

We don't expect a hockey stick I think what's really important if you look at any of our market access wins, there very consistent Holly perform.

We're not forcing a switch to our products were basically opening up access removing step edits.

And then we're going in and selling clinically and the benefits the patients. So we're able to have very sustained predictable growth across these wins and then on some prolific on that same same fraud really only about.

2 million lives have been moved over at this point.

But the remainder will be in January and that is a little bit.

More of a.

Little bit more of a four switch because we will be a preferred exclusive there.

Where patients will have to.

Realized some growth first.

Again, a very favorable rebate, there as well to yes, I agree it's got seems under tremendous job in the only thing I would add to your question is that I think we should expect the sales.

Trajectory to be comparable to what we've seen for example, this yet but we know Q1 in those for the entire US helpful system creates a little bit of a dampening effect as the high deductible plans kick in and folks in transitioning so.

I would anticipate that we'll see a similar pattern as we move forward into 2020 and Oren. You said you had another follow up question, yeah, sorry to be a hard to I'd just add to switch gears a little bit are you still expecting are results of respiratory depression study in first half of next year and can you just talk about potential upside or even downside risks maybe associated with.

I'd like if it looks really compelling how would we be able to take advantage that data could eventually end up in a label or for used elsewhere and Conversely, if it doesn't look as good as you hope is there any risk to future growth in your mind or even two existing business. Thanks.

Absolutely, yes that study has progressed very well is on track and to your point, we anticipate the final study report to be available during the first half are really probably earlier part of Q1.

We have a great deal of confidence I think the.

Before assuming effect of the molecule is well appreciated well understood. We felt it was important to provide additional guidance information by studying it specifically within BELBUCA and doing a head to head versus oxy coating yarn and we're looking forward to see the resulting in to your point about the potential impact.

No I think consistent with what I've share there is a growing appreciation and groundswell of activity at the federal policy level and I think as you look at the Task Force report for example, the specifically highlighted the safety differentiation of buprenorphine versus schedule through opioids and I think this when we further add.

To the understanding and appreciation that significant.

Attribute in the kind of environment that we're dealing with today opioid utilization.

Hi, Thanks for all the time I appreciate it congrats guys.

Thank you aren't thanks one.

Your next question comes from a line of Greg Fraser with Suntrust. Please proceed with your question.

Thank you, it's Greg Fraser on for Gregg Gilbert.

On excess coverage what are your goals for preferred access you're at about 60% of covered lives now where would you like you do like that to me, but how do we think about cost getting there you had a lot of lives with the recent wins without impacting gross net you much the benefit of HHS. Your point, that's a trend that you've been can continue.

Yeah, Hey, Greg. Thanks, So much for your question I'm going to just star them turn over to Scott. Our goal is 100% of patients in the United States should have appropriate access to both buca.

Patients that are suffering from chronic pain, we believe implicitly in providing physicians with an open plainfield to make it does clinical choice for their patients and we believe it will be because important element of physicians armamentarium in your program management of this disease.

But I know that that wasn't exactly the essence of the question, but I think it's important for folks to recognize understand our strong belief in the product and we continue to advocate intensely with payers to ensure that we do our part as a good stewards of the product for patients that axis. The that's definitely want to talk a little bit about some become.

Decisions that were having on the deferred side and and to be fair Medicare continues to be a little bit stickier flows.

Yeah, that's great great question and so so on the commercial side, we we still feel we have an opportunity that we obviously just.

Hi, this important formulary change with really the last large PBM that we have not.

Secured previously so we've done that now what we're doing is making sure we have regional plans underneath these commercial plans that we could also impact.

Improve access.

And we believe it can continue to do that it just takes longer period of time, sometimes to do so.

In regard to Medicare Herman mentioned at the end stickier.

It is we're on we're up we're really always having active conversations trying to prove it there what we're trying to be thoughtful also.

The truth is.

If you can get access, but it's not profitable access if it doesn't make sense if it completely destroyed your gross to not to doesn't make sense. However, we firmly believe that Medicare patients should not have stepped through Sentinel oxy co down and morphing to get to BELBUCA.

So we're committed to doing so.

And.

We will continue to work hard to do that and then huh, yes, I know theres others I really appreciate that you're absolutely right. I believe we continue to have very active engage in discussions with the entities that are providing coverage for Medicare patients. We continue to believe as we've expressed.

On multiple occasions that is the clinical value and clinical proposition of the product.

That is really most important element of the discussion and again as I mentioned earlier, the there's a lot of activity in Washington, including ATSI CMS really reevaluating.

There are there particular guidance to the organizations they contract with on the opioid.

Coverage that is provided in patients that are suffering from chronic pain.

And you know we're hopeful that that is going to be an opportunity to have a focus with the conversation beyond the clinical value will be the moving forward and again, we will do our part to be good partners in that process and look forward to continuing to drive a pathway of opening access to Medicare patients moving forward and very optimistic that back in half.

And in the time to come.

Great that's very helpful color.

On business development can you speak to your latest priority is that how would you characterize the availability of the types of assets that your interests.

Yeah, Greg and I. Appreciate the question, obviously, we're having a tremendous amount of success only first and foremost say priority number. One is continued flawless execution with the portfolio of products that we have.

I think if anything we have demonstrated that we keep an eye on the task at hand, and while we're certainly very proud of the success of the growth that we've achieved with BELBUCA.

We have 3% marketable.

And we have you know I guess.

Third quarter less than 8% new to brand share, which is Scott pointed out is there's a dramatic increase from where we've been.

What if anything that also highlights the of the significant opportunity to continue drive dramatic growth with BELBUCA and against some pro gives a wonderful complementary asset fits that's perfect plug and play into our portfolio and we're doing very well that we also see significant opportunity for for a lot of growth moving forward with some problem. So.

Priority number one to your question is the flawless execution for that we have and to continue to drive this dramatic growth that we've been experiencing.

Now that does create an organization.

With an opportunity to really controls destiny.

And our focus is really to to be thoughtful to be judicious. That's how we scale the company moving forward, but we already growth oriented company and we will keep an eye open for opportunities that we feel continue to be additive and accretive to the opportunity of driving significant growth moving forward, but you know what are we.

We're going to be very thoughtful about the kind of opportunities that we take a look at and.

And again right now we're really just focused on execution of the products that we have.

Got it thank you.

Your next question comes right in line of Scott Henry with Roth Capital. Please proceed with your question.

Thank you good afternoon, and congratulations from really strong execution on the BELBUCA launch.

Just a couple of questions first of all I.

Terry give a a peak sales estimate I think I at 500 million was the back of it I could you just.

<unk> I didn't quite catch that just let me now what exactly that was and what that was pertaining to.

I think it's consistent it first of all of that thank you. So much an i. I'd like to transfer your accolades to discard the entire organization that is it's really a tremendous team and I know the ones that have really done a tremendous job.

Greatly appreciate your your kind words, a long way to go in a great opportunity moving forward as we've expressed here I think what Weve just really reiterated is that when you look at the portfolio of products would go up you can some pro it again looking long term, we have a great deal confidence and the growth opportunity for these products.

We continue to see a portfolio that can reach $500 million and every day every month every quarter as we continue to execute as well as we have our confidence level in that continues to rise and moving forward. We've always said, we we may increase that if.

The data proves to us that the opportunity could be bigger than that moving forward I think more importantly, right in front of Oh, the confidence in finishing 2019 very strong the confidence in the significant growth expectations that we have now for 2020 and I think what's also important will settle.

Along is that beyond 2020, we continue to see very strong growth, we're growing 100%.

This year with Bob you, though you see BELBUCA next year again growing you know well over 50% and obviously, we don't anticipate 2021 that thats all of us I'm going to collapse right. So so we do see moving forward and opportunity for this brand to continue to drive significant growth and therefore significant shareholder value for the corporation.

Great. Thank you for that clarity harm.

A couple of modeling questions I guess for city project, we've got our first full quarter.

It looks like revenue per script this.

And in that 140 to 150 range <unk> question is that a good range should we think about that as representative going forward and second question can you talk a little bit about the gross margin assumptions, we should have on symbolic.

Sure Scott This is Terry I'm. So Oh, yes. Your your estimate is about right I I estimate about 150.

Dollars per script, and so that's probably a good good place to be and for the foreseeable future and based on the gross to nets says that we're estimating at this point in time and it is early days were just over 60% as I shared earlier, so it's probably a safe place for you to be estimating I do think once we get you know a few quarter.

I was under our belt, we'll be able to fine tune that and and you know reflect what's really where the patients are really coming from across the different payers and so on.

In terms of the gross margins was your question so actually our gross margins on some projects are very comfortable to w. 'cause or in the low to mid 80.

Even after paying the royalty too.

Two shionogi, so a actually.

Like that it actually doesn't play with our P. and Alan and is in line with what we would expect as well.

Okay, great. Thank you for that color.

Staying on the model SGN <unk>, who is around 23 million in the quarter.

Which was up as as we would expect from Q2.

How should we think about that ask DNA line going forward is is this kind of a new rate to expect or should we think about higher or lower from here.

Yeah. So so I think the fourth quarter, you know being in line with the third quarter, its probably where we would end up.

We look forward into 2020, we've been thinking we will end up somewhere averaging in the mid twentys throughout the year and that's excluding amortization.

Okay and radiation right at 1.9 million a quarter.

So.

Prs DNA.

Okay final question still in the model a interest expense you know, it's that kind of a representative that I think it was 1.2 million in the quarter. That's that's a good go forward number.

Yes, I think and it reflects the significant improvement we've made on the and that's our net interest expense and it reflects the significant improvement following the debt refinancing earlier this year.

So.

We no longer have any warrants amortization either so the net number is the 1.2, we were up it's like 2.6, a year ago, when you had everything and.

Yeah, there's no that looks great well. Thank you for taking the questions. Congratulations again.

Thank you so much Scott and stuff.

Your next question comes from the line of Matt Kaplan with Ladenburg Thalmann. Please proceed with your question.

Hey, guys and good afternoon, and congrats on a nice quarter I'm just wanted to dig in into a couple of things with BELBUCA can you give us a little bit more color in terms of who's who's currently prescribing the trial, because it really pain specialists as a GPS and I guess what.

The mixture and then you know really when they when they prescribing it too or are they patients transitioning from other opioids for patients transitioning from and said to something stronger where are you where are you getting where you're getting traction with us.

Hey, Matt It it's a it's a Scott ill answer the question for you.

Appreciate the question so as we look at our prescriber base.

It's sometimes difficult to tell exactly their specialties. So.

So for example, probably 50% to 60% of them actually have a pain.

Designation there am a designation is pain related.

And then there are many mid levels and so.

So nurse practitioners in P. is it really don't have a specialty associated with them, they're kind of our next bucket of prescribers and those are really are our call targets as we go forward.

And then there obviously there is a small number of Rheumatologists neurologists.

And so kind of.

Specialty is on the edge of pain specialty and then for most part they are patients that are being transitioned from short acting obviously shared this during our script, but 80% of the patience, we see going over to BELBUCA are coming from short acting opiates.

In 2% recently, 18% was from long acting, but about 60% of that as a few tran switch so very little long acting long acting movement, and that's actually pretty common within the space.

So so that's where the patients are coming from we don't we're on one able unable to understand if somebody is moving from an end said.

To to BELBUCA, because it's not captured as our data I know that is happening and they'll be somewhat of a majority is really short acting to two BELBUCA.

Okay Thats helpful. Yeah, that's very helpful. Thank you.

And then just digging into two separate like the opportunity in general can you help us think about that.

Kind of going forward and and you know you gave us some good detail on to help you gun and and I think people are more familiar with that but help us understand in terms of the opportunity for some frelick as you know.

As you go forward here.

Yes, so when we look at it the PAMORA markets not that complex. It's it's basically movantik relet store in some proact with movantik owning about 80% of the market. So.

Our primary goal is the only to the market's been stable which is good.

When you compare to the long acting opioid market actually is decline much more than the the.

Good morning, South so.

We think thats encouraging, but if you look at just Movantik is about 40000 scripts per month.

So we definitely have some some room to grow there.

Believe that were clinically differentiated.

We believe that adding additional market access wins, specifically in the commercial space.

We have an opportunity to add more preferred lives. We also have a good number that are not covered Phil.

So we have an opportunity to I'm, sorry, I've covered but we have to step through movantik and will work very hard over the next.

Six months to a year to change that so that we're not having the stuff through them.

What's what's the price point differential between Movantik and some product is there.

It's negligible overall within like 5% of each other awesome novanta with well store being.

Eight or nine Oh I'm sorry.

For full higher.

Okay.

Great well, thanks, Ed detail.

Thank you.

Your next question comes from line of Tim Lugo with William Blair. Please proceed with your question.

Hi, guys. This is John on for Tim. Thanks, So much for the question I was just wondering given that you already have around 90% of course are covered lives with Topeka access where do you see the next major growth opportunities for that product and route to peak sales expectations.

Hi, John Scott, So first and foremost most we just need to keep executing within our current ones.

When you look at it adding just 14 million lives here going into 2020.

That's a good good number of lives in the commercial side.

And then again, if I look at really every plan that we've been able to improve our access there's a really nice growth trend in place. There. So we need to keep that in place. We do that we're gonna have really nice steady growth going forward and then we will look to pick off the Medicare plans, but we need to do it at the right rebate levels.

And then herm, Yeah, I was going to look when you John I think it's a great question I think it's a very important question, we get asked us a lot.

I guess in the line from misses that once you run out of plans to open therefore, you cannot grow.

It's actually flipping that around because one of the greatest barriers to growth of a product launch is the availability of physicians to righted disease. If patients don't have access to the product. We've done is in a in a relatively short period of time, we had remove that barrier of physician disk.

Option for their patients. So now it's really about clinically partnering with physicians as I think about optimal utilization of their opioid choices in how we've been describing the abuse. It can really be an important consideration given the significant differentiation, particularly in the safety perspective, and a high degree of efficacy.

So now the the element of whether it's covered or not covered is removed from the physicians consideration and now it's up to our teams are really part and with those doctors and capitalize on that open access it actually is a pathway and playing field of growth rather than.

The other way around.

That's really about changing the way they practice.

The treatment of of chronic pain.

And.

In selling clinically and providing the benefits and we're really fortunate to have a clearly different products in a C product in BELBUCA.

We're very fortunate.

And.

The other thing I'll add is our goal is really never been to force switches. That's been really just remove the stuff that's where we don't have stepped through.

The other long acting.

We need to have we want to insert ourselves when a patient use a long acting we really believe.

Firmly believes that the C products would be the first thing years like BELBUCA as long as clinic clinically appropriate.

Yes, the clinically appropriate, but all things being equal C should always be forced into.

Alright, thanks, so much thanks, congrats on the quarter.

Thank you thank you Jason.

Your next question comes from the line of Brendan folks with Cantor Fitzgerald. Please proceed with your question.

Hi, Thanks for taking my questions and congratulations on the quarter into 2020 guidance and.

Especially Scott I think you mentioned that 80% of patients mutual buccal coming from IR switches and believe this is up nicely from Q2.

The sand.

Yes, so we definitely see the toss Force report working my question to you as you.

Do you have any color in terms of what percentage marketshare catch it you have outpatient switching to any long acting summit, Hey, IR.

Hey, John set and then having fun. Thank you.

Brendan can you clarify that question I'm, sorry, I'm trying to.

Lets wasn't problems.

From so all the whole IR too long acting switches across all if you like.

Do you have a sense of what percentage market share capture you currently have.

Any IR patient switching to any long acting appealing.

Yes, so thats, our new to brand show that we we've been sharing so that's actually incorporate switches and adds though.

So it's we we'd like to refer to must transition Brandon. So a good number of patients are there just adding a long acting pizza doctors are adding along asking to a short acting and then especially with BELBUCA what they do as though puts so don't taper down on their short acting add Bellevue.

And then what really with the goal of eventually getting off the short acting.

But so a lot of times, it's an AD and then.

Very seldom is a cold switch over to another product, usually I'm kind of transitioning over and then tapering down the short acting.

But yeah, that's RMB odds with 7.6% for Q3.

Up significantly in and that's what we referred to during kind of our script, where we're really encouraged by the fact, we had a 7.6% and the Rx compared to 3% Trx share.

Which is exactly the opposite of the other traditional long acting opiates. They all have an embryonic that as much lower than though trx share.

Okay, great. Thank you.

And then secondly, I know Youve got to stock in the past you yeah, you've talked that Youre commercial footprint is right sized watch them with cigarettes that we seen in 29 Kenyan 2020 can you just provide some color around you updated thinking there. Thank you.

No I appreciate the question. So we're always looking to optimize and make sure. We're right size, we do feel that our footprint is appropriate and our space but.

As part of our recent review of where we are and also complying with the wins we've had.

When we look at the access in certain parts of the country. What for example, the this recent when means to US we are going to be heavy in a few areas, where we feel like we're not going to maximize our opportunities. So.

What do you could probably think about going forward is maybe another seven or eight RUPS. So about 120 total no incremental managers. So a minimal minimal spend we want to be thoughtful and make sure that.

We're not growing larger than we need to.

Yeah, I would as Scott that to the question I think that Thats very well said.

Our approach with our go to market model is to call on the pain specialists.

As you described earlier that are really writing the vast propensity of life long acting opioids.

And as you pointed out every year, we reevaluate that in the market moves a little bit is right and so to your point, we are appropriately, making tweaks and the periphery to put our team and the best position to capitalize on the opportunity with BELBUCA.

But as you correctly pointed out that that's that's just a little tweaking and there's certainly no need for any wholesale changes we have the right model to capitalize on the opportunity we have the right team in place, which is why we're experiencing the strong growth and the expectations that we have for 2020 beyond.

Your next question comes from line of asked or Hong with Janney Montgomery Scott. Please proceed with your question.

Hi, So guidance has been raised three times this year I'm in so I'm just wondering I've all the factors contributing to BELBUCA sales growth what was the most surprising or perhaps under appreciated. Thanks.

Hi answer it from you know that they are written thank you very much for your question. It has been a a tremendous year and part of it is due to your question is a brand that since launch mode right in and as evidence mounts and developed in terms of the robustness of the growth.

That gives us the confidence.

To to have a forward looking point of view and we've been in a wonderful position with the team has done a tremendous job and again, we have a lot of environmental support from the payers were providing the kind of axis of patient needs for the product on the commercial side as we described the now more and more so.

From a federal policy initiatives coming out of health and human services.

And so as these events have unfolded, it's just giving us more clarity more specificity in enabled us.

To to provide a.

An elevated view if the opportunity so I'm not sure that there's really necessarily been one event that has really been a surprise, it's really been a collective convergence of the four points strategic plan that we put into place last year, which was getting the the team that Scott.

Just described the Rightsizing the right architecture to partner with the physicians opening up access, which I think we've done a really is incredible job out more and more room to go certainly, but a thing really a tremendous advancements over the last 18 months building out the medical team.

Certainly takes time and we're really seeing the fruits of that labor nothing Painweek for me was a coming out party for for the all the work the medical team has done over the last year, we had a tremendous presence.

Early September at at the largest screen conference in the United States with five abstracts and presentations the that were accepted and very highly appreciated and a lot of other activity that was.

Robustly attended by healthcare professionals as well as a multitude of other endeavors in activities of the medical team has done and we'll be doing such as the respiratory study moving forward and then finally, the fourth element of our strategy was really beginning to appropriately engage with consumers and and so what we're really seeing is all the fruits of all this.

Investment enough for continuously really taking root and taken hold and give us confidence to have a erosion roads your outlook throughout the year and also to give us confidence to provide now.

Very robust look for 20 Twond.

Great. Thanks.

Well, thank you very much out there and it has there before we conclude actually.

One to see if.

Yeah, I think Terry is going to just provide a clarification on a on a data point Terry yes. Thanks, Karen So yeah. Just wanted to clarify that there is a minor typo in the earnings presentation regarding the upper end of our total net revenue.

Expectations for 2020 on slide five and 15, it's Herman I shared in our prepared remarks, our expectation is that the range will be $165 million to $175 million. The press release, its correct and we will we post the deck for for your information and follow up.

Ladies and gentlemen that concludes today's conference.

Any last minute remarks.

Got it goes you said think or thank you very much and then we are prepared to close the meeting at this point.

All right ladies gentlemen. This concludes today's conference you may disconnect you lines at this time. Thank you for your participation.

Yes.

[noise].

[noise].

[noise].

[noise].