Q1 2020 Earnings Call
Forward looking statements are subject to risks and uncertainty, which could cause actual results could differ materially from these stated expectations.
For further information on the company's risk factors. Please see their 10-Q report filed with the security and Exchange Commission. This afternoon, the earnings release and the slides prepared for this presentation.
Joining us today for mankind, our Chief Executive Officer, Michael Companion.
And Chief Financial Officer, Steve and I Wonder I.
I would now like to turn the conference over to your host Mr. Steven are Mr. 'cause Tanya. Please go ahead Sir.
Hello, and thank you everyone. Good evening.
Nancy spoke 17 million people had filed for unemployment unfortunate that number's, probably going to double by tomorrow.
I'm optimistic as the country. It was up people kind of just two new normal and we can expect a gradual recovery as things go forward.
The one plus for us what code, but the discussion around eight once you control in diabetes as we've seen a significant higher death rate of people, who go into the hospital that diabetes and those without.
This discussion is being elevated as we go forward out there with our customers considering that the 5 million people want injectable influence or not a goal I need to be doing everything they can as possible I get the goal now more than ever.
Hence our mission is to get people control their health and the freedom to live their life like more human this has been focused more for us over the last six weeks than ever as it continued to talk about control and it doesn't number webinars that we've done with our commercial sales and marketing team and medical team over the last several weeks.
Real quickly on a touch on the key at key things that we've achieved here in Q1, despite the event of coated happening in early March.
Fred the U.S. quarterly revenue of $8 million was 58% higher over first quarter 2019, and highest quarter sales we've had to date.
There was some stocking of wholesaler and patient stock up increase net revenue by approximately half a million to 700000 as we could see scripts accelerating during the month of March.
However, research analysts ranges ranged from 6.5 million to 7.7 million with a consensus was 7.1 and you can see we conservatively have beat consensus estimates here in Q1.
Our gross margin achieved a record high 40% and this has continued to go more positive each quarter over last five quarters up from a negative gross margins historically.
Additionally, Brazil, Unfortunately launched at the the wrong time with cope with launching a there in Brazil, and shutting down their market slowing their progress.
We anticipate a second shipment in June at a reduced cost to ensure beyond can continue to supply the product that we should not only in September but get the prices down and get through the different currencies that have occurred as well as good sales moving in their market.
Makes you wonder locked down and we come out as surely we talk to them weekly to understand what's going on how we can help them succeed.
Fortunately, United Therapeutics had there and it's called last week and they are on tractors and we're on track to receive our third milestone of $12 million in Q2.
And Cobot 19 was delayed the brief study slightly we don't expect any submission impact to the FDA on our timeline or additional trials, we have to do to commit.
Two now and into the year they were not on the critical path and they don't look like the when the critical path as we open up the markets again.
Yeah.
You do you have done a great job and making sure when the markets open up to enroll patients again that we have additional sites. The protocols are ready to go I believe that we will finish up the brief study and the other two reinsurance trials, which are the PK study and human factor study as quickly as humanly possible over the summer.
On the cash flow from more good news in that we've continued to reduce the cash burn quarter over quarter, Steve will share with you. Shortly at 11.1 million this year versus 24.1 million and 2019.
Overall, I am happy with our continued growth over the past few quarters and excited to see that tritium moves forward.
Thank you to manage our cash tightly new environment that we were running the company.
And then a bridge slightly over to talk about what we're doing filled at 19 as everyone is asking what is our response to covert.
Number one two and three is keep our employee safe and our patient safe.
We've implemented work from home, we've had travel restrictions since I pretty much early March.
How amazed at how smoothly, it's been to move entire company to a virtual work environment. It seems as an incredible job and communications enhance significantly I think everyone's working more hours that they wake up to assume call. It eight o'clock and shutdown of six or seven o'clock at night before they can you start to be dream of.
Number two is we're maintaining supply of our life saving products Afrezza, the denbury manufacturing facility.
Limited to essential personnel on me with the remaining staff working from home, we need to maintain our supply chain, where in the process of producing finished goods that will carry us through remainder of 2022 insured no supply disruption occurs in the marketplace.
Additionally want to reduce the strain on the medical system by minimizing in person health care provider visits.
We've made as a nation, a massive banbury hospital or continue to find opportunities to support our local communities that we operate in.
In terms of developing treatments for covert 19, we evaluated for opportunities that I talked about recently.
At this point, we decided not pursuing two of them one because it is likely and O T. C product that we won't be able to move forward and our current capacity or FDA regulations and the second one is because it would require probably 10 to 15 cartridges of inflation powder.
Three or four times, a day, which just is not a feasible solution.
There are two other products that we remain under investigation that will continue to watch the marketplace as its evolves and see whether or not we moved these forward as we said previously we're not going to invest a lot of shareholder much money uncover 19, but we will seek outside partners and opportunities to fund opportune to fund these opportunities, but we're happy to dedicate our personnel in our infrastructure around these.
[noise] I'm hopeful as a vaccine comes available that we could be one of the partners to make and inhalable vaccine like we've seen with the flu.
But yet you still need to find a vaccine before we get too optimistic on anything like that.
In addition, it's mostly it's really important that we sustain our business on reducing activities, which reduces our spend here in Q2 and for the year end. Many of our vendors have helped us reduce our cost structure here in Q2 by taking cut in their own fees.
Either in this quarter or for the arena part of the year.
Reduce the majority of our employees pay by 20% for Q2.
We were lucky to receive the paycheck to Paycheck protection program, which helped us preserve jobs as we went forward here starting out Q2.
Let me share with you some of the insight that we had going into two April when we see these funds.
Well one you can see the indexes were tracking up in February through the first week of March here on the Blue line, but he's really peak the first week of March and bid on a downward trend over the last seven weeks.
And there's always usually a lag between new patient starts and trx is going into the marketplace, but you can see to your access start to be impacted.
As a lack of product build up in demand that we saw in Q1 not happened in Q2 and it looks to me if things are hopefully going start to stabilize as we get into may and get our salesforce back out there.
Patient retention has held up remarkably well consider considering that our NBR axis, which are true new to brand treatments are down almost 35% through early April.
We just opened up seven territories. This week and we're getting feedback from these reps on whats happening how the being received in the marketplace and using those insights to train our salesforce going out again next week, because we expect each week was the tenure at least waves of our employees back into the marketplace as things open up.
I can tell you anecdotally feedback has been positive that our customers are walking us to the offices are using customary protection equipment, we're checking temperatures and making sure. We follow good housekeeping guidelines to make sure. We don't cause any cross contamination or employees are supposed to come to 19 [noise].
We expect 20 more reps to go out next week.
Assuming all things go out this week and there's no changes in the states that are opening up.
He's will help us start to drive new axis as we go forward in coming weeks, where I think we'll start to see stabilization and hopefully growth as we get into June and close out Q2.
The team to take feedback from the reps and the good news. So far is be customers that are we're getting into R&D private practice smaller doctors, where we have a disproportionate amount of sales of Afrezza. We are seeing limited welcoming in academic centers in large health with Alf practices that are there more academic based per se.
So that's something we'll tell you to watch and well, that's not where we get our bread and butter. There are some new patient starts that occur in those places will continue to try to get in there where as possible in a safe.
So for those of you may not have seen the at QB report that's out there that's really downloadable I want to talk about some of the market trends. We saw overall Cook a 19 had a disruptive market impact in the healthcare system across many many parts of the industry.
And then be ARX isn't new starts are way down in some of the new launches have also been negatively impacted.
Patient interactions are down 30% to 70% depending on the specialty and Tele health is up a lot, but generally not for new patient starts are changing treatment regimens at least not in today's normal pulled that we're facing.
As the Tele health continues to persist I see this being a big opportunity to help manage people living with diabetes as they don't want to go out in the marketplace.
On Rx timing, we talked about pull forward in March we see that softness in April and hopefully start to flatten out here in may and we've seen a 90 day, Phil actually slightly increase but not significantly the other disease states here for Afrezza, but we've seen across the marketplace with 90 day fills and more mail order.
Would it be done to mitigate these activities number one we've implemented a virtual care model that we can now have effective interactions with HCP as do.
We have something that we call and chats that allow us to talk to doctors one on one with the thought leader.
We continue to engage thought leaders and host Webinars every week, we had one today one on one day and a couple of last week, where you're getting 5200 customers at a time listening to different topics that we're putting out there around cobot 19 of president and telemedicine.
Our customer experience center is continuing to help out patients where possible. We're also focused on moving our our free bridge claims and you paid claims that we believe 60% to 70% of then can be converted to pay claims as we go forward and we're seeing some early signs of that continued decrease every four weeks as we go forward.
We're also here to help ensure patients have content continuity care. Despite the unemployment where the startup program that can provide free drug for up to four months at a co pay assistance program that should make sure any commercial patient doesn't pay more than $15.
We lost a specialty pharmacy network in Q1 and that is now almost 10% of our sales.
We don't expect that to show up to make any major impact in our weekly scripts as all these pharmacies and what we understand do report to Symphony.
Additionally, one of the rate limiting factor starting a phrase is making sure patients can have an NPV one device and we've implemented a program, where we can ship directly to patients to minimize any disruption new patient starts.
While our overall commercial efforts have been disrupted and we expect an unfavorable impact in Q2, you can't predict the ultimate impacts of endemic event on or near term business.
That said we are planning for success, we're investing in a new reimbursement support hub that will launch in Q3, we filled the 12 wells that we plan for that we expand afford back in Q1.
Finalizing our pediatric protocol with medical in the FDA later this year.
So while we can't predict the future we're trying to control our destiny as best we can.
I'm going to turn over to Steve.
Thanks, Mike and good afternoon.
Very pleased to review, our first quarter 2020 financial results, which show another quarter of accelerating a frozen net revenue.
Increasing afrezza gross margin and improving operating cash burn.
I'll be discussing select financial highlights and EG urge you to read the condensed consolidated financial statements and Mdna contains our 10-Q, which was filed with the FCC. This afternoon.
Let's start with looking at revenues for the first quarter 2020.
Present, net revenue was a record $8 million versus 5.1 million for the corresponding first quarter of 2019, the 58% increase with generated by volume growth from underlying the Fraser prescription demand up 27%.
Favorable mix of cartridges, which I'll dive into in the next slide.
Price.
And approximately point $5.7 million from increased buying patterns and patient prescription trends as patients stocked up on Afrezza as pandemic stayed home orders increased across United States in March.
There was no afrezza international revenue in the first quarter gross to nets were 43% for the quarter, which fell into our expected range or 40% to 44% as communicated during our 2019 yearend earnings call.
The increased from 38% a year earlier was primarily due to an increased estimate or product returns and an increase in the utilization of our patient co pay assistance program.
Revenue from collaboration services was 8.2 million for the first quarter of 2020 versus 12.4 million for the corresponding quarter first quarter of 2019.
The reduction in revenue was mainly due to the recognition of the $10 million United Therapeutics Research agreement over the period, the fourth quarter of 2018 through the second quarter 2019, when our performance obligations were substantially completed.
Inception to date, we've recognized 45.6 million from the United Therapeutics license agreement and 9.8 million from the United Therapeutics Research agreement for a total of 50 455.4 million recognize inception to date.
The next slide shows how our favorable product mix impacted our first quarter revenue growth.
I've explained on prior quarter earnings calls are 12 unit cartridge price three times before unit cartridge and the agent or cartridge. This price two times before unit cartridge. So here in the slide we're showing for unit equivalent cartridges to enable an easy comparison of growth rates and the show the favorable impact in a fraser revenues from cartridge mix.
The bars on the rights showed the most expensive 12 unit cartridge had the fastest growth is 73% versus the first quarter of 2019, followed by the eight you at 60% and the for you at 42%.
Faster growth of the higher unit cartridges equates to a higher growth rate of Afrezza revenue.
Moving to a freshpet gross profit in gross margin. This slide shows gross profit steadily increasing from 1.1 million in the first quarter of 2019 to 3.8 million in the first quarter of 2020.
And the Green box below the gross profit you will see that the gross margin for the first quarter of 2020 was 48%, which has also been steadily growing since the beginning of 2019.
The primary reason for rising gross profit and gross margin is increased afrezza revenue.
As we sold more afrezza the cost of goods, so relatively flat throughout the period, Sean Mcgrath due to prodrug production volumes remaining lower than our production capacity. We don't yet have large variations in cost of goods sold by quarter as a majority of manufacturing expenses are being recognized as cost of goods sold.
In the quarter incurred.
This next slide shows how we used cash and operating activities for the first quarter of 2020 and for all four quarters of 2019.
The lighter magenta bars on the top represent going to present net revenue from the first quarter 2019 through the first quarter of 2020.
The bottom bars represent the non-GAAP net cash used in operating activities.
You can see a steady reduction in net cash outflows quarter on quarter as we carefully managed our spending while being helped by increasing our president net revenues.
Non-GAAP net cash used in operating activities was $11.1 million in the first quarter of 2020, but the last bar on the bottom right versus 24.1 million in the first quarter of 29 team. That's the first bar in the bottom well representing a 54% decrease in net cash used mainly driven by nine point.
$3 million spent in the first quarter of last year on direct to consumer TV advertising, which was not repeated in 2020.
There were also reductions and other promotional and marketing activities as well as personnel and employee related costs, which contributed to the lower cash burn in the first quarter of 2020.
I'm proud of the awareness that are employees have regarding the importance of spending cash widely wisely and it shows in our results.
Wrapping things up we had a solid quarter to start 2020, who we are facing headwinds from the cobot 19 pandemic.
As Mike just described in mitigating mitigate the impact of the pandemic on the company, we have pulled back on spending.
I've asked for and received fee reductions from vendors have implemented at pay reduction for majority of our employees and received a PPP loan.
We will continue to be proactive in navigating the company through the pandemic uncertainty and we'll continue to take actions, we feel appropriate to keep mankind moving into right direction for all of our stakeholders.
Thank you and now I'll turn it back over to Mike for some additional comments.
Thank you Steve on the next slide here you can see that our taxes have continued to grown since we put our salesforce infrastructure out there in Q1 of 17, all the way through now Q1 of 2020, we typically see a small blip here in Q1 versus Q4 and that was no different this year, albeit a lot less than the previous year.
But that that will recover should recover as we progress throughout the year as we see Q1 drops and typically Q2 three four pick up this year may see a flattening in Q2 and the pickup as we go in Q3 and four.
We've done everything we tend to ensure success coming out of coded and as you see here, we have a three X growth and as you Steve talked about on the revenue side or think about as a one to two leverage almost where you've got three exports and prescriptions you get almost double that revenue here. We saw quarterly net revenue go from 1.2 million in 2017 almost up to over eight.
$1 here in 22.
20, and so that's a sevenx growth in revenue, we don't see anything dramatically shifting this this trajectory as we continue with forward over the quarters beyond 2020, just have to get through this code that hiccup that we're all facing [noise].
Lots happening here, we're continuing to progress forward warm make sure we align our resources of propylene reduce our costs, where we can continue to deliver demand and get this company going into right direction.
We also move into a virtual shareholder meeting here on May 20, onest someone to remind people to make sure. They both are shares. Please sign intend to 15 minutes before the start and heavier control number one you log in order to ask questions. This will be really important for people ask questions.
Our five proposals here on the agenda collection of our new directors as you guys know we've added two new directors in the last few months and one of our a whole new doctors has stepped down for reelection we're asking rent increase unauthorized common shares were down to about 20 million shares currently in our authorized capital, which was a less increased three years ago.
So those shares with last approximately three years.
We are looking to amend the 2018 equity incentive plan divisor pool for our compensation of our non executive officers and the ratified to wait so again one of thank all of our shareholders for your patience earnest trying time I believe the company's going into right direction, we've taken appropriate action and I believe Q1 is a good reflection of what's to come as we continue to make this company grade and get a present to more pace.
And while we continue to move trustee and international expansion forward.
So I want to thank our employees.
Especially the commercial finance HR and moving fast to get secure the PPP loan, which definitely preserve jobs our employees working under extremely difficult conditions maintain afrezza production to keep trip tea on the right track and making clinical supplies, there as well as getting ready for the FDA filing later this year.
The R&D team continues to work on track tea and continue to work on the co. The 19 as well as pipeline opportunities and our sales and medical team I've never seen such a big jump and communication and collaboration and more than ever I'm excited about the teamwork that I'm seeing in that effort as we go forward and just here is a nice thumbs up from our two employees around the field yesterday Scott.
And age and one of the thank you for all your work out there and all of our employees are starting to go out and get back out to normal.
Thank you for everyone and I think we'll move to questions.
Thank you if you'd like to ask your question. Please sitting by pressing Star Wars any telephone keypad, if you're using a speaker phone. Please make sure your need function is turned off to layer signal to reach our equipment.
Once again that is star one if you'd like to ask a question.
We'll take our first question from Brandon Folkes with Cantor Fitzgerald. Please go ahead.
Hi, So nice questions on congratulations on all the progress during the quarter.
Firstly cleanliness talk about the impact of closing 19.
On your ability to onboarding potentially train new patients Yeah, I mean, you've told electric outflows came back to work that maybe in April how we should think about that and and.
The salesforce ramp back half our namesake any hoping you can elaborate further on what drives growth in the higher unit cost just thank you.
Great.
Great question branding.
Written down.
So.
I think we definitely saw drop about 35% in new to brand starts and so that is due to the fact that they're just less patient being seen by doctors and our even last year patient being seen in office. So a lot of people had moved to telemedicine.
And I think that's just really to maintain care I won't say people are looking to actively change care. However, we have started those conversations with providers and implemented a of I'll call. You know the ability to ship at TV, one directly to a patient where they can access the instruction video video with Dr. show them. The TV, one result, and ensure that implies compliantly starting to pay.
Since that program just launched last weekend were already shipping devices days later, so I think we are able to continue to get new patients on board and doctors to start new patient. The second question is around training new patients to make sure. They start off appropriately that's even more importantly, we've kinda created a virtual training program, where patients and doctors I can get support.
From a company, where we can engage in appropriate training with patients.
In ways that we never had before and so we're experimenting with new technologies, new opportunities and new capabilities will continue to assess these as we open up back into normal markets, but right now all of our team has been equipped to get new patient started as that is the life blood to our future in our growth we expect it to be slower than it was in Q1, but but I think you're still seeing proceed around 100 150 new pace.
It's a week they started on the brand and so we think that's important as we turn the corner here throughout May and June.
Well it drives growth at a higher unit cartridges is actually a great thing because one of the reasons the drug struggle in the first couple of years launch was mainly around under dosing and doctors just could not get their head around a four unit cartridges not equivalent to a four unit injectable and so I think when you see all the work that the medical and commercial teams put out there around appropriate dosing would a convert the right.
Conversion is a we expect more patients to be on eight some 12 to me do on fours needs.
And so that's really good reflection of the commercial strategy in the medical team doing their job around getting the information out there to providers and getting this one to one ratio or did you know that was really launched out there with Sanofi that you know it really is not a one to one and that's I think you're seeing that reflect as it gets you see growth year over year and higher strengths.
There so I think it's a good good effect of the execution we're doing.
Great. Thank you very much.
Thank you.
Thank you and I'll take our next question from Steven Lichtman with Oppenheimer and company. Please go ahead.
Okay.
Mike you need to seven character music videos to me this week.
Just late spring there just a little further or are these areas that are leading up to any person e. cheese is it was it now that your sales. This seasonal when were perhaps moved in and it certainly was it was this the first group UBS Tim <unk>.
Yes, Steve you're coming in very cloudy, maybe it's the mascara and Sydney I think your question. Why this is the first week, we're opening up a and as the seven reps. What's the feedback received you're seeing with the plan for what's what's the plan is that one is that what the question let's see.
Yeah, what <unk> yeah. There. It was it was more headphones good math spread that right.
I just I'll ask again real quick so just wondering I understand a little bit more what the.
Kevin territory opening up means is that opening up in hurt in person patient visits in those areas or is it now that your sales reps can go in or is that both is one understand what that say opening up.
Yep.
Yes, so I think our definition open up his first that the states a work compliant and following the stay at home orders in the various states and that does states that are starting to open up opportunities for people to get back to normal that we're allowing those people. This was our first pilot week and I think it was four states and we had seven reps impacted some some.
Other states, we don't actually have reps in so it's irrelevant, but to the states. We did have seven reps.
And I think that they're just getting out there prospecting seen it. They can set up lunches is that going to be appropriate or not our doctors opening to see in reps or even opened in their offices. I think we're hearing for example, even Atlanta is opening up the doctors are no pain open until late late May early June so even though our reps can be out there there's not a lot of places for them to go it.
Doctors offices are still staying close where I think other market with South Carolina.
And in that market, we did find opportunities to to get out there and made some customers, they're very grateful to see our salesforce again.
You know, we're still here and you know hopefully their support will be stronger than ever.
And so that was positive feedback and then some of those markets. We got general feedback that the academic centers in large Oklahoma area health systems like integrated delivery networks, they're a little more closed still and we expect to be close for the next four to six weeks. So the majority of our business happens to be private practice doctors and so.
It's a good thing as those are the ones opening up first because they do have to keep their lives one as well.
So.
So we'll see it's only 72 hours out so I can't give you a whole lot of color, but I can just tell you. The feedback was positive yesterday in our reps are falling appropriate protection mission.
Closing them or the patient so doctors offices.
Hi, My name is interesting live.
That's all Steve was a doctor said, we weren't check in temperatures on every patient coming in but it was kinda pointless because no one had a temperature so they stopped doing that.
Because you know if you do a 100 times of under negative Kinda you got to work out a system and try to figure out what's going to actually make a difference. So I think we're all learning as we open up and we'll continue to transfer those earnings from market to market.
I have stood in north or anything else Bob.
Good.
And then Steve just opening next week, we expect I don't know exactly.
From what they said more states next week, which impact another 20 reps so.
We have about 70 reps today, so about 27 of them will be up and running by next week and we just hired a new training class, which will start on Monday as well.
So that will help us as we get out there and Jim by that makes them more to markets be open.
Hi, Thanks, Mike or the color I'm pretty good due to the IB expand side on gross margin your product gross margin expansion continues to be impressive Steve yeah at about what rapidly level should we expect absolute Cogs, though you start moving higher and then secondly I.
I know, you're obviously, not giving guidance, but on that cost of revenue per cooperations I guess, that's a little more on your control any directional direct guidance you can provide on that if we look out over the next few quarters.
Sure. So the first question was on our cost of goods sold in our gross margin expansion. So we don't give forward looking guidance, but I will say that we'll continue to have a gross margin expanded until such time as we actually I have to add additional costs in our manufacturing sites such as it did.
Additional shifts or additional lines to manufacture afrezza.
In relation to the revenue on the collaborations that is being amortized.
Someone on a straight line basis through the end of 2021, So you will see mostly consistent.
Amortization of that revenue to our revenue line between now and the end of 2021, so for your modeling it that's what you see.
And Steve just a little more color right I mean, I think Steve that you did we don't.
Foreseeable future in the next I'll call three to four quarters, you shouldn't expect any type of shifting that into manufacturing line in terms of adding a second shift. So I think we look out over the next four quarters you can see that's been pretty consistent in the range Steve provided.
But you know the factory built for scale, you've seen it and I think we still have some good expansion opportunities and productivity improvements we can make the fourth at more shifts.
Well, Okay. This may all shift as we get to try to production and what does that look like when depending how much capacity reason for that and how much Stephanie that that could shift a lot of things going into 2021.
Okay got it and it varies very lastly, you mentioned.
Obviously some of the initiatives you put in place on the cost diaper asked DNA. It already do take a pretty big step down in the first quarter.
Based upon the new steps you can't and should we.
I expect directionally, but there's still some room to to go down on an absolute basis sequentially here.
Yeah, I mean, our goals continue to improve this year over year I mean, we're trying to run the company very tight there there are sometimes.
Won all things to happen like in Q2 annual bonuses simply get paid so that you know year over year, that's more relevance in quarter to quarter insurance renewals habit for directors and officers insurance in August every year, so certain onetime events each year. So it's really hard to look sequentially.
But I think you can see where continue to manage cash very tightly but seniors on an amazing job of running lean as people you know leaves the company. We don't always replace some of this kind of a play for the new people. So we kind of very who will keep your talent and you know so I think we're trying to put every dollar we can into revenue generating opportunities. The knows that further breaks trend that thing.
Okay.
That's really our focus is continue bill or get the.
Moving the right direction that has a patients.
Thank you guys appreciate it.
Thank you.
Thank you want to take our next question from Thomas Smith, Let's cut speed. The Leerink. Please go ahead.
Hi, guys. Good afternoon. Thanks for taking my questions I just had a couple first it it's obviously difficult operating environment out there can you just give us a little more color on some of the things that you're doing to stay engaged with the existing afrezza prescribers. During this time and then can you talk about some of the actions you're taking for patients who were now face.
Thing unemployment baby lost their insurance coverage. During this time, so many actions you're taking to retain that as patients and keep them on afrezza.
Sure I'm actually have David Kendall and here David I also want to give a few words on what we're doing interacts with our salt leaders to stay engaged.
Yeah. Thanks for the questions on its actually uses myself I know you really unique opportunity for us.
People when they've got a little three times really.
[noise] most if not.
Exactly what they were looking for with lower volumes.
I personally in our medical had the opportunity [laughter] providers, who are active prescribers.
To review with them, both public and continue a program safely many of ask questions for example about.
How are present therapy can be utilized in the presence of usual upper respiratory infections.
As well as supporting them on the virtual instruction on the inhaler as.
And as Mike talked about I'm getting a devices to measure pulmonary function into the hands of patients so that can be done remotely.
So just making sure that providers have those.
Key clinical interventions Similarly, we're coming up on meeting season, even though they're all virtual.
Getting additional information on a president dosing, a frozen utility president effectiveness out to those provider. So all of those are things. Fortunately weve had the opportunity to do over the last six eight weeks.
As with regard to patient support obviously, the virtual patient teaches at our commercial team excuse.
Well supported.
Systems.
These virtually starts I think a top to bottom.
Well to maintain that medical medical connection.
To coordinate that was our commercial be even though obviously all of them are the field.
And I can tell you have an email list of about 700 providers I email probably once every six to 10 days and a nice to hear their feedback on the topics for sending for example, I did a tele health weather in our about two weeks ago on Friday, and a lot of people today I'd love to hear it I just can't style at that time can you do it again, we actually did this past Monday about another 100 people join.
And what I found great questions, great thought leaders, joining us and great interaction, which had another one this morning with this development and.
Dr. Nick Argento down in Maryland, So great great again engage with 60 70 provider. So I think well do every weekend to keep customers top of mind and keep a further top of mind and also just bring value to them. During this downtime as they start to think about how they reengineer their business model how do they start to think about reduce patient volumes are getting people more.
Officially into a tell at Tele medicine and in person clinic. So we're trying to bring value where we can in terms of the information and I think so far that engagements and very very high with our top top prescribers and our top thought leaders, so and I've actually been impressed just listening to some of them, let him talk to adhere to a hearing your thoughts on a present how much their attitude is change towards about.
Thing of frozen bright patient population, so I didn't more excited than ever around how people are thinking about it and are on a growth as we go forward as we come out of those people are seriously considering a phrases real mealtime alternative to pumps and injectable unfold, so and it's it's coming from I'd be header names out there. So I'm excited to continue to see that tie turn.
The southern answered your question, what we're doing to stay engaged and just give you some context either zoom meetings. These are webinars on either one on ones are everything you can imagine, but all virtual for the most part and a informative.
In terms of unemployment our teams and we're going to a couple options, which we're going to see next week, we have not had delayed or not I I will say any but I don't believe it any inquiries on had lost my job and I can access the Fred I imagine there are people in that situation and so we have multiple programs available today, if somebody needed afrezza I'll have a start up.
Program, we can modified to make sure. They get coverage immediately we have a cash program, we can modify and lower the price or people in a needle niamh onetime <unk> Louis payment.
And we have anyone that's on Cobra they'll still qualify for commercial coverage and I looked at this as of last week, we have not seen any dramatic shifts.
Through last Wednesday at least I got the weekly data on.
Medicaid <unk> Medicare versus commercial commercial continue to grow this year I would expect Medicaid to pick up a little bit, but I haven't seen that happened yet and the data, but but it's just natural when you have 30 million people employed it's going to happen. So so when we make sure patients don't go without.
And those are things are watching here in Q2, guys. So it's hard to give clear guidance and we don't know we may stabilize scripts, but of 10% shift the Medicaid that changes the revenue line. So.
Right now we haven't seen that but that will continue to watch out of them next six weeks.
Right. Okay. No. Thanks, that's that's helpful color and then can you just talk a little bit about the paycheck protection program funds I know we've seen some companies in this space who received loans under this program actually return the capital.
Based on their interpretation of the Treasury Department guidelines can you I guess just talk about how you're thinking about these funds and whether there's any chance, but you have to repay the funds based on the updated Treasury Department guns.
Yeah look we've been following the news coverage about the Paycheck protection program with I looked around 340 public companies got funds and about 42 of them returned the funds, but you know 99% of the money went to non public companies, partially to the public companies with national qualify either because they're not based on the U.S. are they meet the criteria laid out by the ASP.
Okay and arcade [noise].
That you know where the sort of small business that was meant to protect.
233 employees were well within the 500 employee limit.
That they defined as a small business that they they increased the number of what the definition of was a small business and the p. people it wasnt necessary to support our ongoing operations of the business given the economic conditions.
Especially when we think about 50% of our cost here of mankind, our people and lot of time, we're making a decision on what to do a we were seeing our news MDR axes drop we were seeing or enter axis drop.
So we knew what things weren't going to look that bright for Q2, and we had to make some choices as to stay on water started to be implemented you know outside of those trends we were facing those decisions and we honestly, we're getting concern because we're supposed to try to get upside petition the week before we did but the system just wasn't opened up in a way for public companies I'm. So sorry.
For a long people were able to preserve our cash offset the decline in revenue right out the downturn, which we thought would simply be detrimental to our business. If we had to lay off people. So so we're excited that we're able to protect jobs keep people employed and the people who want to address this gap.
Which is important I mean that was a key part of this as they think about.
The guidance in that you know where are you at appropriate to take the phones or not and you need. The funds you know I would say in late March in early April when we made these decisions. There were no sources of liquidity, we were leveraged company with them at the mid cap they weren't look into loan more money in an economic crisis and when you think about.
The equity markets. They were effectively shut down for follow on offerings between mid May mid March in mid April and so we've made all the right decisions at the time enables decisions and you know in fact, our authorized shares are low and we were in a quarterly earnings quite period. So there wasn't much we could do to raise money in the country. We had to do what we had to do to pursue.
Their jobs so.
Yes, they said, they're going to provide additional guidance about how will review certifications and we'll wait that guidance as it comes out and go accordingly, but at this point. We believe we were right in taking the funds and are we going to see a in the government because there were there for their jobs and it preserves well over under jobs.
Allowed us to keep our business plan.
Plans on track for the year and hire additional people, which weve because it easily not hired I would never see these funds.
I was like a little bit of color I'm watching it closely and you know well managed to it either way as we've always managed everything that comes on at Us.
Right, Okay, great. Thanks, Mike I appreciate the color.
Thank you we'll take our next question from Bert Hazlett with BTG.
[laughter]. Thanks, I told it later, maybe I missed this but my apologies, but could it seems as if United Therapeutics is increasingly bullish on the prospects for <unk>, probably they show and expansion beyond the current market that they're focused on a in a number of different ways could you just remind us.
About how Tracy specifically can participate in that it and and the plans to do so in the expanded market.
Yeah, I mean look when we enter to deal with United We knew that trial was was coming obviously it was early you would know the read out was and having a positive rate on that I think isn't whr three criteria literally expands the market dramatically for tyvaso.
We would expect our tread T program to be able to participate in that market expansion in fact, it'll probably help penetrate that market because of the easier delivery platform.
That we haven't and administration time and backup supplies you need et cetera. So you know we're very excited we went into this expecting you know tyvaso and ph. We felt that alone was a good enough partnership to make this a worthwhile endeavor from both companies and now this is all upside and we've got to think through that forecast, we I think through that as a manufacturing capacity.
Thing about that our packaging. So so it definitely changes and that we're working closely with an eye every week to make sure. We continue to supply patients and breeze, but also think about the interstitial lung disease indication, how we prepare for that wouldn't try TISA. So we're very excited about surpassing all we think that will provide the future capital.
The company to ensure continued acceleration of growth because as we get out there.
And just to remind investors, we will receive double digit royalties.
Upon approval. So so it's just like I said today does a little over $400 million cities are significant when you look out and see where for the revenues will be and touch base on top of that some.
We're excited.
Other other questions Bert you missed a record revenue.
Oh, sorry, sorry, I muted are you contemplating additional or are you additional additional.
Expansion, even you know beyond to the type three patients in.
Your manufacturing plants again, there there there are talking fairly substantial even about the on the most recent data. So I'm just kind of curious as to what extent that's being contemplated.
In mankind.
Yeah, I mean, we we are the CMO for fortunate to have a fortune Boston all I need the ISO you know obviously, we're in discussions with then we'll work accordingly, we have time in our side to scale up where we need to.
So you know we think about filing within the next I'll call 12 months risk or sooner plus the theory time that gives you plenty of time to continue to figure out what you need to scale manufacturing tell supply the market, but I mean, if I recall martine.
It was JP Morgan <unk> midstream in the fall, but you know she sees that it'll be in a billion dollars product.
That gets us very excited as we think about our future. So Ah Onez. We always felt this is a great program a great opportunity how patients and I think the patients in the B study are demonstrating the success of this product as we know there's a rollover phase and we're seeing where people are doing in a little over face and they're staying on the product and they're happy So I'm I'm excited to have more patients with.
Technology and I think it just continues to.
I will demonstrate the platform what else it can do for other diseases. The on page I, all the diabetes migraine et cetera. So.
Somebody anything it's just reinforces we got to continue this pipeline in the company forward and find additional partners to the company down the road and an extended technology.
Thanks.
Thank you and that does conclude today's question and answer session and like to turn the conference back over to management for any additional for closing remarks.
No I just want to thank everybody again, we have 88 coming up which has now moved to a virtual meeting as well as Endo 2020, I know, David Kendall setting up lots and one on ones with thought leaders. We have some datasets that will be released that these conferences as well as ongoing publications.
Working on that wants to move outpatient addition, as all the a and office professional addition, so as people get back out there both from new tools to train patients.
And so we remain.
Excited about our future. We know TPP is important aspects of Q2 for us because it is something we want the master like every other drug company and I think just lost a weekly scripts and hopefully see them stabilize over the next three four weeks as the markets open up and patients come back in the treatment, but otherwise I think we've held up remarkably well considering where the world was four to six weeks ago. So.
Generally optimistic about where things I didn't want to thank our shareholders our employees and everyone. That's been here to support us what looks like we're going to come through this and hopefully be stronger team accompanying come out of it. So thank you again.
Thank you.
Thank you that does conclude today's conference. Thank you all for your participation you may now disconnect.
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