Q1 2020 Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the first quarter plenty plenty earnings call. At this time, all participants are no listen only mode.
Third just be curious presentation, there will be a question and answer session to ask a question journey to session you will need to press star one on your telephone.
No like to tyrannical ovary TBD shield.
Christine.
Thank you for the good afternoon, and thank you for joining us today to discuss aiming first quarter 20 talking financial results and recent operational highlights today's call will be webcast, which will be available on our corporate web site at aiming dot com.
Joining me on the call today are Dr., Jason Dallas, President and Chief Executive Officer, Andrew Oxybate, Chief Commercial officer, and their Coke Chief Financial Officer. After our prepared remarks, we will open the call for questions, Daniel Adelman or Chief Medical Officer will join us for the kuna.
Before we begin I would like to remind you that during today's call and queuing. They session. We will be making forward looking statements. These forward looking statements include aiming expectations regarding the potential effects of cobot 19 on our business and financial condition, the potential benefits of pulp worthy of the commercial launch of California, including engagement.
Our commercial field team with allergist, the timing for when allergy practices. They reopen piling for initiated initiating direct to consumer mobilization activity and timing for payers in the United States as held for the two Formulators. The review periods for Puffers, yet by the M- Swissmedic development plans for a our two or one.
And the multi between that program.
Central timing for completion of enrollment of our phase three Poseidon clinical trial for Paul Forgue projections of cash spend for the remainder of Twentytwenty. This is sufficiency of Amiens cash resources plans to explore the use of Amen 7195, as an adjunct adjunct to our coda programs the potential Ben.
If it as using biologics as adjuncts to coated and Amy expectations regarding potential applications of the could approach to treat like like certain food allergies.
Risks and uncertainties that contribute to the uncertain nature of forward looking statements include the effects of the cobot 19 pandemic on our business and financial condition expectation that anyone will need additional funds to finance operations.
Means dependence on the success of California, and means ability to build a commercial field organization and distribution network. The degree of acceptance of California, among physicians patients and healthcare payers patient advocacy groups and the general metal medical community.
I knew the ability to obtain from favorable coverage and reimbursement from third party payers for California, and means ability to implement and comply with the mens people for the unused or any of its collaborative partners ability to initiate and or complete clinical trials. The unpredictability of the regulatory process the possibility of the aiming for.
We have its collaborative partners clinical trials will not be successful the reliance on third parties for the manufacturer of Paul for the and our product candidates.
Possible regulatory developments in the United States in foreign countries, and aiming to ability to attract and retain senior management personnel.
These forward looking statements are based on assumptions and are subject to risks and uncertainties that can cause actual results could differ significantly from those stated on this call. Given these risks and uncertainties you should not place undue reliance on these forward looking statements. Please refer to our quarterly report on form 10-Q for the quarter ended March 30, Onest Twentytwenty.
For some of the important risk factors that could cause actual results to differ material materially from forward looking statements made on this call.
Except as required by law Indian disclaims any obligation to publicly update or revise any information to reflect the events or circumstances occur. After this call.
And now I will turn the call over to Jason.
Thank you Debbie good afternoon, everyone. Thank you for joining us today for our first quarter 2020 financial results call.
Firstly, I hope you're old thing safe unhealthy, we're working an unprecedented times due to the cold is 19 pandemic rapidly changing operating and economic environment. These prevent us on companies across the globe.
I'm, just not sort of.
The first thing I'd like to discusses the impact of a pandemic on the portfolio loans from the United States.
The first quarter, we received FDA approval for portfolio I'm following months of preparation we were ready to launch from the United States, We're very Paul first patient perceived commercial portfolio.
I think March 13th.
The following week first sheltering placeholders went into effect.
Vast majority of allergists around the country stop seeing patients in person all of them for emergency business. This is remains the case since then.
Given that the initial dose escalation on the first those each new dose level ophuls, you need to be administered in the Allergan softens. The overall impact has been a short term poles and the ability of new patients to be in issues on commercial treatment.
However, we are still receiving request for information from I would just interested in prescribing portfolio.
Parents, who want to get their children on therapy as soon as variable almost I was just.
Able to stop you patients on therapy now they can get their patients enrolled in the Rems program. During this time when analysis are able to reopen their practices over the next few months patient already enrolled in the Rems program will be ready for their initial dose escalation budget.
As such we believe the potential for portfolio to be a blockbuster product.
First ever approved therapies to treat any form of food allergy remained solidly impact.
Although sales were portfolio will be run much later than we had anticipated we continue to remain in a strong financial position throughout this pandemic, we apartheid safety or by employees.
A few patients and ongoing clinical trial and the safety of those patients will be prescribed commercial portfolio since approval.
Our employees, we have made appropriate adjustments, including mandating a temporary work from home pharmacy, and providing our team with a sporting technology. They need to continue doing backdrops remotely I'm proud of the flexibility and commitment that the entire team has demonstrated during with unprecedented times.
For patients enrolled not clinical trial, we have implemented promotes clinical trial monitoring and ensuring continuity of trials in line with guidance issued by international regulatory authorities.
I'm pleased to report that we've been able to provide an uninterrupted supply of clinical trial medication to all patients and ongoing clinical programs. This will continue for as long as in person visits to investigative sites about feasible.
In addition, we've been able to provide uninterrupted supply of commercial portfolio for those patients being treated since approval.
Further we have a quick you asked practice account managers or problems with resources. So that they can provide support to outages some practices remotely.
As of continue to engage with outages to provide important information on the grounds process and training on how to safely incorporate portfolio into their practices.
This engagement will continue until I was just about I'm not able to safely with you in person interaction.
In addition, our medical science liaison team has continued to provide ongoing education to outages.
Now, let's just have remained engaged despite the pandemic with many using the times learn more about portfolio. We are pleased with our sustained level of interest.
Finally, a form the reduction conversations with plans are progressing well and as scheduled and we're making great progress.
Since the shutdown, we have conducted market research amongst alister, some caregivers to help us better understand what the portfolio amongst dynamics will look like us to shelter in place orders are lifted.
On the physician flight, we expect an allergy practices will reopen regionally varying rates over the summer.
I was just tell us what that you get to reopen their practices and we are beginning to hear anecdotes of practices climbing to reopen in some parts of the country in the coming weeks.
Our market research with caregivers is also very encouraging.
The results revealed that the cause of 19 pandemic has had little or no impacts on K give his willingness to stop actuals and on California in fact over 70% to carry give a survey it's up to staffing that Charles on portfolio as a top priority country reopened.
That's the fundamentals of our business have not changed the interesting paparazzi remarks, I'll just have a need for patients to have an approved therapy for peanut allergy remained solid.
All of our preparations about possible portfolio have positioned us well with outages caregivers and payers.
In the interim body of evidence in support of portfolio continues to grow.
We will be presenting new portfolio data at the European Academy of Allergan clinically with all the G. All Yakking meeting, which will be held virtually from June to through June eight.
We will be presenting long term safety efficacy and Immunomodulation base or California, as well, let's say the on patient satisfaction with portfolio treatment. We look forward to sharing the these data with you following the meeting.
On the regulatory front the review of portfolio in Europe remains on schedule, we have submitted our responses to the day onetwenty questions to the EMEA and continue to expect to review to be completed in the fourth quarter of this year.
Swissmedic review of portfolios also ongoing with a target action date mid 2021.
Turning off and pipeline.
As is broadly true across the industry enrollment of new patients and taught clinical trials ceased wants it was no longer profitable for patients to be screens in person.
Despite this we have been able to provide uninterrupted supply of study medication to all patients already enrolled in our clinical trial.
Such all of our clinical trials remain ongoing.
Specifically, our Poseidon phase three clinical trial to explore the efficacy and safety for a period young peanuts allergic children, aged one through slightly less than four years continues we are holding patients enrolled in this study of the dose they were taking at the time to shelter in place orders were put into effect. However, no new sites will be added on the study will be completed currently active sites.
In part as a cost saving measures we have made the decision to close enrollments in our phase two clinical trial in patients with AEG allergy.
The patients presently enrolled in the study will be able to complete the trial, we intend to review the data from these subjects and then determine the best path forward.
Regarding regarding our multi tree nut program. We recently had a positive an encouraging pre I, indeed meeting with the FDA, which helped define a clear path forward for clinical development.
Finally, we remain enthusiastic about our recently unlicensed amat seven one line five monoclonal antibody and the potential it may have an adjunctive therapy with portfolio here and our other coated product candidates.
Hey, Matt seven one line five has the potential to improve patient journey through the decent association process and perhaps accelerate the time to remission in a larger percentage of patients from those treated with portfolio remote overall, we have taken and we'll continue to take a thoughtful measured responsible and flexible approach towards managing our business.
Definitely balancing launched provides us with cash preservation, we will continue to prioritize safety in the coming weeks and months as we add society at large stopped the journey back to normal we remain confident in our prospects and steadfast in our mission to improve alliance with people with food allergens I'll now turn the call over to address.
Thank you Jason as Jason mentioned, although the cobot 19 pandemic is effectively pulls though youre proposing launch I'm pleased with the speed and scope of the launch preparation activities that were able to complete pulling all approval on January 31st.
80 pounds were fully trained on the funnel product workable and deployed into the field within two working days or portfolios approval.
By mid March over 2000, Algenist receipt at least one visit from a pen.
This means that in addition to covering our initial target list of 1300 oncologists, we were able to respond to numerous inquiries and reach outs from additional allergists I missed on the question other visit from a problem or support from medical information departments.
During the initial few weeks following approval. We also worked diligently to implement the funnel runs requirements that were communicates to us by FDA as part of the approach approval process.
The portfolio. He runs website went live on February 21st along allergists their offices and patience to enroll in the Rems program and since then over 700 allergists have enrolled in the rounds.
In addition, we fully implemented overruns requirements or network your specialty pharmacies been mid March.
I will support mechanisms were also brought some won during February including.
Our first off patient support hope to help positions on the patient care givers, where the benefits investigation and medical exception purchases.
Our co pay program, which helps patients payers with was $20 per month for the drug in conjunction with their insurance plan.
Ill patient assistance programs to help qualified uninsured patients receive access to call for you.
Although the covered months in pandemic presents an immediate some challenge to al just being able to start new patients on therapy. We recently completed market research, which helps us to better understand our just some patient care give us of human because we've not seen situation and their attitudes and beliefs towards affords you as a treatment option.
Over the period of a few weeks, we're able to conduct both qualitative Unconstructive research with approximately 150, allergists and over 400 patient care givers.
I'd like to share some of the conclusions appears this research with you now as well as actions that we're implementing as a result of what we've learned.
Let me start by talking about what we've learned from positions as you might imagine I will just practices have been greatly impacted by the time dynamic with average patient volume down by 65%.
Almost all I will just we surveyed said that they were currently seeing no new patients in the cobot environment and the majority of the taken several weeks of patient backlog to work through when they begin to reopen their practices.
Despite the short term challenges the I'll just we serve it indicated no change in their belief or enthusiasm for California as a treatment for that peanut allergy patients and the majority said, there's still anticipated getting up to speed and starting patient sample force here during the summer months.
With these results in mind, we focused our efforts on providing resources I will just can access neutralize in a virtual environments that will help and prepare now for the eventual practice openings.
An example of this is a series of online on demand video training modules, which help algae stepped up their clinics and trimesta. After so if we administer California.
Another effort is a new specific website, which takes the allergies through a checklist of virtual patient preparation activities as part of a consultation conducted by a telemedicine, including patient enrollments in the Rems program.
Turning to the conclusions of the patient care Giver research, we saw the cobot situation clearly impacts can give a willingness to currently and to healthcare settings and the most could give us a postponing visits to the outages for routine environmental allergy shots.
Looking ahead, 40% of respondents indicated that they expect to that it would be June before the return Seattle, just with a child and 80% indicated that they would return by August.
Very encouragingly respondents indicated that the cobot 19 pandemic has had no impact from their willingness to start their children on portfolio.
More than 75% report that they would be highway or somewhat likely to stop the child on pulp force here in both pre and post pandemics scenarios.
We're just understanding of the timing of care give a willingness to return to their allergist, we plan to initiate our direct to consumer mobilization activities. During the month of June and we expect to ramp these are gradually through the summer across different channels.
This completes lots of work recently to understand the media consumption habits of peanut allergy patient care givers and.
And our intention is to ensure the caregivers are aware of the steps. They can take in consultation with the largest to prepare the child for potential treatment with California.
Besides this work on the I will just in patient care giver forums, we're also making good progress with payers.
Since mid February our strategic account directors have worked closely with our medical affairs team to engage with the clinical come into the payers via web conferencing to discuss the details of our final product label on the clinical profile of California.
Despite the challenging environments. These discussions have been progressing at the same pace as they were prior to the covert months interruption and by now we've met with payers covering over 75% of U.S. lives on the commercial or managed Medicaid plans.
As of the end of April there were 15 plans in the U.S., which have either entering or permanent policies written regarding portfolio.
These plans represents approximately 43 million lives almost 29 million of which are on commercial books.
Examples of these plans include the commercial books for Bluecross Blueshield Federal employees program Cigna and Humana.
We're encouraged by the positive nature of the early conversations that have occurred since approval between our account team and pay clinical committees.
We look forward to continue discussions in the weeks and months ahead to enable additional access to patients, including our ongoing discussions with the launch Ppms, we anticipate should be making coverage determinations in Q3.
In conclusion, despite the challenge the topic 19, we were able to complete although pre launch activities, including the full implementation of our Rems program prior to the pandemic effectively shutting down the country.
We believe we're in a strong positions to support for took take once patients are able to return to physicians offices and look forward to continuing to work with al just and their teams to help patients and their families suffering from a burden of peanut allergy.
And with that I'll turn the call over to Eric.
Thank you Andrew.
We ended the first quarter of 2020 with a strong balance sheet and 371.6 million of cash cash equivalents and investments.
First quarter increase versus the 168.2 million held on December 31, 29, Keane reflect capital raises highlighted during our fourth quarter earnings call, including the 200 million equity investment from Nestle health fine and the $85 million draw on our long term KKR.
The increase is partially offset by cash flows used to upgrade our business, which included approximately 15 million of cash expenses unique in the first quarter.
As you would expect and as Jason mentioned earlier, we have reviewed our business plan for 2020 and they are coming years in light of quoted 19 and have made adjustments to reflect the broader uncertainties caused by the pandemic, we have essentially frozen hiring of new employee.
These contractors and agencies.
On the number of other ways to reduce expenses.
As a result, we expect that quarterly cash spending for the remainder of the year will be substantially lower than what we reported in the first quarter.
We anticipate that based on our current business plan, our financial resources fully fund the company.
For the three month ended March 31st 2020, net loss was 86.4 million versus a net loss of 54.3 million for the comparable period last year.
On a per share basis net loss for the first quarter of 2020 was $1.34 versus a net loss per share of 87 cents for the comparable period up 29 team.
In addition to reporting GAAP financial information, our 2021st quarter results include non-GAAP financial measures, which we believe provide useful supplemental information to investors.
Non-GAAP net loss for the first quarter of 2020, with 66.1 million or a dollar and three cents per share versus non-GAAP net loss of 46, and a half million or 75 cents per share for the comparable period in 2019.
Non-GAAP net loss excludes stock based compensation as well as upfront cash and equity payments associated with the execution of the aim ABS 7195 license agreement in the first quarter of 2020.
Net product revenue for the first quarter of 2020 with 575000.
Resulting from sales of four is there, which we began shipping in March.
From an accounting perspective, we recognized revenue when our specialty pharmacy and distribution partners receive outboards yeah.
It's important to note that our first quarter revenue for reflect initial stocking by our specialty pharma T. and distribution partners in March and is not an indication of prescription pulled through to patients in the quarter.
As previously communicated we will not be providing revenue guidance as we believe it is too early to draw a meaningful conclusions.
Cost of revenue for the first quarter 22.8, what 257000.
In looking at our problems caused you will see a 55% first quarter gross profit margin.
How far you have been medicine that needs to meet type product specification because of the variability of source materials and these tight specification, we periodically scrap manufacturing lot that do not meet our stringent product criteria.
In the first quarter recorded an approximately 200000 the charge for scratch product. We also recorded in the first quarter benefits totaling less than 100000 for sales of product that's worth manufacture prior to regulatory approval and with previously Expensed R&D adjusting for the scrapped.
Doug and pre approval benefit would yield and adjusted gross profit margin of approximately 80%, which is consistent with our expectation to fill that recorded level of sale.
R&D expense for the first quarter of 2020, or 36, and a half million.
Versus 31.3 million for the comparable period last year increase was primarily due to the 10 million cash in equity payment is then court in February 2024, the license of aim at 7195.
This increase was partially offset by decrease clinical trial costs, primarily due to the close out certain power for their clinical trial and decreased manufacturing cost as we began capitalizing costs for inventory upon FDA approval of California.
Adjusting for the aim at 7195 licensees the first quarter continue that trend a reduced quarterly R&D expense.
S. DNA expense for the first quarter 2020 was 49.1 million versus 23.7 million for the comparable period of 29 team. The increase was primarily due to additional headcount to support the commercialization of California, including Especial Tcl Tim of approximately 80 time.
Targeting practicing allergies and other costs related to medical affairs and preparations for commercial launch.
With that we will open the call for questions.
Ladies and gentlemen, it seems like to ask questions. That's probably one on your telephone again, if you like asked question best type one and your telephone well past presents a moment to compile the Q any Boston.
Forever first question, it's from Charles Duncan from the Canton community.
Your line is that thing.
Hi, This is Charles from Cantor, Thanks, gentlemen for taking my questions [laughter] realize it's a tough environment, but I'm I'm wondering if you could provide a little bit more color.
On you know the is the conversation, saying, you're having with potential prescribers I guess in a in March April versus now.
Is there seem to be qualitatively any difference and our our prescribers continuing to put together list of patients that they anticipate.
As I call it early adapters for California.
[noise] each has its Jason thanks. Thanks for the question now I'll start and then I'll ask Andrew to.
Provide a little bit more detail I think in a very high level. The way you can describe the sort of change in the conversations we've been having is in late March early April and it's just we're very focused on trying to figure out how they're actually going to manage that passes and helpful to think about many of these community based allergist essentially a small businesses and entered in the.
Same both at any other small businesses, which is why do I do my staff ones with my patients what to do it my office rents and on how am I going to figure this out and that was kind of all consuming for them as they were figuring out how to answer what this transition Nu parent was done it looks like that we will sort of dealt within in the shelter in place environment.
The cost of the last couple of weeks, though that has fundamentally changed from what we've started to see is the allergy community looking forward to reopening obviously in different ways at different speeds across the country, but this much more attention now on how do I told my practice back how do I get up and running how do I deal with my existing backlog and then how do I continue to build my.
The way it was building before all of this started in the first place and so to the ability to look forward of course me that you have the community of stocks that are vastly more engaged and ready to start speaking about how they go to incorporate in California or all of the concept of all immunotherapy into their practices. So Andrew do you want to add a little bit of color to that.
Yeah I will.
As Jason mentioned, we went through a good five or six week period, where.
I will just we're very much grappling with the situation they found themselves in as we all work.
Figuring out how to make adjustments to their practice and how they would operates and and things of that nature and so our tommy's by this point about the time, there's sort of national pandemic was declared we'd had about six weeks between approval I'm not period, which meant that been by then.
They had a chance to go out there have initial conversations with over 2000 Algea since really have initial conversations and build relationships, which meant that they would enable once a pandemic kids two to virtually engage ring round and sort of check in and see how things work.
The overwhelming response was hey, we're trying to deal with this right now in terms of impacts and apprentices. So please come back towards sometime in mid to late April and chip backend and let's see where we work. So we we've done that and I have to say what we're seeing is to keep the number one.
Just first of all I'm talking to us about okay.
I live in a state where I'm starting to see that we're coming out of the the shelter in place.
Restrictions, so I'm starting to think about what that looks like and besides working through some of the backlog I'm already thinking about patients, but we'll be putting on pro forma here and so the certainly encouraging dialogue from from that perspective.
And because of that what we what we've done over the last few weeks of April as we put together. Some some specific website information, which allows us I would just in a code environment to be able to help prepare their practices for when they're able to start seeing patients again, so order.
Doing is able to rems enrolled themselves in their practice, but also work with patients and via phone or telemedicine consultations enroll patients in the Rems program. So that when they do come up and were able to stop physically seeing patients again in their office, they're able to a variable do so smoothly and seamlessly.
And by then the patient should have gone through the benefits investigation process and any medical exception persist two to two I get the insurance coverage those conversations and that's a willingness to engage in this recent the wouldn't have happened in the first sort of five or six weeks.
International shutdown went into effect. So we've certainly seen a change in the in the tone of the conversation in the past couple of weeks and those resources should help al just as they work through the coming weeks and then a interest a situation where they can see patients again.
Okay, that's helpful Andrew and Jason.
Sounds like it could.
Reengage relatively quickly when an allergy practice opens up.
I wanted to ask a question regarding the pipeline you talk about the a program closing down that clinical trial, where there any observations in that program that.
That.
I guess.
Change your thinking about it or was it just simply a matter of call. It enrollment and then strategic priorities.
Yes, no specific issue because we talked about enrollment.
Being relatively slower than peanut allergy assume though most patients outgrow unlike peanuts or other trina.
Enrollment has been a little slower than we'd like to but we did have patients enrolled the challenge that we faced the ones that because we couldn't mineral new patients over the course of the last few months. If we carried on what we stopped enrollment again once we got back up and running the duration of the phase two program would have become an extraordinarily long and then what would the sort of the weight the whole hole program dumb.
Downstream, so what we decided to do rather given that this is the phase two program is not a labeling study is to stop enrollment met the folks in the study finish up the trial and then just take a look at what learnings we can get from does that patient population and figure out how to design an optimal phase three program and.
The construct to clinical development program for for this outages going forward that down if on the line. So I'm asking whether he has any additional commentary on that.
Thanks, Charles Thanks, Jason.
I really have much to add the then.
Every patient as an opportunity to her to create gain additional.
Insights into.
The performance of the drug and we intend to look extremely carefully at every data point and use it to inform our decisions as we met choices moving forward.
It's very helpful. Last question is for Eric and that is Eric had mentioned that you thought the current capital resources were sufficient to fund the company or fully fund the company I guess, it's probably now forever, but you're making some assumptions about topline and getting back.
Two new normal or a normal normal.
Can you share any of the key drivers there with us.
As we said on my call, we assume that there are some kind of return to normal.
You know some point this year and that's the launch will actually take place.
In the late summer early fall.
And that we will start to generate revenues so some of their non now.
And that's reflected in our our business plan.
Okay perfect. Hopefully you guys here right in terms of the returned to normal I think you will be I'd. Appreciate you taking my questions.
That China.
For the next Monday have crest Freeman from Piper Stanley Chris Your line is open.
Hi, Good afternoon. This is Alan Brasil on current Chris.
So as related to that market research you highlighted on the call is it your sense that kids getting back to the classroom.
And if you have epic catalyst for how far here demand.
And what kind of work are you doing at segmenting. The U.S. at regionally to have a sense of probability that kids in those areas will indeed be going back to school. So maybe just talk about your planned a into stocks to start getting kits in the office now to get them prepared for that back to school and.
Potential accidental cat exposure.
Andrew you want to take that.
Yeah, absolutely. So I don't know so much I mean from the research that we did I don't know the getting back to school isn't necessarily a major catalyst or driver. There was some things that came out of the qualitative interviews that were interesting certainly caregivers indicated that one of the things that that become acutely aware.
During the current shutdown is you know dropped a bit of the child, how did have some accidental exposure to pina that the vulnerable.
So I have to take them to the E are which is something that they wouldn't want to do environment like this either now or certainly that should rare we're up again in the future and so it sort of brought home for them a heightened depreciation for the need to.
Address the situation and get the trial on some on therapy to be able to to address the peanut allergy, we didnt hear a great deal specifically about back to school, although it certainly stands to reason that during the summer months before June do go back to school than before.
I would they would use as an opportunity. The other part of your question was around some some geo a regional differences across the U.S. on the nature of the of the server that we did was such that we were able to tease out some of the differences across the U.S. and we didn't see massive differences either on the caregiver allergist side and.
Sums of attitudes and beliefs we.
We did see some one of the major things that we're looking at those obviously being being aware of the fact that some states are coming back to operating out of the shutdown sooner than others and so without a mine we are prepared to mobilize both our field organization as well as potentially some drips consumer.
Mobilization work to make sure that can give us a patients are aware that treatment options on target those efforts more in areas of the country, which are coming back sooner than than than the areas, which you're gonna be likely shut down for a little bit longer. So that's the one way that we're able to.
You some of those Geo differences.
I think that's probably also some leading indicators that we have as we start getting inbound requests from allergy offices in some parts of the country for us to actually come back and stuff visiting them and as we actually do starting some new scripts come through into the benefits assessment sensor from those sort of.
Chris regions of the countries as we sort of compile all of this one I understand.
Things are going and where things are coming back to normal quicker than than than other parts of the country.
Got it thanks, so much guys.
For the next month, we have leann unless you notice from Red Bush Securities. Your line is open.
Hi, Thank you might ask me on.
The first question is what are some of the steps we're meeting for inclusion of high school idea on formulary and then do you anticipate a broad coverage.
Andrew do you want to address that.
Yes.
So we are we're really in very early days of discussions with payers and the processes as follows so.
Our account team and a medical affairs team are currently working their way through conversations with the clinical committees of payers and depending on the payer and you know that particular internal processing.
Those clinical committees will make recommendations to the PNC Committee that will then make a determination regarding coverage as well as once here will be covered off.
It's it's.
It's a complicated thing because of the just the number of plans in the U.S. and on the variations are on benefit design. So maybe that at a national level sort of umbrella plan has a certain.
Our coverage determination the specifics of what that looks like maiden very little bit depending on the particular plummeted employ signs up for or regional variation, but some of the big brother plant. So we're working through those as I mentioned earlier on the call. We've had conversations now with a lot of the funds and we're down to sort of around two of some of these discussions.
The launch PBM have a six month periods by which they won't make any formal coverage determination and so we're expecting that we would get snows in.
In Q3.
What our goal is to make sure that as many patients as possible can have access to the to the product that are appropriate for treatment.
And along with that as the prior authorization criteria, which go into ensuring that they can get on the products are reasonable and strong label and so far the discussions that we've had on the policies that have been written and there's about 15 plans that are written policies that cover portfolio regarding paphos, you those policies hub.
Hi, Ross realization of buying large I'm, a very acceptable. So we're pleased with the progress so far but it's early days yet.
I'd also add a couple of things one is that we are right at the place we expect to be in terms of discussions with as has happened. The covert 19 shells replaced situation not come into play in other words.
Progress in work within during this past staying on track and stayed on target as we sort of go through the process of the launch the other thing what's important is as well as we're starting to be coverage decisions come through from the plan. We have yet to have any payers denied coverage levels of yet.
For the step edit in place and so we're actually getting decent formulary coverage as by the time the allergy practices get back to.
To opening up again, and starting to put new patient somebody could actually be in a better situation than we then we would have been have those first patients would go go on in March.
Got it and just one question on the program can you talk about how many patients over and going in this study and do you plan on hearing potato.
So we havent disclosed number of patients in the study and once once the study is done and we'll take a look at the data we'll see we'll see what the data tells US obviously, we've always disclosed on published ALLDATA and that will be true.
Okay. Thank you.
Forget next Monday, it's from Kennen Chi from RBC capital markets. Your line is open.
Hi, Thanks for taking the question and to your point Allergists are hurting financially live now largely Miss this spring allergy shots seasoned in your sort of in anecdotally from ER physician checks and commercial trucks, you're doing a do I will just understand the cash flow benefits to the clinic associated with prescribing or what.
The one and using this an inpatient thanks.
So Kevin I'll start and then I'll ask under two facility game.
Well I was just have always.
I was just our practices even before the sheltering places have been hurting a little bit in terms of their patients being stolen by other practice practice sort out the specialty so we've seen the severe asthmatic being sort of push if you like by the pulmonologists than we've seen the the skin diseases, sorry advocates right. So it's kind of thing go.
Over to the the dermatologist and one thing remains very very true throughout all of this and that if that food allergy and interventional in treatments of food allergy something that the Allergan community absolutely no that they can they can own and the community have always proceeds. This is something that will enhance and grow their practices simply because they've got patients in the.
So so they're managing haven't been able to do anything for and find it is going to be able to offer them. After them a therapeutic advantages that hasn't changed that hasn't changed at all from all the work we've doubled the obviously through the shutdown. They see the serves as an opportunity in terms of them coming back into building up their practices, while they may be missed the window with new patients.
Coming into the seasonal allergy season. This year, there's still going to have to play catch up for patients have already started on immunotherapy. Many of them have not continue dosing patients at all until theyre going to how to play the catch up as they get back up to speed or that's going to be accomplished at of catching up and thinking about what new patient they can bring into their practice.
As they build it back to viability.
Andrew anything you want to add to that.
No I think you summarized it well Jason the only thing I would emphasize is that.
As you say if this is very consistent feedback and it's really feedback that we've uncovered through multiple rounds of market research, including.
The one that we just conducted over the past few weeks and so it's consistent with where we were pre pre cobot, one would imagine there given some of the pressures that have been put on by the Kirby situation.
Not only did not change there's actually I'm, even more important from that perspective, the only other thing I I think I wouldn't though is that its been market research, which has given us information, we as a commercial organization.
Can engage and will not engage in those nature natures of those discussions with our just because.
How they run their practices and the financial implications about is something that is for them to work through.
It is something that we've heard a time and again through research that we've done over the Oh, well last year, but it but in this year as well.
[laughter].
[noise] and for our next question, it's from Brian Stewart from Baird. Your line is open.
Thanks for taking my question guys I'm really just what a housekeeping item Eric when you were terminal the cost of revenues on that cars on did you said the after the adjustments for gross margin would be 80% and and that's what you would expect going forward here and and you kind of highlighted some of the amounts product as previously expense or R&D I'm just wondering.
There is there any of that product remaining that's already been expensed or roll all revenue generating products from here on out on the manufacturing cost associated expense in that quarter.
Yeah. Thanks, Brian what I said was bad was the level of gross profit margin. We would expect for this level of sales and that's an important qualification because.
There's a lot of kind of fixed cost and then manufacturing organization in one area that are allocated to.
Cost of sales and so as sales grow well, we would expect a those to be amortized over a greater revenue base and and gross profit margins to go up.
We said the at we've only expense or less than 100000 of back of the.
R&D of the manufacturing cost that was expenses R&D and there's a lot more to go but we haven't been specific about how much.
Okay great helpful. Thanks.
For our next question is from the job.
They're fraud capital partners. Your line is open.
[laughter] couple of questions here first when are you can P.C. regional differences in terms of team members allocators horrifying.
I might be pitino, as we think about which region might be more affected when you're shelton place like in its kind of left it and then another question I think also for engine how long.
Does it take they typically get a patient to the Rems program, it's kind of when it is now.
At the advantage will be for getting the patient data when spreads and now versus waiting and then the last one maybe tayfun and can you provide any details on kind of that data that we're going to T replica Institute Immunomodulation I'd be happy to data expected at the congrats again.
[noise], so I'm I'll ask Andrew to answer the first two and then I'll ask them to to give you a high level. Those of you. Obviously the specific the other is embargoed, but you can give you a high level peek into Andrew and that you start.
Hi shall yeah. So yeah very good question, so with regard to HCP sort of certified and the Rems program, they're off some states, where we have a far more than others and no surprises is sort of lines up with the with the U.S. population sort of the five states with the highest number.
Of ER physicians that are the testing in the Rems.
New York, California, Texas, Florida, and Illinois, and when you look states, which are said the buried in the process of opening currently and you look across the country, we end up with something along the lines of about 49% of those Oh.
1% of our Rems certified HCP lineup with those states that are opening so it's about half.
And depending on the on the survey that you look how the other piece of analysis, it's done that lines up with roughly 62% of the population of the U.S. and so it's probably in line with what would what one would expect in terms of the number of HCP is lining up with the general population.
Your second question regarding the Rems program natural enrollment of the patient in the Rems program is or is it similar straightforward.
Process really consultation between the physician and the caregiver, if the patient and usually rotations presence as well.
And completing paperwork sort of fine with the patients have access to FNF friend.
I don't understand the procedure that are signing up for and things of that nature not can be done virtually in we've we've got some information now on a specific website as I mentioned to.
Allow the the Algenist and also the patients when it's done exactly what that process looks like but thats relatively quick.
The other thing that can be done virtually in prior to a patient actually physically visiting the Algenist office.
Is the benefits investigation in the medical extraction process to make sure that the patients insurance coverage is determined and that's the person that can take longer can we've had it.
Take a short as 24 hours that can take up two week on maybe with longer and so that's something that can be completed prior to.
The patient coming in.
For any just for the first visit and so both of those things can be done virtually and so that's why we're encouraging people to understand what that looks like so they can one through able to physically C patients. They can sort of hit the ground running so the rems.
Programs certification itself is relatively short.
But for doing that in conjunction with the benefits investigation medical attraction process can can save some time once the I'll just a clinic is open.
Jason ever question.
Yeah, I'm Gonna I'm Gonna tend to take a question around the immunosuppression literary yaki.
Sure.
So we are going to be presenting some data on long term immunomodulation safety and efficacy from the open label rollover study that was a continuation of the original phase III Palisades study.
And again without going into the details.
We are going to be showing that there is ongoing immunomodulation. During the first two years of therapy with improvement in those biomarker parameters.
As well as ongoing improvement both in safety and efficacy.
Thank you.
For our next question, it's from at least Subq from JMP Securities. Please hang in line to them.
Lisa as you might have for concern for score, but sort of clarify the cost of revenues were 257 K how much of that was the cost for the write off of the one manufacturing block, which didn't meet the your manufacturing specifications.
And then second question.
Do you guys anticipate kind of needing a six month window to initiate therapy.
Given kind of theories that there's going to be returned an outbreak in the fall just kind of six months from now thanks.
I'll address that first one for them.
Oh God. Okay. Go ahead are okay, yeah, and I am I answering very quick if say approximately 200000 work, but cost of the write off.
[noise] I'm on the second question I think one of the main reasons that we did research and we wanted to do both qualitative and quantitative research with physicians and patients was really to try to understand how they were thinking about coming back and whether they were going to be wanting to wait and see what happens in.
The result, we've had an overwhelmingly tier but both sides of that equation really do want to get up and running quickly and parents and caregivers do want to get their children onto portfolio therapy relatively quickly I.
I think in our assumptions as we've looked at over it.
Things that could happen.
If there is a second wave of the virus, we don't necessarily believe that you'll see another national locked down we think that they will be probably pockets of sheltering places happening around the country things nothing happened different geographically. We also think we maybe on the place where there are other therapeutic options available and ultimately obviously about the but the community told us quite overtime.
Helming leave that they are not going to wait three to six months to see what happens. They said how soon as we can open will open in the calculus hold was as soon as good practices are open we're going to bring our kids back and get them treated and one of the advantages of.
For the or is that should someone starts therapy and and as we said we didn't have a couple of patients actually start therapy before the shelter in places they can stay on those to therapy that they're on for an extended period of time. So is there is a regional or local sheltered places kick back in they'll be able to stay on the dose with Iran. And then when things get back to normal loans.
They'll be able to carry out on the out dosing until the flexibility of dosing is one of the really important things here, we can continue to provide patients.
Treatment at home through any shutdown period once they are established though on the mats.
Jason but I've got one additional day, one additional detail of double click to what you just have co founder.
Yeah.
So Jason indicated the theme of their search was very much the patients and caregivers wants to get on with therapy as soon as it was feasible to do so and interestingly. We asked a question on the survey.
How how does the with the potential flare up for reemergence of cobot in that area.
They're thinking around that.
We ask that question in the context of the product profile, where they didn't understand or didnt helpful. Awareness of the fact that they could continue to stay about their dose than we asked a question again. After they were aware of this time, but there's a distribution mechanism that would allow them to keep taking the same dosing through essentially remain about desensitization level.
And interestingly they were positive before they knew about the profile of the product with regards to that sort of level or.
Not to ability to stay about desensitization level, but their responses improved even more once they were fully aware of the fact that was passage of the of the way the product was distributed in the way. The product is administered so I do think essentially an important aspects of our product difference, let's say for environmental allergy shots that you.
Can we see distribution at your home continued agreed to stay about desensitization level until you're able to return and go back to your own just office.
Thanks, guys appreciate.
And for every last question is from Paul Troy from Goldman Sachs. Your line is open.
Hi, Thank you good afternoon, everyone and thanks for squeezing me in.
Jason I think in your prepared comments, you said you're on the Poseidon trial whole thing holding down the kids at their last dose so either for you or for Dan I was wondering if you could just maybe elaborate on.
If these kids reach the 12 month point and are not up to their 600 or.
1000, like dosing in Europe, and 600, making you ask it's a plan to treat them at up you know sort of last observation carried forward in terms that are dosing.
How does that potentially affect a trial and I was just kind of wondering if you perhaps.
Elaborate on that and then second add a commercial follow up question for Andrew.
Yes, I'll start and asked them to carry on so pull there is another 601000 milligram dose stop the highest dose of portfolios. There is 300 milligrams and okay and that's what those that we will continue to titrate patients up to it really doesn't matter. How long was hydration takes so even if they go six nine or even 12 months on an existing those once there.
Well to get in and how another visibility there in the clinical sites. They will continue that titration up until they get to the 300 milligram dose. So we anticipate continuing to titrate all patients until they will get up to the 300 milligram doses I think what you're talking about at the level of protection that you get and we know that folks are protected from 600000, an 18 month data showed even 2000, but.
The Gulf subpoena, despite onethree hundred milligram dose.
Got anything you want to add to that.
No.
The the two weekend or both usually use for up dosing is as Jason has said many times, it's as it's a speed limit you can't we don't want people to go faster, but they can certainly go slower in the the flexibility that are regimen allows.
Allows them to stay at those levels as long as they need to.
We will up dose them, but they will go on the protocol defined duration of maintenance and then we will do the exit through challenges and so I.
I don't believe that there will be any problem with interpreting the data and and.
You know a lot of safety data.
Got it that's that's very hoping we'll have some opportunistic data that shows us what happens if you take slightly longer to titrate up from a dose than we did in the other clinical trial.
Right.
Got it I see that's very helpful. Thank you and then I'm just a quick follow up for Andrew with regard to the 700 patients are by 700 physicians, who have arms find out onto the ramp can you maybe just provide some color for us as to how many of them are currently actively treating.
Patients with with peanut allergy versus those who are potentially first time.
First time treaters for peanut allergy any color there would be helpful. Thank you.
Yes, Thanks Paul.
I assume you're referring to is those that have been processing, a food or likely which was obviously prior to the approval of California.
So in terms of the though the Ram certified I believe it's around 75 to 100 of those folks we would would we put in that category. So people will have some familiarity with food or lightsey and remember that quanta brought church because you have folks that have been have been doing through the lightly.
Cross multiple different food items quite a bit for a number of years. But then you also have actually much bigger group in there, which is going to on a very limited basis and the reason that the only reason they've been doing it is because they are a little demand from the patients that they wanted some sort of treatment for peanut allergy for their kids and so this was the only thing that was it.
<unk> to them and so now with.
An approved option available with the obviously will not Rems program.
And embracing the fact that there's an approved option that they can they can treat with.
Great. Thanks for taking your questions.
Thanks, Paul.
Thanks, Paul.
I'm showing that we are out of time I wouldn't like to turn the conference back to teeth in Dallas.
Thank you so much.
So just to add on to summarize I remain extremely proud of the team go that aiming for rising to the challenges posed by the pandemic I could not have asked for a more dedicated and talented group of professionals.
Meeting these challenges with the portal approach to our business. So that we can maximize the commercial potential of California, while continuing to preserve capital we're confident in our prospects our mission to improve the lives of people with food allergies, and we approached the uncertainty for the coming months with resolve and from a position of strength.
Lastly, I'd like to share my sincere wishes for everyone throughout the communities, we serve to stay safe and healthy and to know that will turn the corner and brighter days are ahead of us as always thank you for your ongoing support and for joining us for today's call.
Ladies and gentlemen. This concludes today's conference call. Thank you also Fixating you may now disconnect.
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