Q1 2020 Earnings Call
[music].
[music].
Good afternoon.
Got you only vice President corporate communications and industrial action.
Slides can be viewed directly via the webcast well under the investors tab on flexi therapeutic stop.
In addition, the press release, we issued this afternoon and an archive of this conference call can also be father.
Today's conference call will be led by Flexions, Chief Executive Officer, Dr., Michael claim and he's joined by David Archuleta, Chief Financial Officer, and what's the Lehmann Chief commercial officer.
On today's call will be making forward looking statements include commercial financial clinical and regulatory projection.
Statements relating to future financial or business, performing conditions or strategies and other business matters, including expectations regarding that fail operating expenses cash utilization.
<unk> regulatory and commercial development and anticipated milestones are forward looking statements within the meaning of the private Securities Litigation Reform Act.
Flexion cautions that these forward looking statements are subject to various assumptions risks and uncertainties, which change over time.
Additional information on factors risks that could affect collection business financial condition results of operations are contained inflections form 10-Q for the quarter ended March 31st 2020 filed with the FTC today and other filings, which are available at www Dot FCC Dot Gov is.
Well as flexing website.
These forward looking statements speak only as of the data that's cool inflection assumes no duty to update such statement I.
Ill now turn the call over to flex and CEO, Mike Glenn.
Thank you Scott.
Thank you all for joining us today.
It is clear then the only eight weeks since our fourth quarter earnings call.
World has changed dramatically as result of Cobiz 19.
On today's call will talk about what we've been seeing and doing both commercially and operationally during the unprecedented public health crisis, but we'll begin with a focus on our first quarter performance and provide color on my we remain.
Yes, typically bullish about you'll read as future.
Today.
<unk> net zilretta sales of $20.1 million for the first quarter of 2020.
We previously indicated that we believe during Q1 sales would be roughly flat versus Q4 sales up $23.7 million and we were on track to deliver sales in this range prior to the Cobiz 19 outbreak.
We also said that at that point, it was simply impossible to predict how the outbreak ball.
What the effects of more aggressive social distancing or other containment efforts might have on patients or practices.
Since then.
Picture had become much clear and we can speak now into the effects of the pandemic on Zilretta sales and later in the call on our development activities.
Beginning in late Q1, we saw most practices substantially reduced patient visits or even suspend these altogether.
And as a result utilization of Zilretta drops significantly.
We believe it will take time to get to the new norm indications of the recovery will vary practice practice region by region and even a person by person.
Thus far we've seen decreased demand for go read in the second quarter and believe Cobiz 19 will adversely impact the red or revenue for the remainder of the year.
That said, we do take note of a number of external circumstances that have the potential <unk> increased demand for zilretta overtime.
These are all relate to the delay postponement or cancellation of total knee arthroplasty. These days and the intense medical need to provide rapid substantial durable non opioid analgesia.
For patients, whose knee pain drove them to consider teekay in the first place.
Three factors contribute to this dynamic and these were all brought down our attention by orthopedic key leaders.
First while elective surgeries are beginning to happen around the country. In most cases, there will be a gradual returned to full capacity and many teekay <unk> will be further delayed.
Second.
Really for those of Medicare age group all considered in the vulnerable cobot 19 population.
There may be reluctance to enter a hospital that surgery until these patients have greater confidence they can avoid infectious risk.
Finally for those who are younger than 65 and were previously employed many prioritize income generation.
Over surgery and rehab.
Recent survey data indicate that almost 50% of worth DDIC surgeons expect a procedure volume will not be back to normal until some time 2021, and 63% expect anywhere between 25%.
75% of their patients will continue to the laser surgery for fear of Golden Monkey.
Of course flexion is adapting to.
Since instructing our employees to work from home in mid March.
RMB EMS have adopted various technologies engage meaningful conversations with prescribing physicians.
Melissa can provide more color.
Turning to field, but since healthcare practitioners have more time on their events are nbn have experienced greater access to prescribers, who have historically been very difficult to see and their response to this will read a clinical data.
Has been highly encouraging and even with koby 19th we continue to hear stories in connection with received unprecedented olay knee pain relief from Zilretta.
The bottom line is that our confidence in Zilretta clinical performance and long term potential.
Is undiminished.
We're not the only company to believe that's already to holds tremendous potential for millions of patients with away knee pain in April in the midst of the pandemic, we announced that we entered into an exclusive license agreement with HK Theano and Jang seething subs.
City area of C. D C, a leading Chinese biopharmaceutical company.
Under the terms of the agreement we are entitled to receive an upfront payment of $10 million and up to 32, and a half million dollars in development regulatory and commercial sales milestone payment.
Inflection will be solely responsible for the manufacturing and supply zilretta for all clinical and commercial activities.
While our confidence is the red is resolute.
It is impossible for us to predict how long that the pandemic will affect sales and as we announced in our press release. This afternoon, we have taken meaningful actions to reduce our operating expenses in the near term.
David will discuss these steps in more detail, but we are committed to ensuring that we come out of the and then in a strong financial position.
Regarding clinical development.
Recognizing that many clinical trial sites had shut down.
Wanting to ensure the safety of our research participants and in consideration of guidance issued by the FDA.
In early April we announced that we would temporarily suspended our phase two clinical trial evaluating the efficacy of zilretta in patients with shoulder away or adhesive Capsulitis and also our phase one clinical trial.
Alley waiting the safety and Tolerability FX to a one our intra articular gene therapy candidate for away.
Subsequently, we made the strategic decision to discontinue our phase two trial investigating has already shoulder away and in adhesive capsulitis.
Given the small number of patients enrolled in that trial. She uncertainty of one would be able to restart it and well is the costs required to maintain the study in an inactive status. We believe terminating the trials that most responsible action at this time.
Moving forward, we will look to leverage our learnings from the study and potentially use the to refine the trial designed to enhance already in these indications.
We also aims to re initiate yeah. Thanks to a one single ascending dose trial, and we commenced enrollment condition and staffing at our trial sites safely permit the return of patients.
Turning to FX real one our NAV 1.7 inhibitor formulated within a thermo sensitive hybrid gel for ministration as a peripheral nerve block for controls post operative pain.
We continue to advance this product candidate.
Ethics Threeo, one is a liquid at room temperature and gels following injection and body temperature to create a controlled release eco that can provide persistent therapeutic concentrations of drug locally at the selected nerve.
We recently unveiled new preclinical data in a virtual poster presentation now available on the American Society of regional anesthesia in acute pain medicines website.
These data showed that compared to lipid zone will be pivoting and placebo FX three a one provided sustain post operative analgesic effect with no impairment in motor function.
In addition, hi, local concentrations of funded by the active ingredient in FX three a one were measured at the site of administration for the duration of the study consistent with the creation of the depot refining control drug release.
While it's still early days for the program. These findings support our lead that unlike typical local anesthetics the selective pharmacology of FX three a one has the potential to deliver substantial and persistent pain relief.
Preserving motor function, which could enable earlier rehabilitation following muscular skeletal surgery and potentially more rapid discharge from the hospital.
We are completing GLP tox studies for FX Threeo, one and we remain on track to initiate clinical trials in 2021.
Before I turn it over to Melissa I would like to make just a few final comments.
While there are many uncertainties about the shape and pace of the recovery. There are some key facts, we know right now.
We know that there are millions of patients for whom zilretta can provide substantial and extended really from only need.
We know that at least many tens of thousands of elective knee replacements have been deferred due to cobiz 19 in those patients will need affected pain relief, while they wait for surgery.
We know that our commercial organization is poised for the recovery at what ever pace or shape. It takes.
Finally, we know that everyone inflection stands ready to adapt to any circumstances, we face and we remain confident in our future prospects.
At this point I would like to turn it over to Melissa to discuss our commercial operations.
Thank you Mike.
I've been with flexion now for just under two months My first day, Mark by our Q4 earnings call.
My second day by the work from home directive, resulting from the rise of the Cobot 19 pandemic.
Despite having yet but in the field I've met virtually with dozens of physicians and members of our sales organization.
Each of these meetings has only confirmed what I believed about Florida before joining the team.
Bolstered my perception of the Flexi organization, particularly in light of our response to cope with 19 and enhance role I know Zilretta can play an effective durable pain management per patient all along the away knee pain treatment continue on.
Mike discussed some of what we've experienced in the field very recently.
I'll provide some additional color on how we've been engaging with prescribers during the crisis and how we plan to emerge from the crisis or stores already prior sales trajectory and continue to grow from there.
Before I talk about what we are seeing now I'd like to start by walking through the commercial metrics for the first quarter.
As Mike mentioned, we were pleased with the way the first quarter was progressing prior to the onset of covered my team and the lead zilretta with tracking to meet our expectation.
You can see on slide two.
Recorded Zilretta net sales of 20.1 million, reflecting the pandemics material impact on March sale.
We expanded our list of targeted town in the fourth quarter 5000.
And by March 31st 2020 outreach had extended to almost all of them.
And by the end of the first quarter 3672 account had purchased Zilretta, which was an increase of 184 purchasing accounts compared to the fourth quarter of 2019.
As of the end of March 2832, or 77% of accounts had re order zilretta.
Notably this increase in purchaser occurred off at customer base that continue to grow even in light of the pandemic.
On slide three you can see how our sales have progressed since launch and as we've mentioned we were pleased with the performance in the first part of Q1 prior to the onset of Cobot 19. When you were on track to deliver sales in line with fourth quarter of last year consistent with our previous guidance.
The next three slides reflects the letter purchasing patterns across our growing its helpful comprised of practices clinics and hospitals various sizes and potential.
Slide four describes the cumulative number of accounts that have purchased zilretta since launch as well as the distribution of quarterly purchase volumes across our account base.
In Q1, the trends continued with a growing number of accounts purchasing within and across the purchase price of one to 10 units.
11 to 50 units and 51 or more units with significant growth to 916 account in the 51 plus category.
Slide five flips the perspective looking at the cumulative distribution of Zilretta purchases by account.
For example, those 916 account and the 51 class purchase group shown on the previous slide.
I've been responsible for 177664 of the total units purchased since launch.
And roughly 35000 more units then were purchased from this purchase volume growth in Q4, 2019th.
This clearly illustrates the purchasing a pound continue to move through the Zilretta utilization continue I'm described on previous calls.
As we also previously highlighted even our largest the past remain under penetrated and we continue to believe that there is tremendous opportunity to increase already utilization within and across each of these group.
It is also important to point out that well total direct purchases in the first quarter, where approximately 36500 units, which is slightly lower than the 37500 units purchased in the fourth quarter.
Through the Middle of March we were pleased with our progress unbelievably, we're well on track to meet or exceed the fourth quarter purchase volume until the effects of cobot 19 began to impact our business.
Rather purchases dropped precipitously.
And our final slide number six.
We break out the rather purchasing by new and existing power.
In Q1, new accounts purchase 12504 units, which further illustrates our strong start to 2020 prior to the onset of covert 19 across the U.S.
As Mike mentioned Cobot 19 has had significant impact on our customers.
Throughout the covert 19 impacted window overall, finishing up the she's already eligible patients has been limited variable unprocessed dependent.
Some packages have shutdown in person patient visits altogether, well others are open to high priority critical or Q cases, while implementing social just anything measures.
Well the circumstances very one common denominator has been the president and tenacity of our Salesforce.
Well not a replacement for in person exchanges, our reps have been successful in targeted remote detailing in some cases, gaining access to prescribers that exceeds pre covert 19 levels.
They have effectively employed various audio visual technologies to engage with both existing and new account to discuss the important role Zilretta can play in the Oh wait treatment paradigm, including for those patients who are waiting for up to decline surgery went to covert 19 restrictions are lifted.
To better understand the current impact of Cobot 19 on orthopedic practice and what the recovery might look like we held a series of focus groups, especially from across the nation.
The insight from those exchanges support our assumptions that the return to new normalized practice patient flow will be gradual and driven by ongoing social just anything requirements and safety requirements as well as patient comfort in returning to their doctors offices.
However, we also see the potential for increased use of zilretta in a wider variety of patient type.
Both existing and new prescribers look to manage the growing backlog of surgical candidates, including those previously scheduled for T.K., our who for various covert 19 related reasons to see differ treatment in favor of less invasive option like zilretta.
Hi, Mike athlete described we cannot predict the timing or shape of the recovery, but as it occurs our commercial team will be there to support prescribers and ensure they understand the even more important role zilretta can play in effectively managing their patients Oh way knee pain prior to or in avoidance of surgery.
With that I'll now turn it over to David for the financial update.
Thank you Melissa before I provide an overview of our financial performance in the first quarter.
Like to share some details on our fiscal response to the economic and business disruption caused by Cobot 19.
Mike mentioned and as we described in our first quarter earnings press release, we undertook a series of prudent and disciplined steps to reduce expenses across the organization in order to enhance our financial flexibility and liquidity.
In total we believe these steps will deliver between 43 million and 53 million in savings this year.
As a result.
Our full year 2020 total operating expenses.
4.7 million and 3.9 million for the three months ended March 31, 2020, and 2019, respectively.
As of March 31, 2020, we had approximately 125.2 million and cash cash equivalence and marketable securities compared with 136.7 million as of December 31, 2019.
At this point in time, we cannot forecast with any precision the duration of the pandemic or its full impact on purchasing patterns or utilization of zilretta.
Therefore it.
It would be imprudent for us to provide specific guidance with respect to our feature sales of zilretta or our cash runway. We will continue to review and reassess our assumptions and provide additional color when possible.
Like mentioned our confidence in is already is as strong as ever and we will take the steps necessary to ensure we are well position from a financial perspective to maximize the red as value in a post covert 19 environment.
At this point I would ask the operator, please open the line for questions.
Yes, Sir ladies and gentlemen, if you have a question or comment at this time. Please press starve in one or your telephone keypad. If your question has been answered or you wish to remove yourself from the Q. simply press the pound cake.
Again, if you have a question or comment at this time, Please press star within one or your telephone keypad.
Please stand by well, we can probably q. and a roster.
[noise]. Our first question I found that comes from the line Oh Randall sticky from our B.C. capital markets. Your line is okay.
Great. Thank says Gee you have it.
<unk> reopened.
As to what they're working patterns looked like.
That you attend or at least.
Position or practice thinking around any pent up demand.
And then where they intend to focus on from a procedure perspective, you know kind of channel <unk>.
Inventory aside and they have a follow up.
<unk>.
That's me.
We have.
The basis for which <unk>.
It's not see graphically.
Read that their parents.
Volume is going to vary.
By region by Crackers.
<unk>.
Any impact you <unk>.
You should slow that we've seen.
Necessarily correlate the areas, where coping 19 seemed more prevalent.
Well and just building I mean, when I'm just thinking.
Well there are that let's see patterns.
Seeing some account or substantial quantities other cats ordering yes or no.
But it's it's far from each month every day to day say, yeah clarity on more than.
Oh, let me ask a follow up I'm enjoying this.
Shut down period, which you know in some regions reaches like New York is probably going to continue have you guys been able to alter your outreach you know V.A.D.T.C. I mean, you have kept his patients who are homebound, who are probably in pain, maybe thinking about the timing of elective surgeries have you.
Figure out a way to access those patients to get Zilretta as an option in front of them.
So with regard to ask <unk>.
It's typically our efforts haven't been focused their during this period they have been okay, I, specifically with our health care providers.
<unk> force has been working from home since the middle of March and they have been fully audio visual equipped.
To continue to engage positions remotely.
And in fact, many of their conversation Wow with our users and some of our Nonusers.
Focused around that very coin, which is that with surgeries, having been reschedule postpones cancelled altogether, the wait times to get those surgeries, our <unk> and that go read a offered an alternative to managing the in track.
Little pain that these patients are continuing to suffer with and therefore is being more widely considered by our customers as.
That bridging tool that they can use until those patients are able to be put back onto the surgical schedule.
Okay, great. Thanks, Chris.
Thanks random.
Thank you are next question or comment sounds from a line of Gary Nachtmann from B.M.O. capital markets. You line is open.
Hi, guys. Good afternoon, just falling on the previous question in terms of the variability physician practices and how they're handling <unk> have you been able to stratified. These practices in any way and target them differently based on those that might be willing to treat patients sooner and then maybe go after those practice.
There's more aggressively in the near term.
In fact, we have we've done exactly that we've been able to stratified practices really into three different groups and they're moving between and among those groups as the pandemic progressive but we are seeing <unk>.
Some practices that are completely shut down to patients altogether.
Others that are seeing only.
What we would describe as trauma cases, and still others that are open to more than just trauma cases interesting picks and.
That might be considered critical.
But not necessarily trauma.
And so with the recognition that any given one of our customers might fall into any one of those three stratification.
We are guiding our sales force to engage and more urgent conversations around they used to zilretta as that bridge to surgery or practices that are continuing to see patients above those that we would describe as trauma cases.
For those that are not seen zilretta eligible patients today, we are engaging them in conversation about preparing for the time when they'll start to open their practices more patience and the role that so read it can play in those patients.
As well as.
Suggesting that they work now to to pre verify coverage for those patients personal rata.
And then a similar discussion with those practices, where they are close down to all patients, but again considering go right to as a tool that they can begin to manage with now remotely in anticipation of the Queen at which they will begin to see patients again.
Okay.
And as part of the cost cutting you didn't specifically mentioned sales for us It I'm curious.
This new world that's evolving D. thing is maybe it'll make sense to be more efficient with the sales force if he could use telling medicine, maybe more more frequently so it's.
[noise] certainly you know the onset of Tele medicine as as a way <unk> interact with patients has has taken root and we believe appears day.
As far as implications on our in person detailing on our sales force.
Currently conducting a variety of commercial analyses to ensure that.
Footprint is optimized.
As we emerged from <unk> and reset the sales trajectory.
It would be premature to comment on any of the potential outcomes from these analyses in any change is to our commercial footprint that they might suggest but we are currently not planning to make any revisions to our sales footprint at this time.
Okay, and then just a couple of for David Oh go ahead, and you want to add like I'm sorry.
We're just going to say that you know or.
We think that we're we're learning.
Mm.
Detail and actually is.
Okay.
<unk> said that.
It's also important right now.
Yeah.
Yeah, Yeah, sure or reactions are important so I wouldn't want anyone to leave this all moving that we're moving on.
In the direction of Oh, Okay.
Not a question is yes or sales.
Yeah, I can sort of.
Listen in their office there.
Mmm.
When.
He does the same group.
<unk>.
Okay, and just a couple of lessons for David. So is your gross Mars are going to be impacted at all by stopping the manufacturing of so let us or period of time and then I think you mentioned them just jumping on a couple of calls how much good sales be down in the second quarter now they have a couple of month.
In the bag you mention inventories would be an issue.
Yeah, Gary So answer the the second question first look it's it's so it's still early days.
<unk> hit us the middle of the Middle of March and that resulted in the material decline at that point in time.
We're we're not going to give a tip x. on how things are playing out because it is as you can appreciate it is very fluid is at this juncture. Your first question was about manufacturing and gross margins and yes.
During that time.
During that time that we have manufacturing suspended or gross margin will be a adversely impacted that's because we do have certain fix production costs.
Recall this is a condominium model with would pay the on and those fixed production costs.
With production would've been charged inventory now they're going to need to be recognized as parts cost of sales. So this this will this will occur during the time that we have a suspended manufacturing.
Okay. So rough I I mean, you you actually had good gross margin the first quarter I think trending into high eighties. So.
I don't know, but can you give us a sense of where that like does it get cut in half or a dramatic it might be.
It's pretty fluid at this point time is your point.
There we had a gross margin.
<unk>. So we were clearly I'm heading to the right direction, but we're going to take a little bit of pause, but again, it's just too it's too early into fluid underscore food to give specific guidance on what the gross margins are going to look like during this time of production suspension.
Okay, I just said alright, thank you guys.
Yeah.
Thank you are an x. question or comment comes from the line of Elliott Wilbert from Raymond James and Associates. Your wine is okay.
That's good afternoon, I I didn't realize that was able to make comments on the call I <unk> I, probably shouldn't I'll, just I'll stick with questions.
Type of questions for for David I, I never thought I'd be asking a selection of a question about whip, but nevertheless, I'm gonna I'm going to.
Preceding that direction.
Just looking through the queue, you've got working process inventory of around 10 million on the balance sheet finished goods around.
7 million.
And I think somebody is going to look at the finish good to 7 million divide by your margin in the corridor.
Include dead.
That means you've got inventory on hand.
Satisfied about 60 million sales for the balance of.
The year, so just wanted to.
How about that idea off you if I'm thinking about that correctly I'm not sure about the process of converting whip into finished goods at this point in time and and whether that 7 million may actually under represent what you think you have in terms of finish 'cause inventory to satisfy any additional demanded in 2021st.
Question.
Got it okay. So thank you Elliot appreciate the appreciate inventory question.
Yeah I think.
Just looking at finished goods is is an incomplete picture that that <unk> will be converted and and may be already converted given that we're a little bit of time side of a outside of the under the first quarter. So just looking.
Finished goods alone is is only part of this story and I think I I would just.
Revert back to what we said on our on our prepare reports that.
We we do have adequate supply of so rata to meet demand for at least the remainder of 2020 and again as we talked about you have the ability to restart up in that paper.
Three months of notice so <unk>, obviously keep a close I I'm, what our inventory levels are it'll be killed her job structure.
Okay and for yourself as well David one as question around the the the dead the term loan and and and the revolver and then also the P.C. on expenses, which I think jump up and 2021 is well I'm just how are you thinking about.
Those obligations not really an issue this year, but potentially a little bit more. So next if in fact things don't bounce back longer time lines that while hoping and expecting possibility of [laughter] renegotiating interest rate.
Maybe these different amortization of.
The dead or anything you can do with respect to the the pay down expensive to push push those out just trying to think about.
Yeah, what you could what kind of flexibility you have in terms of some of these fixed obligations that or what concentrated in 2021 2020 right right. So as it relates to the.
Over or let alone.
<unk>, we're currently in discussions engaging productive and constructive discussions with our lenders.
Potentially modify select terms that week people evil favorably impact our liquidity or lenders very much understands unprecedent <unk> that we are in as a result of covert 19 and we're.
The us to come up with a mutually agreeable solution, we're not there yet but once we have agreement on this than will provide a an up in the in the appropriate for so we're we're optimistic.
A little premature as it relates to details as it relates to pay the appreciate that from an accounting standpoint that shows up as a as a oh Oh, partially has at least but it's really it's really about a manufacturing a long term manufacturing.
Contract, we've talked about the fact that we've the that we've pause production for the time being and have the opportunity.
The start up with three months notice given we have a good relationship with pay John and as things progress through 2020, we won't be working closely with Epifix, what makes sense beyond beyond this year.
Okay.
And ask a question.
Directed at Mike with respect to the C.S.B.C. agreement, specifically, the the milestones associated with that 32, and a half million if I remember.
Correctly I would assume the bulk of that is tied to final.
Approval, but just trying to get a sense of how much of those couldn't fact be generated if everything goes according to plan.
Answer of <unk> final approval.
Yeah.
I should know exactly what that is the third if you've got young might have been better whiners.
Well my recollection is at the third and a half million in milestone [noise].
Regular <unk> milestones are are heavily weighted in the direction of.
Mmm.
Okay, and then just one last question for.
Alicia with respect to account conversion and the opportunity there still seems to be on the table guess looking at the latest metrics you still have like 45% of a couch that generate or.
Excuse me that purchase you know roughly 3% to 4% of.
Total unit show kind of wondering you know just how much.
Sales force time effort energy attention in costs are sort of targeted.
45% to generate relatively small volume and you know so what's the best strategy to really try and and convert those a couch.
Right now versus maybe just.
Focusing efforts more on the.
Hi, prescribing accounts, which is still may be.
Under your lighters or in terms of their potential total volume. Thanks.
[noise] spark as we said before we think that there is room for all of our accounts, regardless of whether we can cut it has to be hired.
Volume purchasers could be more penetrated.
David talked on previous how about that already utilizing continuum.
And you can see from a number of the commercial mess slides that we are continuing to new customers.
Into the small volume purchases move customers, some small volume purchases to to the midsize volume purchases and 'cause midsize going for a larger my purchases and that really we believe that assumption you know.
Customers getting comfortable with initial trial being able to in the context of their own practice get evidence of.
The clinical impact that's already can have on a small number of Haitian experience successful coding billing and reimbursement and then expanding that use two other patients within that physicians per view and other positions within that practice.
So the degree of effort that is placed against a small volume purposes is proportional to the opportunity that exists.
Practices as we understand.
Thank you.
Our next question or comment comes from the line.
Surrogate ballenger from need to make company. Your line is open.
Hey, [noise].
10 over search.
I just had a few questions so give them the positive impact they've seen on your virtual on each program so far [noise] sorry.
I guess just broadly speaking how do you.
Planned to I guess incorporate this virtual technologies in tech tools going forward.
His coded environment I guess, if there's something that you think it's worthwhile in pursuing long term.
[laughter].
Absolutely I think you know we know.
Sure that the Red is a highly promotional lee sensitive product and regardless of whether that promotion is in person, which is currently most effective.
For remote it all count towards the ability to drive utilization, we'd been benefitted by the fact that has just didn't have time on their hands now and we can access them to a greater degree.
Through our own you know.
<unk> detailing and they likewise are accessing their patients through the Tele medicine services that they are now getting more and more equipped to everyday to use that creates an opportunity for us to leverage the remote position to patient dynamic with.
Don't read the advertising on and that is absolutely something for looking into in terms direct disposition promotion through remote detailing in addition to our sales.
People are spending.
A majority of their time today doing that we are also I'm beginning to turn on.
<unk> education.
I'm from a remote position, including a number of national speaker programs with panels experience positions in terms of there used to read and being able to engage a much broader number of positions across the country remotely endeavour type of interaction.
Great. Thank you.
Thank you again, ladies and gentlemen, if you have a question or comment at this time. Please press Star then what are your telephone keep our.
Our next question or comment comes from a lot of <unk> <unk> <unk>, Craig Hallam capital groups. Your line is open.
Thanks, that's taking a question just quickly here I was wondering if more costly starting now that you've given a little more guidance and the impact in 43 to 53 million is that in any way related to turn on your you know revenue expectations here or.
Waiting on that day, you know to to get more.
Clarity before getting good so.
Oh right. This is David so this as you can appreciate it as I said in my prepared remarks.
This was a this was really a a deep dive throughout the organization to reduce expenses in order to.
In order to ensure that we have.
Neutral flexibility and liquidity given what we're experiencing over 19.
We we we got we have eliminated we reduced we'd deferred.
So it made the most sense and we've talked about this in the past planning for the worse than being prepared for recovery.
As it relates to revenues as you appreciate you know we're still.
Relatively early days at this pandemic and things are changing every day. So we didn't we didn't sit there and match up our it's reductions to revenue to what what we think our revenues going to be because it's it's.
There's a there's a side dispersion of of outcomes.
We are goes in focused on or expense reductions based on what we think makes sense for them. Both short term in long term risk objective and dancing financial flexibility and liquidity.
Now that makes more sense, thanks to that and then did the cost cutting start <unk>. It seems like the sales were starting to really get hit in mid March with <unk> did cost cutting start at that point or is this really going forward and according to come here.
We really embarked on that late and we'll say late in the late in the first quarter by.
Impact on our on our expenses first quarter related to those I.D.'s is is really diminimus because.
Already well in progress so it's really about it's really about our expenses do two three and we're going forward and and the other way to think about it is I'm just doing the math.
We are expecting.
<unk> operating expenses two to three to four to be in 100 change 124 million dollar range, given what we incurred in the first one.
Understood and then just Leslie here in terms of pacey on in production.
Is this something that you always let the street or let the public know when you read Reengaged production would take beyond because it seems like it would be related with what's going on in in the medical practice.
That's a good question I think we would figure out what what makes some a disclosure standpoint, when we initiate production I think it'd be kind of premature to at this point to say.
We will let everybody know at that point time or not getting those if.
Closed we would we would give let me see I know when there's a three month notice period.
Excellent that's it for me thank you.
Yeah.
Thank you My next question or comment comes from a line of Bruce Jackson from Benchmarked still on his.
Hi, Thanks for taking my question just quickly on the shoulder trial aren't going to be able to Tom salvage any data out of that.
Yeah, <unk>, yeah, we import we will.
The study we on blind to study.
Analyze the data.
And.
<unk> definitely.
Up there.
<unk> right.
I I would caution, though routine they're limited number of the patients enrolled on the.
Apparently <unk> more your expectations too too hard but.
Yeah, Asians, who enrolled themselves or job over that file and Morgan community distract whatever.
<unk>.
[laughter].
Okay. Good and then with F.X. two one of these things are going to be able to search got stuck up pretty quickly when you get the opportunity.
Well I think the operational great.
Hmm.
Hmm.
Already in your we are not <unk>.
<unk> <unk>.
<unk>.
Okay, great. Thank you very much.
Mhm.
Thank you I'm sure I know additional comments or <unk> at this time I'd like to turn the conference back over to Mr. Microclimate for any closing remarks.
Yeah.
Thank you for all those into anything for those who are the question.
I just want to lead people with the idea that we feel good about the future Yeah per day day by day, but we are now that's a neat go right and <unk> <unk> <unk> yeah.
All the elements yeah outline.
Okay. Thanks very much.
Ladies and gentlemen, thank you for participating in today's conference. This concludes the program you may now disconnect everyone have a wonderful Spacex <unk>.
[music].
[music].
[music].
[music].