Half Year 2020 GW Pharmaceuticals PLC Earnings Call and Operational Update

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Any further assistance press Star zero.

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Mr., Stephen Schultz, Vice President Investor Relations. Thank you Sir you may begin.

Welcome all viewing thanks for joining us today for our second quarter Twentytwenty results call again, I'm, Steve Schultz, Vice President of Investor Relations GW today I'm joined by Justin go over to double use Chief Executive Officer, Darren Cline, U.S., Chief Commercial Officer, Chris Tovey Archie.

Operating officer, Dr. Volcker come out first Chief Medical Officer, and Scott Jochum, Belo, our Chief Financial Officer.

We hope you've had a chance to review our press release.

Issued a short while ago, we expect to file our form 10-Q tomorrow.

Before we begin let me remind everyone that today's discussion contains forward looking statements based on the environment as we currently see it and as such does include risks and uncertainties.

List and description of risks and uncertainties associated with an investment in GW can be found in the company's filings with the U.S. Securities and Exchange Commission.

Finally, an archive of today's call will be posted to the GW website in the Investor Relations section I now turn the call over to Justin Gober GW is chief Executive Officer.

Thank you, Steve and welcome to those who joined us today.

Mhm somewhat extraordinary times and Kogan 19, I hope that you will remain healthy and thing.

This time of all core to want to cold in early May GW had responded to the Colin pandemic by adopting a work from home policy for most of the company with the exception of a manufacturing team. We continue to operate under strict safety protocols to ensure patient access to Ahmed.

In the last few months, our manufacturing operations continued to operate smoothly and remain grateful to almost all who continue to come to work every day to ensure that all patients received the medicines that they need.

Oh field commercial team both the U.S. and here have been able to maintain active engagement by remote channel with clinicians prescribing epidemics.

During Q2, all sales organization imitate well for the virtual environment using rapidly adopted educational and marketing materials payment to remote engagement.

Overall I'm extremely proud of how even in the faces. The challenge is this unprecedented pandemic, we have to live in quarter on quarter revenue growth in the U.S. methodology net sales in the U.S. in Q2, reaching $111 million.

I think this growth is a real testimony to the importance of Epidiolex meeting a serious unmet need in patients with treatment resistant. He just after the commitment of our organization to these patients and their families.

Within the last week, we were delighted to announce that episodic was approved by the FDA for the treatment the seasons associated with Cuba sclerosis complex TSC.

Its approval is a very significant milestone in the expansion of the market opportunity rapidly representing a need doubling of the target patient population.

We believe with the launch of this new indication. This month, we along with strong support from the commercial momentum of Epidiolex as we moved through the second part of the year and beyond.

We view epidemic as the first what we believe will be several know who can happen was meant to emerge from our platform in the coming it.

At the end of June we hosted a west coast to announce details of the U.S. development and commercialization strategy for the fix a malls, which we expect to see our net U.S. commercial product.

I haven't did you have had the chance to review the women all if at all in all cases available woman she doesn't website on the invest behind things.

In summary, we designed the clinical program that provides multiple accelerated part ways to an N D a submission.

I think as early as next year.

And the leasing that makes the most is very significant commercial potential over the short medium and long term.

Well here on this cool U.S. and European commercial update from down and Chris respectively.

Income will then provide an R&D update Scott reviews, our financial results.

Let me now how many cool ever done for U.S. commercial update.

Thank you Justin the U.S. achieved epidiolex net sales of 111 million in the second quarter compared to 68 million in Q2 of last year.

We're very pleased with this result, which showed growth from 106 million in Q1, despite the challenges of coolant.

I want to thank the U.S. commercial team for continuing to support our health care professionals so effectively.

While also managing through the impact of dependent on their own personal lives.

In the year and a half since the launch we remain humbled by the impact of Epidiolex continues to have.

On patients with survey analytics gusto syndromes.

We're very pleased with the new inclusion of PFC in the label.

Which will enable us to expand the impact that epidiolex can have on patients with T.S.C.

I will speak about the t. opportunity and our commercial launch plans in a moment.

The attributes of Epidiolex.

Continued to be demonstrated during the quarter epidiolex sustained strong persistency and a modest increase in average dose.

While we were initially concerned about the impact on new patient acquisition during the early stages of a pandemic.

New patient starts continued at a healthy rate throughout Q2, albeit at a lower rate than pre cobot.

With a heightened focus on ensuring epidiolex prescriptions were received by patients I'm pleased to report our specialty pharmacy network played a key role in ensuring delivery of products and.

And decreasing or average time to fill a prescription tableau 10 days during the quarter.

The specialty pharmacy network also played an important role ensuring that patients were able to access refills have seamlessly and safely as possible, resulting in our strong performance.

During the second quarter, we witnessed the shift to tele medicine by providers and a significant reduction in patient clinic and institution visits.

To meet customer needs, we also transition to a virtual promotional model during the quarter.

While this transition impacted our ability to engage our customers approximately 40% of our customers are willing to engage virtually with our sales team.

While our sales tools are available in digital formats, and our field teams continue the master the our virtual customer engagement.

As a result, the quality of remote engagements as high.

To ensure we can get information into the hands of patients who may be engaging with neurologists virtually as well. We recently launched the up a direct you to channel.

To help support health care providers, we've enhanced our Epidiolex HVP dotcom website.

Providing self service access to easily started patient.

As some of our customers have recently indicated a willingness for face to face visits.

Our field sales team began live engagements on a very limited basis in June.

Access to HCP has remained highly variable depending on region and care setting and the overall situation remains very fluid as the pandemics impacts different parts of the country.

The vast majority of customer interactions at this time remain virtual.

We will continue to navigate this changing landscape during the remainder of the year.

I also wanted to update you on our progress into the long term care segment in the U.S.

While this segment has been hit especially hard by cover 19. The team has made progress during the quarter with a focused efforts on driving engagement education.

We continue to work with the largest binder, it's on education centered around epidiolex and identifying appropriate patients that can benefit from the therapy, we're pleased with our progress thus far.

Following a recent therell be scheduling about the dialogues.

We continue to progress are the scheduling upwards at the state level with nearly half of the U.S. States now recognizing epidiolex as a non control products.

The conversion in some states has been impaired by cobot, but we anticipate the majority of the remaining states to be converted by the end of 2020.

Now turning to our newest indication and TSC as a reminder, there are approximately 50000 individuals in the PST in the United States.

<unk>, 85% suffer from seizures, and nearly two thirds, which are refractory market research with patience and they're treating physicians indicate there was an unmet medical need and a dissatisfaction with prior therapies.

I would like to highlight two noteworthy items in the label.

The first is an update to the age range at the dialects is now indicated in patients one year of age and older for all our indications.

This newer lower age limit down from two years of age.

Speaks directly to the safety profile of Epidiolex, which is the only products specifically approved procedures associated with Turvey syndrome, or TSC down to the age of one.

The second pertains to dosing.

The label now includes a recommended maintenance dose of 25 milligrams per kilograms per day for KFC patients, which differs from the 10 to 20 milligram per kilogram per day range for LG is underway.

Well, we'll be focused on two critical success factors for the TSV launch.

The first will be to establish epidiolex as a first in class AGD with T.S.C. prescribers in the treatment of choice for seizures associated with TSC.

We believe a 48% seizure reduction in refractory patients with TSV and the effect on seizure reduction in a wide range of specific seizure types demonstrates the broad spectrum efficacy of Epidiolex.

Additionally.

The novel mechanism of action remains important to distinguish up a dialects from other anti seizure medicines.

The second is to drive Swift uptake of Epidiolex and increased use earlier in the treatment algorithm. One specific initiative, we will be executing is focused on the 66 TSC clinics across the United States.

We are implementing a specific peer to peer Webinars program, specifically targeted at approximately 200 directors are these TSC centers and their ancillary staff across the country.

Three well respected key opinion leaders will review the clinical data and their own personal experience as investigators in the clinical trials.

These virtual data reviews will be subsequently followed up the our field sales force. We will also augment these data reviews with additional virtual KFC speaker programs and other Trc initiative.

Initiatives to drive patient identification.

The field sales team has been focusing on preparing for the launch of the TSC indication.

While we would prefer to launch this exciting label expansion with live interactions with our customers. We're prepared to execute this launch using whichever method our customers prefer.

Now turning to the payers in the U.S. as a reminder of the dialects currently enjoys 97% coverage across commercial Medicaid and Medicare plans.

In preparation for the approval of TSC the payer count team is conducting clinical presentations with our largest commercial payers.

We expect a number of large commercial health plan to PBM cigarettes, yes, the TSC indication and lower the age range immediately at approval.

We anticipate the remainder of commercial payers to add Trc reimbursement post their next PNC review.

We also anticipate the 46 of the 50 state medic Cade programs will include two as Trc and their policies within 90 days.

Certain states, including California, Florida, Illinois, we'll be adding Trc a minute immediately into their policies.

Well movie removing utilization management barriers, so patients can access up a dialects without paying attention across all payer channels continues to be the teams objective.

While these efforts were affected by cobot in Q2, we are now starting to see some wins and expect the pace of widening access to pick up in the second half approximately 20.

To provide some recent examples the costs of Tennessee.

In Michigan, and new Hampshire's Medicaid removed a prior authorization from Epidiolex, adding more than 2 million lives gaining unrestricted access we anticipate additional updates like these to occur before the end of year.

During the quarter, we made significant progress in building our field reimbursement team.

The earlier reimbursement manager will interact with HCP offices, and their staff to uncover specific reimbursement needs and provide educational support a product coverage for patients in accordance with the payer policy.

These new roles have been filled and will be deployed in August. We believe this team will play an important role in helping patients gain access to epidiolex. After the prescribing decision by the HCP has been made.

Our salesforce will continue to focus on identifying patients and generating new demand.

In conclusion, I'm very proud that despite the challenges of coated the team remains focused during the quarter and continue to advance our commercial initiatives supporting epidiolex patients and their families.

We look forward to launching the TSC indication later this month and believe that Epidiolex will offer an important new treatment option for these patients I look forward to updating you on our progress.

Now I'll turn the call over to Chris to provide an update on our progress in Europe and manufacturing Chris.

Thanks Darren.

First looking at record all excluded in Europe, which currently is predominantly focused on major markets.

Second quarter, we've made further good progress against our loan funds as I stated previously 2020 at principal focus is on securing favorable pricing reimbursement conditions for epidiolex.

Major European markets.

UK towards the end of 2019, we received endorsement from nice and central funding for Epidiolex from the NHS, England was introduced in January.

In Italy, Epidiolex was awarded innovations basis on the basis of its clinical evaluation by the reimbursement authorities.

We secured a central national funding.

We currently engaged in pricing negotiations with the same authorities, which we expect to conclude later this year.

In Germany, where episodic Julie's orphan medicine stated, we did the pricing reimbursement prices, we secured a positive GBA benefit right.

Further the GBA also considered the value that the dialect and make to take today to be considerable which ensures that we're in good shape the pricing negotiation phase.

Well current engage in negotiations with the authorities, we shouldn't have anticipated to conclude later this year.

In from the number of Epidiolex patients in the French regulatory agencies 80, you, though the exit program continues to grow and Wootton patient physician and hospital experience when at the Ducks.

In parallel with this we are progressing well with pricing and reimbursement.

Transparency Commission lumpy and now pool lighting I wasn't clear recognition of the clinical importance of epidiolex, putting us in solid position for price negotiations, which would not progressing and expect to conclude later this year.

We're also enjoying early success in that second weighted European countries, following pricing and reimbursement dossier submissions early in the year, let alone in Denmark and granting of early temporary remote reimbursement in Sweden lump that submission is still under review.

Longer these pricing and reimbursement successes ex us net.

Two quarters of $17 million represents a good stuff.

As we stated in the time about Q1 results. We had expected Q2 ex U.S sales the mountain lower than Q1 as a result in coated which was indeed the case.

Looking ahead market research recently conducted in the UK, Germany commercial loans countries continues to show strong prescribe intends to increase antibiotics used.

However, during Kecy you three we expect epilepsy clinic continues to be impacted by coded and mutations initiation to be impacted by the holiday mums just customers in Europe.

Consequently, although we do anticipate very limited beginning and returned to more normal treatments in describing practices.

We expect European sales growth to be muted in Q3.

Our European commercial medical customer facing stuff.

In the majority still working from home and customer engagement largely through digital channels.

However, we have recently, we started limited face to face steel engagement, where appropriate and we continued the momentum and adapt to changing environment.

Finally, let me provide an update on global manufacturing supply chain, which falls under my as a sign.

Our manufacturing facility continues to operate at its highest levels and efficiency.

And deliver against plans production schedules.

We also continued to benefit from limited reliance on other realizations in that production processes.

A consequence about significant investment in our own manufacturing services over recent years.

As a result, we've been able to build a maintains significant stocks in us and European products and our supply chain continues to exhibit ongoing resilience to ensure patients supply continuity.

Even though even through these recent months coatings restrictions.

In addition, our longer term capacity manufacturing expansion plans are on track to service that we expect to be robust long term demand.

Thank you and let me hand, the cools and welcome to his update.

Thank you, Chris and good day everyone.

As you've heard from just isn't there and we're very pleased with the approval of therapy dialects to treat thesis associated with tuberculosis complex.

Along with this new indication the age range for Epidiolex now includes patients one year of HR older for all three approved indications.

This is important because these and dramatic forms of childhood onset epilepsy, often are diagnosed early in infancy, enabling physicians to now treat these patients at the time of diagnosis.

Looking beyond that be dynamics.

Our recent Investor Webinars, we discussed our accelerated viewers development and regulatory strategy front, a big Simos.

Over the last 18 months.

We have had multiple inform a different collaborative meetings with the FDA regarding the path to an end the 400 extra launch we've gained agreement to supplement and bridge.

Existing European pivotal data with data from one more trial with either muscle tone or muscle spasms as the primary endpoint.

At our Webinars, we detailed the program of five and MS Spasticity trial.

Two of which are anticipated to commence this year and three in the first half of 2021.

We believe that positive results from any one of these trials will be sufficient for us to submit the NDA.

The other pieces of the are either increase or anticipated to be by the first half of 2021, thus, enabling dnbi to be submitted as soon as we have data from one positive study.

The first such opportunities should be mid next year and there will be data read outs from the remaining four trials at regular intervals over the course of the remainder of 2021 and 2022.

Our discussions with Ft also provide confidence in the ability for the big similar to gain a broader specificity label overtime.

The FCS view with specificity is under a logical manifestation of which is common to several conditions.

And we believe that our program to study spinal cord injury spasticity may therefore, not only allows for expansion to this patient population, but may lead to a broad spasticity indication.

We have planned a program of three spinal cord injury studies.

And beyond specificity, we have selected posttraumatic stress disorder as an additional target indication for the big for molds and expect to phase two three study to commence in the first half of 2021.

With respect to other development programs.

We recently completed the first cohort of newborn with neonatal hypoxic ischemia conceptual lot Patheon HIV using our intravenous CBD formulation.

For other pipeline trial, we are still experiencing interruptions.

What are starting to see tried activity resume.

We believe that several studies will start recruitment again in September. This includes the pediatric phase three study in Rett syndrome. The phase Twob study in schizophrenia in collaboration study in autism and several phase one studies.

We also expect to open the VIX most piece three emmis spasticity studies to start in the fourth quarter. These studies are the 52 patient placebo controlled muscle tone study and the 450 patient placebo controlled spasm frequency study.

The three remaining the victim modes feast Vms trials are all on track to commence in the first half of 2021.

Thank you and let me now hand, the call to Scott Checker better to provides the financial review Scott.

Thanks, Volcker and good afternoon.

I'll now provide high level comments on financial results for the quarter from six months ended June Thirtyth 2020.

For more detailed discussion of results will be provided in our 10-Q to be filed with the SEC tomorrow.

I'll start with revenue.

Total revenue for the quarter increased to $121.3 million compared to 72 million in the prior year quarter due primarily to global Epidiolex net sales of 117.7 million in the quarter.

Total deductions from gross sales for allowances were 31.2 million for the quarter compared to 14.5 million in the prior year and relate mainly to epidiolex.

Gross to net was consistent with Q1 as the unfavorable seasonal impact from Q1 was largely offset by higher Medicaid mix in Q2.

Cost of sales amounted to $8.7 million for the quarter or 7% of net product sales compared to 6.6 million or 9% of net product sales in the prior year quarter.

This improvement was due to substantial increase in Epidiolex net sales over the prior year period.

Moving to R&D spend.

Research and development expense was in line with the previous quarter at $45.7 million.

This represents an increase of 13.3 million from the prior year quarter reflects expenses related to the ongoing Epidiolex development program as well as advancing the readiness of the victim all clinical program and our other pipeline programs.

Turning to ask DNA.

Selling general and administrative expenses increased to $75.9 million in the quarter from 62.3 million in the same period in 2019.

This increase was primarily due to cost related to the launch of Epidiolex in the U.S. and the build out of our commercial operations in Europe.

This is all resulted in a net loss for the quarter of $8.8 million compared to net income has 79.7 million in the prior year quarter.

The Q2 2019 results included net proceeds from the sale of our priority review voucher of 104.1 million, which were recorded in other non operating income.

Moving to cash flow for the six month period.

Net cash used in operating activities for the six months as of June thirtyth amounted to $34.3 million compared to 89.9 million for the prior year period.

Net cash used in investing activities for the six month period was 19.2 million compared to net cash provided by investing activities of $80.6 million in the prior year period, which included the proceeds from the sale of the priority review voucher.

Capital expenditure for the period was $12.8 million compared to 23.5 million for the prior year period, reflecting continued investments and the expansion of our economic production facilities.

The resulting net decrease in cash and cash cash equivalents for the six month period was $59.4 million and we ended the quarter with cash and cash equivalents, a 477.6 million.

Turning to guidance.

The full extent to which the cobot 19 pandemic will impact our expenditure for the remainder of the year continues to be uncertain.

However, we are modestly lowering our guidance and now expect R&D and Thats Gina expenses for 2020 in the range of 520 to 550 million and capital expenditure in the range of $25 million to $35 million.

Thank you and I'll now hand, the call back to Justin.

Thank you Scott.

In closing, we're very pleased with the performance of GW business in the second quarter, the strongest in our 20 year history.

In particular, we have seen continued growth of Epidiolex us revenue during the quarter and with the TSC approval now enhance our US commercial team is poised for the launch of this important new indication, we should provide a solid tailwind for epidiolex growth through 2020 and beyond.

We're very excited about the impact of this expanded label and about the progress we are starting to see with US pay is in widening access.

We also continued to make progress in further solidifying the exclusivity position of Epidiolex.

In this last quarter, we added a further three patents to the Orange book, bringing the total amount of 13 patents listed.

12 of these patents expire in 2035, providing real confidence in the durability of the brand.

One of the three recent patents is a non U.S patent directed to the oral formulations and methodology.

We think the addition of this first formulation patent isn't important new feature of the portfolio.

We expect to continue to follow them prosecute further related patent applications to grow.

In addition to the patent granted under review, we continue to progress the composition patent application.

We believe this growing and complex patent portfolio and corresponding exclusivity position is under appreciated.

Beyond Epidiolex on Unipixels program offers an exciting new horizon line for investors.

We now have a clear path to in EMEA with multiple shots on goal, perhaps soon as next year.

We also believe that make some old office extended exclusivity due to the complex botanical composition of this medicine.

We strongly believe that now is the ideal time for this product to emerge in the United States and believe it it has the potential to become a broadly used medicine meeting patient needs across numerous indications in the coming years, providing another important growth driver for investors GW well into the future.

More broadly our leadership in developing cannabinoid medicines is second to none and we intend on maintaining that leadership as our pipeline of earlier stage products in multiple additional indications continues to evolve.

Thank you for your time today and I look forward to updating you on future progress I would now like to open the call for a few questions.

At this time, if he would like to ask your question. Please press Star then the number one on your telephone keypad again that Star then the number one on your telephone keypad to ask a question.

Your first question comes from the line up to the NIM odd way the bank of America.

Good afternoon, my thanks for taking my questions.

Thank you.

[laughter].

Jeff and I just wanted to get your thoughts on a quarter aside from some of the dynamic.

You did talk about in the prepared statement I believe that there was an increase in the Medicaid grouping. This quarter can you talk about what that split was and you expect that to continue.

Question.

Can you also talk about what three key with looking like so far on patient adds.

And at the top growth for you to tell us by what percent teenage patients were added sequentially from Q2, Q and then I might have a follow up after that.

Hi, dizzying going to say a few few if you want to sell and that let me I'll I'll, let Scott tool to the the gross to net dynamic and mix and I think on that.

More broadly I think.

We did continue to see new patient adds in Q2 as we said.

This trend to continuing into Q3, so assuming.

Sure, it's a very fluid world out there, but assuming those trends continue and you know.

You continue to see growth in Q3, and so I think the dynamics in the world where it's been.

We are in a situation where.

Telemedicine is.

Is the new one and a remote detailing the normally the visa unusual well when we wish we genuinely thing, where we're navigating well and engagement with physicians remains high.

I'm not going to give you percentages reduction.

At quarter end quarter and on patient numbers, but.

Scott.

Gee line, just just elaborate on your usual Medicaid mix point.

Yes, sure Thanks, Jonathan Hydrazine.

Just a context on that comment overall I think.

Well, we're trying to communicate there is gross to net normally moving into calendar year from Q1 to Q2, given some of the seasonal dynamics you would expect your allowances to to be a little bit better in Q2 versus Q1, and what we actually saw was that we were pretty consistent actually and really what all that really happened. There is we did.

See a slight tick up now and it's like on the Medicaid mix side and from an overall perspective.

A payer mix, it's not enough that it's anything to be be worried about we just see a little tick up in the quarter and that's not surprising and we may continue to see that tick up in the back half given the economic environment in us, but all in all of its a very modest movement. So I don't think anything to be be concerned about.

Okay. So you had a modest movement in Medicaid and you did say in your prepared remark that youre seeing continued growth in the U.S. and thus far this quarter can you talk a little bit about the cadence of that growth maybe compare it to what you were seeing into Q.

You mean in Q2, Q I mean, I think in general we said in the times in May that we.

That we've seen.

Continuing new patient starts in April, albeit at lower levels in pre coals and sampling in his remarks today.

Yeah that dynamic is essentially continued through.

Q2.

And so.

I think we can.

Absolutely continue seeing you patients come on this therapy.

And.

We're about to launch it goes from CSC indication and I think it is.

An important moment fruitful product as as we seek to roll that out later this month and.

Well, obviously will be a very important new dynamic as we go through a lot upon this quarter and into Q4.

Right. Okay. Good clinical critical qualitative comments about how to light what the can sign.

Okay, but as a second job July is is.

As it can look inconsistent with what we're seeing in June.

Okay. Thank you.

Our next question is from the line of Cory Kasimov with JP Morgan.

Hey, good afternoon, guys. Thanks for taking my question now that the Epidiolex label broadly indicate using patients a year and older can you talk I like what this means to incrementally in terms of your target market and how it could potentially other change the trajectory or the longer term potential the product.

And I have one follow up.

Alright. Thank you for the question Darren and I had that once you.

Yes, hi, Corey Thanks to the question, yes, it's an important.

Component of of the label expansion. It was Volcker said many of our patience with a survey and CFC in particular.

Are diagnosed.

Very early in their lives if not right at birth and so this is an important and then I think it speaks directly to the safety profile of the therapy and I think as clinicians now.

I understand and we educate around this component of the label I just think they'll look not continue to look that up a dialogue SaaS.

An option earlier in patients and as I pointed out we're the only one with within drove a and C.

Caesars associated with both of syndromes to go down to one year of age. So it's exciting and I think you know physicians will continue to think.

You know more broadly now as they think about early diagnosis of these patients.

Okay and then during you previously mentioned, you're not anticipating a bolus effect of CFC patients in the initial launch phase, but can you kind of talk about how you envision the syndication coming online and maybe how covitz potentially change your thinking on this front if it has.

Yes, seeking help we wish.

Folks have referenced kind of list of patients and I think without was the way I think the patient backlog will start of.

Prior to the launch 18 months ago, Ryan for LG yesterday and.

But I think this one is different in the fact that it's less about list, but as now about.

Physicians actually looking at within their practice after Trc patients.

And evaluating where epidiolex to now be.

Used within there are material so.

I think so I think thats, how how we look out and what customers through some of our market research and AD boards I think of it.

Regarding your question regarding cobot.

It's it this is unprecedented times as we talked about customer engagements.

Have been down in person.

Patient visits are clearly have been down you know what is the country now kind of maybe.

Goes a little bit backwards, this very fluid and we're watching it constantly but as we've stated its important label.

Expansion and an important treatment for Trc patients and we really feel that physicians will will want to know about this.

Label expansion and you know as I spoke in my prepared remarks, we got some very specific initiatives.

Aimed at the Ts clinics.

Key staff from physicians within those clinics.

But I think it's an important.

Label expansion that physicians want to hear about.

Okay, great. Thanks for taking the questions.

Thanks Corey.

Your next question is from Salveen Richter with Goldman Sachs.

Good afternoon. Thanks for taking my question, so as you're engaging impaired discussions regarding that we'll see local expansion I'm hopeful help your existing restrictions on algae platform and drive a Ami among you know could you just comment on the comfort that the overall local teams from our clubs Paul I'm not under.

Label Ana Paula.

Yeah, Thanks, Justin I'm, assuming you're going to take out [laughter] go ahead.

[laughter], Thanks I'll game.

Yeah, I mean work, we've been as Weve as I pointed out as of last several months engaging with payors.

Not only on just the general Epidiolex policy and just what we think as the natural evolution.

Of LG us another refractory epilepsies now intersecting with with this trc.

Expansion into the label and so again those discussions are continue to.

Go very well I think as you know there's some.

Commercial plans that you know trc will be available.

Now and some over within definitely within the next 30 60 90 days depending on the PNG.

Reviews of which the same time there'll be evaluating.

You know epidiolex the whole entire policy as it relates to our three indications and and how they're going to manage and moving forward. So again.

The efficacy or safety profile.

Very well received as in not surprising and even the dose.

Up to 25.

I understand it in the context of its in the label now lets the dose that shows efficacy. So I think those continue to progress and we look forward to you know the the third and fourth quarter with continued.

Momentum across both the commercial and Medicaid lives.

Great and then can you just elaborate further on your outreach to the next wave of prescribers you are targeting the greater than a thousand.

Provider cohorts and then the long term care segment, and how that might impact the second world.

Yeah, I mean, it's definitely a continued focus for ours.

I think again kind of stepping back and looking at kind of the unprecedented Tom Moran.

You know this move to Tele medicine, this move to virtual promotions.

Never replace the in person patient visit in the in person.

Communication between our sales force.

In the physicians and so I think I think moving forward will continue to focus on not only our high prescribers, but also now the second tier and I do think what the TSC a label expansion.

It does give us and because.

Not only our trc patients treated at the Trc centers, the 66 throughout the U.S., but they're also treated.

By their within their community by the neurologist and they manage the seizure portion of club chassis patients disease. So you know it's another nice entry point for us.

Communicate.

The broad safety and efficacy of of Epidiolex and how can impact.

Patients within their practice.

Regarding the long term care segment.

Again, it's been hit, particularly hard but our dedicated team. That's been you know in the field now since January.

I'm very pleased with the progress there and we're really.

Been focusing on.

Education around Epidiolex.

With their clinical pharmacist at these large buying groups and group homes, and we continue to that focus and it actually feel very good about some of the.

Progress we've made.

And again, particularly in a in a minute setting that saw that hit particularly hard.

Thank you.

Welcome.

Your next question comes from the line of Marc Goodman with SBB low rank.

Yes, hi.

Talked about quite a few words like for you said, 40% of the customers are willing to virtually engage which means 60% or not willing to virtual engage can you talk about why is that what are the problems I know in the last conference call you talked about how the epilepsy epilepsy centers, where we're working to set up for Tele medicine.

Maybe this is all related and there's just not quite getting there yet.

Can you give us a flavor for adults versus pediatrics as well like you normally do.

Thanks.

Hi, Thank you Don.

Yeah. Thanks, Mark for the question, Yeah, I, just regarding the ability to virtually.

Communicate with with our customers.

You know I do think that regarding large epilepsy centers.

That transition.

Has gotten much better now as we think about four plus months past.

And you know, it's just based on.

Our customer base.

No that's not everybody is willing to at some point in time to to engage I will say.

We have seen those numbers increase a month by month.

As you know Phil fill that particularly with the TSC a label expansion and some of the tactics we have moving forward.

We feel that number will increase so I just think that theres a.

You know kind of waves of.

The ability to to engage and I think that we have.

Some important updates throughout the year.

The scheduling.

Now with the Trc label expansion.

That.

We feel that you know.

Greater majority of our customers will will be willing to engage and regarding your question on the mix.

Largely unchanged at sits around that 60, 40 that we've alluded to previously.

Thanks.

[noise] [noise]. Your next question comes from along Paul Matteis with Stifel.

Hey.

Thank you so much for taking my questions I really appreciate it I.

I was what did you comment on patient retention you talked a lot about.

New starts and I think patient retention I would be helpful to cover.

Separately I think this is relevant for for sort of backing into net patient adds this quarter, but I think you said one Q was similar to Fourq you and both of those quarters were around say 1500 to 2000 net patient adds backed by our math and you had said you had this script dynamic where the average script per patient went down and once you.

Did that go up into Q, and how should that again kind of inform the patient base for which we model off of going forward. Thanks a lot.

You pull 11, I'm not sure we're going to Latin granularity a fruitful.

The actual numbers that and it.

Darren can you give us again.

Yeah, So I listen I think that.

[music].

What we said about kind of the first of the year we overcame.

Some of the seasonality started to build momentum towards the end of the quarter, then and then covert heads and that and so.

We while we do have healthy starts during Q2 have not at the level that we've we've seen we've seen previously so again I think that.

You know the fundamentals of the business are solid and you spoke about the persistency again the remains a strength of the brand.

You know the ability for.

And the ability of our specialty pharmacy network really stepped up and during the quarter to ensure that the patients got their therapy on time on even dropping down time to fill so so again it remains the fundamentals of the business remains remains strong there.

No, but I can I'll, just say that this is what kind of enough and during Q2 at an unprecedented.

Time, and I think for us to continue.

New patient adds persistency being strong links speaks to.

Now with with TSC.

Giving us a nice tailwind for the remainder of the year.

We're pretty proud of the result, we put up and look really look forward to the feature on the second half of your and beyond.

Your next question comes from the line of Sergei Bellanger with Needham.

Hi, good afternoon. Thanks for taking my questions first one is related to penetration of the driven syndrome and lend itself. So.

Patient population, making them pass you've talked about being close to.

Just 50% just wondering if.

That 50% market penetration has moved at all and what is your outlook to a two increasing that number going forward.

Thanks, such as Dan you again, yeah, yeah. Thanks for the question search Yeah. So we've said.

Below 50%, we still are although I, you know I think that.

What drove Ace syndrome, we think we're gonna were higher but there's still plenty of opportunity.

With with LG us moving forward and listen I think the you know the opportunity how we feel about as you know epidiolex.

Again has all the other key attributes.

To be.

Blockbuster brand I mean, we are faced now and with this cobot environments, we do need in person.

Visits to to return.

But do you, but even with that said, we will continue to to grow the brand I think that with our increasing focus on the payer and those.

We epidiolex policies.

Easing, where there is no intervention by payers much of physician writes prescriptions.

I think.

And now with the Trc label expansion.

No again provide at what we think are strong fundamentals for the business moving.

The forward.

Okay.

And then on.

In terms of the she has to driven.

Gross that we expect in the second half year.

Given that.

Pair determinations or payer coverage for Trc likely won't happen.

A few months should we expect a.

Sequential growth to really.

Take off towards the fourth quarter or something we should look for as soon as a third quarter.

Yeah, I think maybe I'll take that such as Justin here like I think.

Darren has said that it actually.

Some major commercial plans and Medicaid states that will be covering TSC straight away actually and the remaining the with both within the commercial and Medicaid environment.

I think it's reasonable to expect.

Within 90 days to sort of coverage to be in place and so they were well set in terms of coverage and I think the timing of coverage and looks to be very favorable and I think your last point of your question does Recognizer schools, we were launching this indication on sort of midway through.

Q3, so inevitably.

Well I think we're excited to see what what we can do TSC first full quarter TSC.

We will be the fourth quarter, but.

No it was still expect to seasons.

Important progress with TSC through Q3.

Thank you.

Your next question comes from David.

Did that goal with 18 the capital markets.

Hi, good evening, Thanks for taking my questions and congrats on the quarter. A couple of questions first I think Darren you mentioned that the new patient starts for both LG Atsinger day, while they were good they necessarily help meet your expectations and understandably due to Kogut. So I guess my question is can you maybe provide a bit of.

A color on that I mean, what type of the magnitude did not meet your expectations by but also just bringing in another point given that epidiolex.

Given the DEA scheduling any rush and rescheduling in Europe part of the the benefit of this was too easy access for patients increase efficiency for packaging et cetera. So I'm just wondering how to both of these points kind of did accounts with each other out or should I be looking at it slightly differently.

Thanks.

Yes, Darren you won't take that I will just correct, David I think we had said that.

[laughter] Didnt meet expectations bear in mind, I mean, I think actually has met expectations that the down you want to comment more than.

Yeah, now David I, Yeah and.

I think actually not knowing what the impact of the pandemic I would have.

Knowing that you know we want to to shelter in place during the quarter we.

You saw vast reduction of in person.

Visits by patients.

Perhaps the centers you know essentially shutting down and then kind of reopening at much reduced our capacity.

I think actually if I look at the quarter.

Based on kind of what we knew starting I'm very pleased with.

With what the commercial team was able to deliver.

In the quarter so.

The steps, that's how we the London, which I'm looking at at night. So in your second question regarding the scheduling.

We've always highlighted that it's it's good for the brand.

And.

There are key things around longer script prescriptions.

Easing of prescriptions to get to the right network.

Within our long term care facilities being able to.

Two dose based on stayed regulations and so.

We're very very optimistic about the scheduling, but it's really going to be a second half a year and beyond.

As stated in my prepared remarks.

Just about half the U.S. states would be scheduled.

We expect the remainder by by the end of year. So again, we view it as a absolute positive it's good for patients good for physicians.

And it's something that.

We will unfold over the latter half the year and.

We'll be able to update you win is complete and.

Yes, we'll start to see those benefits that outline.

Got it thank you and just a follow up that for the price of Epidiolex for T.S.C. I know currently for Jobin LG is the average price and its weight based obviously, but average price will be around the 32 five mark is that similar for CST as well in the U.S.

Now [noise].

Yeah. Thanks for the question David.

Yeah. The average price is for lids dray LG us around 32, five I think it's too early.

Really the impact of Trc, while the maintenance dose is as we've noted up to 25 milligrams per kilogram per day.

It remains to be seen how physicians in the U.S. do dosing and so I think I think economics.

Couple of quarters out, we'll have an idea of a better ideas of how physicians are our dosing as you know just to remind you that they're epidiolex was through the year and a half ago.

As a lot of familiarity with it particularly around dosing and the starting dose and how physicians escalate dose and so I think having that 25.

Dose is is obviously good because it does provide physicians with additional data on on dosing of the product so.

It'll play out over the next couple of quarters.

What the impact of dose and price will be.

Understood Thanks very much.

Your next question comes from the line of Nita, They treated guard with Citi.

Hey, guys. Thanks for taking my question. So just a question on again kind of the impact of telemedicine on on new starts.

I guess over the <unk> over the second quarter, and then kind of into July did you see the pace start to pick up I mean, it sounds like from your prior commentary that it kind of has remained flat.

And then I guess, if telemedicine does kind of stick around for a longer period of time. If you think that we can get back to a period of kind of.

An uptick in new starts.

For two main LTL.

Not counting in the TSC launch or do you expect that Pat to kind of fell back to a normalized level, we will have to patients come back into the office. Thanks.

Neenah and its Justin here, maybe I'll take this just to get down to break I think the permit.

In perspective, it's given that will then the pandemics. So does that mean flowing in Q2 I think I think you noted from our remarks I think it.

Being cautious about attributing trend within within quarter, because it just feels that.

You know they may they may not be real and but overall you know the trend has been.

Pretty solid through the quarter, we didnt see dramatic swings throughout and.

I think.

We still feel like we navigated that caught a little there's the challenges very well.

You know downs already mentioned, but we know the telemedicine I think now become part of Oh.

Life within within this field.

With TSC coming on board it Doesnt change the dynamics pool as well as living Cobiz changing dynamics. So I think I think there is a reason at a pretty compelling reasons to think that that for epidiolex in particular this gain to be.

Shifting dynamic as as this new indication launches and the level of interaction increases as we don't get used to living in this current world. So I.

I think we've listened.

Well it is fluid there's nothing we kind of go through.

The uncertainties of Q2 and feel pretty good about how we're.

Coming into Q3.

Okay. Thank you.

Your next question comes from Yeah, 10, so your job with Guggenheim partners.

Thank you. Thank you for taking my question just a couple from me real quick ones. In you Didnt mention you expect Q3 to be muted that you're not expecting it to be down quarter at their crack. So thats first question on you framed the second is if you could remind us where you.

On the doors on the average doors now washes lets say you know a couple of more hard last quarter I, you're seeing any uptake.

And the final question is Oh, but can you talk about maybe off label use in out indications other than drove and I know gastro I think some of my checks were suggesting that that is already some music TSG. So maybe if you can provide at what level of use if you have any visibility on that front. Thank you. So.

<unk>.

Thanks, Jen, Chris or another quick comment on Europe.

Yes. Thanks for the question your team I think no we know expecting to be Dan quota, but.

It's going to be a little complicated in Europe by the holiday money. So I think everybody's aware that July and August spread across Europe tend to be pretty big holiday months combine that with cobot 90 units.

No I think although when starting now to see the return of a more normal treatment and prescribing sort of patent.

For physicians, it's not anywhere near normal during Q3.

Now what anyway.

Adapt which are and I think were.

Remain excited by over market research, we do and the feedback we get from physicians of around intend to prescribing dissatisfaction, particularly the launch markets in Germany in the UK.

Are those that have already prescribed epidiolex. Thanks.

Daniel and talk to them out use outside prevailed yes.

Yeah, Yeah. It's.

We obviously hear anecdotally.

Abuse, it's hard to pinpoint we don't have that specificity of data, but we do know.

Got it does get use another refractory epilepsies.

We hear this from our from our payers and the discussions we have.

Famine.

Particularly in the context of.

If we either it's an appeal or peer to peer.

That those two are getting a vast majority of them getting paid and again, there's really no other options for these patients.

And regarding.

TSC, it's similar it's it's hard to pinpoint.

Use.

Because we don't how to that level of hilarity.

Into into the utilization, but we feel that.

Lets not used very much.

Okay, and so we think theres, obviously tremendous opportunity for us.

We'll report.

Okay. Thank you.

Your next question is from Doug So with H.C. Wainwright.

Hi, Chris dealt on for Doug. Thanks for taking my question I Hope that NASA dropped on calls all day. So I want to know about GWP for 003, I know you guys are expecting a trial in schizophrenia VW plant you give us a little more color on that or you're going to try to treat.

A positive symptoms or the negative symptoms.

Vulcan.

Yeah, well. Thank you for the interest in the need for two zero as user threes for for schizophrenia.

So this study is a probe study for this compound and we're looking at a breadth of endpoints to really best characterize it. So we'll be looking at both positive and negative symptoms or the the initial studies a pilot is this.

It's published and if you take a look at the result as suggested efficacy on both of those domains predominantly on the positive symptom side, but let's go to both of these domains maybe affected by this pharmacology.

Awesome.

Thank you.

Your next question is from Lars Christian sound with Cowen.

Hi, Thanks for taking my question, just a quick Glenn and I know that qbs scripts that theoretically theoretically less reliable spending path right now from the low capture but that quarter over quarter trends actually seem to be pretty indicative in in Q2. So I'm wondering if going forward you expect that to also be.

Okay.

Or if you kind of see that is just the flip.

Hey, Lawrence Justin here, Yeah, I think I think we continue express extreme caution around around these data data services there.

Then not reliable.

Got it that's helpful. Thanks.

At this time I would like to turn it back over the management for closing remarks.

Well I think we run through analysis. Thank you everyone for your attention today.

So I wanted to to let you know how CSC launched goes and and reporting Q3 results them. Later this year. So thanks for your attention today and a good bye for now.

Thank you. This concludes today's conference you may now disconnect speakers, if you'll hold the line.