Q2 2020 BioDelivery Sciences International Inc Earnings Call
Ladies and gentlemen.
Oh for today's conference call at this time assembling today's audience from time to the underway shortly.
The sheet your patients.
On the line.
[music].
Good day and welcome to the Biodelivery science, its second quarter Twentytwenty earnings call.
This conference is being worked for Jack.
At this time I would like to turn the conference over to carry Claudio Chief Financial Officer for Bio delivery Sciences. Please go ahead.
Thank you and good morning, everyone welcome to our second quarter 2020, <unk> earnings Conference call.
During the call today, it's Jeff Bailey interim Chief Executive Officer, we're joined by Scott's question, President and Chief commercial that's true.
Our prepared remarks, we will conduct a question answer session.
Earlier today, the liver site just issued a press release announcing its financial results for the second quarter 2020.
A copy of the release can be found on the Investor Relations page of the company's website.
Before we begin I'd like to remind everyone that certain statements may be made during this call which may contain forward looking statements such forward looking statements are based upon current expectations and there can be no assurances that the results contemplated in these statements will be realized.
Results may differ materially from such statements due to a number of factors and risks some of which are identified in our press release, and our annual or quarterly and other reports filed with the after she.
These forward looking statements are based on information available to be at site. Today August 2020, and the company assumes no obligation to update statements as circumstances change.
An audio recording and broadcast replay for today's conference call will also be available online investor section put the company's website.
With that I'd like to turn the call over just barely interim CEO Jeff.
That's very much Terry and welcome everyone to our company's second quarter 2020, Rachel.
My first earnings call with you as interim CEO H. <unk> children towards the culturally yes, the a child she's going to street.
However, I'm really sportsmen jobs conservative the dynamic growing apparel brands.
The balance sheet, Jim inspiring high quality you guys. You can't go extremely focused on execution, just you wouldn't BARDA.
George three times, I really hope you'll take away slowly on each.
First we mobilized the attorney chain very early because your pin debit.
Sure we are proactive.
Operator, the most effective way possible.
Jimmy very structured we agreed that national and local data wishing to caregivers and employees want joking, how other toppings you're approaching this you acquired.
This has really made a big difference.
Second Archie performed very well in the second quarter with BELBUCA continuing to take market share immature racks long acting opioid market should help you could continuing to show strong great year over year.
Second quarter performance <unk>.
Oh I'm sorry.
Trx volume and market share.
Sure sure all time high for Trx volume and market shares well.
Michelle we actually did you talk differentiated products as well as outstanding commercial execution.
She.
Well my titles interim CEO I missed a third thing if you could take away.
Sure.
Hi plants or maybe a key leadership will be a softer long Charlie I mean, very committed to working with a strong executive change into Bbs whiteboard to BT aside to next level. That's real people focused on continuing the strong growth what products I suppose concentrating on business development strategies, <unk> really bring value to the pace.
<unk> caregivers shareholders that we serve.
I'm pleased to say I've been working closely with.
The magic changed so my first three months and they have made it easy for me to really hit the ground Robby.
Now, let's start getting into some of the details on the results from the big Pausing for BELBUCA is that outperformed.
Next slide actually opioid market nicely by growing BELBUCA Trx volume, 5.2% over Q1 watermark was down by 1.6 percentage.
Additionally, BELBUCA trx market share hit another all time high by growing to over 3.8% in Q2 compared to 3.6% Q1.
Got it highlights the momentum for the brand, which was also confirmed by the fact that rapidly for BELBUCA, 34% year over year.
[noise]. This important stretch so we are focusing on new tactics doing just had gotten it looks like you to brag market prescriptions direct scripts were down Q2, we believe that this trend was driven by significant decline it patient person visits the physician offices.
Which some estimate due to wage 30% to 40%.
As a result.
Actually is Jim.
Okay, and long acting markets were down approximately 18%.
We feel strongly that this change if market conditions require some new tools to help boost your patient stars Keith has done a really nice job focusing on this dynamic and a corporate environment. Scott will give you more details what do you see shortly.
I'll also cover additional details on the new selling program. So we didn't know during the pandemic.
Our sales team has adapted to hybrid selling model or reps, you still have face to face customer actions where possible.
Also our effectively using books that commercial and educational tools to support our work with caregivers.
We also recognize that matching business. During this a pandemic, there's a moving target within local geographies. We therefore rite aid very vigilant candomble and use our now well established process with our weekly Kogut dashboard and lives weekly team meetings to really stay on top of organic.
Let's get into the slides.
Any backlog rapid response to covert chaotic I'm extremely proud of power employees have responded to this unprecedented challenge.
Yeah. He quickly in swiftly three thoughts first we focused on taking actions to ensure the shape you won't be that are employees patient scan to communities we serve.
Very early on we proactively procure additional materials T shirt close the cyber products.
They provide important clinical really for patients suffering from chronic conditions.
Secondly, we transitioned our customer engagement to promotional support and launching a rate Duke customer and patient support programs and finally got troll Kogan 18 cross functional can Daddy, we established which I mentioned before has been vigilantly assessing trends can market dynamics benchmark.
Best practices across the industry. It can ensuring we're highly focused to navigate through this unprecedented situation.
We see that these actions or how did a beneficial impact on our business based on the brand trends. Thus far we believe there will be important components for continued momentum as our customers returned to more normal operations.
So what's the next slide you really see that that's strong performance both year to date in Q2 conditions, just haven't occasionally for future growth.
As I mentioned before BELBUCA really outperformed the market and also hit another all time Trx share high of 3.8%. Just continued momentum is so important, especially direct side what other products our space you deploy.
Next I want to mention that we position ourselves well by further optimize our salesforce that you want by adding a new territory managers that appeal to grow incremental revenues.
He used to say these territories overall or any additional traction in Q2.
Also important to our growth they are company substantial progress at payers to realize more opportunities that make financial sense force. We continue to make good progress on this front Scott will share more details.
We've begun to capitalize on some recent previously announced market access wins. In addition, we've expanded access where there's several prominent regional health systems, which offer both their own covered lives as well as potentially close on clinical practice within their metropolitan communities.
And lastly, we began the year with a strong balance sheet.
And have been able to strengthen that get our cash with a very successful second quarter.
Yes, sure its financial strength as a key strategic priority for Bts side, we're prudently manage their spend during this period to protect steer the business through sheer choice disruption or continuing to invest toward sustained long term growth.
Our strong balance sheet allows me to said in meaningful percentage my time, along with other senior members of our team exploring strategic business development opportunities speaking with potential partners.
To conclude.
Very pleased by the success of the second quarter as well as how the organizations responded to the challenges presented by the covert 18 pandemic.
They are particularly important products strong balance sheet at Calvert City committed team of employees, we remain poised to successfully navigate through the short term uncertainty that cheap our ambition of long term sustained growth.
With that I'll turn the call over to Scott to provide more details or performance during the second quarter Scott.
Thank you John.
Mentioned during Q2 BELBUCA prescriptions grew by 5160, a new high more than 104600 retail care axis.
This represents almost a 31% increase in BELBUCA trx as compared to second quarter 20 liking.
5.2% increase or the first quarter of 2020.
This was accomplished despite 1.6% decline and the overall long acting opioid market during the second quarter.
We are pleased about continued growth.
Which led to it Q2 chair marketshare, increasing to over 3.8%.
3.6% in the first quarter 2020.
During the second quarter BELBUCA, new to brand market share of 7.3%.
Study from the first quarter, well above its trx share, 3.8% and there's still.
Opportunity to grow total prescription share as these metrics historically converge.
New to brand prescription decline for the first quarter the second quarter.
Stay at home orders were.
However, we were encouraged by the improvement in new patient being prescribed BELBUCA a state began reopening in June.
So you're going to prescriber base remains stable in the second quarter at the impact or kind of it was most pronounced during that period.
Over 7600 total unique prescribers in the quarter.
We're encouraged by the fact that BELBUCA reached a new monthly high.
6170, new prescribers are in June of patient began to return to offices.
Early July our self worth of the redeployed across all territories, enabling in person does it in addition to their continued virtual interaction.
That's really been previously announced in early Q2, we were able to improve WP recovered from non formulary not covered to covered or preferred status in over 2 million Medicare part D lives within express scripts.
Well I tell you PMT health.
Early from traditional these wins, but we're encouraged by the growth we're seeing across these plans and would expect their uptake to increase in Q3 in Q4.
We continue to believe that with additional work we have the potential to add several million more Medicare lives as we head into 2021.
On the commercial side in Q2, we improved our coverage within two prominent regional commercial plans.
Hi, Mark <unk> shield.
At the University of Pittsburgh Medical Center, or you PMC <unk>.
<unk> was improved coverage for over 760000 lives combined.
Again, it's early in his win and we anticipate growth in Q3 in Q4 from these plants.
Can you tell you to retail prescriptions reached a new high over 17200, representing an 11.1% increase year over year compared to Q2, 20 light and heavy.
And a 6.7% increase over Q1 2020.
We're also try to share that's import enjoyed its largest quarter over quarter prescription growth.
We relaunched it in Q2 2019.
During Q2 2020, we generated a 13.4 enteric share.
And a 12.3 trx share representing the highest market shares today.
We expect continued Tara and revenue growth for some pilot.
Enteric share and consistently exceeded total Rx share since may 2019, when btafive again active promotion.
And the second quarter, we successfully added 940, new prescribers person proag, maintaining our prescriber universe of approximately 5000 health care provider.
We do some pro it gets a highly complimentary brands BELBUCA and continue to believe our early 2020 marketing market access line, but probably therapeutic area will be catalysts for growth for the remainder 2020 and beyond.
Yes, I feel for US has done a strong job taking advantage of these men and improved our Cherokee and Pryor therapeutics.
Like 56% in Q1, and 38% in Q2 compared to previous quarter.
We've also seen consistent growth within CBS.
Market share and more Clive has increased from 10.5% in Q4 2019.
To 14.4% during Q2 2020.
We're also excited about that we've recently enhanced book access with an independent repercussions shield and Humana commercial lives.
Over 1 billion lives under independence Blue Cross Blue Shield have moved from non preferred data, where they stopped at it required to our preferred unrestricted status.
Within Humana, approximately 420000 wise, one Bobby covered and non preferred level without restriction compared to what non formulary not cover data previously.
We believe that the Bts <unk> commercial team will be able to pull through these wins and build upon the brands momentum.
We're very proud to result at the commercial team generated during Q2, especially within the bottom end environment and market that dynamic that we pay the covert 19 pandemic.
While the influx of new patients where products.
And the markets. They are in low during the quarter. We are encouraged by the increase in patient visit.
Heavier axes of states have read opened over the past few months.
And the impact of Cobot 19 grew our focus was on supporting our HCP isn't there patients while ensuring the safety of our employees.
College, the by reinforcing the many resources, we offer to patients at HCP.
And the unique attributes are products to the.
We also augment that our patient support by providing enhanced Kobe coverage for BELBUCA.
And prior authorization assistance for both BELBUCA anthem program.
As Joe highlighted our commercial team rapidly adapted to the new promotional environment.
We have equip our sales team with toll that facilitate effective discussions around the clinical value of our product either in person or virtually.
This includes the virtual customer engagement platform.
Advocated email portal as well the ability to ship samples and other resources directly to offices.
During the quarter, we also adapt at many of our marketing programs and ample pot amplified our digital marketing efforts.
This resulted in an increased digital presence, we implemented new program and magnified others.
We have built sales and marketing platform that will allow us to promote our products effectively and compliantly.
If he is a patient during a very unique time.
Importantly, it also provides the foundation that will allow us to adapt as the selling environment evolves.
We had a very successful Q2 that resulted in yet another record quarter for prescriptions and many other important growth metrics for both BELBUCA anthem public.
Our Q2 results support the effectiveness of our commercial team and more importantly, the clinical value that our products provide to patients.
It's the fees.
We continue to believe that without a high level of execution incremental market access improvements and when patients returning to offices were very well positioned for growth in the second half of 2020 and beyond.
Hey, concluding, particularly proud of the dedication nimbleness and focus our commercial team exhibited to support our health care professionals for their patients during these challenging times.
With that I'll turn the call over to carry to provide an update on the financial.
Terry.
Thank you Scott.
As Jeff Scott discussed we're excited to report our second quarter results, which have remained strong despite the covert 19 pandemic.
Total net revenue for the second quarter, 2020 was $36.6 million, an increase of 23% compared to $29.7 million in the second quarter of 2019.
Year to date net revenue through June 30, 2020, $74.9 million to 51% compared to the same period and 29 chain driven by strong BELBUCA growth and the impact of the still Krulik acquisition, partially offset by lower sales at the end avail.
Well you can that sales in the second quarter with $32.3 million, an increase of 34% compared to $24.1 million in the second quarter of 2019.
Well Keryxs grew approximately 5% in the quarter. The net sales decline of 3% in the quarter versus the first quarter of 2020 was primarily due to the timing of shipped orders and a tightening of wholesaler inventory in the second quarter of about four days compared to the first quarter and compared to the levels of inventory typically help.
Year to date Hope you can net sales through June 30, 2020, $65.8 million grew 54% compared to the first half of 2019.
You, probably which was acquired during the second quarter of 29 change has been an ideal complementary product for media site as we were able to effectively integrate it into our product portfolio and take advantage of the substantial overlap in the target prescriber base.
Net sales for some pro in the second quarter of 2020 were $3.4 million.
In order to BELBUCA pure exits grew close to 7% in the second quarter compared to the first quarter of 2020, the net sales decline of 18% in the same period was primarily due to the timing of shipped orders and a tightening of wholesaler inventory in the second quarter of about six days compared to the first quarter.
Year over year net sales in the quarter grew 7%.
As a reminder, the second quarter 2019, net sales results incorporated benefit they distribution agreement, which you know which favorably impacted the second quarter 2019 net sales.
You know net sales for the second quarter were $700000 compared to $800000 in the second quarter of 2019.
In March of this year, the company announced the plan discontinuation of marketing of the NFL in 2020 and ceased accessory sales effective June 15 2020.
Well she revenues for S.U.S. sales that pain kill and breakout totaled $137000 for the second quarter, a decrease of $400000 when compared to the first quarter of 2020.
Total gross margin for the quarter was an attractive 85%, that's compared to 83% and the second quarter of 29 chain and consistent with the 85% margin during the first quarter of 2020.
As Jeff discussed management swiftly took action when the pandemic first emerge to ensure we were protecting our cash position in light of the high degree of uncertainty at that time.
A key area of focus was to evaluate our operating expenses across all functions to ensure prioritization of critical initiatives needed to support our continued growth.
While making sometimes tough choices about deferring certain planned activities.
As a result, excluding the onetime financial impact of cost associated with the transition of our CEO, we were able to reduce continuing operating expenses by $3.5 million in the second quarter as compared to the first quarter of 2020.
With that said total reported operating expenses in the second quarter of 2020 were $28.2 million compared to $22 million and the second quarter of 29 change and $26.7 million in the first quarter of 2020.
The year over year and quarter over quarter increases are primarily driven by the onetime costs associated with the CEO transition in the quarter, partially offset by lower T. any spent.
GAAP net income for the second quarter was $1.2 million or net income of one cents per share compared to GAAP net loss of $11.1 million in the second quarter of 2019 or a net loss of 13 cents per share.
The year over year improvement and GAAP net income a $12.3 million is primarily driven by an 11.7 million dollar decrease and non operating expenses related to the crj debt extinguishment incurred during Q2 2019.
Year to date GAAP net income to June Thirtyth, 2020 was $6.1 million, an increase of $21.1 million compared to the same period and 2019.
EBITDA in the second quarter, 2020 was $5.1 million or 14% of net sales.
Compared with $4.8 million in the second quarter of 29 change and $7.8 million or 20% of net sales in the first quarter of 2020.
This quarter marks the sixth consecutive quarter of positive EBITDA for immediate bye.
Year to date EBITDA through June Thirtyth of 2020 is $12.9 million or 17% of net sales.
Paired with $4.9 million or 10% of net sales for the same period and 2019.
Non-GAAP net income for the second quarter was $9.6 million and reflects GAAP net income excluding stock based compensation.
Noncash amortization of intangible assets, the nonrecurring financial impacts of the do you have elds discontinuation and the onetime expenses related to the CEO transition.
This compares to non-GAAP net income of $8.3 million in the first quarter of 2020, <unk>, excluding stock based compensation, a noncash amortization of intangible assets.
Year to date non-GAAP net income through June Thirtyth, 2020 was $17.9 million compared to $3.2 million for the same period in 2019, an increased $14.7 million year over year.
As of June Thirtyth, 2020 beat if I had cash cash equivalents at $91 million as compared to $70.6 million at March 31st 2020.
The combination of continued strong revenue and attractive gross margins together with cost reductions discussed earlier and excluding the impact of CEO transition related costs resulted in positive operating cash flow year to date through June thirtyth, 20, $26.7 million or $5 million.
ER positive operating cash flow, including those costs.
For the second quarter operating cash flows also excluding the impacts of the CEO transition costs were essentially breakeven.
The overall 20.4 million dollar increase and the cash position over the prior quarter includes the net proceeds of $19.6 million from the draw down in May 2020 of $20 million, So tranche b of our existing debt facility.
The decision to Opportunistically draw down the expiring second tranche of the bone reflects our ongoing commitment to enhance our cash position, while retaining flexibility to support the company's important organic and business development growth opportunities.
The company's total long term debt position as of June Thirtyth 2020 was $80 million.
We're very pleased to have ended the first half of the year with revenue growth greater than 50% year over year, continuing profitability reflected in our 17% EBITDA margin year to date in a strong cash position.
Importantly, we are managing our expenditures prudently and sharing prioritization and continuation of key initiatives.
Ill now turn the call back to Jeff's for some concluding remarks before we open up the call for QNX Jess.
Thank you Terry.
Overall as a company, we're very proud of our resilience to the team's ability to adapt very effectively over the past two quarters. We expect to see continued the momentum of our early investments or hybrid commercial efforts and our strategic actions to strengthen and broaden our customer relationships our high quality dip.
<unk> products, coupled with our dedicated team positions us well for a strong second half 2020.
We now like to take your questions operator.
Thank you if he would like to ask a question T. signal by pressing star one on your telephone keypad.
If you using a speakerphone. Please make sure your mute function is turned off to allow your signal to reach our equipment.
Definitely something on the phone line will indicate when your line is open again death star one asking questions.
Pause for just a moment to allow everyone an opportunity to signal for question.
We will now take our first question from Brandon Folkes from Cantor Fitzgerald. Please go ahead. Your line is open.
Hi, Thanks for taking my questions and congratulations on the progress in the course in navigating a cut.
After.
I wanted to just go down a little bit into the funnel of new patients and what you saw in the core saying that it was sort of what you are seeing in July crossing there's obviously a number of challenges within Congress, but.
Can you elaborate where the challenge patients staying on an IR opioid longer or will they had the long acting up there on what isn't even earlier in the final unmet patient not even going on how I feel like at the moment any color in terms of great. I mean, this challenge around new to brand may stay.
And a little but beyond that lockdowns as we've had.
And as that patients entering its final and then do you have any day on how long patient actually on either and I don't know opioid or a different long acting opioid before they have switched to BELBUCA.
Scott you want to read off first and then hopefully go for Scott. Please yeah, Jeff. Thank you Hey, Brandon It's Scott. Thank you for the question I appreciate it so.
A couple of dynamics were seeing and I can give you some.
Kind of round numbers, but.
General if you look at Q1 and directs numbers for the long acting market.
And where we are as well, we see about 18% decline.
And then burak says for the Elio market and we're basically in line lined with that so.
If you ever looked at what that means on a weekly basis for US we did maintain or sure. My prior comments, we we did maintain a 7.3 of your as market share.
But in fact that cost you about 300.
New to brand scripts on average a week during April and May.
What was encouraging to see is that that delta.
Some of the June one states reopened actually was cut in half more than kind of in house. So we started seeing patients coming back and office. So we really view the decline goes.
More of a patients into offices lot of the pain management physicians want and then levels want to actually see a patients face to face before they make a change in therapy. We saw it based on the data that we have this across all specialties, there was about 30% to 40%.
Reduction throughout Q2 in office visits that was supplemented by about 10% Tele medicine.
However, obviously that doesn't cover that delta completely. So we believe that's the drop that we saw was religious patients I'm not going into the office to to be transitioned over to long acting opioids. We don't have Ah. That's obviously new data, we don't companies who have enough data yet.
To to make a determination.
Just staying on shore dockings longer, but I think that's a good assumption in that they're just not moving I'm not able to go into an office and how to a change made I imagine there probably is playing.
Around with different doses is moving patients so dosages type trading whatever they need to go in the short acting.
So and and as a reminder, we don't see a lot of than the class, whether it's two BELBUCA or from BELBUCA. The other long acting so there's really not much movement. It is really about the short acting patients being transitioned to a long acting says were the primary growth is.
So hopefully that answers your question.
But all branded if I could just add so Scott did a really good job covering some place there at all so I think another thing.
We'll go to the pen better mix or is that we control a fair amount of some things yeah, we cannot control among the patients their frequency, though it's either blockers did the office Saddam into Scott highlighted we're still a threat to us it goes back to the office, but I think really important to note is that we'll play it at the hybrid.
Activity by our sales team or there is the combination of.
I used to face also their virtual interactions with customers. This quarter late in two total prescriptions. So hopkins activity in results. There. So I think it's with all the noise. That's out there we're really pay close attention to date.
You mentioned that we're very focused for the weak with a weekly.
And they see a world and just because we have a weekly done you at a dashboard are we really look very closely all the data that we're seeing that correlation which to me is really important.
Republicans correlation between activity, but hybrid I'm here as far as hybrid when it comes to virtual it also pay space are actually by our team and that means that look at BELBUCA. This promotionally sensitive, but that's always see it sounds like what's going to feel like your control space on around you and while we can't control the patient feedback the office the MPR acts.
At the restaurant was referencing.
Take wed see learning that we're still so far this stuff into environment.
Brendan we I guess your question Okay.
You get very comprehensive <unk>. Thank you very much twice before that and one follow up if I may so you get ready and yeah I think.
I had because it does that make a few times mentioned today. So could you just talk about fuel business, because its entirety and what parts of Texas. We may look at and how do you see the opportunity fit within the current environment. Thank you.
Yes, so a few things like it's just stepping back and looked at.
Much of my experience has been in this space and business development and go to build a larger product launch the company.
<unk>.
Well I'm really focused right now working with the senior management changes in that area.
And you take a look at first of all were started off with its a very strong commercial infrastructure.
Got it which were levers that so that's the person brand that that we want to see if it goes away with the levers that with our business development activity Doernberg attractive assets that are out there, but you know to look at.
The.
Give it before but just as examples because the shortly about limited to Butler Rohlicek CNS or does it could be complementary to our focus.
And also.
We're a company that makes us.
[laughter].
Or the history with BELBUCA. So some pro it goes taking assets launching them.
Re launching them into that successfully it really be company area I think something that you know earlier in the everybody and I Gotta business development and something that.
His focus this next chapter with the company and a there's a lot of work going on so it will be burst thoughtful berg judicious through a with that that really they could show a focus here the way things as far as more specifics I can't go to put some sales, but let's spend some of your credit they were very much focused on media unmet medical needs, especially commercial products.
So your late stage products as well and is there really making sure that we'll be looking at different opportunities out there that could be really efficient operator.
So.
You probably sell to my confidence that this is a big area of focus and there was a strong team to be able to sort of make sure. We see something story. That's that's we sit right now spread it okay.
[music].
Thanks, very much that's very helpful.
[noise] Leland damage to our next question from R&D mismatch from P.H.C. Wainwright. Please go ahead. Your line is open.
Thinks the question its congrats on pretty strong execution, we've spent a lot of challenges.
I guess, if you could just revisit the opportunities for switching.
Maybe even some other long acting product I know, that's not a big part of your narrative and you've been very clear the IR to E are driving those your volume, but I get a lot of questions about all this volume out there in the market for both oxycontin and even beauty brands, which I think combined with the generic authorized generic is actually still larger that doesn't go and people ask me.
Hey, why are you not capturing more share from that market given challenges. The you know that maybe back Grand those products. So have you know off if you have clear differentiation you trend I imagine that promotion there is flagging. So what opportunity do you have it you know with or without.
Cobot impacts to capture some of that massive volumes sitting out there and the idea of Apollo.
Thanks aren't it Scott I'll take that question. So first on buprenorphine side of things, we we to your point, we have not cannibalize much of the generic buprenorphine market. The fact, we really have expanded the marketplace is actually if you take it.
Okay.
Attributed to the the molecule buprenorphine does its really only molecule over the last couple of years, that's actually been able to grow.
In the environment, while the other long actions were falling off.
We are actually up to approximately 45% share now of the buprenorphine market. We do believe that we can continue to to expand the marketplace.
Just some color as to how the categories performed during the quarter.
We did see BELBUCA outperform.
The buprenorphine touch on new to brand as well as tier axis during the quarter as well they did not grow as much we actually cannibalize some of their business.
And to your point, though it hasn't been our focus there is.
The product was promoted by Purdue very wide ranging primary care there a lot of physicians.
That were basically.
Writing or write him one script here or there it's kind of an end steep mile wide I'm. So when we look at our core group of physicians were performing quite well and we have territories, even with 80% to 90% of shares.
Of the marketplace within our core targets.
As far as a long after the market when we look at all the data. This this was not just us what we see is pretty much every.
Brand or molecules getting patients from the short acting it's just the way that.
She piece of have.
Wanted to practice and.
Honestly, it's been the most effective way for us to game business is too.
On a step in catch people and we think it's the the appropriate also is when people are patients are moving from a short acting to a long acting that has to BELBUCA.
So we really focus our efforts there and and honestly, it's a it's a lot lot larger opportunity I know you could we can look all the businesses out there, but a lot of patient spin on Oxy for example that are doing quite well.
Okay.
[music].
That's what gives you know tailor made for a couple of running there I'm sorry.
Excellent. Thank God Orange, sorry, well you also highlighted some and energy as you probably had versus others see two opioids, whether they be IR already our earlier this pandemic with regard to your Advair advantageous scheduling.
Being able to Collin scripts multiple prescriptions.
Hi, I mean, clearly outperformed the market overall, but have you detected a major impact of those properties. That's something that you are able to promote I'm now and even going forward I mean, obviously lot of fear about resurgence of disruptions and you would think satisfied with the dock transition some bad wants to get them I mean, I know what could maintain and do resales then.
Right new prescriptions much easier if we went into a lock down again, you know that for bad or is that something out your publicized.
Yeah, it's part of our messaging definitely a efficacy first that somebody's other attributes second and we do feel that did those messages. So to your point early on we upsized those messages and it was about keeping patients on therapy, and making sure that you'd see piece and patience other resources they need it to stay.
On therapy.
We've really focused recently on the direct side of things and have put some programs in place to accelerate that and part of our messaging going forwards to your point or the them.
Markets have opened up now and states have opened up those messages may not resonate the same I'm right now, but we are saying in case that they do close down again here isn't the damage.
So.
Okay. Thanks appreciate it.
Thanks.
We will now move to my next question from Greg Fraser from choose Securities. Please go ahead.
Thank you, it's Greg Fraser on Gregg Gilbert good morning, everybody.
They're even when he mentioned.
There you mentioned wholesaler inventory tightening where do you inventories for Belviq It stand and what do you use a normalized level and can you comment on any material gross to net changes during the quarter.
Ah, yes, absolutely correct. So in terms of the inventory levels. What we have typically seen over this as long as I've been with the company last year and has been anywhere in the you know that kind of 2.3 weeks to two and a half weeks right in that range, that's where we'd like it today with our kind of our growth trajectory.
We saw a drop down at the end of Q2, two under two weeks about 1.9 and some of the hopes isn't it's you know a couple of the wholesalers and particular I have really seem to tighten down in general we think it's probably maybe a bit of doesn't managing their own you know their own businesses across the board but.
That's where we are right now we personally I mean, it's Scott and I watch this very carefully and the her ideal would be clear about two and a half weeks I think at least to be able to manage the growth that we have.
There were not any material movements in the goes nuts overall pretty consistent quarter over quarter as they typically do see the second quarter instance, up a little bit compared to the first quarter in the third quarter will again as patients move into the donut hole.
And the coverage gap, but I wouldn't call them Cheerios resets that was.
Maybe a percent or so.
And.
She may stay thing that vested in the quarter would you say are temporary versus more permanent in nature.
Oh, I'm sorry, you cut out at the beginning of your question could you repeat.
Yeah, how much of the S. <unk> savings in the quarter would you say are temporary versus permanent.
Oh, that's a great question I would say, but most of it is I guess, what we call permanent in nature. You know we've heard some activity. So they are investments or initiative. So we'd like to pursue that maybe we can back to a at a later time. Some of it is I would say is.
Potentially temporary a it's related to T. Any savings that reps are not to address and others have us or not traveling as much outsource if and when the world gets back to two traveling as it did before I think we'll see that pick up some but Ah. We you know we did take a hard look across a number of areas too.
To make some savings in terms of potentially new hires another activities.
Got it and then just to kind of bigger question bigger picture question on the long acting opioid market. It did you think about the size of the market and how big it used to be and how do you got to you at its peak and how it's been shrinking for a number of years. What do you view is sort of normalized baseline level for long acting opioid prescribing and Wendy.
Keep in market could reach definitely.
Hi, Greg It's it's Scott I'm pretty good question so.
When were when we're modeling I'm kind of where the market will be were were.
Hands on what products, obviously, you're throwing into the market ours is pretty inclusive, but we're looking at somewhere.
North of 875000 closer to 900000.
Tear axes I'm on a monthly basis.
Got it and.
Just a quick quick last one for guests are you considering dropping the interim title [laughter]. Thank you.
[noise] favorite to hear me I understand like activities like Ray rid of power outage or under last night, So hopefully victory here the okay.
Yeah, no as far as the interim title goes side as I mentioned to buy 'em remarks, before I plan to very much more of a key leadership role here that's tied for long term and very committed work that the do executive leadership team, which I found just to be actually but also with the board and this is all about second didnt like that makes level.
Yeah, I suspect you cited a well pharma sector I know well.
And we're very much focused on continuing the strong growth and focusing on a differentiated products.
Also on business development, I guess I'd mentioned before it really a key area for us as well.
So you take a look at it.
I've done the CEO role quite a number of times.
But I really like the challenge.
Right now I'm going to be in the interim role I'm country for indefinitely.
But there's really no plans to change that at this point, but I'm just making what did take away is it like I just want to team did a great products and committed to.
Sure we take things to next level and Michael energies are focused on delivering great execution result, so they are chasing sashes pull it that's for sure.
Got it thank you.
Hi, My name is try next question from Scott Henry from Roth Capital. Please go ahead. Your line is open.
Thank you and good morning, I guess just for starting outside.
Do you have any thoughts on revenue guidance I know you had it out there before.
And then kind of pulled it back.
Any you want to make any comments on it at this point or would you consider it after the next quarter just wanted to get that out there.
Hey, Scott so at so it's a good question I think at this point in time, we you know way, where you have a lot of confidence in our brands. We're really pleased with how this Ah. This quarter has progressed and have the hub. The business continues to progress through the this period of uncertainty, but we really do feel it's important to provide guidance.
When there there is more certainty about the future and if anything you know some of the a the recent trends with dependent make don't give us that pool, you know set of content. So we'd love to be able to come back and give it as soon as you know as we feel it would be appropriate to do so.
Okay Fair enough a second question.
Severance 5 million seems like a large number.
Any comments on and why that number was that magnitude.
So is it that was the number it's a combination of cash and stock compensation a it it is associated with the contract, but Ah that with but arm had in place.
Okay.
I guess day, saying on the income statement the operating expense savings significant the I know, you've you've mentioned that before hot the roughly the three and a half million.
How much of that do you think was in DNA versus selling extensive.
Oh so.
Yeah, So I would say.
Probably probably about half and half obviously t. and he is a component of spending both parts of the business and as I mentioned before but the other question that can and you know we did see lower travel with both but obviously get bigger Salesforce, and then management, but the where there were savings across both area.
As I think we typically you know early in the year you.
You know you to kick off some of the marketing initiatives you tend to spend a little bit heavier in the first quarter and so that what you know wouldn't have come in as much I'm in the second quarter and we you know delayed some instead, it's as I said before so it's it's probably a mixture said some extra.
Okay.
Turning to final question for you guys as they're just getting through the income statement I eat you're starting to stack together a lot of positive earnings quarters, a at some point. The accountants will will tell you to extends for taxes, whether you're paying them or not.
When we do expect to start.
Reported on a fully tax basis.
So we have.
Quite we we have well over $250 million of Nols are there.
So I think you wouldn't see us having to pay taxes or federal tax it certainly for for quite some period of time.
Yeah, but if I recall that the years on the accounting side won't you have to a onetime your book of what a onetime gain for that and then you'll report on a continuing ops bases tax.
Perhaps we can take that offline, but I believe that yeah, we can tell them that offline.
Okay.
Shifting over to Scott I got it sounds like.
<unk> to Q.
The sales reps were running at about a 60% to 70%.
Relative productivity rate based on the numbers you gave a where do you think that isn't real time, I mean, obviously, they're not going to get back up to 100%, yet but are they making game sequentially from two Q to Q3, I imagine they are and I'm just curious the magnitude of that.
Yeah I appreciate the question Scott. So we we were very thoughtful as part of our curve It committee in evaluating when to.
Kinda stagger the release reopening of territories.
So it was very gradual through May and June I'm actually June and then in early July was the first time, we were 100% all territories open.
I guess you know in my opening comments, we talk I talked a lot about the hybrid role and Jeff mentioned as well.
I think what we've done here is we realize we're not in this environment.
For over a long at last.
We're probably not going to have the same number of face to face visits as we once had we're really encouraged the as numbers gone up each week the last except for the holiday week fourth of July weak, but we've seen a go up and it's now well over 50% of the face to face is we had pretty kogut.
But with all the other systems, we adult we have the ability to to present to HCPCS.
Virtually over a one of X., where we can sure materials and compliant manner. We Oh, we have a dedicated email portal was a information concerning and then text messages we've done virtual speaker programs.
There are lot of different ways, we're educating so our thought process flows.
If we're not gonna get the same number face to face we need to build a platform that can pivot and its different across each territory and each office has different protocols, either and then maybe how often we can go in and so.
We're encouraged by the fact that we blend together everything our sales force is doing.
We actually are getting more touch points than we were previously now we do believe face to face matters.
We've seen that Jeff touched on we had a small expansion earlier.
Early in Q1.
And that group actually grew twice our national average from Q1 into Q2, so plugging into new individuals into territories were a little bit under underserved. We we saw nice return so.
No I think going forward can be a blend we feel we have besides just the with the reps are doing weve also augmented with a marketing programs also a lot of digital work as well whether its banner ads were 80 pieces are located where the Facebook page now for patient access things like that so.
All these things kind of one to gather to be able to adapt.
Depending on what's going on in the world and in each individual territory.
Okay that helps.
We want them into my next question from David I'm for them from Piper Sandler. Please go ahead. Your line is open.
Hi, everyone. That's exactly on for David. Thank you for taking my question just a quick one from Yeltsin Procon, sorry, if I missed this.
But we were just 70 got some color on what you guys are kind of need to do to gain share for the product specifically to gain share on advantek. Thank you.
Hi, Zack it's Scott.
Appreciate the question and.
One of the key things I believe and we announced a couple of small wins today, but I'm simply got the product back one of the things early on was you know we had.
We have market access that was average we did have access and certain plans, but we've done a really nice job.
In Q1 actually ended last year early this year of adding some really large payers with Cvs, we weren't disadvantage within Tvs and now we're.
Basically on equal statuses, Novanta could you see our market share growth literally it's up over 40% since that change and early in early 2020, I'm, saying the prime Therapeutics, where you know we've basically more than doubled our business.
And in two quarters, So where are you keep chipping away at the market access and exit side of things. There I think it's a marketplace, it's very sensitive to the market access.
And we'll also look to implement some different marketing programs here over the next quarter, two as well to accelerate the growth.
Again, it you know my opening comments, it's meant to be a complimentary product.
We believe we continue to grow it.
But we also are mindful that well vehicle, we first and some broke his second where we don't want to.
You know loose BELBUCA momentum or a bill you could call at the expenses to support calls as well so trying to balance those two things, but I believe based on some things I mentioned earlier, we'll we'll keep it keeps moving ball forwarding and continuing to take market share.
Great that makes sense. Thank you.
Looking thinks that.
Hi, My name is to our next question from can you go from William Blair. Please go ahead. Your line is open.
Oh, thank you for doesn't across.
Can you broadly talk about price it seems like the industry have settled into a pretty regular price and done then its however, there's obviously been costly disturbances around the current them, which everyone is doing worse themselves.
As far as fluctuations that's really what's the current thinking on price, maybe being more aggressive there or maybe you can just less predictable.
Okay. So different Paul obviously to to discuss price I think is somewhere.
Look at it on a regular basis or what's appropriate for for the market and where were the broader landscape is so a really don't have any other.
Okay. That's it.
I just want to comment.
We'll take beyond that I don't care, if you ever the initial comment that you'd like that as well.
Sorry, I was I.
That was on mute. So so I think on pricing what what we've tended to look at we feel like you know there there's a balance that you're considering every time and and when you don't you know if you take a higher price increasing running seeing price protection on different contracts you run on to Medicaid impacts you know best price things like that so we tend to.
Say, let's let's make sure what pricing appropriately and and basically being able to take advantage to the full you know on a net basis as much of the price increases the Ken but weve.
I think you've seen us now typically once you're doing a price increase and Scott I think he would agree that we feel that that's appropriate.
That's correct I think you know our our price increase we talked earlier this year.
5%, we're able to realize most about based on the contracts we have in place.
Okay fair enough and.
You know maybe maybe for.
You know the Sunbelt, obviously important region for.
Boasts the class.
So you talk about this kind of what is I wouldn't read to look like on the ground right now.
We have some weather down in Florida.
I was thinking compounding effect.
And.
Well the anything more sensitive during the quarter than maybe.
The March timeframe.
Are you reference you like a different market dynamics of all under the current data.
But the whether that's what you're referencing ISO.
Yeah, Yeah, you know others, who could have been talked into sunbelt during the quarter. There we have some why there. So it's kind of hoping for maybe a real time or.
<unk>.
Yeah. So let me go for Scott you jump there but.
Do you have what would assess stupid field input.
Absolutely.
Every week also with other companies as far as benchmarking, what's going on a different reaches the country.
So it's it [laughter] art.
Yeah.
It's not one size fits all which I think you're referencing a and also how we're approaching the market at a different area I'm sure. It can vary from <unk> based on topic [laughter].
But.
It is true so.
I know.
Something that'll be a repair from what I said before but people do make a difference.
Finally, it go sit or no matter, if spot where it fits and face to the customer or not we're finding is that virtual or face to face. The combination between took treatment to any activity does make a difference.
That's.
Very focused on making sure we understand the regional differences to your point, which is a really good point, it's one where Ah we recognize that early on that it's not one size fits all that out or.
Oh, Yeah historic Kuwait it varies canvas, that's something that we can stay on top of and we'll continue to stay on top of going forward.
With a different dashboard much we haven't place, but also regularly but he then do people that helps put to make sure were brought pop that stock if anything else you would have to that.
I think it's all cover Jeff I did is it is variable from territory by territory I think when they go back to Weve I think we felt a platform that allows our reps to pivot based on the needs I'm not I'm, just not just territory level, but HCP level.
And it's one of our marketing goals is to have something.
Different.
When you are different touch point that we can provide almost on a monthly basis, especially if it's going to happen at a distance.
To interact with HCP, so something there's something different to grab their attention and interact with you know even if it's a minor change or point to share. So so we're we're working closely as a complete commercial team to.
Make sure we have the right tools and a rough hands.
Thank you.
Thanks, Tim.
And then I think our last question from Mark Captain from Ladenburg Thalmann. Please go ahead. Your line is open.
Hi, guys and good morning.
Thanks for taking my questions and just wanted to follow up but I, probably at a higher questions in terms of that looks like he successfully.
Entered into yeah, addressing the pandemic indices that problem dislocation Max and but.
Help us understand in terms of when we should expect kind of return to growth of revenues with respect to BELBUCA and and and some pro so given given way.
[laughter] pandemic dynamic that we're seeing right now and a.
And it and what you're seeing on the ground right now.
Yes.
Thanks for the question that it's Scott so.
You know, we talked a lot of up to patients returning a new the brand and I've shared earlier due to be more specific on the numbers. We were seeing just under 1200, new new patients a week for the four weeks in February.
You know that fell down to about 900 and April may and we're encouraged that June the and be are actually their averaged a 1070 fruit.
[noise] already kind of bouncing back and the market looks like that as well you know last data point, we have one data point, but and direct show some 0.8%. So it's nice bump up for us.
We were not going to just rely on the market, though to recover completely we realize we need to grab more share a we were implementing we've implemented already you know three different things I think will help impact and direxxis versus the prior authorization a hub. So we want to help patients.
Get through the prior authorization process, if necessary, especially if offices are under stuff.
And then we enhanced our co pay card program.
Which reduces the maximum out of pocket for patients and we think.
As as patients are financially stressed during this time it may help them.
First off stay on the product it there if their current user but also.
May make it easier for people start and we actually have heard many examples of that and then we've also literally just kicked off this week and new to brand program.
Whereby were reducing or eliminating financial.
Commitment by patient there first.
First prescription.
So and we're you know this is meant to augment what we're doing and I you know it's not could be for every every new patient, but I do think obviously has to be a commercially only and compliant but I do think literally what we've demonstrated with the levels. We're out we still had growth if we want to accelerate that growth.
Need to raise the MPR axis in the in the coming quarters. We believe we have the plan in place to do that.
Okay. Thanks, Scott that's very helpful. And then a question for John in terms of.
Mentioned that you can you be stopped the BD element of the business.
Can you maybe detail so for some of your goals for the remainder of 2020 and looking into the first half between 21.
Oh.
Just.
Oh, Jeff Medrano, he may have I'm going to having some connectivity problems.
If we can follow up on that enter and I'll call.
Okay. Okay.
Thanks, guys. Thanks Oscar.
[music].
Thanks, Matt appreciate it.
[music].
Thank you.
Well continue to actually many session and that will contribute to call. Thank you for your participation you may now disconnect.
Yes.
HM.
[noise].
Oh.
Hmm.
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