Q2 2020 Menlo Therapeutics Inc Earnings Call
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A large fry I'd probably gifts. Please go ahead.
[music]. Thank you good morning, and thank you for joining yesterday before we begin to <unk>. The box Salt remind you that some of your information because the <unk>. If you try to copy this morning.
And on this topic skull contain Florida things taken that involved it's I'm certainties and assumptions theater difficult to predict whereas it expressly reflect optimism satisfaction current car grass.
Extra protection exceptions, whereas including believes intend expect plan I just paid is similar variations identify for looking statements for their absence of talked me into the statement, it's not for nothing except for getting statements about a guarantee it performance and the company's actual results could different materials somebody's could change and such statements.
What type of Doctor take a call to contribute yourself differences striker detail, it's been a little parakeets filings, where they got C. C.
You spell that he was taken speak only as of today personally the topic school and the company undertakes no obligation publicly update any form of your statements are supplying your information.
Additionally, financial portion of I'll just called include <unk> financial information related to the companies operating expenses company has provided a reconciliation protection numbers starting snakes.
Participating on today's call, David <unk> exactly officer, Mellow actually shakes, Chief Financial Officer, and that's why they cheeseburgers lobster.
Trying to like to talk to trying to call up to date themselves P. A date. Please go ahead.
Thanks, Michael and good wanting to everyone.
This is an exciting time for menlo as we establish the company is a commercial business in the dermatologist space.
As you know we launched a M. So you'd get the beginning of the year.
And although we have experienced some disruption as a result of the pandemic feel forced remains engaged.
Based on the most recent prescription trends in other metrics that we follow forensic.
We believe we are well positioned to grow the brand at the market continues to recover.
Yeah, Yeah, you proved out second product milkshake during the second quarter.
Which means we are in the fortunate position of having to products approved and a period of less than nine months.
It's really restrike than a balance sheet with our most recent successful equity offerings.
That'd be getting with the positive news on joke city, formerly known as that that makes one O three.
I'll have FDA approval to market this product for the treatment of inflammatory legions of rose shit an adult.
This is the first and then a cyclone product of any kind to be approved by the F. D. A for you said rosaceous.
We believe that silk see offers a unique proposition <unk> it should receive broad market acceptance upon our lunch with continued growth a prescription trends.
Let's see was approved on the strikes too well design phase three trials that were conducted in more than 1500 patients.
I'm market research indicates that patients place a high value on the excellent advocacy and safety demonstrated at 12 and 52 weeks in these studies.
We believe that the favorable tolerability of the jokes he will be a driver of usage considering that patients find many products currently prescribed for Wednesday shouldn't be irritating.
Furthermore, we believe that patients are generally unsatisfied with currently available treatments as evidenced by the high discontinuation rates with existing products.
Ah goes to launch jokes eat in the fourth quarter of this year.
And not widely will provide more details and a phenomenon.
Oh June 2nd we announced positive results from a phase to trial evaluating the preliminary safety and efficacy of pets C. D. One O five which is our combination minutes cycling it adapalene phone product for the treatment moderate sincere accurate.
Saudi F X 2016, dashed 40 enrolled 447 patients.
And showed statistically significant improvements for one O five versus vehicle.
Iga score and an inflammatory elysian count reduction.
Although the trial was not originally power to demonstrate a statistical difference between F. C. D. One O five in either of the amount of therapy arms three per cent minutes cyclone phone for 0.3% Adapalene palm tree, but.
The majority of comparative did indeed, she always statistically significant improvement in favor of attitude you one O five at 12.
We're very excited about these results.
Which if reproduced and they registration study suggests that F. C. D. One O five has the potential to be a best in class treatment for patients without me.
I plan to hold an interface you're meeting with the F. D. A before the end of this year and which we intend to share. These trial data along with our plans for a phase three development program.
Regarding your balance sheet, we raise $54 million in an equity offering on June 5th.
There was broad institutional support and weird grateful to the investors who participated.
As a result of is offering a cash balance at the end of the quarter was just over $100 million.
Last week and light at the current market uncertainties due to Kobe. We recently attended a credit agreement with perceptive and what isn't it.
Most relevant as the existing revenue covenants within the credit agreement habit extended by six months.
After completing our equity Reyes, we thought it was prudent and responsible to our shareholders to modify our credit agreement. How did you wanted to remove any concern or potential ever had.
With that let me know I'll turn to call over to Matt why we aren't cheap commercial officer, who will provide an update on a commercial activities.
Thank you day.
I'll begin with M sneak in the act in the market market is still recovering from the curb at 19 shut downs with new grading the prescription volume's and actually down over 30 per cent during the second quarter.
The end of the quarter or does it improve modestly with a 17% delta the first quarter norms.
Well most of our target offices are open for pizza.
Consultations in some capacity.
Presentive access regains impaired.
Internal market intelligence indicate.
Half of all of our target offices have restrictions department pharmaceutical sales representatives, making it challenging to fully with Harper favorite baseball activity.
Alright, that's Ah reps were able to reach the majority of our targeted customers during the quarter and why faithful meetings quanta roughly three quarters of their total cloth all activity on your end of June.
Samples lots of <unk>, another surrogate lightpole activity with limited I complete off as shut down to cross the country in April may, but it's been recovering subtly and most recent that a weeks.
Prescription <unk> the second quarter came in at 42169 total prescriptions, representing seven three per cent grote versus the first quarter.
In recent weeks, however, we've seen very strong recovery and total prescriptions rising approximately 85% smell O. As in March [laughter] are you need prescribers continue to grow expanding our reach and file a M D.
The number of unique prescribers Akitas 4200 during the second quarter.
Well productivity of her keep targets increase more than 12 prescriptions per target.
<unk> cute too we executed over 60 virtual and lives speaker programs educating more than 600 healthcare provider's on the teachers and benefits a M D.
Ah market access progress as bought our coverage to 63 per cent of commercial lives.
With one major P D M negotiation in progress.
We're focusing on completing these negotiations by the fourth quarter, which would bring her commercial coverage to an optimal position of over 80 per cent of commercial lives.
Running now to guilty, which is which was approved by the FTA on may 28th.
Reason for the launches progressing on schedule.
[noise] sales reps will commence with their home study beginning in mid August in preparation for our virtual lives launch meeting scheduled for September.
Given the high overlap between acne and rosacea prescribers, we will laboratory existing commercial infrastructure I will Lawrenceville C without needing to hire additional sales representatives.
Completed market research on our <unk> for marketing assets for promotion.
The results Perl upset the product has the potential for brought acceptance in the disease date.
Specifically I researched helped us that'd be intend to prescribe after hearing guilty marketing narratives, you'll have the score of nine eight out of pattern.
[noise] group.
Which demonstrates again, how long <unk> and that need exist.
Messages around efficacy dermal tolerability longterm effects created significant impact.
Conversations with payers on Beltsy had been encouraging.
<unk> to coordinate clinical reviews with P. M T me [laughter].
Expect to begin negotiating contract with this quarter and through the balance of the year.
We look forward to providing further update.
Watch initiatives get underway.
I will now if you Wanna call over to Andrew who will provide a fucking it'll update.
[noise] snake that.
And my review the second appointment from Angels, I will talk about resumes clustering corner, what was the cash position.
They're all sorts of material non-cash items on the income statement this corner, namely relating to the merger and that will spend a little time going over some of these in detail.
Grilled onions, total 11 $7 million for the second order 2020.
There were no revenues for the comparable period and 2019.
Revenue number was comprised of $1.5 million from the product sales the damn Geek, which was launched in January 2020.
$10 million, which is the upfront cashed pain in under the license license.
We started with two T N N point $2 million in royalty rabbit.
Our net loss for the second quarter 2020 was 167 4 million as compared to 19 million for the comparable period and 2019.
<unk>, one time non-cash expensive during the corner of $148.3 million.
Oh really expensive 64, 23 million where non-cash transactions.
As soon as easy to be impairment goodwill and I P. O N D related to the moment murdered.
84.7 million, we're related to the contingent stopped right or C S hours, which converted into two due to the negative beta read off too often.
Two items can be seen on the face of our income statement to the financial statements.
Is there a 99.3 of them is due to a one time reevaluation of legacy informix options due to the T. S. R. A conclusion a neat.
C. A certain version cute choose it applied to legs. He told me shareholders also applied to the legacy phonics employee options on the T. S are converted as a result.
M P. Three outcome the legs. He told them, it's options became stick to a conversion ratio of 1.8006.
[noise] conversion ratios the legacy told me shareholders, which materially increase the value of the options.
He expense related to the best adoptions as of June 30th was taken to the P. N L immediately which was the 19th $3 million I, just referenced and an additional S estimated $626 million related the unrest options will flow through the P&L over the next five years.
[noise] will vary based on any potential employee departures.
[noise] normal or recurring employee stock charges during the quarters more 1.5 million.
Looking at the piano I would like to give the shareholders visibility into expensive, excluding one non-cash chargers.
It is I had highlighted since the one time downcast expenses are not indicative of our operating results for the quarter.
That's a good soldier point 2 million and we're not impacted by one time non-cash charges.
[noise] ported Orange D number was 13.1 million Thanksgiving, one time stock compensation charges at 2.6 million Orange D was 10 5 million.
Reported that CNA expenses with 26.5 million, excluding one time stock compensation charges of approximately six 6 million S. D. N. A was 19th 8 million.
Hello operating expenses, excluding one time non-cash Ah charged.
Compensation charges, a 9.3 million, whereas $35 million for the quarter, there's $35 million an operating expenses is closer to our expected run me going forward, but it does reflect some wind-down expenses from my savings to one O five trial and closeout expenses from the <unk> lots of them trial.
Our cash position at June 30th was $100.4 million are sure count posted conversion the csrs's approximately 136 million chairs with the issuance of additional suit chairs related to a recent hekmati raise our current sure account is approximately 168 million sugars.
Regarding a restructuring.
Last quarter, we announced that beauty Tobin, it's over 19 impact and resulting disruption Z N D lunch and then the buffets three years old sister-in-law button, we reevaluated our cost structure and initiated a college savings initiatives that we believe is necessary to extend our cash runway.
He's kind of savings initiatives did not impact decided in the field for somebody remain fully committed to launch a N Z successful lunch I'm guilty and two four.
[noise] the restructuring is now materially complete the benefits will not be fully realized until later in the year and a coffee too do you to do not yet reflect the full impact into cost savings either S. G. N. A R. R. A N D.
You would expect the majority of the savings will be reflected in there to three financial statements and the Q4 would be representatives of our cost structure moving forward.
I would note that making projections on cash lemonade is highly uncertain in the current market, giving the impact and potential future impact until the 19.
Do you believe however that the <unk> the with the college savings initiatives put in place.
Current sales expectations for him he can guilty and with the cash received from the cute T. A license plus the $54 million public offering that we have a cashman way through the end of 2021 without need for additional that were equity financing.
Additionally is Dave outlined them as opening comments, we signed an amendment to our credibility blame revise the minimum net revenue Covenantor news name.
First minimum revenue Covenant measurement date was September 30th 2020.
Part of the amendment to the credit agreement the minimum revenue covenants were pushed out six months.
One small additional revenue targeted $6 million was added for December 31st 2020, so beyond that our existing revenue covenants now begin on March 31st 2021, instead of September 30th of this year.
There are no additional changes costs or considerations to the credit agreement.
For full details on the financial results, including the results from a six month period any June 30th 2020.
[noise] referred to a form tend to file today will be <unk>.
Oh now turn it back over today for a crazy comments.
Thanks, Andrew a map for your detailed updates.
Man lives going through an incredible transformation over the past year cause we have evolved from a clinical stage organization to a fully integrated company with straw a commercial capabilities.
We've completed a murderer and subsequent restructure of all operations to the United States.
Launched our first product received up the approval for a second product.
Signed our first.
X U S out license agreement for our own brands Advancer pipeline and approved of companies balance sheet without recent equity financing.
I'm grateful to each of my fellow colleagues I'm proud of their tireless work, especially during these unprecedented times.
Most importantly for our shareholders.
Maine laser focused on the watch a M C and preparing for the lots of milkshake.
We believe both of these products have the potential for broad utilization.
[noise] transition to a commercial states company, our objective has been to maximize operational leverage to accelerate revenue in earnings.
We'll do that with a watches of <unk>. So you by focusing on for keep tenants.
Precise targeting of our customers and leveraging the overlap of our called on universe of health care providers.
Continuing to accelerate broad experienced a M Z at M. S T technology, which should allow for wrap it up take a milkshake.
Game brought acceptance from Payors, and Broadway Embarkment, and lastly, Labrador infrastructure and internal shared services, leading to reduce the operational expenses.
I'm very excited about the prospects of our business as we continue our work to build longterm value for our shareholders.
And with that that concludes our prepared remarks, we're happy to open the call for questions. So I would turn to call back over to our opera.
Thank you. So you wish to ask a question up this time T signal by pressing star one on your telephone keypad piece insurance can eat function on your telephone is kicks off Tonight your sickness chocolate mint.
<unk> <unk> wanted to ask the question.
You can take our first question now for these channels counterfeit challenge. Please go ahead.
Alright, what everyone just as <unk> and for Luis It's just a few questions here what percentage of.
<unk> says your patients are coming out of their primary care office. Today are you able to cover the majority of patients focusing on dirt offices, a second week due to a coke with 19, many doctor so switching to tell him medicine.
Okay. The transfer assist for the rest of 2020, how would impact M. C. Prescription number are the lunch of associate last week, we see that's a huge overlap between <unk>. How are you play modestly or expert or your commercial Salesforce S. We anticipate the lunch hour. So sweet thank you.
That's Garvey my third why did you take all of those okay.
Sure. Thank they've thanks for the question.
So you know the question about the percentage of Actinian rosacea patients within dermatology that percentage is pretty high.
I think one of the things that we had express in previous calls is how we derive are targeting models predicated on.
Using claims data to identify where the patients are so it's agnostic.
Specialty in many cases, the primary specialty may be listed as something other than dermatology.
Those cases are are relatively small, but you you may have some pediatricians you may I have some better.
Designated as an internal medicine Doctor when in fact, they may be double board it.
So the majority is dermatology I would say probably better than 90%.
Is is what I have.
At my Fingertips here.
Regarding the telemedicine questions. So you know telemedicine is obviously something back out a lot of attention during TOBA 19, and there've been several studies that I've looked at the uptake of telemedicine across different specialties.
There was a syndicated report.
Focused in on dermatology that was published back in May.
And what that showed was the the patient bowling the average patient volume for a dermatologist over a course of a week prior to Kobe 19 was around 140 or so patients that dropped it 28 patience.
Drink late March and April.
And so it'd be be increase in telemedicine utilization went up over 50%, but it was on a much smaller base.
When I asked about the effectiveness amusing telemedicine greater than 50 per cent dermatologists in this.
Particular research study.
Indicated that it wasn't as effective as in in person console.
And so the expected use on a go for it is roughly 11% again based on this study.
And it it's certainly going to be a part of dermatology diagnosis and treatment on a go forward I will remind you, though that both of the diagnosis and the treatment.
Are captured in the claims data.
That we utilize for targeting.
And so as a consequence of that we're capturing these physicians, regardless of where they make the diagnosis, regardless of where they're consulting patient and applying a therapeutic.
And so will still be able to intervene with those target.
Regardless of the top one that they use we do.
Intend to and are currently advertising on these platforms and that is a way that we can are being at the point of.
Ah console.
Regarding the target overlap we have really good target overlap between Actinian rose shall we have roughly 87% of the targeted positions.
Are currently in our call universe, where we expand our targets five roughly 500 or so physicians.
That's why we don't have to expand our footprints all of those 500 positions that we're expanding are within the current territory alignment.
We're gonna have some target that are unique for a N D. We're gonna have those 500 or so that are gonna be unique Brazil C. And then we're gonna have overlapping targets within.
The balance of our target universe.
Okay. Thank you so much thanks bathroom.
And we cannot take our next question, Jason Carberry of Bank of America. Please go ahead.
Hi, I was in Saudi or.
What type of my classroom.
My name in terms of volume, we'll talk about the current volume trying to ban book and surely July Okay cool for now.
And how do you <unk>.
Involving over there and medium root beer.
Okay I'm at.
So as it relates to the the trends in volume of prescription said last out a week we have for the the week 724, we had over 2400 prescription. So what we're seeing in a recovery is more what we expected to see.
It's more of a check mark recovery. So we had the the big dip backend late March in early April.
And that's been rebounding over time as the market healed I mean, you know remember it's at the <unk>.
Volume's dropped over 30%.
Where it was in March on a weekly basis to that beginning of April timeframe instead of the market hasn't completely healed. Even this last out a week there about 65000 or so new prescriptions. When 72 to 75000 was the norm back in February and March so the market.
Is healing it hasn't killed completely <unk>.
We do expect it to come back these patients haven't gone away by the way they still need to.
Have their acne either diagnosed or therapeutic.
Prescribed.
Buddy there's just it seems as if there is a patient slow or a throughput issue that is slowly healing across the country.
Okay. That's helpful.
And another question can you talk about your process a pair contracting an antique.
The last.
Sure. So there is one major payer that we had been working with back in the first half of the year that to.
Spend it it's contracts with manufacturers and in favor of a contracting change in attitude changes. So that is a delayed that process with that particular P. B M. Ah those conversation conversations have been going up really well and we expect too.
Hopefully have that resolved in house or access squared away by the fourth quarter in the fourth quarter.
So.
Other than awesome, and United help that brought our our total Harper lives up to 63%, we're happy about having those contracts in place.
And we're optimistic about the prospects for the the remaining T V and it's outstanding.
Yeah that would just.
That's you have to work that's been done on the pair of France, Yeah, we we.
We intend, it's always been or a chance to leverage that's asthma preparing for the upcoming along shepherds elxsi and so the teams you know already in discussions with virus payers four they'll see between 10 am onto the fourth quarter and.
Actually we've talked about in the past a lot of the work that we've been conductive ramzi over the last sixth nine months.
Yeah, we we certainly believe that that could be helpful for us as we're discussing with the same payors about bringing is oxiana contract.
Oh, great. Thanks, so much.
I can they'll take care of next question from Georgia, Georgia, That's Cohen and company. Please go ahead.
Hey, I. Thank you so much for taking my question and congratulations on the progress. So I guess first for EM Zeke. If you could talk about the current where you can know dynamics in terms of dermatological offices opening up or clothing are you seeing currently the majority of your prescription come.
From any specific creatures and you think there'll be any changes for the remainder of the year as things progress so regardless regarding the pin demick and on that no. What is the elderly feedback that you're getting from yourselves fours in terms of patient and physicians satisfaction with the product.
And how it competes we didn't want established friends are you seeing any.
[noise] tourists mine use a M E R kind of like.
More.
For them to use the treatment paradigm.
Sure so.
A lot to unpack here first of all we did an internal survey of our sales personnel and Ah and our managers just to to try to assess.
How many physician offices are open for business generally and what we found being the survey is roughly 90% of dermatology offices across the country.
Are open and seeing patients.
Now that doesn't speak to the throughput of the patient's I don't know if that seems to I do too dynamics in the office.
But at least patients are coming back and the offices are generally across the country seeing patients.
As I I noted and they're prepared remarks, roughly half of the offices have some restrictions on salesforce activity and so obviously that that does impact as bad as well, although our sales team.
That was an outstanding job and getting to our targets. They found creative ways of getting to them either virtually or alive. When others may not have been able to.
And that's a testament to the quality that sales team that we have.
So I'll I'll I'll pay that there's no reasonable Ah.
Specific hot point Nope today is things that healed over the last couple of weeks, we see pretty uniform.
Uptake as we had prior to Cove it.
Across the country, we have some mark instead accelerate faster than others. So in Florida for instance in Texas.
Arizona, California, Georgia.
These are places that have had significant volumes, but they had significant volumes prior to the <unk> came back.
And we can do you need to see those he'll regret nicely.
Regarding patient feedback everything that we've heard from just field Intel and from physician feedback as spend positive Ah you know we were just getting to that nine to 10 week point.
Befor Cove at 19 shut down when patients would've been naturally coming back into the office for consultation and so it's unfortunate that we didn't get a lot of that feedback in April may, but what we have heard has been positives and we expect that Ah.
Will will continue to hear those stories over time and mortar report nah as we get through the balance of this quarter.
Regarding first and second line roughly 50% of the M. D utilization comes from patients who are new brand of therapy altogether and another half comes from those that are switched or added to something else.
[noise] consistent with what we saw on or demand studied every we ran in 2018, we anticipated and we mentioned back in 2019 that just shouldn't be disruptive to the market because the displacement of products was going to be brought.
And that's exactly what we're seeing an switching and add two behavior is that the the type of switching behavior is pretty broth.
And that that does mean that we're creating our own lane in the Yankees space. So I'm encouraged by that it's great. When you see that the reality of your launches matching up to the market research that you did prior to it.
What else.
Yeah, that's right.
Is that a few of del sur.
I'll just had a few additional comments pick it back off or whatnot shared so as we've talked to pass we we saw with the initial launch a M. Zeke the the initial lift and I'll take him to brand was was very straw.
[noise], we're faced with the pandemic and we saw the significant contraction in the market and that's talked about on today's called.
And yeah, we we have not yet been hats full capacity, if you will at that point pretty covid levels. Yet however, despite that the the grilled trans how does it have been really really impressive, especially over the course of the last week. Yeah. We had that we were an entire Marcus shut.
[noise] down where the entire nation was clothes for several weeks and then we had some of the Marcus <unk> ER outlines, especially in the South East South Central that we're we're leading the reopening if you will with markets and say the north central part of the United States Northeast mid Atlantic Atlantic lagging behind.
And then as we all know some of these markets in California, Arizona, Texas, Florida, Georgia et cetera, I got hit with significant spikes in the coronavirus, we saw some contraction for awhile.
And those market places wild in the northeast submit Atlantic in North Central areas. We're starting to then reopened so asmat set out by that word now at a point where where.
Not quite back to all the way to pre covid levels overseeing a nice reopening in the space. We're very encouraged when we take a look at the car prescription trends.
We're very encouraged about what can be once the the market is fully healed and we've got the salesforce. That's at full capacity meeting that so they have full access to the office as patients are back at the levels They were pretty Cove. It.
Yeah, we're already at total prescription levels that are just about it where they were pre cove, it and we're saying nice increases on a week by week basis, and if that continues based on the worked at the teams done once once they are at full capacity officer fully open yeah, we're very bullish about the opportunity to direct continue to drive Proscriptive forensic as we move forward.
Thank you. This is very very impressive very helpful and just very briefly on your upcoming longterm silk see obviously you do products are priced parity, but do you anticipate any different I seem to manage cared dynamic interesting thing that makes that we've seen with N Z and would you couldn't.
Did you ever get 200 to 400 range to also be applicable to Zip here as well.
And they're going to go through in terms isn't that so yeah. So.
So great questions and yeah, we we did price a parody because we wanted to that some of the feedback, but we got in market research.
With a payers was bad.
They did fear some movement between acne and rose Asia and different concentrations of products. So parody pricing was the logical thing to do.
The players are reviewing these a separate products that are not looking at is <unk> line extension.
Our new indication for the existing M seek brands. So they are looking at its own product there aren't doing their full clinical review process and business review process.
But our approaches the same with.
The players on jokes he has its bandwidth antique although the the market dynamics or a different we believe that working with purse in a similar fashion.
Did on them as thick as the prudent thing to do and it's all based on feedback that we got in market research.
And then your final question about the.
<unk>.
The plan price expectations 204 hundred is applicable here as well.
<unk>, that's that's what they expect and that's what they told US a research so I bet that assumption that we had an M C <unk>.
That's great. Thank you so much.
Thank you.
Oh, you're in N out take our next question from Patrick Telecom likes like how can I. Please go ahead.
Hi, Thanks for taking the questions.
I guess I'll.
See what are they getting factors to watching this products, perhaps you can provide a bit more color there.
And I didn't even mention that you got to have some pair of conversations there as well is there any types of how quickly you imagine somebody's fathers' being able to come online for this product relative to M C.
[noise] they Patrick.
[noise] states. So I'll I'll I'll, just you know all for national thoughts that they all our our plans to launch jokes in the fourth quarter and certainly.
The the data and until that masks commercial team has gathered suggest that we will indeed do that yeah, I'll I'll turn it over to my to provide some more Colorado.
Alright, Thanks, Patrick Yeah. So you know one of those things. So we look at at Daily Weekly.
Is how the rotation market is healing, obviously be anorexia, new prescription volume is most important because that's the market that we're gonna be trying to capture launch and what we've observed over time is that the the market is completely healed. We look at February prescriptions Brandon market.
We're back above.
Those volumes now last out a week.
So the market is healed nicely.
I do think that there are a couple of things a couple of interesting dynamics and rose should've consider here too you know one we know a factor that exacerbates the Simpsons of Rosaceous stress and there's a lot back going around due to Coca 19.
But the other thing that has been.
Voluminous in in the literature recently is the requirement to wear masks across the country has exacerbated the symptoms for these patients even more so and so as we go into cute for we're actually launching into what I think it's gonna be a very strong market with a high on that neat.
And additional factors that are exactly exacerbating the symptoms for these patients.
So we're excited about launching into the fourth quarter and we believe the market is is ready for this lunch.
And I'm sorry, Patrick your second question again.
Just related to some of the pair conversations your card and kind of how rapidly you imagine those being able to come online perhaps relative to.
The conversations like you had with M. D. You kind of cut off the the pair onboarding process there.
Sure I mean, so these these things obviously take their their own course, and so certain things like the the P. P M contracting to way that we saw with AMC those things can happen.
You know typically we see contracts in place and six to nine months postwatch within that timeframe and so we're optimistic that.
That'll be the same was they'll see but.
Anything can happen in those timelines and so we we are planning for the best with our our per approach and we're hopeful that we have good coverage wrapped up and.
[noise] succession.
Yeah, one thing that's like about two Patrick is yeah, we've we've got.
Yeah, we we had the product approved.
Several weeks ago, and we're launching a fourth quarter and that that gives us.
A bit more runway before we actually distribute the the proud of care of the United States.
So as we mentioned, whereas as we have relations and we just complete a contracts with the virus payors, especially some of the larger pbms.
You know our our intent is to try to maximize those opportunities writing and look to get under contract as quickly as possible with with your tennis actually go into the launch hopefully with some of these large parents already under contract. So we're working feverishly to do that you know, it's Matt outlaw.
And you in some regards here you behold into the P&C review timelines of the purse, but we've got a good sightlines that on this we're encouraged by what we've seen so far we're in your knee deep in dialogue with all three of the larger papers.
And I was mad separate quite optimistic as we had into the lunch of milkshake, the fourth quarter, if I'm gonna keep you posted.
Got it thanks for that and I guess kind of.
Aggregate it sounds like in a prescription numbers are moving in the right direction and I'm just curious.
Individual by and visual basis, how do you think about sales reps laundry a new product in this environment is there a difference and what kind of the frequency visits that germs are allowing at this point or any other factors that are kind of limiting their ability to it's a really be effective enjoying depend on it.
Ah well sure yeah they'd be you know as mentioned the offices have changed the dynamic by which representatives are welcome into an office and so things are scheduled more often than they are spontaneous.
Certainly be they call volumes have.
I've been increasing overtime I would say that our call volumes now are pretty close to where they were in February in early March not quite where it was and most of those interactions our face to face and not virtual.
Bedroom, 85% of.
All of our calls are face to face now versus either telephonic way or via some other virtual platform.
And so that's encouraging I I think the other thing that's that's really encouraging to me Patrick is that.
I I do look at samples velocity as a surrogate to face to face call volume.
And we've seen the sample velocity increasing week over a week in fact last week, we distributed more samples to offices then we have in any given week since lunch.
And that's indicative of a couple of things throughput for acne patients has to be increasing because our samples are moving out of the office, they're they're into the hands of patients.
And there's more demand for more offices that are opening up there are more weekly unique prescribers a van Z now than there have been since the pandemic shut down and so all of these things together show that the market is dealing in a very positive direction.
And and I'm encouraged by these metrics something.
That's helpful and I guess, one more for me and just Ah City, one O five we'd love to hear your thoughts on how the magnitude of effect on Iga's for it and since I'm sorry, what you said this compares relative to to your existing chickens out there and kind of how you guys see this product fitting within the broader treatment paradigm.
Sure sure what we were obviously very pleased with the face to results of resolve Rep City. One O. Five we're always cautious about you know discussing comparisons versus other problems that are out there because we've we've opted not conducted any <unk> any head to head studies, but when you just take a look it later.
Sure and honestly this as a face to study yeah, we had over Florida patient centered across for arms. So it was a robot space to study forest, but when we take a look at the Iga results, which were most of the 35% of the pages were clear almost clear at the end of 12 weeks as as we've outlined that that has if it's replicated that has the potential.
Would be best in class over other currently approved products here in the United States.
So we're in in the same thing when we take a look at the reduction inflammatory leash accounts you know there right at the peak of any other products that are currently approved.
Distribution and are you at so so we're quite encouraged by those results.
Yeah, we're going to continue down our Pathic adductor interface to meeting before the end of this year.
With the intent to initiate a phase three studies sometime the first half or so of next year.
Yeah, we believe that again, if if a proof if it's a if it's a best in class type of advocacy that could be associated with the product I think that it speaks for itself in terms of what we anticipate could be the uptake for the branch I mean, we're obviously very encouraged by what we see with <unk> and if F. C. D. One O five actually has.
Even better efficacy results and remains to have a high level tolerability because it obviously is a project that has a retinoid associated with it as we've discussed in the past retinoids often lead to you know issues with irritation cutaneous side effects and if we see the type of say.
The profile that we saw and face to the type of efficacy profile to resolve face too that's replicated in in the pivotal studies and the products approved.
If if it's got that type of best in class data Yeah. We believe it would obviously have rapid I'll take.
Great. Thanks for taking my questions and congrats on the progress.
Got it thanks Patrick.
I sure am I enjoy your <unk>, Taiwan to ask the question.
We cannot take care of next question from the Orange isn't that's T. T. Please go ahead.
Hi, Thanks for taking the questions.
Since we're two quarters into law and Shelby. It obviously not you know normal quarters are you prepared to speak to I guess gross to nets, you're seeing on <unk> and maybe what proportion of volume that we're seeing any a third party you know data services are paid versus you know free drive.
Yeah, one mechanism or another because they obviously, we're trying to model that's going forward. It to see if this volume you know I'm practically ran up again Halloween <unk>, how do we eat them, how do we get that from that to a revenue number and you know near term and longterm and I'll say, you mentioned sampling and I'm just curious they know what kind of volumes are you, saying such that weekend, maybe see them.
That's a you know <unk> drag on prescription volume and that will eventually convert hopefully to pay it prescriptions.
[noise], that's excellent I'll I'll offer some initial Ah commerce and turn it over to Andrew I'm at at this stage, where you know where we're not obviously gotta provide any any comments on gross and that's because it it's still it's stolen RVO early and obviously, we're dealing with a a market that is unlike anything <unk>.
Ever experienced before they big Andrew outline as in is prepared comments. It's it's got its challenges to predict runways cashed runways modeling et cetera, but we certainly are very encouraged by you know the prescription trans we've seen especially in the in the last several weeks.
I didn't Wanna things that's been beneficial is that as you know the market has healed, even though obviously we saw a a.
[noise] rather significant decline in the months of you know called end of March and April starting to come back out and May we as you know, we're quite active and negotiated contract with payers and we were able to to lock up a couple of additional payers during that time period. So I just comes back as a bargain continuous come back on a prescription channel trying to continue to.
[noise] grow more and more of those prescriptions, obviously, it will be covered and we will not need to rely on to the now conversion programs that we had we have in place and so insured in summary, we do know that the prescriptions are gobs to continue to grow we are seeing a large.
Sure proportion of those on a weekly basis are covered and we went anticipated that will continue certainly as we move through the balance of this year, because we come out I moved towards you know Q3 Q for will be in a visit to provide more Colorado how are gross than that I was looking but we are certainly encouraged by what we're saying out there.
I'll I'll I'll push it off and and as a Andrew I'm out of any additional colored comments on that.
[laughter] that's good.
Yeah, Yeah, I think you've covered just crazy I mean, usually.
He's very specifically sort of not given guidance on this yet you you've been obviously surmised quite a lot from our financial statements.
[noise] of our garage sales relative to our michelle's.
But you know I I think in in that you can give additional tell her to this you know given cove, it and give them. The fact that we have the one P. M outstanding it's taken a little bit longer when we had hoped to get to where we ultimately wanna be so I don't think you're gonna see the the final person that settle out until the early next year, but I'm at all.
Let you have some color.
Yeah. So you know as we look at our co pay offering one other thing as bad as they are good surrogates to to follow his are covered versus not covered or denial conversion prescriptions that goes through those channels. Then we have been seeing that would be covered prescriptions had been growing nicely.
Over the quarter I continue to and you know as these contract went into effect after him and May United C. N June.
A lot of the.
The denial conversion program that was covering those prescriptions now they're going to the covered benefit. We're also seeing prescription that are outside of the coupon those at fault either under $35 or those that are.
Paid for by the patient's themselves and we're seeing those continue to grow so it's all and we're seeing positive impact Ah from our covered versus denied.
[noise] patient volumes and we expect those to continue and hopefully we get the rest of our market access squared away and Q4, I will see that impact Ah.
The balance of the year can change it to a heel.
Regarding sampling so it's it's hard to give you true metrics on sampling and how the velocity that we're seeing in physician demand equates too.
The volume is being dispensed to patient says they walk outdoor.
But we've seen double digit increases in velocity and what we are delivering physician offices over the last several weeks and last week wasn't astonishing number as I said, it's over it's higher than anything that we've seen since lunch.
The previous week did that was pretty close to what we saw back in January and February of where your stockings physicians for the very first time.
So these are these are good.
Signals that our target prescribers art demanding samples and going through them at a a more rapid quipped today.
Then they have over the last several weeks you know as as you can imagine things were grossly impaired in our ability to get samples to physician offices, because they were closed back in April.
But those have been coming back that'll eight a M. D. Volume's that we're seeing going out to physicians has been a really positive.
Yeah.
[noise] about how that impact overall scripts I mean, you know these samples are.
[noise], it's meant to last a week or so and so as as those samples are utilized in and exhausted the prescription should follow.
[noise], Okay, and if I could just follow up on that girlfriend, that's I'm totally I. Appreciate your sensitivity around that giving you still negotiating I guess with one major P. P. M. Can you at least comment that on a normalized basis is that net 200 to 400 dollar range, even if he may be.
At one extreme of it is that range still realistic if we ate a year from now after all your P. B M. As in place and you know everything you know you're a good coverage or not giving away a ton of afraid red.
Is it reasonable to assume you're value prescript would be above $200.
[noise] Hi, Andrea one second.
Sure Yeah, absolutely I mean, we we haven't changed that guidance then we still think that that's appropriate for both of our drugs.
C N N Z.
Alright, that's really helpful. Sorry, I had to twist your arm [laughter] I appreciate it.
[laughter] north.
We can now take our next question 17 Chang.
[noise] Securities. Please go ahead.
Alright. Thanks, you know I know you guys had commented on just a recent <unk>.
Isn't prescription transfer M. Zeke do you see that continuing especially if you see the false school year.
Come back fully you know how much how many of the target patients that have acne, our our school age adolescence and and also just a financial question. You know I think you mentioned you have what about over $160 million. This year is fully diluted now.
$168 million is there any.
Thought on doing.
Split at some point.
[noise] pay to them, so I'll I'll I'll for some initial thoughts first of all.
We were certainly.
Ah intend hope and plan to see Proscriptive trying to continue to increase assuming you know the markets are open and patients are coming back is.
Is is mats outlined there'll be an enthusiasm for the bran certainly is there is mats outline. These these patients have not gone away they they need and will be seeking treatment and yeah. We we certainly know that as we come into the school year that those are those were high volume Ah times.
And as a patient started coming back and seeing their their position. So we were certainly I hope you can see the the contingency those types of girlfriends.
No matter, perhaps you're going off for some additional thoughts your pretense question.
Sure I mean, you know so they'd be acting market typically is your your gender the population age, but you know somewhere between 13 24 years old.
And and I think everyone in that demographic is gonna be seeking treatment you know, whether they're going back to school, whether they're going back to work whether they are.
Interacting on zoom calls.
The asked me problems still persists and in fact, one of the things that we've seen in in search history is mask acne or or masked me.
Has increased in Google search volume over time, because the the mask issue for acne patience is just as real as it is four rows Asia patients. There's there's certainly an irritant.
That causes exacerbation in the back the Simpsons.
Those needs to be treated as well so yeah. We we do feel good about the position that were in.
They were coming out of this <unk>.
Market deficit that we've seen over the last couple of months and as the market is healing.
We're able to not just penetrating to the growing market, but expander penetration into the crown market.
And you want to take the finance question.
Yeah sure.
Yeah. It it's a good question on the sure town, obviously 168 million chairs and a lot for a company are size.
You know probably the way I'll answer that is we we had a requirement to go to our shareholders for approval to do a reverse split we did that hey, there. Most reason shareholder meeting so on Monday, we had the menu menlo annual shareholder meeting and announced.
Proposal was approved by shareholders.
So so we know do have the ability to enact sure split the shareholders approved the split somewhere between one <unk> one to a seven and one to two.
So that's something that the management subject to the boards approval can do an order discretion going forward.
Hey, Hey, Andrew just wanted to follow up.
I think in the press release, you guys kind of hinted that.
[noise], if if cove it persists.
You may need to go access additional capital put it you know just from what you guys had said earlier on the call and you've got sufficient funds until the end of next year. So I just wanted to sort of.
Reconcile the comments and that you guys have highlighted in on the call and just sort of what you stayed on the press release. So I just wanted to clarify that.
Yeah sure.
Do you know it is we do our internal forecasting you know with sensitivity analysis. We think we have cash through next year and then let's let's be clear right. We said.
Last quarter that we had cats through June.
Raised approximately two quarters worth of cash. So we think we're good through next year.
You know there's a problem isn't there were obviously counting on assumptions economy, and dermatologists office as being relatively open and nobody knows exactly what's gonna happen. So I think it's only rational to put that.
[noise] you know clarification in there that caveat, but you know look at you were seeing nice increases in Scribd trends were very optimistic about grilled cheese. You know, we think that there's terrific pent up demand. So I'm, assuming the things go well we should be fine.
Is is that clear enough.
Yeah, Yeah, and and again, you you kind of broke out what the [noise].
Continuing opex was right. It was around $30 million. This quarter cause you you expect that figure to sort of yes.
See about the same in in in theory, Q and <unk>.
So I would expect it to continue trending down I think don't expect a huge shifts in Q3, but then by Q4, we should be Ah what I expect our run right to be as a commercial organization.
Obviously, you would go back up if we you know started our fee Street trials on one O five.
So that's something that we have to consider you know there's gonna be some expenses coming in this quarter, mainly I'm looking at C. N T right, so I'm getting the clinical material ready.
But we wouldn't start seeing really material expenses on that until next year. So my download has good visibility in the water uptake goes over to two products.
And we'll continue communicating man this weekend, so yeah, no I I would I would love to Q4 is being sort of the one will hit or steady state expense.
Street.
Okay, great. Thanks.
Mhm.
[noise] concludes the question answer session I would know like dance back to management for any additional that sounds you relax.
Okay. Thanks, operator Ah certainly appreciate everyone's take your time out of their busy schedules I know today is very active day for earnings across the board. So Ah very <unk> very good dialogue robots questions and hopefully we've had a chance to address them all to satisfactory level, we look forward to keeping everyone update on the progress of or <unk>.
<unk> says, we're very excited about you know not only what we're doing now, but certainly the the future for them Menlo going for it. So thanks very much we look forward to speaking with everyone's so that'd be well stay safe.
<unk>.
[noise] complete today's call. Thank you for your participation in N out disconnect.
[noise].