Q2 2020 Global Blood Therapeutics Inc Earnings Call
Greetings and welcome to the catalyst blast Therapeutics conference call.
On a participant or.
Yes.
These Christian and all suspicion, what's going to prepaid remarks.
If anyone should require practices during the conference.
Thanks, Chris starts you're right on your telephone keypad.
As a reminder, this conference is being recorded.
Alex <unk>. It's me out please go ahead.
Thank you and welcome to the GBT conference call to discuss the Companys financial results for the second quarter 2020, actually provide a business update I'm Stephanie out senior director of Investor Relations in corporate communication joining me on the call are Dr. Tad lab, our president and Chief Executive Officer, who will provide.
An overview of the progress in the second quarter. So I'm just stay around our Chief Financial Officer will provide an overview of our financial results. He will be followed by David Johnson or D.J., our chief commercial officer to give an update on looks bright as lunch.
Well, then provide an update on our research activities and other long term growth initiatives.
Earlier. This afternoon, we issued a press release announcing GBTA business progress and financial results for the second quarter ended June 30, Twentytwenty before we begin I would like to remind you that certain statements. We make on this call that are not historical facts, maybe forward looking statements that are subject to risks and uncertainties.
Information concerning factors that could cause actual results to differ materially from those expressed or implied by such forward. Looking statements are contained in our SEC filings, including but not limited to our most recent quarterly report on form 10-Q, as well as in today's press release copies of our SEC filings and press.
Releases can be obtained from the investors page of our company website at <unk> Dot Com a forward looking statements made on this call are only as of the time. They are made and should not place undue reliance on such statements future events or simply the passage of time may cause I believe to change and we disclaim any obligation to update any for.
<unk> looking statements other than as required by law with that I will turn the call over to attach.
Thank you Stephanie and good afternoon, everyone.
Give me do you had a strong second quarter as we advance the launch of box Brenda and remain steadfastly focused on getting our disease modifying therapy to patients.
We are accomplishing this against the backdrop of an unprecedented level pandemic.
That has been felt more acutely by S.C.D. patients.
Who are at increased risk of severe illness in death from Cobot 19.
The pandemic has impacted patients ability to conduct daily activities meet basic needs and secure access to health care.
Hi, G.P.T., we are approaching the current environment head on with a deep passion and commitment to serving the assay de community.
It is more important than ever that as he patients have access to care, they need and deserve including access to innovative new therapies like Aucs right.
As such we are excited at more patients are starting on X brighter.
And that we.
Our receiving positive feedback from across stakeholders.
During the second quarter, we continued to make progress with three key factors for our launch, including a continuation of trends from the first quarter that give us confidence in our positioning and growth potential.
Number one despite the impact of cobot 19.
There was strong demand frac spread in the second quarter.
The reduction in inpatient beds. It's good to covert 19 was partially offset by physicians increase in Tele medicine.
The impact on new prescriptions, what's left and we initially expected and we're pleased with the interest we're seeing from health care providers and patients.
We're pleased to see that Aucs Friday is being prescribed by broad to a broad range of patients, which DJ will discuss in more detail.
Number two our field teams are utilizing virtual tools to engage with health care providers and eliminate cases have started in person engagements.
This translated into more first time, our ox brighter prescribers in the quarter.
In addition, our data indicates that a nice mix of health care provider types are prescribing Hawks brighter.
And finally number three our payer meetings are on track and more than half of all lives are now cover through publish decisions our medical exception.
We continue to believe we will meet our called abroad payer coverage by the end of a year.
We are encouraged that the environment for our launch improved over the quarter, including a growing use or virtual too [laughter] that we believe it should soften the impact of a potential second wave of cobot 19.
Well all of US are better equipped to deal with Koby 19, then when it first drop it still presents a significant ongoing challenge.
Particularly into your biographies with high prevalence breastfeeding.
Many states and local communities are experiencing.
And in an increase in new cases, which has led to increased caution surrounding in person interactions by health care providers and patients.
We're closely monitoring infection rates across the country.
With a focus on the south.
Texas and California.
The health and safety, a patient health care providers and our employees will always be our highest priority and we will continue to adapt our activities with this as a guiding principle.
However, based on our progress we're confident that the pandemic will not impact occupied as long term potential.
Overall, we are happy what our launch progress today.
GBC delivered strong performance in the first half.
Of the here and has exceeded expectations.
We are executing on plans to expand the number of patients whose lives we can potentially change and our entire team is focused on delivering for the S.C.D. community.
With that I will turn the call over to Jeff to provide an update on our second quarter results.
Thank you Ted GBT delivered strong results in the second quarter, and we've continued to maintain a healthy balance sheet.
Total net revenue for the second quarter of 2020 was 31.5 million, resulting from sales of Aucs brighter.
Compares to 14.1 million in the first quarter, which represents a 17.4 million or 123% sequential increase.
Second quarter revenues were driven by strong underlying patient demand.
As well as good early payer coverage, including through medical exceptions.
Additionally, our gross to net adjustment was 13% in the second quarter.
Which is lower than we anticipated a future steady state.
The gross to net adjustment each quarter will be driven by patient insurance coverage prescriptions filled by 340 be pharmacies.
The Medicare part D coverage gap and patient co pay assistance.
As previously stated.
We anticipate that over time, our gross to net will stabilize at around 25% to 30% once we reach our expected pair mix.
Cost of sales for the three months ended June Thirtyth 2020 was 377000.
Cost of sales was low in the second quarter as the majority of the manufacturing cost related to occupy the sales were incurred prior to FDA approval industrial recorded as R&D expense.
We expect that the cost of occupied sales as a percentage of revenues will increase in future periods as fully expensed product manufactured prior to FDA approval is utilized.
It is important to point out that we believe that we have enough commercial supply box brighter.
Dane estimated patient needs into late 2021.
We continue to manufacture occupied a tablets and our production plans have not been impacted by any covered related closures or delays in our supply network.
R&D expenses for the second quarter, 2020, or 34.1 million compared with 36 million for the same period in 2019.
The decrease in R&D expenses in 2020 was primarily due to lower manufacturing costs for Oxaydo that were Expensed R&D.
Following the approval box brighter by the FDA, we now capitalized manufacturing to inventory.
The decrease in R&D expenses was partially offset by increased costs related to development a bit clock map and other preclinical research activities.
And increased employee costs.
Sales general and administrative costs for the second quarter 2020 were 49.1 million compared with 24.8 million for the same period in 2019.
The increase in X gene expenses was primarily due to increased employee related costs, including noncash stock compensation and increased professional and consulting services associated with the build out of our commercial operations and launch of Aucs brighter.
Net loss for the three months ended June Thirtyth 2020 was 52.8 million compared to 57 point Threemillion for the same period in 2019.
Basic and diluted net loss per share for three months ended June Thirtyth 2020 was 86 cents per share compared with the dollar one per share for the same period in 2019.
We ended the second quarter with a strong balance sheet and with cash cash equivalents and marketable securities a 574.2 million compared with 615.2 million at March 30, Onest 2020.
We continue to believe that our existing cash in investments along with access to the additional 75 million under our term loan facility have the potential to provide the necessary runway for us to achieve positive cash flow, while enabling ongoing advancement of clinical development programs and other earlier stage product candidates.
And we'll also highlight today that we filed a shelf registration statement with the FCC.
I want to clarify that we have no near term plans to use the shelf and this filing is purely a good housekeeping matter as our existing shelf was due to expire this month.
We remain confident that we're from a position of strength.
We will continue to execute on our plan to get Aucs brighter to patients.
With that I will now turn the call over the DJ for an update on the Aucs bridal watch.
Thank you Jeff Good afternoon, everyone I'm excited to provide another update on the launch of Aucs brighter.
We made good progress in the second quarter, minimizing cobot 19 disruption to our launch by successfully transitioning to a virtual working environment.
Prioritizing the safety of our team and the communities we serve.
I will start by providing an update on the three key metrics that combined with net revenues well give you further insights into our progress. These metrics are new prescriptions for looks brighter, which informs underlying patient demand.
The number of health care providers prescribing aucs brighter, which captures the progress we are making in adoption.
And payer coverage, which speaks to the axis environment for X brighter.
First new prescriptions, there were approximately 1000, new prescriptions works brighter during the second quarter.
This result is in line with our expectations for new prescriptions to be lower due to cobot 19.
However, we are encouraged to see but the decrease in new prescription appears to have stabilized in the second quarter, two and approximately 40% decrease from the first quarter levels. We believe the stabilization is in part due to the adoption of virtual interactions and telemedicine. It is taking place broadly across the SPD community.
This stabilization has so far continued into the third quarter and given the uncertainty with cobot 19, it's possible that this trend will continue through the rest of year.
Well, we are encouraged by our recent market research, which shows that 100% of SPD health care providers surveyed have adopted telemedicine in some form there are limitations for example.
Some positions are not comfortable starting in FCD patient on a new therapy until they have an in person office visit.
And when in person appointment as arranged our research shows that it is not uncommon in the cobot 19 environment for the patient to postpone or cancel the appointment.
With this in mind, we have a number of initiatives to support virtual interactions between healthcare providers and patients and between providers and GBT. During the second quarter. We deployed our first branded digital visual aid materials, providing about source for use in virtual engagements with health care providers and in July we launched our branded health care provider web.
Right.
On the patient side, we launched our branded direct to patient marketing campaign. This includes a variety of targeted digital communications, which will be augmented by additional camping tactics in the second half of the year.
Well, it's still early in this rollout we are encouraged at a recent patient survey indicated there's already strong interest in looks brighter with nearly three fourths of responded who were not taking aucs freida, stating that they are likely to ask their health care provider about it.
Overall, we are working to maximize our launch potential during the cobot 19, and beyond and we expect that overtime. The number of new prescriptions will further improve and surpassed pre cobot 19 levels.
Similar to the first quarter the vast majority of new prescriptions were enrollments in GP GBT source, our high touch patient support program that provides a wide range of real time, and practical support including education and financial support that's customized to each patients needs.
We're pleased that the time from prescription enrollment in GB t. source to a patient receiving medication is decreasing over time to around 15 days by the end of the second quarter. In addition, early data shows that refills are happening on time for the vast majority of patients which speaks positively about compliance.
In order to get more granular data on the patients who are being prescribed docs brighter. We conducted a review of patient charts claims and lab data importantly, our analysis of more than 1000 Oaks Friday patients showed that almost half of the patients started therapy with a baseline hemoglobin greater than eight grams per deciliter.
And more than half are on combination therapy for FCD.
Interestingly Mcbride is being broadly used in patients who are experiencing a significant rate available occlusion crisis with nearly half experience he three or more vlccs in the prior year and finally on Friday is being widely used to treat patients across all ages 12 and older. The results demonstrate that Aucs Friday is being prescribed for a broad range of.
Patients, which we believe is a positive indication of its growth potential as adoption expands.
Now I'll turn to the second metric health care provider penetration, which is driven by our ongoing engagement with physicians, we're achieving between 506 hundred customer field interactions per week with our sales team and most of these are virtual while this is below the pre cobot 19 in person levels. It does represented an improvement.
During Q2, we expect this metric to further improve over time, especially as health care providers continue to become more custom to virtual engagements.
We believe our virtual activities or having a positive impact on awareness and interest inox brighter.
And that we will be able to reach a growing number of health care providers. This way.
Our latest market research conducted in June indicates that aided awareness bucks brighter among top FCD specialists remained above 90% and overall awareness continues to increase as well. Additionally, we continue to see strong interest in aucs brighter with over 90% of position, indicating they will use aucs Friday in their practice and nearly six.
80%, indicating they plan to initiate aucs brighter within the next five months.
Since launch through June our therapeutic specialists have reached approximately 86% of our highest decile physicians and overall reach 55% of the approximately 6000 health care providers, we are targeting in the United States.
Our team has engaged our highest ethyol targets, an average of seven times and has had nearly 34600 total customer interaction since launch.
All of our launch efforts have contributed to achieving approximately 920 unique health care providers, who have written a prescription for looks brighter from launch through the end of the second quarter. This includes approximately 260, new prescribers in the second quarter during which we were limited.
Almost entirely to virtual interactions this demonstrates the interest and demand for looks brighter and the need for new treatment options for FCD patients.
When we look at the breakout of writers. We are pleased that a range of health care providers are prescribing aucs brighter around 40% of the prescriptions are being written by non specialist such as primary care physicians nurse practitioners and physician assistants, and we're pleased to continue to see that overall prescriber base is.
Writing multiple prescriptions, averaging approximately three per prescriber since launch.
Which we believe is a good indication of the experienced an overall satisfaction.
With X brighter.
Turning to payer coverage. We are ahead of schedule in reaching all targeted payers nationally and regionally and are engaging in follow up meetings setting the stage for our goal of broad coverage by the end of year consistent with our expectations at the end of the second quarter, 53% of lives were covered by payers either through published policies or medical.
Exceptions, this breaks out into 44% of commercial lives, 62% of Medicaid lives and 53% of Medicare lives, having access to X freida.
Notably we have secured fee for service Medicaid coverage in 42 states, including all 17 priority states, where approximately 85% of SPD patients lip. This is important given the influence the fee for service Medicaid plans have on the overall coverage picture in the states. This is also can.
Attributing to the ongoing growth in the number of managed Medicaid plans, covering aucs brighter either through policies or medical exception.
In terms of commercial insurers, we're pleased that United Health care commercial and pharmacy benefit manager Prime Therapeutics, which represented about about 9 million and 20 million lives respectively are now covering aucs freida with broad coverage policies consistent with labeling.
During the quarter. We also had an important win with the federal employees health benefits program, extending OCC sporadic coverage for all government employees and their families. This provides another example of the strong government coverage being established rux rider spanning Medicaid Medicare F E H B and.
The federal supply schedule that covers the veterans Affairs network through the department of Defense.
Our progress on the payer front is confirmed by our market research, which indicates that health care providers are satisfied with the access environment. We have received positive feedback on our patient support services and on the ability to obtain ox write up.
We're pleased with the progress we have made with payers and I'd like to reiterate that we continue to believe we will meet our goal of obtaining broad coverage by the end of the year.
I'll now turn the call over to Ted to provide an update on our clinical development activities and pipeline.
Thanks, Steve Jack.
As we consider the progress, we're making with the U.S. entre rock spread out and the positive impact we're having for patients a key priority for JBT has to make ox freida available to all patients living with FCD.
In June we announced our plans to expand our FDA label to include children as young as four years old.
And to secure initial a European approval trucks brighter.
For the pediatric label expansion, a U.S., we plan to submit a new drug application to the FDA.
Including a new age appropriate formulation by mid 2021.
We believe this will be an important treatment option for this patient population.
Partly because the potential to mitigate longtime organ damage and life threatening complications that can occur in adult it could do do the disease progression that starts early in life.
For Europe, we plan to submit.
Hey, marketing authorization application to the he may by mid 2021.
To treat hemolytic anemia, inpatient 12 years and older.
Currently all approved FCD therapies in Europe focus on pain. So aucs BARDA has the potential to meet a critical need.
As a reminder, the FCD community is geographically concentrated in Europe, which should allow for an efficient commercial infrastructure and launch if approved.
With respect to develop and we are beginning to resume activities related to our clinical trials.
We are working closely with our clinical trial sites on the protocols and the safety measures needed to support new patient enrollments.
Our plans remain on track to initiate a pivot cope pivotal clinical study for income App, a fully human monoclonal p. selective inhibitor in the first half of 2021.
We believe in clinical map has the potential to become.
The best in class treatment for Vlccs.
Finally, we also continue to adopt original research and our labs and in collaboration with heroes, what's the goal of developing more breakthrough therapies for SCB.
I want to thank all of our employees for the excellent work and passion they bring every day.
Im very proud of our team that has rallied in the current environment.
Shifting to a virtual workplace, while maintaining unwavering focus on getting occupied at to patients.
In closing I'd like to take a moment to address the issue of ratio injustice.
Which is finally getting the national attention that requires if we are to become the country envision by our U.S. computation.
We have too often been indifferent to failure to live up to that document.
States in its second paragraph.
We hold these troops to be self up again.
That all men are created equal.
They are in doubt by their creator.
Certain unavailable rights.
That among these are life.
Liberty and the pursuit of happiness.
The brutal murders of George flow at Briana, Taylor and I'm odd operating.
And our ongoing mass incarceration and people of color.
Our due to our failure to deal with racial and justice and exploitation.
The massive protest across our country.
In which both whites and people are color our pointedly demanding racial justice.
Our forces that have made me helpful.
We may have arrived at a tipping point.
Where all of us will demand that we realize the ideal described by our country's founders.
At JBT, we've been working on these issues since our founding.
It's part of our DNA as a company.
And who we are as people.
We are striving to live up to this ideal by changing the treatment paradigm for those but FCD.
And through our broader initiatives to address health disparities and racial and justice.
With that we'd like to open the call for questions.
Operator.
Thank you.
We will now be conducting a question that position.
Just thought please limit yourself to one question.
If we have time remaining we will take no question.
If you would like to ask a question. Please press star one any telephone keypad.
The confirmation 10 would indicate your line is into question kit.
You might play start to it if we would like term is a question for the Q.
Well participants using speaker equipment, maybe next the church, because your hentic pushing to stocky.
One moment peacefully Paul's question.
My first question is from Jim personnel, Oh, well okay.
Hi, guys Ted Thanks for that strong statement at the end and congrats on all the progress and the launch of box brighter.
Just one question for me is you know since launch you had 350 patients and for Q 16, 50 in one Q and a thousand this quarter. So roughly 3000 unique patients could you maybe speak to the disposition of those patients between pre drugs those that are being reimbursed and maybe those that you might.
We have lost a follow up I'm, just trying to get a sense of retention rate at the patients that have come on at the therapy and other being cared for.
First Jim. Thank you for the question I think all F.D.J. to give some of the centric. Although we are limited and some of the details that were sharing at this point, but DJ is the appropriate.
Hey, Jim Yeah, we're not breaking out the exact distribution or disposition of the patients what I can say is that as we said in our prepared comments, we have seen the vast majority of the patients have good compliance and true as measured by refills. So refills are happening on time for the vast majority of patients, which we think bodes well for the law.
Long term compliance although it is early or you know for a lot of lot of the patients. The second thing I'd just remind you about is.
Some patients are in process. So some from Q1 were pulled through in Q2. It takes a certain amount of time, depending on the payer to Poland through in some in Q2 will be pulled through in Q3 in terms of actual again, if the shipment of the drugs. So.
So some are in process during that process. There's some that are lost a follow up or abandonment and when we look at kind of the marketplace. A common abandonment rate for the industry is around 15%. So we would expect to be consistent with the industry on hat, losing some to follow up through the process and that with cobot.
Hi team, we'll see if that impacts that you know its people are very busy and focused on on a lot of things right now so.
So there's going to be some folks at and and when I say abandonment that doesn't mean forever. Some may abandoned forever. So I may just abandoned for a few weeks or a few months why they.
Work on other things so so we're watching that closely.
So those are a couple of things I think that help and then of course, we've always said that we have a really comprehensive free drug program to help act as a safety net as we work through the payer process with folks. So there's gonna be a certain percent of patients that will go on the free drug program. Although I will say that we have been very successful we think in getting patients through the payer process whether it through.
Formulary acceptance or through the medical exceptions, those are going very well. So so we're getting plenty pay for as well hope that helps.
Our next question from any Cho of Pinto.
Hey, guys. Thanks for taking my question Congrats on the very good quarter and Ted Firstly I think if that's come at the end I truly appreciate them. Thanks for being a leader so about the lots and just curious about when you do find you never session to are cautious.
You know kind of how those conversations go like what's their first back what's kind of ever thought on have does have some of those positions potentially started to come around as they have had early experiences thing.
I lead you. Thank you for joining the calling for for being a supporter of of our company and what we're trying to do.
No actually yeah, I'll ask DJ to add some more commentary, but I would say overall.
We have not gotten a lot of pushback.
In general what we're saying is that.
The patients once they know about the drug and they hear about the drug to their networks are excited about the drug in patients who get on it or are generally saying that they can tell a difference on the drug very quickly and that makes them excited about remaining on the drug and encouraging their friends and colleagues in sickle cell to.
On the drug.
Oh, we have of course main physicians.
Focus on patients with lower hemoglobin first and that kind of makes sense.
Even to me, but I think ultimately over time that is going to change. So all that I will say, even now physicians are using the drug in a broad group of patients as DJ referenced.
Irrespective of hemoglobin and irrespective of the LP history, because they understand that the drug is really going after.
The fundamental molecular base of disease. So segmenting patients ultimately lot doesn't make a lot does make a lot offense, but as a place you might start low hemoglobin does intuitive to make some sense, but you Jay maybe you can elaborate more on pushbacks that they think that your hair sure maybe just one comment Ted.
I think back to my consumer behavior courses in the in college marketing and they said the on average you need to talk to any consumer seven times before they'll make it a buy decision and you know I'm patients and physicians are no different. So it's a distribution you know the early adopters 'em, we didn't need to meet with it all they were ready to start OCC spread it right out of the gate, we saw that in Q4.
As of last year.
But the vast majority of folks.
So I need to be.
Educated four times and really understand the drug suddenly 10 times and so we're right in the middle of that process of of educating folks as many times as possible, we're getting to a now that we've been out for a few quarters, you're seeing more and more physicians come onboard I mean, we're almost at a thousand unique prescribers and even during cobot 19, when there was a lot of conservatism upfront about.
About how to how to operationalize in this environment, we still got new prescribers. So that tells me. The education is working the team is really optimized now with a lot of new digital tools to do more education going forward and the second half of this year. So we feel really good about that.
But but yeah, it's just going through that process of educating as Ted said, we're not getting a lot of pushback from people that don't want to be educated Aucs freida. It's quite the opposite people are quite interested in being educated but some of them require multiple visits before they are ready to make a decision.
Our next question is from it since nature of Guggenheim partners.
I have one let me add my congratulation on a great quarter as well, maybe if you could just for light and little bit more color I know you've I just mentioned about the stabilization could you perhaps help us understand.
All the months have programs you know what are you seeing and month over month uptake.
Patients start in Q2, and how those trend might be holding up in July on into August and then you know would have got for the 3000 patients.
Our 3000, new patient starts is it fair to assume that the vast majority are on the drug that's at the end up.
Q2, given that takes only about two weeks.
New patient starts so.
Basically anybody who has added before to last in the last two weeks should be under frog and then one quick one for Jeff if he can comment on the inventory level, where they are in Q1 Q2 say thanks.
Thanks, John Oliver DJ to comment on the first.
Half of your questions and then Jeff will talk about the inventory.
Yes, so in terms of the process and I just want to be be clear about the new patient starts <unk>. The number that I think Jim referred to about a 3000, new prescriptions that we've announced those are not new patient starts those are enrollments and unique prescription so.
As we've stated many of those are either in processor. Some can be in process. Some can be going on free drug some can be lost a follow up so.
The the number of patients that start drug will always be lower than whatever number we give for enrollment. So that's just one clarifying point and then I'm I'm sorry, we back on point what was your first question that you had gotten for me. He was off asking about kind of the ramp more weekly and monthly yeah, and so that's an.
Interesting one you know at the end well at the time, we had our Q1 call. We were very helpful. Right that shelter in place efforts were being lifted at that time recall and that there was you know there was some hope and some light that maybe we were getting past cobot in some of the markets, where there's a lot of sickle cell.
Patients. So we were very helpful. At the time and I think we even communicated that we started to see some recovery on the enrollments as well. However, Unfortunately this has not been the case as Q2 continued what we saw was that there there was kind of a resurgence of cobot infections in those states that had decreases in kogut infection.
It's actually had reversed course and saw increases again, so from that point of view, what we've seen I'm kind of carry forward. I think is Q2 is probably a good proxy for what we're seeing going forward into Q3, thus far I'm in terms of.
In terms of enrollments and in terms of the amount of patients will be able to get into see positions in any given a week or any every get any given quarter.
Given the impact of Cobi in the country right now.
Jeff did you have anything to add to that no no I think that's spot on of course, we did see that one immediate drop we talk from the peak just prior to the pandemic being announced to the trough words about 60% and as we noted in our discussions earlier that it sort of averaged out at about 40% decrease and so.
D.J. said I think Q2 as a good proxy for what we might see in Q3.
And then just adding to your discussion or your question on inventory levels yachting.
Inventory levels held at the at the various distributors was very consistent with what we had in the first quarter. So really come an apples to apples perspective, you're looking at the same inventory hold.
Our next question is from beyond Oh.
Oh wait for security.
Thank you for taking my question, Ted we need you to running for President this year.
[laughter] Liana.
[laughter] my questions for Jess.
Can you remind us how you book sales and how long.
The manufactured product pre approval is going to be you step.
Sure. So we book sales, we record revenue when we shipped from our warehouse to the specialty pharmacy or the specialty distributor.
So when they order and it lives at their door step is when we recognize revenue.
And for the question on how long are sort of R&D expense inventory is going to last we expect that to a probably continue into late this year probably into the late fourth quarter before we exhaust that supply. So we gross margins will be.
Unusually high until we get through that entire pre.
Approval inventory now.
Next question is from reaches Lowe of Cowen.
Hi, guys. This is my line parents here. Thank you for taking the question and congratulations on that.
I was wondering if you could you clarify that.
Trends you're seeing.
Regional prescription I know that you mentioned that you're watching the south in Texas in California, but she does region Jefferies that.
Thanks.
Substantial hits more accident and how does this relate to the key.
Thank you.
<unk>.
Yes.
Thank you.
Yeah, I mean, DJ may want to add more <unk>, we really haven't spent a lot of time looking at it that way, we mostly focused on.
The big picture, because as you break it into smaller and smaller groups you do just can't inherently more variability, but but like I was just put a really simple point on this and maybe have DJ perhaps more color but.
I think our biggest obstacle right now.
Is something that we're all facing.
My wife wants me to go from my General Checkup, and I'm, saying no matter, how bother I'm not sick I'm not going to go in and risk getting covet.
And a lot of people are not going to their Dennis and not gone in their doctor right now in sickle cell patients given their risk there even more terrified.
And that is coupled with the fact that while some physicians.
Our comfortable prescribing ox brighter through virtual interaction with that patient some or not so we're doing the best we can to try to get physicians comfortable.
But we really don't.
We expect sickle cell patients just start running into the doctor's offices until the environment are safer and I think nationally right now there's concern about povich, whether in Florida, or whether in California, or whether in Alabama, I think there's concern about exposure I think sickle cell patients.
Our appropriately very maybe double the concerned about that but DJ out maybe you want to add more than I know, there's not much more to add to that's exactly right. It's in it so fluid. It's a it's changing week by week geography by geography, just based on infection reports and that sort of thing but to Ted's earlier point you know on June 25th.
The CDC put out because they are expanded list of at risk populations and of the seven at risk populations for cobot of increased risk sickle cell disease patients were right there in the middle so.
Things like that caused folks to be a little more cautious in this environment, So and that's pretty much true in any any geography.
Our next question is from culturally of Goldman Sachs.
Oh, Thank you for taking my questions and and thank you Ted front for your comments earlier as well.
I want to maybe get if you could get a clarification on the on the refill rates and maybe from TJ. Perhaps did you mean by that by we felt that these are bottles being shipped out the door or in our prescriptions being renewed given that most patients I believe I have a 90 day supply and then just on the on the 40% try.
Off here that you talked about earlier.
If that sort of the baseline assumption for the second half of the are just some clarification on that would be helpful. Thank you.
The last answer the first one and then maybe just to help second as well so refill rates. Yeah. Those are bottles shipped so we're really counting you know our people getting their bottles shipped.
Shipped on time, and so if they have a three month prescription every 30 days, there's a contact between the patient and the GBP source solutions to set up their next shipment of their bottle and those are the vast majority of patients are happening on time, which is gives us hope that were havent really good compliance.
But in terms of a 40% decrease from Q1 I think I think we're confident in saying that that's at this stage of the game until we see some improvements in cobot, which hopefully are around the corner, but that's probably a good proxy for Q3 at least so far it has been for us.
Thanks, Paul.
Our next question is from Ericsson of Morgan Stanley.
Great. Good afternoon. Thanks for taking the question. Thanks for your your comments earlier, Yeah, I had one I guess for you.
Just wanted to ask about conversion.
These fee for service contracts into.
Long term.
Contracts or commercial contracts and sort of how the cadence of that is going and what sort of feedback you're getting as you're you're working through that process. Thanks.
Thank you Matt did you I think what he's asking about is fee for service and how that relates to the the non fee for service Medicare patients sure. Yeah. The managed Medicaid yeah, yeah. Thanks, Matthew So as we stated in our prepared comments, it's going very very well with the fee for service Medicaid.
It's particularly in the 17 states, where 85% of the sickle cell patients reside all 17 states are covering patients now through their fee for service centralized Medicaid either through a published formulary or through medical exception in other words, they're paying for patients as we get them through the process with our hub.
And so that's gone very well.
We also mentioned that this is important because the fee for services have great influence given that it's a centrally run the formulary is done by the state. They often you back in some states. They mandate that the managed Medicaid formulary is can't be any more restrictive than the fee for service Medicaid formulary, that's why that fee for services so influential.
And so we're having good progress getting patients through on managed Medicaid as well in those 17 states because of that success, we're having with a fee for service, even though much in some states. Most patients go through managed Medicaid the fee for service is really important so we've really focused on that early.
There is no contracting going on in terms of you know any supplemental kind of contract and that sort of thing that were that we're focused on we obviously.
Our participating in the mandated discounts to that to the government and so that's all gone very smoothly.
Thanks, Yes.
Our next question is from Mark Breidenbach of Oppenheimer.
Hey, guys congrats on a very impressive quarter, despite a less than ideal conditions.
Maybe two part question for me first of all I really appreciate you did a review of chart and claims and lab data and I'm wondering if we can expect to see an analysis of real world patient demographics and outcomes presented at any upcoming medical conferences and second part my question really it's unrelated.
But I'm wondering if you've seen any evidence of a rebound effect either in the real world setting or in your clinical trials with increased Nielsen's income since you discontinue ups, Florida, which has been a a hypothetical concern for certain classes of drugs like PPR activators. Thanks for taking my questions.
Okay. Thanks Mark.
Why don't I throw out with the with their passion about rebound. So last year, we actually had a couple of very important abstracts on this question and the data, we're actually quite striking and quite encouraging number one the data showed that the higher your.
Hemoglobin Roes on occupied at.
The lower your VLP rate was so it was actually the antithesis of the concern about viscosity going up.
And that probably because it's not viscosity, which is the issue with the polymer rising red cells that are causing the problem and so as the hemoglobin was going up it was going up because the red cells were being protected from a destructive nature of sickle cell disease.
In addition.
To the question about.
Stopping aucs right up there was also.
And analysis done of all the data we've ever accrued for patients stopping either aucs brighter or placebo in placebo controlled studies and what that data showed was in fact the rate of Yossi observed over 30 days with higher in the placebo group than in the off.
Credit grip.
So what that probably suggest is that the.
Trend that we have seen.
Of occupied a decreasing vlccs.
May still be protecting these patients for a period as they come off of ops Freida, that's probably the more rational hypothesis than this rebound hypothesis. So the data has been a positive for lower vo fees as your hemoglobin goes higher on a Friday and it's been positive.
For stopping OCC spread versus placebo.
There was a question about real world data coming over and real World data.
So we are this is the kind of data that we will be looking to get overtime and we'll be making public. We obviously don't know what abstracts will have at ash this year yet.
But that is the exact kinda data.
From real World experience that we want to we want to gather and make public.
Our next question is from Matthew Hope of JP Morgan.
Hey, guys. Thanks for taking my question on a congrats on the quarter I'm, just wondering if you're able to give us a sense of how much overlap there. It's between commercial patients that have hemoglobin levels greater than eight grams per deciliter and ones that experienced three I'm more the seeds.
Basically what I'm trying to understand is whether doctors I prescribing indiscriminately hemoglobin levels are fast [laughter]. Some types of patients. In addition, other ones are smoking by the level that doctors are targeting.
Yeah, I think it's pretty indiscriminate, but the.
The data that are that the DJ may want to reference you may want to even put some numbers in there, but fundamentally they're on a lot of physical calculations with very high hemoglobin levels. So you are going to gravitate toward eight but my recollection. When I look at the data Matt is that there is a very large.
A percentage of patients I think at least a quarter of the patients who have hemoglobins above eight half. So this notion that it's only the patients with hemoglobin that are very low oneoks credit that's absolutely untrue.
And it doesn't even make sense ultimately because if you think about.
HIV for example would you want to only treat the people with the highest viral load or would you want to treat people and keep their viral load from becoming bad it's kind of true here why let people's bone marrow die to the point, where their hemoglobins are very low to begin therapy. So I think ultimately while physicians.
They gravitate to the patients that they perceive as having the greatest need long term division there has to be protect people from Oregon loss as opposed to intervene after organ loss, but did you have enough you want to add any more specific but I do think it's quite a sizeable percentage of people that are already being.
He brought into.
Our proprietary what hemoglobins above eight and even even NAV.
Yes to that to that to that point, that's exactly right. One of our largest groups of patients that have started as we look at again. These are claims data with over 1000 or spread to patients.
One of the largest categories are 8.1 hemoglobin, a 9.5 and so it's you know clearly above eight and obviously still anemic and so physicians feel comfortable initiating aucs freida, there and so and of course, we've just scratched the surface a lot of patients in that group in particular that.
Still be treated and then to answer the question Matt.
If I if I hear a credit correctly, I think you're exactly right I mean.
Our claims data it showed that an interesting finding a more be off season, the occupied a patient than that make sense right if you're a.
Sicker patient or more advanced patient, perhaps you have more beyond these perhaps your physician, though it does tend to be a patients that we found that had lower hemoglobins as well and so lower hemoglobins higher vlccs seemed to seem to go together with some of the early use of box right and we are seeing positions Ah but patients.
On a deck the out and whats Bretaa and I think in the case of high the fees quite frankly that probably makes a lot of fence.
To try to intervene with something that works immediately on Vlccs as opposed to what is likely going on with Fox Bretaa, where there's a effect over time.
Due to.
Allowing the inflammation to resolve would resolution are diminishing of him out of office.
Our next question I, some Jason good theory of Bank of America.
Hi, Thanks for taking my questions.
Question on the payer front I'm just wonder if you can compare your commercial coverage I think to Novartis is close to 85% of commercial plan coverage for it backfill and are you seeing.
I can use with ER Doc CEO and is there any payer pushback the utilization of the two proprietary combination therapies.
Well I'll start kind of with the high level and then B D. Joe will fill in some details, but the drugs are indicated for different.
Different purposes.
And that's actually been a real I think strategic advantage.
Not only for us and Novartis, but I think it's a it's strategic advantage of the patient so one drug as indicated to treat vlccs.
The other drug as indicated to treat the fundamental nature of.
The disease or the anemia, homologous, which every patient suffers from.
So we pushed back really hard on somebody who is limiting our drug.
Because of the L.C. history, one way or the other would be healthy is quite frankly, not in our indication statement. It isn't the ADAC Theo statement and that's why I know we have seen some patients be started on both drugs and payers have paid for that because.
Yeah, they pay for two drugs and CF they pay for sure drugs in myeloma or sometimes four or five drugs. They pay for a lot of drugs in combination in HIV, it's really the norm or to have multiple drugs and chronic this life threatening diseases.
Yeah, I'll just add a couple of comments to that Jason So it tends exactly right big differences between the drugs indication Wise administration wise location wise were outpatient there in patient and payer wise right does with the part B benefit and went through part D., so very different kind of.
Processes and everything around these products are hard to compare them, we're very happy with our payer environment to be at over 50% coverage halfway through the year is exactly where we want to be to reach our goal of broad coverage by the end of this year and most important for us is making for the government payers are online and and the government payers through Medicaid Medicare the feds.
So supply schedule all of that is going very very well.
So we feel like we're in good shape there.
And he was asking about.
Breaking out.
By payer, but I don't think we've done that but I would say that we've done well in every segment of payer Yeah. I mentioned in my prepared comments that were up 44% of commercial lives recovered.
Which again, we're happy with where we're out there where we know the commercial lives are just.
You know a matter time as they go through their process and we do the update so we feel good about that.
Next question is when did you just okay I'll HP one right.
Good afternoon, and thanks for taking the questions. Its a couple if I may.
One our pairs of physicians acquiring a follow up lot desktop to say three months for continued prescription and if docs are focused on a threshold of hemoglobin increase or is it really being detected by improvements in fatigue et cetera from a patient perspective, where you without quantifying mcburney definitely to increase.
Hemoglobin, you would you should feel lot better and the second question is primarily from European commercial infrastructure build when do you plan to start that NFS, especially if you're going into low on in a very concentrated market. Thanks. So much.
Thanks Debbie.
DJ you May DJ or our Jeff may want to comment on on Europe, but I'll, let me start out with the checking hemoglobin levels after starting therapy, many physicians like to do it.
And and and and as a physician I used to like to do this kind of south as well, but but but but one of things I've heard now from a number of physicians is that the patients feel better often time, even before the hemoglobin goes up.
And the patients tell us that.
And I've also heard from positions that they've had patients where the hemoglobin actually didn't go up very much but the patient is dramatically different in terms of their quality of life and what they can do with their lives in terms of exertion going back to work et cetera, So and.
And actually if what I predicted scientific link.
Because hemoglobin going up is simply one way that enter interrupting plumbers I should help you. There are many ways that that should help you. One is that all the energy that use man on making red cells only to destroy them can be recovered and that's a lot of energy when you think.
About the number of red cells, we make.
I, giving us an analogy and I'll give it here again, if you formed a lot. If you lined up every red cell coming out of a normal bone marrow. It would form of growing line and the line we'd be growing at 15 miles per hour.
Sickle cell patients is.
Producing red cells at the rate of 150 miles per hour. So you recover.
Some.
Of that energy and you can use that energy for a lot of things even without your hemoglobin going up the other problem in six out of the is that the red cells can not physically get through capillaries because they have this rigid polymer inside it and so they're not really for mobile and even if you have a red cell.
That has plenty of oxygen in it and it can't get through a capillary it can't deliver oxygen and if you can take some of that polymer load out then you could allow the red cell to actually function and then finally I would add that hi think personally the left shifting in sickle cell disease is enormous.
Problem and the analogy I get it people, it's like a it would be like a train.
Car without sideboards, the cargo would fall off and that's why we have hemoglobin affinity so that hemoglobin.
Can hold onto the oxygen wow, the red cells traverse into the deeper tissues and then at those deeper tissues. The oxygen stripping mechanism strip the hemoglobin off but if you don't have much affinity of hemoglobin that the oxygen just falls off and when the red cells get there they don't have much options.
That's a long winded answer, but the truth I mean this exactly why there is not going to be a perfect correlation between hemoglobin and clinical benefit.
With the drug and we've seen that over and over all game clinically, although I definitely think the hemoglobin going up is good it is not required by the label and that's one of the things that we're trying to train physicians is that you don't need to practice medicine that way you don't need to get a hemoglobin pre and post treatment you can't if you want.
But it fit in pairs you from being able to treat your patience drink Cove. It it's not clear to your during the patient a big service.
Yeah, just regarding Europe. So we've been obviously, we've announced that we plan to file next year in Europe in the first half of the year. So we don't want to get ahead of ourselves in Europe, but we have started the process certainly a lot of planning for Europe.
As you May know that in Germany, you can generate large pretty quickly after approval. So we started the timelines and all the planning that's associated with that and have begun some of our preliminary hiring of key roles in Europe to part to help us with all about planning, but obviously we are.
We want to file first in and get the drug to patients as we build out but had also mentioned in his prepared comments that it's a very targeted.
Patient population. So we think our infrastructure can be pretty tight there and make a big difference with few people.
Our next question from right you push that accordingly.
Thanks for taking my question and Ted again, thanks for the the comments I'm, hoping to hear a lot more earnings calls with with comments like that.
<unk>.
I'm just a quick question on your the highest if a physician did you guys have spoken with seems like you've hit most of them already 56% of them.
What's been kind of the the profile patients that they put on and what the pushback from those positions and no updated data coming up potentially in the fourth quarter Alright axis you from the hope trial is there anything from that data set that maybe we can glean to address some of.
The questions you've been getting from from this position. Thanks.
Hi, Thanks for the question the.
Hi push back is not really a term I think we've been getting a lot of ER and as I. As we said earlier I think the biggest challenge for US has been that maybe the push back is that physician many times like to see the patient.
Before before prescribing, a new drug and Cove. It is making many of these patients.
Not show up for their appointments and so that if you want to if you want to use the term pushed back that's probably the biggest pushback I. We're facing of course that should be relieved as cove. It gets better but that also might be enhanced by the physician realizing that there's nothing in our label.
From the FDA that recommends checking any blood tests.
Thanks, Brad you don't need to following the liver enzymes.
You don't need to follow hemoglobin.
There's no reason to really focus on that.
So overtime I think the Cove. It you know I pushed back will resolve.
But I think also overtime physicians will become more and more comfortable not trying to.
Hi, ops brighter two hemoglobin level, so tightly because it's become increasingly clear that if the hemoglobin doesn't go up and the patient says I'm dramatically better would you really want to stop the drug in that patient you you won't.
So that may mean that getting the hemoglobin at the baseline.
Isn't gonna supplanted discussion with the patient any in anyway.
Yeah.
Uh-huh Krishna Gioconda style of hypothetical.
Hi, This is Charles I for Joe Thanks for taking your questions I wanted to ask a follow up question answered earlier comments about prescriber mix can you provide any additional detailing how prescription levels differing relative terms among sickle cell specialist versus non specialist.
Versus mid level prescribers or maybe what the different thing relative opportunity is between those groups and maybe as a corollary, how do sales interaction differ between advance versus let's invest prescribers.
If at all and what differences are there any willingness to prescribe or the buying required between those groups if any.
That's been about five question [laughter] yeah. Thank you. Thanks, Charles [laughter]. So so in terms of to give you a little background, we call in about 6000 health care providers that see sickle cell patients in the U.S. about half of those are specialists about half of those are primary care primary care can be any.
I think from a PCP to a nurse practitioner physician assistants to pediatrician specialists, primarily in sickle cell disease, our hematologist and to a smaller extent pediatric hematologist, which of course will become more and more important as we.
Get approvals in younger and younger patients.
But that the the largest group of prescription ER prescriptions, we've had so far or enrollments have been from the hematologist specialty and they make up it depends it changes week by week, but anywhere from you know.
40% and if you add in that the small percentage of pediatric hematologist that have some adolescents that are using aucs brighter you know maybe as high 65% in a given week of enrollments or given month can be from that category. The rest 35% to 40%. Our non specialists really these are the primary care docs that we call on the.
So the nurse practitioners and physicians assistant that see a lot of patients and so that group is very important to us as well now you're right that the specialists do have higher volumes and so we do tend to spend more time with the specialists they tend to be higher desks aisle as we say internally, we dial our physicians and those with more patience and.
And and more influence and you know involved in studies and whatnot, we're going to make sure that we're calling on them more times and so that's why we've had a higher penetration or.
Engagement rate that we talked about with with the specialists and then with the overall population. So that's because we're prioritizing that group in the first half of the launch.
Doesn't mean that the a the rest of the folks aren't important it's just that they have less patience and and to be honest they tend to take a little bit longer and want to follow the specialists.
And get insights from the specialists for so makes sense for us to do it that way. So that's what we're doing PREIT work that we built our teams to call on both and so like I said, our reach allows us to do that so we're calling on all top prescribers of sickle cell patients in our geographies in the country with the team we havent.
Place now.
So that will continue to grow over time in terms of number of prescribers.
That is over time, we have today I would like tend to go back to take for closing comments.
Thank you and I just want to thank everybody for joining the call today.
We want I wish you all.
Hello, and staying safe.
Also in let everyone know please reach out to Stephanie Yeah. If you have any additional questions. Thanks again.
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