Q2 2020 OptiNose Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to have Tonight's Kiichi 2020 earnings calls at this time all participants are no listen only mode. Later, we look at that day question answer session and instructions will follow at that time, if anyone should require assistance. During the conference. Please press Star then zero undertaking.
Joe and telephone as a reminder, this conference call is being recorded I would now that's kinda compressed over to your host Mr., John didn't really VP of Investor Relations.
Good morning, and thank you for joining us today as we review opt in over the second quarter 2020 performance in our plans for the year ahead I'm joined today by our CEO, Peter Millar, our President and Chief operating Officer running off road, our Chief Commercial Officer Nickel Valley, and our CFO Keith Goldan.
Besides it will be presented on this call can be viewed on our website opt in those dot com and the investors section.
We start I would like to remind you that our discussions during this conference call will include forward looking statements. All statements that are not historical back by identified as forward looking statements forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated by such statements.
Additional information regarding these factors and forward looking statements as discussed under the cautionary note on forward looking statements section of the earnings release that we issued today as well as under the risk factor section and elsewhere in the top knows his most recent form 10-K and form 10-Q that are filed with the FCC and available at their website SCC dot Gov and on our website it out to knows.
Dot Com you are cautioned not to place undue reliance on forward looking statements forward looking statements. During this conference call speak only as of the original date of this call or any earlier date indicated in such statement and we undertake no obligation to update or revise any of these statements.
I will now make prepared remarks, and then we will move to a question and answer session with that I will now turn the call over to Peter Millar Theater.
Thanks, very much Jonathan good morning, everybody.
We appreciate you joining us for a second quarter update.
To start I would like to commend and thank everybody in the off and his team for the outstanding job. This quarter, we moved rapidly to adapt our business to an environment reshaped by the Corona buyers pandemic and continued to drive drive the growth of expanse.
While there will likely be continuing challenges related to covert 19. Our performance. This quarter continues to reinforce my belief that this team is well underway to delivering on the promise of expanse and I feel stronger than ever about our ability to build a very successful business.
Starting on slide three.
Well go into more detail the moment, but I'd like to start by providing five key takeaways from today's presentation first we believe its hands demonstrated remarkably resiliency as we successfully adapted our cold in our business to the cobot 19 environment.
His hands prescription volume continued to grow in the second quarter, which was impressive given the major disruptions to patient volumes and care pathways total prescriptions grew 84% year over year end quarter over quarter prescriptions grew 11% and we continue to see growth in July.
For context based on third party data we believed in the first 68 weeks of the quarter physician office has experienced a 50% to 75% decrease in patient visits compared to pre cobot 19 norms and based on interactions with our field force and customers. We believe NTN allergy practices were similarly impacted.
As public health restrictions began to lift in late may patient visits to Eattwenty analogy physician offices began to improve but we estimate that the visits continue to be below pre cobot 19, baseline, though with substantial regional variation.
In a few moments I'll discuss more about what we did do adapt and how we will continue to achieve expense growth moving forward in this environment.
Second we recently announced a co promotion with collateral we're excited to partner with clay will leverage the strong relationships. They have built with physicians and our target audience.
Well it will promote expands to an agreed upon audience of office based healthcare professionals rapidly increasing both promotional reach and frequency for expense.
The co promote audience is large including nearly 6000 prescribers that half of whom are incremental to the current often those called on universe.
We expect Kaleo sales representatives to train in third quarter 2020 inch commence in person detailing Buck tober first.
We've been impressed with the management team and business results. The clay was produced and look forward to a strong partnership that we believe in a meaningful impact on expense adoption.
Third we're very encouraged by the significant growth in his hands market share that was achieved in the second quarter environment, our strongest share growth ever and believe this is indicative of resilient demand for its hands compared to the market as a whole.
Importantly, there still remains enormous headroom for additional growth.
Fourth despite the challenges of the cobot environment, we're maintaining our financial guidance for operating expenses and for increasing his hands net revenue per prescription for the remainder of 2020. In addition, we continue to expect initial results from the chronic sinusitis clinical development developmental program in the second half of 2021, which at par.
As it is we believe will be a major driver of value for the company.
And fifth we have a strong balance sheet with 125 million of cash as of June thirtyth.
We believe that our existing cash plus additional funds that may be available under our debt facility with Farmacon could fund operations until we have topline data from at least one of the CS trials expected in second half of 2021.
Turning to slide five.
Turning to our results I'd like to begin with market share as we believe it is the best way to illustrate the resiliency and disproportionate market demand for expense through the second quarter 2020 environment.
Corporate 19 challenged us to build new customer engagement capabilities and to revisit and refresh our commercial strategy in ways that we believe that position us to emerge from the initial phase of the pandemic with renewed brand and organizational strength.
From a promotional perspective during the second quarter of 2020, we learned how to interact remotely when necessary.
Operating digital tools were appropriate with physicians on our target audience.
This is important because we expect to leverage this keep this capability even after the current pandemic is resolved.
Importantly, our success with these tools increases our confidence that our business can continue to be resilient in the event a future disruptions.
Though broadly reduce patient flow creates a challenge. We also believe the kobin related disruptions in patient flow and pathways for patient care, including an increasing number of doctor visits via Tele health and delays and elective surgery creates opportunity.
Because expanse can help physicians manage patients in remote were delayed care scenarios.
To facilitate this during the initial months of the pandemic, we launched the assist program.
Yes. This program offered $0 patient out of pockets for the first three for the first three films as well as support through a hub for new commercially insured patients.
We closed the US is program to new patients at the end of June and returned to our previously successful co pay support programs.
We've received great feedback from physicians regarding the support we rapidly stepped up to provide to patients as the pandemic started.
We look forward to emerging from the early phases of the crisis and seeing the steadily growing recognition of the benefit of expanse in general and particularly as a bridge during care disruptions helped position expanse for continued growth.
Slide five illustrates this market disproportionate strength of expense during the second quarter as reflected in share share as Rick is expressed as a proportion of all internally as was international steroid prescriptions written by the physicians in our target physician audience, you can see that share increase from 2.2% insect.
Quarter of 2019% to 5.6% in second quarter of 2020.
But what I would especially like to draw your attention to the sequential increase from first quarter to second quarter 2020, as you can see in the face of the unusual circumstances in our responses during the second quarter enhanced share grew almost two full points over the first quarter the strongest incremental growth we've achieved since launch.
As patient volumes hopefully continue to return we're focused on sustaining and continuing to build off this space.
Turning to slide six.
In second quarter, 2020, and were 18700, new prescriptions for expanse, a 20% increase in new prescriptions compared to second quarter 2019.
The koeppen 19 related collapse in patient flow. This year had an impact on new treatment initiation early in the quarter.
And following that reset new prescriptions returned to a strong growth trend and in recent weeks are approaching the prior all time highs that were set in the first quarter of 2020.
Refills supported by remind program is managed by our preferred pharmacy network partners and we believe reflective of patient outcomes producing persistence. After initiation are a major contributor to the resilience of expense.
And second quarter 2020, there were 43800 refill prescriptions of expanse, a 139% increase compared to second quarter 2019.
This increase reflects a continued trend we've seen over the past 18 months in the number of prescription fills per patient per year within our preferred pharmacy network, where we can assess this using de identified patient level data.
This number has steadily grown from three a year ago to more than four in recent months. This trend is very encouraging and we believe is reflective of patient feedback.
We have new patient survey data reinforcing previous survey data that suggest a strong majority of patients previously using other nasal steroids experienced symptom improvement with expanse prefer against other treatments and our net promoters of the product.
Turning to slide seven.
Potent the new and refill prescriptions together the total number of his hands prescriptions in the second quarter of 2020 was approximately 62500. This represents 84% growth over the second quarter of 2019.
But really stands out as help how strong the year over year in quarter over quarter performances were for total and new prescriptions given the significant declines in nine as market volumes that were driven by the coven 19 pandemic.
These gains coupled with the minus market decline translated into the strong market share growth I covered a moment ago.
Turning to slide eight.
Breadth and depth of prescribing as measured by the total number of physicians with patients filling expanse prescriptions increased over prior year. Despite the substantial decrease in patient flows that we discussed earlier regarding breadth in second quarter 2020, approximately 6209 physicians had a patient fill at least one prescription of expanse.
The increase of 40% compared to second quarter of 2019 regarding depth. The number of physicians, who had more than 15 expanse prescriptions filled by their patients in the quarter is growing even faster with that number increasing by 97% from second quarter 2019 second quarter 2020, with now more than 1000 physicians in this segment.
Well the strong growth trend in breadth and depth was blunted quarter over quarter. During this spring. We believe that is patient volumes recover from the dramatic decline and second second quarter, we will see a return to sequential growth in both breadth and depth.
We believe the sustained trend of growth here illustrates again, the resilience of expanse and long term potential as we see even the cobot 19 environment as an increasing number of cold on physicians became full scale adopters.
Growing the size of this group remains a strategic priority for the company and as a significant focus of our commercial team.
In a few moments I'll provide some closing remarks, but I'll first turn the call over to our CFO Keith Goldan for comments regarding our second quarter 2020 results and perspectives regarding our corporate guidance.
Thank you Peter and thank you everybody joining today.
Turning to slide 10.
As we reported upturn as recognized $10.3 million Bucks, hence net revenue in the second quarter of 2020.
As noted on prior calls one of the metrics that we track is expense average net revenue per prescription, which is calculated by dividing net revenue for the quarter by the estimated number of expense prescriptions dispensed during the quarter.
We continue to believe this is useful metric to evaluate net revenues generated per prescription. However, we remind you that this metric is subject to variability.
The variability as result of factors that do not necessarily reflect a change in the price that is paid for an individual unit of expense, including ordering patterns and the inventory levels for wholesale customers and pharmacies that we sell to directly.
Utilization rates of patient affordability programs.
The proportion of patients quite extends through an insurance benefit and other factors.
Based on available prescription data purchased from third parties and also on data we received directly from our preferred pharmacy network.
Expanse average net revenue per prescription for the second quarter of 2020 was $164, a nearly $40 increase compared to $126 in the first quarter of 2020 and consistent with the expectation of improvement.
For the remainder of 2020 that we previously communicated.
Moving to slide 11.
This morning, we are maintaining all aspects of our previous corporate guidance.
First we expect do we expect that expense net revenue per prescription, we'll continue to improve through the remainder of 2020.
The major factors that influence our gross to net deductions have not experienced structural changes relative to where they stood in 2019.
Overall market access, which drives rebates as generally consistent.
And the terms of our base co pay assistance program are unchanged.
In addition, the end of the short term assist program.
Which we believe supported our accelerated share growth through the disruption associated with Coca 19.
Should also contribute to improvement in the second half of Twentytwenty.
Second for the full year 2020, we expect total operating expenses to be in the range from $131 million to $136 million.
Of which approximately $11 million is expected to be non cash stock based compensation.
Total operating expenses, excluding stock based compensation are therefore expected to be in the range of $120 million to $125 million.
Finally, we got our clinical trials evaluating X hands as a potential treatment for chronic sinusitis.
While ongoing changes in worldwide Coburn 19 restrictions remain fluid and add some uncertainty we continue to expect topline results from both trials in the second half of 2021.
I'll now turn the call back over to Peter to give some closing remarks.
Remarks, Peter Thanks, Keith.
Turning to slide 13 before opening the call for Couponing I'll take a moment to discuss the European 019 program that we announced at the end of June.
We've initiated this new program to take advantage, our proprietary of our proprietary nasal exhibition delivery system to enable delivery of an and aseptic to broad surface areas throughout the names of cavity.
The active ingredient of the broad spectrum and aseptic formulation. We are developing has been shown in third party studies to kill the virus that causes cobot 19 in vitro, but being able to coat the entire high end deep surfaces of the nasal cavity has historically been a major challenge we believe our Mds technology is uniquely suited to solve that problem in ways.
Standard approaches like nasal sprays do not.
Kobin is caused by our respiratory virus that often infected people through the upper Airways, which is why we use masks and social distancing should reduce transmission.
Our EPS drug delivery technology is ideally suited to spread medicine throughout deep areas of the nasal cavity with the covert virus appears to be multiplying and shedding. So we think this has potential to be a winning combination.
Because the plan components of this drug device combination product candidate include both the active drug end delivery device are currently commercial available in the US we expect streamlined and accelerated development.
We expect to have final formulation soon and whats available plan rapid in vitro experiments to verify antiviral activity.
Interaction with the FDA to discuss an idea as planned shortly thereafter.
Overall, we envision an accelerated clinical program, both because of the wealth of prior data supporting the product components and because of the pressing societal need for an intervention that fills the role Opn 019 is intended to Phil.
We are committed to supporting the inexpensive initial stages of development with our current operating expense plan and are seeking grants partnerships and other sources of capital to support further development.
To be clear, while we and other parties are excited by the potential of this new drug device combination to help combat both the current pandemic and future public health crisis, our focus remains on growing expanse and building a lean leading NT and allergy company.
Thank you and now I'd like to open the call for QNX.
Ladies and gentlemen, if you have a question at this time. Please press Star then number one and our tests John telephone. If your question has been answered or you waste Jeremy for yourself from the Keith Please press the pound Keith.
Your first question comes from Gary not Schmidt with BMO capital markets.
Hey, good morning, it profitably on certain Gary.
Net revenue per prescription $164.
The 197 into Q last year can you help quantify that component of that delta how much of a drag was there from the program and how should we thinking about net revenue per prescription the second half of the year relative to the second half of 2019.
We are up a this is this is keith thanks for the question ill take that one.
So first I want to say that the we started from a lower base in 22020 than we did 2019.
The increase we experienced this year as I mentioned in my comments almost $40.
Compared to the increase we saw last year. The 177 to 197 was $20 and that was driven.
Bye.
A couple of factors the lower starting point was driven by.
As we talked about on our one Q call the Andrew annual insurance deductible resets the interacted in the early part of the year with the.
Increase in the year over year proportion of our prescriptions that were refills.
So that's why we said guidance for the first quarter of the range 120 to 140.
I noted the improvement this year was substantially greater than than what we'd seen last year quarter versus quarter.
And while the revenue per prescription is not back yet to the 2019 levels. The gap is closing.
And we believe there are factors, including ones that are unique to this year specifically around around coated.
Give us confidence to give the guidance that we gave that we continue to expect the average net revenue per prescription to increase throughout the year.
We expect the.
Patients to continue to meet their out of pocket insurance deductibles.
As that progress is through the year, that's going to contribute to less co pay assistance that we contribute.
As well as the.
The ending the sunsetting of the assist program.
As Peter mentioned in his comments that program provided three prescriptions at no charge to patients.
That included all commercially eligible patients whether they are covered or not.
So while we expect to see some.
So wait on our third quarter early third quarter average revenue per per prescription.
The patients continue to fill under this program.
But the the sunsetting of that in June is going to contribute one of the contributing factors to increases through the rest of the year keep Saudi I did a couple of things that which is we've said historically that the this year the need the two major fundamental things that drive drive gross to net deductions are not terribly different meaning.
Rebates and the patient affordability program other than the did the choices we made for the Asus program in Twoq and that explains a good bit of the differential year over year and the balance by the way as you know this average net revenue per prescription there's a lot in that number and its influenced by things like shipments, which aren't necessarily truly refer.
Elective of the price, but all in all we continue to feel real confident that we're going to grow share. It we're going to grow up price over the year, because as I said the structural components of on of our pricing really haven't changed dramatically.
Great. Thanks, and then on the Coleto partnership could you provide some color.
On the economics, there and how those are calculated given some of the overlap in the physician call audience.
How many of the Kaleo reps will be promoting excellent. Thank you, yes, I'll, let Victor Valley on Chief Commercial officer take a portion that we can Keith and I can fill in May we talk about the cold on universe Vic and then we can maybe get into the economics, yes, thanks very much.
So what is going to call on roughly in incremental 6000 physicians for us about half of those already with it.
The net increase in frequency, which we reach those customers.
We're going to be new customers for us so they're going to allow us to extend the number of customers, we think about exams within their patient base.
Yes, yes regarding regarding economics on the first group that Zick mentioned, we're going to pay on a cost per call basis on we have built into collaterals plan. However, incentives on salesforce to make sure that the business is being driven in that universe as opposed to just relying on a pay for call.
Because obviously you have to align incentives and make sure we're growing the business on the 3000 of that are not called on we're paying on a per script basis. So that is where there is complete alignment of the Cleo team to just drive incremental volume, what we're going to pay on a per script bases for what they drive.
Great. Thanks, so much.
Your next question comes from Brandon Folkes with Cantor Fitzgerald.
Hi, Thanks for taking my Crystal ball and congratulations on the wholesale and.
Thank you can you just elaborate a little bit on the patients panel that youre seeing in July and.
From both sides basically on patients that are less willing to go and had stayed very now in the current environment than maybe managed on a comp and then secondly, the proceeds of getting these new patients into.
It's hard.
Any color around that and then secondly, if you can just provide some color around scripts on nasal polyps spaces. The CF patients and if you do have the data.
Hey, assisting tia around the population and if it added split between nicely populations as well. Thank you.
I'll start and that can add any color on patient flow and Brent I'll start with just so the absolute number of patients and we don't really have data on this so I'm going to give it to anecdotally, but we estimate that patient volumes are down and it really varies geographically and probably somewhere between zero and 25%.
On depending on the office, depending on the geography. So I said a start there relative to did how July is sort of on sort of looking if you will what's interesting Brandon is if you look at a year over year category on the categories sort of back to where it was a year ago. So we're sort of thinking it.
About it is if we set a miss the season, if you will because of the coated pandemic, but it feels like category is reasonably normalized and I just bring that up because on if patients continue to return on theres, a real potential for tailwind in the back half of the year as you see the.
The second season in late August September October, we can't count on that but it's something we're currently really watching on so thats just said on a broad patient flow in script now relative your specific question on patients in surgery and delays of that effect. There really is variation there.
Yeah.
In some areas. There is surgery is really returned to pre pandemic norms.
Seeing a fair amount of patients who are interested in surgery. However, there is no doubt there are a reasonable number of patients who do not want to get surgery right now.
And physician some of the Aunties aren't don't have the same throughput they've had historically on the surgery front because some some of the procedures the need for cleaning and offices and we as I stated earlier brand in the in the remarks, we think its hands is ideally suited for those patients because of the data we have on our efficacy that you're very familiar with we bring enormous benefit to those pace.
Once.
So we are obviously working our sales team is working with offices in ways that expands can be used as a bridge as we say it for those patients.
The process of getting patients on those patients on expanse.
As you know one of the benefits of our preferred pharmacy network is even if patients aren't coming into the office. There can via Tele health via prescription is prescribed and it gets mailed directly to patients home. So in an environment, where some patients may not be comfortable getting into a physician office as I said, we just think expanses.
Is well positioned and frankly, we think thats. Some of the reason we saw the very strong share growth.
We had in the quarter victory of any thing to add on patient flows and things of that nature for we get an than the split between as a product polyps and chronic sinusitis North America was Rolex summary feet or I mean, we really saw the pin them. It gives an opportunity to think about the patients that we were competing for when they are in the offices and we looked at as another.
Due to both increase or discussion about use of exams in the pre surgical patients.
Perhaps than including those patients were delayed to surgery.
And we also looked to opportunity, especially in the allergists community to talk about the symptoms of patients are presenting with so the.
Physicians would consider and empiric.
Decision when that was appropriate for their patients in both of those allowed us.
Have experienced frozen, though broader range of their patients.
Well as of year last question branded on the split between nasal polyps and see US is really very stable. It we have about you know.
Third roughly of patients are diagnosed with nasal polyps as I think you know brand that data is.
It's not.
It's certainly not census data, it's it's a reasonable estimate on and that about two thirds of patients outside of the polyp indication and we don't see real dramatic changes in that split.
Thanks, and then just.
With the with the growth in Repos are you seeing persistency creep up.
We have Brandon amid some we're really encouraged on the refill front as I said steadily growing from about 318 months ago and I think you know we have really good data on this because the this preferred pharmacy network is the is the significant majority of our business, we get de identified patient data when it's truly census.
Data, we know every single patient, we track them on a monthly basis in cohorts and.
We've been over for you know.
Up into the mid fours frankly.
In some of the months over the past several months. So we're very encouraged by growth in refill and it's clearly.
What one of the major factors that allowed us to achieve the resiliency that we had during the pandemic, but by the way I want to I want to highlight two we're very pleased with new prescriptions.
As I mentioned in the script.
We're actually back to reasonably the levels of new prescription that.
That we were achieving the record highs the we're achieving pre pandemic and it's obviously that's the base that we now have to grow off of.
Great. Thank you that's very helpful. Okay. Congratulations on the quarter. Thanks Brendan.
Your next question comes from Stacy Keach Cowen.
Hey, Thanks for taking my questions congratulations on the quarter.
Another commentary on this strong results can you talk a little bit more about that regional usage.
Is it potentially related to the early pilot DTC program, and then what our expectations for adding new patients given the modest recovery for enhanced visits and have a few follow ups.
Refill was really not impacted all by DTC.
I think the thing that's driving the refill is two things number one it's our pharmacy network and our pharmacy partners to a really good job of refill reminders just to make sure that people are aware that they are eligible for refill, but I think more than anything Stacy, it's the product and as I say again, and again and again the one thing I know Weve complete search.
Andy is this product really works.
Pretty substantially different than other products previously, especially the Intranasally sprays and as you know we have data suggests we remark we were comparable to surgery. So I think what the did the growth in refills I think is largely due to the product. So I would characterize that rami or Vic on if you have anything to add to that.
Their comments about regional variation that we made in the prepared comment.
We're primarily referring to the significant regional differences in how the coated pandemic was affecting patient flows and not so much referring to differences in the regions, where we did or did not have DTC.
Thank you Rami for that DTC I'll just comment on it since you brought it up is that.
We continue to be to evaluate DTC, we we had to stop our DTC test a little bit earlier than planned in.
First quarter because of the pandemic, we made that decision, but we're very encouraged by what we're seeing in DTC. The thing as I mentioned historically that we now know.
Pretty firmly is that we can activate patients.
That we did a very strong job in the pilot markets of Hartford Charlotte.
And Cleveland of activating patients and we're sort of figuring out how we can make sure those activated patients get to the right offices, where we have to figure out how to expand coverage. So I just have no doubt the DTC is theres going to be a role for DTC at some point in the lifecycle of this product, especially as we expand the label.
And therefore broaden the target audience of physicians that we're calling on we're just trying to figure out what the right time as to broaden at this point.
Relative to new patients as I said.
I was really very encouraged that if you look at the most recent weeks in new prescriptions were back to where we were pre pandemic and it's interesting. When this whole thing started we started doing our modeling and we set us up we can get back to new prescriptions being.
By by the end of July reasonably comparable to where we were pre pandemic, we thought okay, well thats going to be a good base to with to grow off of and Thats, where we are right now so.
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What we're hearing from physician offices around the country is that and there really is regional variation here, but.
Offices are pretty busy.
NTN allergy offices, and I think the office dispositions have done an outstanding job I think of creating an environment, which creates a safe environment for patients to come back to some are going to be reluctant, but many are comfortable going back and down we I'm actually very encouraged especially with some of the surges that use.
So on some of the parts of the country. We obviously can look at prescriptions in some of those markets in Texas in Arizona and patient volume appears to be holding reasonably strong.
Got it.
And the claims.
Since starting in Q4 I just to clarify would this be only for an office visits or do they have a telling us present. Thanks, it's all in office.
Okay. Thank you.
Your next question comes from Randall Stanicky with RBC capital markets.
Hey, great. Thanks, Peter.
POC is really story is all about growing prescriptions. So help us think about the timing and what we should expect from Cleo I presume that you need to do some training.
And so this is probably more about looking at 2021, maybe early 2021, but help us understand what we should expect in terms of the opportunity to lift scripts from that partnership and then.
The other follow up to that is we're going into the summer. We're also in a pandemic. So it's obviously not normal times, but how should we think about seasonality.
Recent prescription growth has been strong so just in terms of expectations over the summer when should we be thinking about with respect to that affects the I'll start on Colo and I'd like victim to bid colored as Vic has really done a tremendous job working with the team of Calais own. We're very excited about that partnership and I think you know those that team is built or very strong business and.
For four years has been calling on allergists with one product. So they have deep relationships with the target audiences of allegations that they're calling on so we're excited by not only what they've done, but the chemistry thats being developed between the teams.
Relative to impact Randall as we said in the prepared remarks trainings going to occur in the third quarter on their season is really in the summer months for their EFI pen product historically anyway.
So there we didnt, we didn't want to disrupt that if you will but we do think that on heading into September there should be good training.
That goes on.
Yes. Thank you. Thank you Vic when to make sure I talked to brand. They as I said, they think they have best in class.
And happy pad in the Arctic you product, it's really a very strong product, but their season is in the summer. So we didn't want to disrupt that we wanted a partnership it's really designed to work for both parties their season starts to tail in sort of mid September that's when we'll start up our training.
And then we expect to have them hitting the ground in early October on one of the advantages it's hard for us to predict the impact Randall one of the things that are the Q that kaleo brings to the table is deep relationship with physicians.
So this is not like we're hiring some force that has to develop new relationships with doxey. They have deep relationships with these docs now whether what thats going to produce we'll have to see but Don it's part of the reason we're excited about and I mean, I think it's going to be more of a 2021 impact frankly more than a fourq you this year.
But.
As I said I think they're going to hit the ground running as the in Fourq cubic anything to add yes, I mean.
The where was I think about it really in the two cohorts of doctors were calling on in those doctors that were already calling on theyre going to help us get the message about exams in front of them more consistently.
And so we would expect that the hub five we just need to head of IR, you've heard US talk Randall we are very promotional unresponsive product and the reason we did this deal is that.
When we get additional.
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Contacts with Docs, we see response and we believe this was an efficient way to get contacts on eagle versus things like Salesforce expansion, but Vic Please one and talk about the second segment.
Second segment, we know it takes somewhere between seven to 12, maybe lets say now averaging 10 goal, where doctors begin integrating exams to his or her practice and so thats what were looking at.
In terms of seasonality Randall I sort of alluded to this and my last remarks, but it's hard to predict honestly, but if I'll give you the facts that if you take last years.
The category, so not our brand obviously, but the total category minus prescriptions and you do an overlay of 2020 versus 2019.
What's interesting is that on where the market is in the July timeframe is about where the market was in July of last year. So.
One thing, we think could possibly be happening is that we missed out if you will on the surge of patients you see in this in the allergy season in the spring allergy season, because people weren't willing to go into offices and many of those patients is you know they don't they just forego care they don't show.
Up again in the summer.
Do they are they've set a dealt with their issue.
Despite not going into the Doctor now we don't know this but I alluded to this if truly the category is somewhat normalized in the July timeframe. There certainly is a possibility that you could see a really nice tailwind and you'll now see the normal sort of seasonal lift that you see in the August September October timeframe.
But I want to be really candid with you.
Right, Okay, that's hard for us to predict that so I gave you the data that we have available that we're looking at but.
It's going to be hard for us to predict but you said the right thing, which is we're very focused on growing prescriptions, not only refills, but new prescriptions.
Fair enough. Thanks, that's helpful.
Peter just we Didnt talked about business development, so far on the call. It Thats something thats even in your thinking right now are huge solely focused on growing expense. It is Randall M&A. We've said all along that we our ambition is to bundle, leading NTN allergy company and.
We've always said job one is to get expanse.
Firmly established in the market and we think we have some work to do there we think we're well on our way to accomplishing that but Don.
I think there's it's certainly in our in our thoughts to think about bringing products on into the company either via co promote or likely via co promote.
Or we become the though commercial partner.
For the product in in licensing deal.
At some point in 2021.
And obviously is going great Theres, a fair amount of activity on the Opn 019 relative to partnering.
That's great. Thanks, guys.
Your next question comes from David and John with Piper Sandler.
Thanks, just a couple so first on the reimbursement front for.
Can can you talk through what you think you need to do.
To improve access.
Anything and.
With that in mind.
Do you think you need to contract more aggressively going forward I'm, just trying to gamble sense for ill. What your long term strategy is regarded reimbursement the whether it's anything you need to do differently or stay the course, that's number one and then my second question is is related to the crew.
I wanted sinusitis non Paula.
Indication you've talked in the past the Bob.
Some salesforce expansion, perhaps a co promote.
Can you update us with your latest thoughts on what you would planting or what you're thinking of regarding accessing general practitioners more broadly to the extent you do have favorable data and non palade patients. Thanks.
I'll start on access and I really like the linear VIX comments, because I think you guys know.
We are just delighted to have Vic as part of our team Novick was running was president of Pfizer's inflammation in immunology business. So Isa run a big businesses built several blockbuster brands and.
I think yes perspective on the including perspective on access but.
Ill begin David by saying.
We have good access and I don't know that we say that strongly enough.
I have 75%, 80% commercial access at this stage of the commercialization the product is very strong.
Now on the Medicare Medicaid side on we're working to improve that but we don't think David we're going to have to go the route of being more aggressive on rebates.
We think we have a product that is.
He is recognized by the majority of the of the payers is bringing real value, but in fact, the fact that weve negotiated the contracts we have with the payers that we have suggest that and on the on the couple that have are still outliers. If you will in terms of contracting we believe we're going to win the day on the product not not by having to give.
The way rebates.
But vik I don't if you have anything to add on that and I'll, just say I've been really impressed I think we have an exceptionally strong access to you near both in terms of our field, but its national account directors.
Hundreds as wells with the pharmacy teams that support them I think.
The truth is the value proposition for exam is very attractive to payers and then only gets more attractive.
As there are more biologic entrance into this space.
Guidelines are pretty clear that.
Bruce should optimize topical therapy.
Before they progress to surgery or or biologic therapies, and we see great opportunity to help them.
No I mean and.
Well for the brand.
It's interesting David that we've talked about has historically I mean.
Our bigger challenge on sand the access front is making sure physicians understand our access and affordability.
Because there's just there's just this perception that branded products do not have good access and affordability and we in fact have.
We think strong access and affordability, so I hope that answers your question.
On the CS trial on.
We don't really talk about the value of the chronic sinusitis indication that much but as you know this but as a reminder, the real value of that indication is significant broadening of the physician audience, which will.
Yeah.
Bring a benefit of a substantial number of patients that are in that audience in the numbers. As you know got 10 million people being actively treated by any physician about 3 million of those patients are in the anti allergy 7 million of the patients who have chronic sinusitis are in primary care. So.
We think.
Arguably the CS indication is is going to produce more value than Dennis pulp indication.
By the by the volume that can be generated in that segment.
Yeah, obviously, reaching 40 to 50000 physicians, which is what's necessary to optimize the opportunity in the primary care segment. We think is probably best done via partner and.
There are still.
A reasonable number of pharmaceutical companies in the primary care space, we think that will be good overlap or with products that they have that they're currently calling on from.
Doctors are already calling on who are seeing chronic sinusitis patients.
So we are I'll, just say, David that weren't sort of beginning that whole process of making sure we really understand the opportunity from a market perspective on and beginning just initiating you're starting to have the conversations that are necessary to build towards that partnership.
Okay. That's helpful Theater in that if I may just sneak in.
A follow up.
Would it wouldn't be fair to say that with.
Chronic sinusitis.
In the label there would be.
Significant expansion of of DTC and Ed.
Is that something that.
How would you contemplated that I guess in the question they add it all what kind of ramp in spend I mean, maybe in a qualitative sense. When you expect even in the context of co promotion arrangement.
Yeah, I'm glad you brought it up David because you know potentially the greatest opportunity with the label expansion and reaching a lot of physicians, where patients are potentially going to get move into if they're made aware of the product.
And as a reminder, by the way 30 million people in the United States have chronic site chronic rhinosinusitis 10 million or being actively treated but the 20 million who are not being actively treated our lapsed in other words, we know that they have historically been in physician offices, but they frankly of sort of given up because there just aren't options available that.
They feel are suitable for them. So the 20 million people is that DTC opportunity and.
I feel.
You know my background as an Otcs marketer, David I think there is an enormous opportunity for DTC.
Particularly with label expansion and as I said earlier, what we've learned from our pilot in DTC, we can activate patients even with a nasal polyps indication interestingly on so weve in the DTC, which you may or may not have seen we appropriately have to say you know we have to talk about nasal polyps.
There are some patients when they hear that they say hey, that's not me, but I am reasonably certain actually I am I am certain David if you say to people do you have chronic sinusitis.
30 million people raised their hand on that so the ability to activate patients will only get stronger.
With our ability to communicate in a DTC advertising and the hold back right now for us and I said this earlier to make DTC an appropriate return on investment. We just have to make sure that activated patients turned into prescriptions by going to physicians, who have awareness of the product.
So that's what we're trying to wrestle through but in a in a label expansion world.
I think it's highly likely the DTC will be a major component.
Great all right. Thank you Peter.
Thanks, David I appreciate your comments.
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