Q2 2020 Esperion Therapeutics Inc Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome at this time all participants are in listen only mode. Following the presentation. There will be a question and answer session. Please be advised to today's conference call may be recorded I would now like to hand, the conference call over to been church corporate communications at Esperion. Please go ahead Sir.
Church, and I'm going to corporate communications team here at experience with me on todays call Archon, they've been president and Chief Executive Officer, Mark Glickman, Chief Commercial officer, and Rick barge from Chief Financial Officer Watch.
I remind callers that information discussed on the call today are covered under the safe Harbor provision of the private Securities Litigation Reform Act I caution listeners that management will be making forward looking statement actual results could differ materially from those stated or implied by are forward looking statements due to the risks and uncertainties associated with the business.
These forward looking statements are qualify in their entirety by the cautionary statements contained in today's press release <unk> SEC filings the content of the conference call contain time sensitive information that is accurate only as the date of Thislife broadcast August 10, 2020, we undertake no obligation to revise or update any forward looking statements to reflect event.
Or circumstances after the data this conference call webcast.
As a reminder, this conference call webcast are being recorded an archived we issued a press released this afternoon detailing the content of today's call a copy can be found at www dot Barry on dotcom within the investors and media section.
We will begin with prepared comments and then open the call for your question. Following todays call. The team will be available for follow up question, Pete email Investor relations that if you're in Dot com two scheduled 15 minute to speak with the team I'd now like to turn the call over to our President CEO, Tim Mayleben Tim.
Thank you Ben good afternoon, and thank you to everyone joining us on today's conference call.
As we all know the last several months to 2020 had been unlike any other time in history, we're living.
An unprecedented times, where we see like shifting almost daily as community states countries and the world attempt to reduce the spread of coven 19, while also men minimizing the impact to everyday life.
Our hearts go out to those who have experienced losses.
And we think the healthcare workers, researchers and others serving on the frontline for this pandemic.
During this time, we've also been reminded of the importance of managing chronic cardiovascular health conditions, given the recognition that cardiovascular disease is a co morbidity for covered 19 and that many people are less active due to stay at home orders and are reluctant to see or unable to.
Their health care providers.
So more than ever we view, our singular focus on lipid management as a strength that will help us deliver on our commitment to bringing affordable and convenient oral once daily non stat, and LDL cholesterol lowering medicines to the millions of patients who are not at gold despite the availability of status.
Yes.
For Sperry and it was an extraordinary quarter first as you'll hear from Mark we pivoted to a virtual launch at the height.
The pandemic in order to make our medicines available to health care providers and patients as soon as possible next let tall was commercially available on March Thirtyth, Mexico set on June 4th which was ahead of schedule due to physician demand.
We are making great progress, but as anticipated cobot 19 has been a headwind for both launches in large part because it made health care provider offices and accessible to patients and our customer facing team leading to lower new patient starts. In addition, wholesalers were more cautious and all.
Ordering, particularly for new products like ours, which impacted our net product revenue in the quarter and while we can't control either of the issues I just mentioned our team adapted and over delivered on every single thing that was under our control.
I want to highlight several positive tailwinds that are gaining momentum as we look ahead and that Mark will provide more insights on shortly so first while there was certainly a major headwind from cobot 19 on new prescription volumes early in the quarter prescriptions grew significantly since then.
Monthly average of almost 400% growth over the first four months with more than 4000 total prescriptions in July alone.
Second there was also a major headwind from Covidien 18 for our customer facing team early in the quarter their ability to engage with health care providers virtually or through traditional in person engagement was only about 5% in April.
Meaning 5% of the number of health care provider engagements, we'd expect in a normal pre covert 19 environment, but reached about 70% of pre covert 19 levels by the end of July.
Third we have already achieved our one year March 2021 managed care coverage goals for abroad, and high quality commercial and Medicare part D coverage. This formulary coverage provides the lowest possible cost to patients and the fewest obstacles for health.
Our providers to prescriber medicines.
And finally, we see patient health care providers health care systems and payers heading adapted.
And now better positioned to operate in this new normal than they were at the start of the pandemic. We also see public health policy experts in governments better positioned to implement policies that will balance both public health needs and individual health needs.
Turning now to business development, our team continues to differentiate experience with potential partners maximize the global value of our medicines and position our business for financial outperformance over the long term through committed upfront payments future development and revenue milestones and ex us net product sales royalties.
We announced a precedent setting Japan development and commercial collaboration with Otsuka in April.
And we received the second $150 million milestone from DSC and June resulting in more than $210 million in total revenue for the second quarter.
DSE I'll, just remind you which has responsibility for all commercial decisions and Europe is on track to launch our medicines before the end of the year, providing another tailwind for our business.
Let me turn now to clear outcomes are 14000 patient global cardiovascular outcomes trial epidemic acid in Staten intolerant patients.
I'm pleased to report that this landmark event driven study has accumulated almost 50% of the four component Mace primary endpoints.
We remain confident that the successful completion of the clear outcome study on track for the second half of 2022 will be an important milestone for our medicines.
And it goes without saying, but I'll say it we truly appreciate all the efforts of those colleagues at our company the doctors and health care providers overseeing the study.
As healthcare providers and patients for their commitment to this landmark trial.
Finally, as we think about what's ahead.
We intend to remain focused on lip and management a disease area, where we still see severe underrepresentation of innovation and R&D spend despite the continued ravages of cardiovascular disease, and the U.S. and around the world.
Beyond label expansion for cardiovascular disease risk reduction upon successful completion of clear outcomes and subsequent approval, we see multiple opportunities for expansion, including other oral once daily combination tablets with them, but like I said that will expand the next we'll tall franchise in 2023 and beyond.
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Overall with record collaboration revenue, a very strong balance sheet.
Near perfect pricing and positioning of our medicines precedent setting managed care coverage continuing to come online and increasing access to health care providers by our customer facing team.
We are very well positioned to continue to accelerate prescription volume growth and our business.
We have entered the second half of the year in a stronger position than ever before and with that I'll turn the call over to Mark Glickman, Our chief commercial officer to highlight the strong foundation and momentum we have on our launch of both next the tall and next was it mark.
Thanks, Tim as Tim highlighted Cobot 19 has been a headwind to get the initial trajectory about launches, but there are many reasons optimism about the accelerating growth of Mexico next was that in the second half of Twentytwenty and beyond.
As a reminder, we had just been going our commercial effort last March right as cobot hit we made the decision to transition to a completely virtual launch which means we spent the first couple of months aggregate pivoting our strategy and training our customer facing see these are trying uncertain time as we all experience.
I'm incredibly proud of how the team adapted during this crisis. The progress we made really demonstrate both our teams grit and insurance.
We're very well positioned with differentiated pricing and positioning of our medicine. The main focus of our pre launch efforts our medicines complement standard of oral care once daily maximally tolerated statin therapy and a price affordably. This was a deliberate strategy that aligns with our mission to remove any barriers to access for our affordable convenient.
Oral once daily medicines.
By successfully pricing and positioning our medicines, we placed ourselves in a position to outperform on a critical component of any medicine success managed care coverage.
Payers have seen the clinical and economic value with our medicine, and we have achieved both high quality and broad coverage approximately 80% commercial and approximately 50% Medicare part D. This coverage as of July Onest and just three months. After our initial launch in April is up significantly from the 50% commercial coverage and 20% Medicare.
Part D coverage that we spoke about in early May.
The breadth and quality of managed care coverage is even ahead of our own very high internal expectation for this point of the launch and will only continue to improve as we progressed through the second half of the year.
The quality of coverage as reflected by formulary tier tier is really the key to the economics of managed care coverage and we're where we are positioned strongly compared to other new medicines.
On this slide you'll find a graphical representation of the difference here is a coverage as you'll see not all coverage is created equally as the tier increases so does the financial burden to patients. Many companies emphasize the breadth of their coverage without talking about the quality of coverage for Sperry on we're achieving high quality coverage in preferred.
Here's right along amazing breadth of that coverage Nexus Hall necklace preferred brand medicines, meaning covered lives almost exclusively tier two with some tier three.
This makes them easy to prescribed by healthcare practitioners and readily available for patients.
We've been very successful in our discussions with major payers, including express scripts, Cvs Caremark Prime Therapeutics, Cigna and anthem among others. Our goal is always to achieve formulary coverage at an optimal tier with the lowest possible financial burden low out of pocket cost a co pays for patients while also achieving attractive economics.
For Sperry on.
Would it be more pleased the managed care relationships, we built by the one year anniversary of our launch date March 2021, I expect to have virtually all covered lives under contract.
Now, let's turn to the component of our commercial launch that was most impacted by called 19, the ability of our team to actually engage with healthcare practitioners early in the quarter.
Weve out at launch to be conscientious of the pressures and need to healthcare providers and we have respected their time.
Although we're now seeing improved trends as healthcare system healthcare providers and patients have adapted to the new normal could certainly impacted all early field team efforts.
As many of you have heard me say pre cobot, our approximately 300 person customer facing team would expect to have approximately 10000 healthcare provider interact with each week instead in April due to stay at home orders in almost every state across United States and time spent retraining our field salespeople on virtual details.
[noise] healthcare provider engagement by our customer facing team were nearly nonexistent you heard him say was up 5% of normal the prescription volumes of cost of course reflected the lack of HCP interactions of our territory managers.
By June however, with states reopening our territory managers averaged over 5000, HCP engaged with each week about 50% of what we expect in pre koby levels. In addition, nicklas that was made commercially available June four and our territory managers began to promote this important medicines. The week of June 22nd eight days before the end of the core.
After the positive momentum in June has continued into this quarter with our territory managers, averaging almost 7000 healthcare practitioners engage with each week about 70% of what we'd expect Creek.
During the quarter. We also saw increased momentum with our virtual Speaker Bureau, what we call Smartcast. These virtual meeting leverage national key opinion leaders to provide peer to peer education on Nexus fault and that was that the other healthcare providers. We conducted eight these meeting in May 81 in June and 148 in July.
Cumulatively well over 4000 healthcare practitioners have participated in this important peer to peer education program, including more than 2000 in July alone.
So we're seeing and hearing healthcare providers, it's still very early launch only four months since our virtual launch in April but here are few anecdotes HCP is receiving lab results from the early patients in our medicines and the feedback is incredibly consistent Nexus Hall is meeting and most often exceeding the HCP is expectations.
We recently surveyed 100 healthcare practitioners and amazingly more than 90% of participants are familiar or aware of message will next was that.
Similarly, healthcare practitioners and surveyed say they intend to prescribe our medicine as soon as they are able to meet with their patients. What does this all mean is a high level of interest in our medicine as we gain more exposure and access to healthcare practitioners to.
Historical industry trends show that it takes an average of about six territory manager and HCP interactions for healthcare practitioners, who adopt the new medicine to date, we styles and of healthcare providers and through the end of July we've had already over 2100 unique healthcare practitioners writing prescriptions.
Our increase interactions with healthcare providers already translating into growth in our prescription and this will continue July prescription volume was 97% higher than June our medicines already account almost 10% of new to brand prescriptions in the branded LDL C. Lowering drug market, we surpassed 1000 week the retail prescription equivalent.
In July.
What makes the prescription volume growth in July so impressive is that it was achieved despite the second wave of cobot 19, and additional closures in several states across the country.
But perhaps the best contact with the launch trajectory of our medicine is the comparison with the previous launches other LDL C lowering medicine, the Pcis canines.
In July the launch trajectory of our medicine is ahead of where the Pcsknine inhibitors were at this point in their launches on a combined basis.
Perhaps most importantly, we accomplished this with a focus experienced field team of less than 300 territory managers, which makes where a mind boggling comparison to the estimated 1500 territory managers supporting the PCM canine launch is back in 2015, obviously with no cobot 19 issues.
Overall, we have only begun to scratched the surface of the potential. These medicines, we're confident in the weeks in quarters to come you will see the number prescriptions further accelerate which will in turn drive revenue growth through the increasing wholesale orders.
We will continues that relative with the launch analog and are confident that we will file that has shaped curve on our path to peak penetration of approximately 1.8 million patients in the United States is exactly what you and we want to here to see at this point of his cogan in this coven 19 environment.
I'd like to now some of the colder Rick Barton proper financial update and then Tim will provide closing remarks Rick.
Thanks, Mark I'll provide some comments on our financial results for the second quarter ended June Thirtyth, along with our robust capital position with over $300 million in cash as highlighted in our press release from earlier today.
First I'll start with total revenue, which was $212 million for the second quarter, our highest quarterly to date.
Revenue.
This includes approximately 100, our $211 million of collaboration revenue and over half a million dollars of net product revenue.
Total revenue for the first six months of 2020 was approximately $214 million and again was the highest first half revenue recognized to date in our company's history.
For comparison, we recorded $146 million of revenue during the first six months of 2019.
This represents an increase of almost 50% in total revenue from the prior year driven by our robust business development performance as well as sales of next lets call and natural debt.
Let me also take a moment to put our launch to date net product revenue of one and a half million dollars into context for you, but before I do that I want to remind everyone that we recognized product revenue at the point in time, which are direct customers, which are wholesalers received the product that their distribution centers.
Since Nextel tall was not commercially available until March $30 million of net product revenue were recorded in the first quarter, where initial stocking orders from our wholesalers to support the commercial availability of next we'll talk.
Second quarter net product revenue was impacted by covert 19, and buy more measured wholesaler inventory management and reordering patterns. We believe this caution cautious behavior was intensified for next let's call him next was that because their newly launched products with limited prescription history.
At this point in time will not be providing additional commentary on sell side consensus revenue.
Estimates or providing guidance on full year 2020 net product revenue.
As you heard from Mark the launch trajectory of our medicines in the midst of this pandemic is enviable and we have confidence in the current and future trajectory of prescription volumes.
I encourage you to follow the weekly prescription volumes reported by Symphony and Acumedia. Since these represent an 80% to 90% capture rate of weekly prescriptions of our products.
Let me now turn briefly to expenses R&D expenses totaled $35 million for the second quarter compared to $43 million for the comparable period last year.
The decrease was attributable to the completion of the enrollment of clear outcome study last year R&D expenses have now come generally to a steady state level due to the full enrollment of clear outcomes and we're seeing this result reflected in the second quarter R&D expense.
SGN, a expenses were $48 million for the second quarter compared to $13 million for the comparable period last year.
The increase was primarily attributable to the cost to support the commercialization of next let's call. It mechels that the build out of our 300 member customer facing team and other cost to support our rapid growth as a commercial organization.
Experian reported net income of approximately $125 million core diluted net income per share of $4.32 for the second quarter ended 2020.
As our country came out of stay at home orders. During late Q2, we have begun to resume our planned level of spending.
Consistent with our prior quarters guidance, we expect R&D expenses to be between 135, and $145 million and SGN, a expenses to be between $200 million to $210 million.
These are full year estimates do not include the expected $30 million of noncash expenses, primarily associated to stock based compensation noncash interest expense. So those amounts will need to be added back to your models as you look to estimate the full year operating expense.
Lastly, turning to liquidity and cash resources.
During the second quarter, we continued to strengthen our balance sheet and had over $300 million in cash at the end of the period, our cash position was strengthened from a milestone payments from otsuka and the DSC collaborations along with net product revenue and we also remain on track to complete a true rest of world collaboration by year end.
Finally recall there is an additional $50 million available to us at our option under the overland agreement that is expected to be accessible next year. As a result, these existing and future cash resources are expected to provide us with the necessary cash flows to continue to support the U.S. commercial launch and op.
Operational profitability.
So to summarize we're in a very strong financial position, even taking into consideration the impacts of cobot 19, and with that I'll turn it back to Tim for closing remarks, Tim.
Thank you Rick.
Before we close I want to emphasize the accomplishments of our lip and management team in the second quarter and first half of the year laying the groundwork for long term success for our business as I said earlier, while we expect some continued headwinds to our business from cover 19 as you heard today our company has a number.
For of Tailwinds that are gaining strength and we're in a stronger position than ever.
This is a defining time for Sperry on one we built toward for more than a decade, we've developed practice changing non stat and oral once daily medicines for lowering bad cholesterol and we are now getting them into the hands of health care providers and patients in the us who need them.
Outside the US we have very strong and capable development and commercialization partners that will follow in the same footsteps in the months and years ahead.
This is what motivates us every day.
I can tell you there is a tremendous sense of urgency experian. We're all eager we are determined and we're looking forward to the growth ahead of us.
With that Mark Rick and I will now take your questions Howard Please open the lines for questions.
Yes, Sir ladies and gentlemen, once again, if you ever question or comment at this time. Please press Star then one on your telephone keypad. If your question has been answered or you wish to remove yourself from the Q simply press the pound.
Again, if you ever question or comment at this time. Please press Star then one on your telephone keypad.
Our first question or comment it comes from the line of Michael Yee from Jefferies. Your line is open.
Hey, guys. Thanks for the question.
That's on the progress so far.
Hey, Tim It looks like the message is you've got a lot of payer coverage, 8% commercial lives scripts exceeding pcsknine all other things you talked about their and highlighted but on the other and as you've noted before analysts have a ramp what eight to nine nine and third quarter 15, I understand the fourth quarter show.
Message that youre not commenting on those numbers necessarily in light of coded, but you feel that the fundamentals and the launch are going to well so let it play out but we need to reflect some of this covance stuff in the models can you just maybe kind of tie those two things together.
Pat prior.
To the message as you've said in the past about consensus. Thank you. So much sure. Yes. Thank you Mike for the question and I appreciate.
That being the first question, because it's one that mark and Rick and I have.
Has spent a fair amount of time on as we were leading up to this call. So I think the best thing for me to do is to maybe tippett to Rick to start.
And so Rick why don't you provide comment and then I'll follow up.
Sure Yes, thanks, Mike. So you know as we as we mentioned, we're we're not providing qualitative or quantitative quantitative commentary on sell side model quarterly full year.
Matt.
Providing guidance on the full year net product revenue.
This project pretty typical for companies that.
At similar stages in their commercial evolution.
Now with good intent, we acknowledge some comfort in.
In may but.
We don't believe it's going to continue to benefit anyone.
In a continuous shifting dynamic in encoded but.
The key piece is you heard from us launch trajectory of our medicines in the midst of this pandemic is is enviable when we've got confidence in the current and future trajectory.
Of the prescription volumes and also just following the weekly prescription volumes those are highly visible and not in symphony and Acuvue.
And represent a pretty good capture rate of the weekly prescriptions of our products.
A couple of other things I'd just thanks, Rick couple of other things I just wanted to.
Remind everybody about as well is.
We've been saying for a couple of months now that.
Over the 19, everybody knows once in a century pandemic hasn't happened for 100 years Theres Theres no way to compare Q2, two anything that has come before we have said or maybe I have said put a big old asterisk on Q2 set as a side do not.
Do not use it as a measure of the.
Attractiveness and the trajectory of our medicines.
In this initial launch period for all the reasons that Mark talked about on on the call today and I think he's talked about previously as well.
I think the one thing that that we have pointed everybody to as as Rick just highlighted as well is if you look at July in particular, and and again for those of you that are familiar and watching the economic data traditional GDP and quarterly GDP numbers have had been costa side.
Ed by most economists now because they're not doing a good job of predicting where the economy is going so called high frequency indicators of the economy has gained far more credence now because weekly data is is far more predictive of where the economy is currently and where it will be.
Thing and I think similarly, what we would say is.
Attention to the weekly data.
The weekly trajectory.
That is that is the best indicator of where.
The launch trajectory is going I think as you heard Mark say, we had more prescriptions in July over 4000 than we had for all of the second quarter Bye.
Bye.
I think it exceeded over by like 35% more than than all of the second quarter and that was just one month. So.
I think I guess as the high sequencing indicators. The the recent indicators that market's been highlighting whether it's the degree of HCP engagements that we're seeing internally and were.
Being transparent with everybody about or the weekly prescription volume, that's that's what the pay attention to it.
Yeah got it thank you guys.
Yes, Thanks, Mike.
Thank you. Our next question or comment comes from the line of George return from Bank of America. Your line is open.
Hi, guys. This is Jeff Thanks for the question Hey, Jeff.
Just a couple of questions Tim what would you say is the biggest swing factor to the launch just between now and year end I know you made a lot of success with payers and that's probably the answer and then the second question is when you look at the the outcome study is the event rate kind of inline with what you're thinking from a time perspective and as Eric.
Pants for perhaps an earlier.
Data disclosure based on the events. Thank you.
Thanks, Thanks for the question, Jeff ill answer the second one first and then Mark I'm going to tip. The first one to you.
And.
So with respect to the CV outcomes trial, the as I mentioned, we're we're accumulating we have accumulated that study as accumulated.
Almost 50% of of events and that's tracking a little bit up ahead of what we had projected I think the the open question is all of US have read about the fact that there's medical distancing not just social distancing, but medical distances.
Patients are putting off going to see their physicians there, they're not taking care of their health as they did pre coated 19 missing appointments or just not scheduling appointments and as a result, I think theres a lot of concern in the in the healthcare provider community about.
Deterioration of health and I think that includes cardiovascular health. So I think the swing factor is and again, we certainly wouldn't wish this on any one individual we we're not looking for patients to have events, but people with severe cardiovascular disease do have.
Cardiovascular events and and we accumulate those for the patients were enrolled in our studies. So I think it is quite possible that we could see some.
Advancement in in the accumulation of events in this 14000 patient landmark study of of patients who are stepping in tunnel ridge and and so.
And as we accumulate additional events, whether it's 75% or or 100% I think those are the ones that will report back to you on.
Then it's certainly possible in this environment that that that could cause some acceleration in the accumulation of offense, but where we're not counting on it we're still saying second half of 2022, but if it does accelerate will certainly report back.
Mark can I turn the first question to you hit the first question.
Thank them and thanks, Jeff so.
I think we saw in July exactly we need to happen throughout the rest of year. So we saw.
We don't want to see another spike during the Spike we did see both my marketing team and the sales team just really being able to that now in real time really anything that's in front of them, which ultimately is what we need we need more physician contact and we did see a real acceleration in July in both.
Contacts with physicians and physicians starting to prescribe next Whats Hall and next was that so as we go through the second half of the year, whether or not there's there's more spikes. The team sales team has like a hybrid mode. Now so different paired either through virtual calls peer to peer contacts for life fall.
Or any combination to really continue to keep the momentum going and physician contact and the marketing team continues to adapt tools to move with the flat with the time that is very dynamic situation. So the short answer it's about physician contact and physician touch points and having that position starts right the product and adopt the products. We saw a lot of this.
In July and we're really really optimistic about that continuing through the rest of the year.
Great. Thanks, guys.
Thank you.
Thank you. Our next question comes from a line of Chris Shibutani from Cowen Your line is open.
Thanks, very much as we think about kind of the back half of this year and into 21 and kind of intermediate to longer term.
The level of spending and investment you're going to need, particularly on the sales and marketing.
To achieve the kinds of objectives that not just for 2020, but off so for 2021 that everyone's thinking about.
Tim and then as well Rick can you comment about what you think it's going to take I know you've committed to initiating this launch with your targeted sales force in the U.S., but what kind of.
Milestones you expect you need to get a sense for where there is something more is going to need to happen, whether it's a partnership and Rick you know sort of where where the street is thinking about and we appreciate the 2020 guidance on the 200 billion or so op expenses. This year that does imply if I look at what we've done so far step up in the second half.
Should that trajectory continue into the next year as well framing it against the background of this question I'm asking about kind of intermediate term outlook and how you'll achieve that thank you.
Hey, Thank you Chris for the questions and again I'll start out, but Rick will will typically do.
So I think the way that we are we're thinking about the us launch is.
I can just to remind folks we we know these medicines inside and out we know the labels inside and out we have we have hired an incredibly experienced field sales team just again as a reminder.
On average our territory managers have about a dozen years of.
Sales experience cardiovascular sales experience so they they know the their territory they know there.
There.
Healthcare providers in their territories and and again similarly on on me.
On the marketing side, we have a very experienced innovative team as well and.
And so.
We feel extraordinarily confident Chris in.
And the ability of our team to execute on our business plan.
Our commercial business plan in particular, and this is I know theres been history, obviously, including as Mark referenced with a pcis canines of.
I'll use the term throwing a lot of.
Resources ore bodies.
And and.
I think as we saw what the Tcs canine stat.
That was that proved to be inefficient accrued to be an effective and and I think you know as Mark said in his prepared remarks, we had this amazing managed care coverage.
We have signed contracts that are being implemented as as we speak and we'll continue to be implemented over.
Over the the balance of the here. So we think is that content coverage continues to roll out that.
That we will continue to see ever greater momentum.
Not just with see increased field force engagement with.
Piece, but also with this ever increasing momentum on the managed care side. So.
I think can we remain very confident in in the launch ferry confidence and confident in the launch metrics.
As I think Mark said, Rick said.
Let's let's all keep an eye on the weekly scripts and.
And that will that we'll continue to be in tied for us as as we track the growth of of our medicines.
So with that I'll tippett to Rick to add anything else on that point, but then also talk about the expense side.
Yes sure.
Thanks, Chris.
So on on SGN a expense, yes, as we've said it full year 200, 210 million again, that's sort of excluding excluding some of the noncash items and as you look at B. The first two quarters not necessarily representative of the quarterly run rate.
For a number of factors and onboard the Salesforce until March.
Second quarter expenses.
Add some.
Some optimization due to co bid.
So we do think that Q3 in Q4 are going to be.
More of a return to normalcy as we get back to two our spend and you know will be pretty good proxies for representative quarterly run rates.
Having provided formal guidance and 21, that's something that will will provide next year, but what I want to bring everyone's attention back too is just.
The funding status and over $300 million in cash as of this quarter.
And we as we look ahead.
Expected us product sales.
The cash flows from our collaborations.
Our more than sufficient to to fund operations and and allow us to continue to deliver on the business plan through profitability.
Also draw your attention that theres, the additional $50 million under the overland agreement.
And then we're on track for for rest of World agreement by by the end of year. So given those funding sources now that we're generating product revenues, we've got a lot more optionality and.
Our business plans to maximize shareholder value.
Great. Thank you for the different commentary.
Thank you Chris.
Thank you. Our next question comes from the line Omondi Auster from Credit Suisse. Your line is open.
Thanks for taking my question.
I wanted to follow up maybe briefly on on Christmas question last question. There I'm just curious if you.
You could help clarify what the trigger to enable you to access the $50 million from Oberland and then also on the rest of World agreement that we are anticipating.
Could you frame that in terms of kind of relative size to the reason we find that you could go for example, and then finally, if you could comment on over the balance of 2020 and 2021 are there any milestones you might be eligible for from either the daiichi or the acute transaction. Thanks.
Yes, hey, thank thank you Marty this is Tim I'll start with the last couple of questions event tip it to Rick.
So with with respect to a rest of world deal. We said when we started.
On our discussions again.
About rest of world non Usninety Hugh.
We would expect page nine figure upfront from from the collaboration if it was one or.
Whether it was to potential partners. So I think is so.
We highlighted we got $60 million from.
The otsuka collaboration upfront, so you're doing the math you'd expect something.
In the same ballpark.
For.
For a rest of world deal, perhaps so tens tens of millions of dollars.
And then with respect to additional milestones the.
Okay Sucre.
Collaboration does not have.
Does not have milestones, but keep in mind that they're paying.
All of the development expenses, which we estimate over the next two to three years is going to be about I guess three to four years.
It's going to be around $100 million.
And then.
With respect to DSE, we expect to officially starting later this year start to realize.
Royalties from the.
You.
Revenue that they produce so I'll pause there and to that back to Rick.
Yeah. Thanks, Tim Yes, so Marty I think the only open question was just around the Oberland agreement so under that agreement.
That $50 million is available to us upon meeting certain sales objectives.
Which in the agreement is $100 million.
Trailing six months of sales.
Okay. Thank those and then Tim maybe as a follow up.
I think in the past, we've talked about whether there might be additional capital needs. The Heather Cdfour T readout and I'm curious, how you're thinking about that now and kind of what the preferred.
Mechanism might be the kind of I suppose capital that would be through through debt equity.
Further royalty rate in something like that.
Yes, Rick do you mind if I.
Typically you on that.
Yeah sure so.
So thanks, Marty again, just going back robust cash position right now $300 million and cash we talked about the.
The cash flows available to experience. So we feel very confident that that were funded through through profitability and you know now that we are generating revenue we have a lot of optionality. So it.
It it's a great position that were in financially as well as these precedent setting business development deals that.
And have some some cash flows coming through steadily.
Thanks, Rick.
Thanks. Thanks.
Thank you. Our next question comes from a lot of Jason Butler from JMP Securities. Your line is open.
Hi, Thanks for taking the question congrats on the progress from the quarter.
Just one for Mark in terms of the quality of coverage, obviously, you've had success in achieving your goals with tier two in tier three coverage, but can you talk a little bit about how the b b b effort or documentation from the healthcare provider in their office has played out relative to.
Patients going in.
Sure Mark since since Jason asked that to you directly. Please go right ahead.
Absolutely thanks, Jason so.
No the managed care coverage. So when we're signing the contract. It is we are taking all paperwork in PS into account so.
Negotiations are up front so our.
I would say over time, the PPA indicate were almost have to match our expectations because that's the basis of the rebates.
I would say we're improving.
I think.
Because of cobot not all managed care plans are moving as fast as we would expect so for example, during a time that we signed the contract is a longer time, so the actual paperwork and the adjudication of the products are taking place. It's weeks, it's not month, but I would say.
From the from the contracting perspective and from the communication perspective. The PPA is right in line and we are I mean, it really is P. Eighta label for the most case, Jason that were asked before and that that it pretty much been the case for all the contract and as as the plant get loaded the contracts.
Get pushed down we should expect to see those those minimal PPA days.
If any throughout the entire process. So we'll negotiate negotiate has very little pushback to it to an aggressive PA process, it's been pretty passive that's our expectation moving forward timewise a little bit delayed after we signed the contract, but like I said weeks not not not months.
Okay, Great and then just.
Any update you can give us on your plans to start incorporating DTC in digital marketing.
Program. Thank you.
Yes, Mark go ahead.
Sure. So so we're already doing both DTC and.
While the digital media aspects currently so that was always planned for the fourth quarter as far as what will conduct online media outreach social media and all those aspects regarding DTC TV, which I think may have had been part of that question.
We're going we're evaluating that we do look for metrics as far as coverage, which we could check on and we just we just keeping a very close eye on patients returning to physicians offices physicians offices opening up before we proceed with that to washes metrics very closely and we will be reevaluating that what the third and probably the fourth quarter to make.
That decision, but again I want to stress as far as media consumer that's all starting or been implemented now all the all their social media assets.
Great. Thanks, again for taking questions.
Thanks, Jason.
Thank you. Our next question or comment comes from a lot of Chad Messner from Needham and company. Your line is open.
Great. Thanks, Good evening, Thanks for taking my questions and congrats on on the progress in a in a tough environment.
I'm interested anything you can share on sort of the difference in profile between patients are prescriber between next was that next lets call I know you only have a couple.
Months with the with the combo and it's not the most ideal.
Circumstances, but just just wondering if that split is going sort of as expected or or if there's anything.
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If anything if not it not expected that you've kind of learns now that you've got booked a monotherapy and a combo pill out there and I was also wondering if you have any insight into who are taking these products are are they being prescribed by themselves or or or on topic.
That is both you know any any clue what the mixes thanks.
Sure Hey, Thank you Chad I think those are again I think as you said at the start of your questions. It's still early so I think.
Going to tip is to mark, but just recognize that it's.
More anecdotal than than tremendous amounts of data but.
I think is as we say we have almost 300 intelligence officers.
Out in the field in the form of our.
Very experienced territory managers and so we don't we do have some insights, which mark is closest to and I'll ask into to take it from here.
So thanks to the thanks.
So regarding next was that it is progressing beautifully.
I would say.
Ahead of where we would expect in and we've conducted market research and the positioning next with hall was really for those patients.
Who could tolerate a stat and who are but needed additional LDL lowering.
But could take really no could ramp up Staten and still need more was next event was where that that patient couldn't get to a higher stat within mackie tolerate that was much lower.
Managed care coverage came onboard soon after the launch of Mexico that closely watching closely matching that of next recall, but it was a little bit delayed so to see next was that catching up so so fast.
Despite managed care coverage is coming on just by the time you'd launch has really been exciting.
In that in that I referenced the the market research that we recently conducted with 100 healthcare practitioners, what we will be heard loud and clear physicians already see LDL levels starting to rise in this cobot environment.
And I think it's not Miss a surprise Chad, but it's going to change I think the abuse the profile for for next was that.
It's going to probably expand as patients have been a bit sedentary due to maybe shelter in place not working and just the stress of coated. So they are already reporting that they're seeing significant increases in LDL I think that that's going to.
Lead itself to more of Nick was that in the heavier LDL reduction I want to stress physicians.
The early feedback has been mostly on next with hall and the feedback on the efficacy and safety profile has been really positive. So everything. According to plan I do think next was that is going to be the workforce I think it maybe quicker than we anticipated.
Due to cobot, one last point I want to stress here is also physician did ask us to accelerate next was that they anticipated.
That that LDL goodstart increases cobot environment and they just we're unsure if they'd be able to initiate any kind of injections or any type of therapy. So the pcsknines, we patients who so desperately need additional LDL lowering and Thats. Why we went ahead and offer next was that about a month early than we had originally planned I want to make sure that we did have the offering out there.
As patients who need additional lowering in this in the in these trying times so.
So it's progressing beautifully mostly according to plan next was that a little bit ahead.
Great. Thanks appreciate that.
Thank you. Our next question or comment comes from the line of Joel Beatty from Citi. Your Brown. Your line is open.
Hi, Thanks for taking my question.
First question is on the expectation that cash will be sufficient through profitability could you discuss whether the outlook is achievable. If the current of Everest pandemic persist or even worsens or does that assume a resolution of it at some point in time. Thanks.
Hey, Joe. Thanks. So this is Tim I'm going to start, but I'm going to quickly hit that to Rick One thing I can show you.
You file followed the company for a number of here so you've gotten to know the team pretty well and we always remind folks one that we've been doing this for a long time this being managing this business for a long time.
Through good market cycles, good economic times and bad so weve.
We have a long history there.
And we've done extraordinarily well with that so second second thing that I would highlight is.
At our core where we have Midwest sensibilities about us so what I mean by that is we're conservative by nature in how we run the business and how we think about funding in the business. So.
Those things are always those two things are always sort of prominent in our minds. When we're thinking about the business so with that I'm going to.
But to Rick to to provide more specific responses to your question.
Yes. Thanks, so so Joel obviously, we're running a multitude of scenarios as we look at our financial runway and financial health.
As as you know cobot is unpredictable so we can't possibly run every single scenario that that could be possible outcome, but.
What we expect is the continued trend that we've demonstrated in July of of prescriptions building.
And that gives us confidence.
To continue to deliver the business plan.
As well as the financial strength that we currently have as well as.
The cash resources that we expect to be coming in in the future. So feel confident saying today were funded through through profitability.
Obviously.
The co bid environment that we're all.
Going through is not.
Not sustainable and we think that.
Thats going to be something that does overcome.
In the near in the near term.
Got it thank you.
Thanks Jay.
Thank you. Our next question or comment comes from the line of Paul Troy from Goldman Sachs. Your line is open.
Hi, Thanks, and good afternoon, everyone. My first question is from Mark and I was just wondering if you can maybe by the providing qualitative or quantitative.
Data on just with the availability of an excellent how have your touch points with physicians has either changed or at or increase has delivered docs, who have been just sort of waiting for it.
And now responding to your salesforce or in any any color along those lines what would be helpful.
Yes, so so Paul thanks to the question.
We absolutely have positioned waiting for it that again that was part of the dry.
Even at the key opinion leader level, where.
They just really wanted the.
They knew that in this situation that next was that was coming and they really did want to won't want to work.
Wait for for next Thats come to start stop prescribing. It's really early have specifics yet. So you know who's exclusive to next fall next was that what we do see is.
As an acceleration of physician since we have prescribing since weve since we've offered nichols at but I won't be able to have that physician level data.
And when I do receive it will just be for July and that would be the first month, but as far as the physicians that word the cardiologist and physicians that we're getting into its part of our regular call list I think they were very comfortable to initiate.
Nicholas Hall, knowing that next was that was coming and thinking that they could always.
Switch over later on so I don't think it was it was an impediment, but like I said, we definitely have positioned to say hey, it's going to be so close.
I'll just wait the next was that and again part of the reason to accelerate it on the uptake in understanding of next Whats Hall was really really quick and regarding the educational process and we accelerated that a lot more data over the next few months about the actual makeup of the of the prescribers each product.
Great. Thanks for that color, Mark and maybe just as a follow up just with regard to insurance impair dynamics.
Recognize some of this has.
Only flipped online quite recently, but could you maybe also comment just on the rate of approvals and how much what sort of changes you've seen in terms of paid are covered drug versus medical exceptions.
Versus what you saw the second quarter more recently, thank you very much.
Hey, Thank you Paul and Mark I'll typically you again.
Thanks, Tim and thanks, Paul Yes. So we're just now starting to see we sign contracts really soon after launch and we had we we've actually had a.
Very respectable approval rate.
For for managed care and we've been running ahead of other recent launches. So we were very pleased but then it did level off although lose signing more contract and we're just seeing now and again I'm I'm positive. This is just a co bid loading contract situation and we're seeing now the plans that we sign we're starting to see the approvals.
Start to come up and the rejections come down So I said before this is a week's delay not months, but over the last I would say two to three weeks, we started to see improvement of of of.
Actual managed care approvals and we expect to see that all throughout the second half of the year down to a high single digit or very low double digit rejection rate. So we feel like we're on that path now it was definitely little bit delayed throughout June, but we feel like we're back on track now.
Okay. Thank you very much.
Yes.
Hey, Thank you Paul.
Thank you that concludes our question and answer and our conference for today, Ladies and gentlemen. This concludes todays conference call. Thank you for participating you may now disconnect everyone have a wonderful day.
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