Q2 2020 Osmotica Pharmaceuticals PLC Earnings Call
This time, all participant lines are not listen only mode. After the speakers presentation. There will be a question and answer session to ask the questions I want a session you need to press Star then one of your telephone. Please be advised that today's conference is being recorded if you acquire any further assistance. Please press Star then zero I would now like.
The conference over to your Speaker today, Lisa Wilson Investor Relations for Osmotica.
Please go ahead.
[music]. Thank you operator, welcome to Osmotica Pharmaceuticals second quarter 2020 business update call. This is Lisa Wilson and.
Investor Relations for Osmotica.
With me on today's call.
Motta 'cause Chief Executive Officer, Brian Markuson, Chief operating Officer JD shop.
And Chief Financial Officer, Andrew I'm Horn.
We're also joined by Dr., Derek Cunningham director of Optometry and research from Dell laser consultant.
This afternoon the company issued a press release detailing financial result for the three months ended June Thirtyth 2020.
This press release and a webcast of this call, which also includes a slide presentation can be accessed through the investor section of the Osmotica website at <unk> Dot com.
Before we get started I would like to remind everyone that any statements made on today's conference call that express a belief expectation projection forecast anticipation or intent regarding future events and the company's future performance, maybe considered forward looking statements as before.
My brother Private Securities Litigation Reform Act.
These forward looking statements are based on information available to osmotic because management as of today and involve risks and uncertainties, including those noted in this afternoon's press release and her filings with the FCC.
Such forward looking statements are not guarantees of future performance actual results may differ materially from those projected in the forward looking statements.
Osmotica, specifically disclaims any intent or obligation to update these forward looking statements except as required by law. During this call we refer to non-GAAP measures such as adjusted EBITDA for a reconciliation of adjusted EBITDA to net income or loss. Please see the tables at the end of our press release.
The archive webcast of this call will be available for 30 days, our website Osmotica dot com for the benefit of those who maybe listening to the replay or archive webcast. This call was held and recorded on August 11th 2020.
And then Osmotica may have made announcements related to the topics discussed. So please reference the company's most recent press releases and that's you see filings and with that I'll turn the call over towards Monica CEO, Brian Markuson.
Thank you Lisa.
Good afternoon, everyone and thank you for joining our call today.
As described in our press release, we have made enormous progress this past quarter.
More excited than ever about our future business.
First on July eight we received FDA approval for.
The first and only pharmacologic treatment for acquired Blucora tells us more commonly known as droopy.
JV will devote most of the time on this call to preview in more detail the facts and figures around or commercial plans and Dr. Cunningham.
LIBOR Garden fault meter and I care is going to join US as previously mentioned and share his perspective as well.
Just remember to refer to the slides that were issued on our website. If you don't have access to that program Livens for webcasting this as well.
Second we submitted the or back within India, you for the treatment of that MS. Spasticity with a goal date of December 29.
The symptomatic management spasticity is among the primary therapeutic goals and the management of M.S. today.
The most common treatments were approved decades ago and or associated with porn tolerability.
Our backlog since extensive database highlights.
Products that can be safely administered for extended periods of time, while continuing to demonstrate improvements and spasticity.
Third we were and are thrilled to partner with San Tan from most of the X X U.S. rights for up neat.
So China is well known globally for their excellence in focus that I care with operations in every major markets around the planet.
We look forward to this partnership and the accelerated ability to make up niko available around the globe and finally, we recently completed $30 million follow on offering, which we plan to utilize to fuel the oneq launch and we will also focus on paying down our debt.
So with that I like to turn the call over to Android Horn to recap our financial performance from the quarter Andy.
Thank you Brian.
Total revenues for the three months ended June 30, 2020 were 37, and a half million compared to 57 and a half million for the three months ended June 30 29 T.
Net product sales decreased by 20.9 million to 35.3 million for the three months ended June 30 2020.
As compared to 56.2 million for the three months ended June of 19. This reflects continued price and volume erosion on our existing product portfolio stemming from additional Jared generic competition.
Selling general and administrative expenses decreased 8.9 million during the three months ended June 30, 2020 to 16.6 million, that's compared to 25.5 million in the three months ended June 30 2019.
The decrease reflects expense reductions associated with the sales force reduction in the first quarter 2020, combined with lower spending on marketing and general and administrative expenses during the second quarter of 2020.
Research and development expenses increased by 400000 into three months ended June 30, 20, 25.8 million as compared to 5.4 million in the three months ended June 30 29 team.
The increase reflects costs associated with the preparation and filing of the amended and D.A. for our back within an increased costs associated with medical education programs, partially offset by development batch costs in the three month period ended June 32019, which costs were not present in 2020.
Loss for the second quarter of 2020 was 13 million compared to a net loss of 124.9 million in the second quarter 2019.
Adjusted EBITDA for the second quarter of 2020 was 2.3 million compared to adjusted EBITDA of 14, and a half million for the second quarter 2019.
As of June 30, 2020, we had cash cash equivalents of 140.4 million and borrowing capacity under our revolving credit facility of 50 million.
Last month as Brian noted, we completed an equity offering generating net proceeds of 30.4 million. Additionally, under our recent licensing agreement with San Tan Pharmaceuticals, we received an upfront cash payment from 25 million.
As of June Thirtyth 2020, we had 271 point threemillion aggregate principal amount borrowed under our term loan. This week, we will be making a prepayment of these term loans in the amount of 25 million as part of our strategy to reduce leverage.
I'll now turn the call over to JV.
Thanks, Andy and good afternoon, everyone.
We're excited to discuss the progress plans and commercial strategy for us.
Approval last month, when the culmination of tremendous teamwork throughout our organization and we were thrilled with the opportunity to launch and the first and only at the same through treatment for acquired left for its houses.
Our ongoing commercialization efforts continue to build upon that robust development program, which culminated in the recent approval.
Any organization remains dedicated to executing a first in class rollout for what we continue to believe will be a transformative treatment for acquired luck for its houses page.
On the first slide and before we get into strategy and rollout.
I'd like to know the outsized commercial opportunity in front of us.
We believe acquired ptosis affects more than 15 million adults in the U.S. alone the majority of whom until now have had no treatment options.
Moreover, beyond the functional impact of Texas at its core the appearance. These symptoms tired eyes asymmetry represent a meaningful part of the overall condition.
So what we're really talking about here is re framing a condition that lies at the intersection of Okcular medicine and Okcular settings.
And as we move forward all of our efforts to build a market and elevate awareness well be rooted in a new narrative that transcends the medical connotations as this condition and unlock value across the largest potential patient population of mild to moderate in Texas.
Not only are we delivering on a significant unmet need.
But neat represents the first and only FDIC approved prescription treatment for be island.
Next slide.
Let me welcome you to RBL Pharmaceuticals, Inc.
Our newest operating subsidiary built for purpose and dedicated to eyecare and the launch about me.
RBL was created by design not to fall.
We looked at a first in class product.
Central market opportunity engage meaningfully with our customers both patients and eye care professionals and have launched an organization that will stand apart from the rest focused on the customer and delivering value across the continuum of care.
Moreover, we have transitioned a strong and experienced sales team.
Focused exclusively on building this market and launching a technique.
Lastly, we have re imagined access through this launch and have created RBL pharmacy, our owned and integrated pharmacy, creating a seamless and customer focused fulfillment experience.
From a strategy standpoint, we are approaching the launch of up need in a phase manner.
Always mindful of the current pandemic we are in.
And thoughtfully building awareness and advocacy upfront, while growing the addressable patient population as we increase corresponding investments in sales and marketing.
Initially we will be focused on approximately 650, leading I practices across the country.
Building excitement and buzz within these high value offices from which we intend to expand fairly quickly through the back end of this year, while adapting and adjusting to the early traction and feedback from this core group of customers and their patients experiences.
We are re framing and narrative around acquired left for in Texas.
Transitioning away from an ice CB 10 code that may or may not qualify for surgery to a progressive condition, which affects millions of adult patients and opens up a whole new classification for eye care.
On the next slide and digging a bit deeper into our early experience program aligned with developing a partnership and momentum with that core group of early adopters, we will be launching an early experienced program. The up program uncovering choices with the goal of its staff.
Blushing up sneaks robust safety and efficacy profile, while enabling seamless diagnosis and treatment.
What we know from investigators in patients within our clinical program. It is so powerful to actually see what up need does and the up experienced program is designed to create that same buys and excitement on a much larger scale.
We'll also be able to use those early experiences to derive meaningful data and insights around uptake and responsiveness, which will serve to inform and shape future and ongoing investments in the launch.
Turning now to our access strategy.
RBL Pharmaceuticals has created unrestricted access to up need for all patients.
We are pioneering seamless product access aligned with existing prescribing habits.
Affording prescribers the opportunity to make independent prescribing decisions without third party payer interference traditional obstacles such as P.A. step edits and prerequisites are eliminated.
Affording patients consistent predictable and uniform pricing and customer service.
And allowing for enhanced marketing flexibility relating to practice offerings in partnerships.
We are truly excited about this platform from an access standpoint.
And before we wrap up and turn the call over to Dr. Cunningham.
Up neat pricing.
I will highlight the 90 count value proposition.
We have design and effective pricing strategy to maximize the value to the occasional user.
While optimizing price for the Dalai user.
90, count will represent the most cost effective and convenient option for patients and providers.
Reducing the monthly cost to $75 within a 90 count prescription.
All prices will be inclusive of shipping and handling and this transparency will serve all patients.
Now I'd like to turn the call over to Dr. Derek Cunningham.
A highly regarded thought leader, who will lend his expertise and insights to this opportunity and share some of his early impressions.
Dr Cunningham.
Thanks, JD honored to be involved in that this early clinical trial program. Certainly this is a product that we had been excited about for quite a while when the first heard against development and seeing a go through clinical trials was was really I think.
Exciting for us in that which is not only a new product to a.
Dollar tree that you're almost every doctor will have an office it really represents a new direction with an eye care that we're all excited about it and we're all very much trying to I guess filled the demand.
Static version that comes into our patient or into our population as well and so to talk about my early experience I recently had the ability to not only use this on some quotes colleagues, but also on some patients.
And probably the first thing all references from a clinical standpoint, yes, it's an FDA indication.
That was my primary concern initially I wanted to make sure that this medication has legs.
And so I did use it on on a per patient care, which you can see this picture that we have a before and after isn't that acquired Blucora ptosis female roughly 55 to 60 years old in this case Caucasian and this is probably going to be the target therapeutic markets for the on label use.
Her case, she had bilateral age related.
How assist and when we brought up the idea of Trialing products you know.
You are surprised she was more than adequate the idea of having something that should never complained about what would clearly weighing on her mind quite significantly.
When we try the product unit reported no problems with it whatever whatsoever and also you can see picture here at its picture was only taken.
Roughly 20 to 30 minutes after installation now there is a color difference further.
The picture is not because a different feldman with Houston I apologize for that but you can see we're elevation of currently is.
Im probably what the most important metric to me was more so than her visual field, because you know acquired Bluffer telesis's really significantly devastating to because you'll feel.
Affected.
Is it what does the patient feel like and too.
As you can imagine hurricanes, she was over them, even with the clinical results and could stop going to mirror and looking to mirror and just how excited it was she wasn't although we only had your trial. Her first question is here absolutely. When the earliest she can get this you might get you start on it so that was absolutely great to see.
Hi, and Oh response.
From there we thought it was actually important as well to get a cross section no doesn't understand how this me back other patients as well because I think from a physician standpoint, we aren't going to have quite a bit interest in this product.
Give me some kind of idea when it comes to our clinical setting we actually you forget almost any drug or at least eyedrops going to be released the United States kind of magic early practice to get it.
And.
When I brought this up to mine staff and see my associate doctors I've never seen such into clinical response, everybody wanted to try it we've never had that wouldn't another I'm medication and so when we did let some some patients tried I had some younger patients as well try that you would be interested from the cosmetics down.
I'd point, you can see some unilateral pictures and I did this on purpose because I.
I think thats, the best way to truly understand how this products working so we have.
And Asian.
Patient care as well as a Hispanic patient.
And you could see clearly in the right. This is roughly 30 minutes post installation is not only a elevation of the upper eyes.
I'd also like white effect, which can be north and in many of these patients.
And again, probably the most important metric here was when the patients were asked is this something that you would like or is it something you'd be interested in there was an overwhelming yes from everybody. So.
This really leads us to a product that is then well established in the market through other uses this this molecule. It hasn't it has a well established safety history and profile, but now that we have an ability to use it uniquely in this setting and it is really going to give us kind of a.
A multi tool in our clinics.
That really excites us.
And also it's going to it really probably open up more clinical uses and we had thought you know for instance, the Asian Dr. are these patient care.
Had reported to US that this is something that she thinks will be incredibly sought after by a lot of her colleagues community and that is kind of a clinical use and I had never I never thought about as well as she also noted that there is an immediate effect to the fact that she naturally see from.
From her islands. So she clearly noticed an immediate increase in or peripherals field locations.
Again, another demographic that was not.
First in mind right when I saw this product so from a clinical standpoint, we saw that it's very well tolerated. These patients really not only have reported really no significant side effects or negative effects from the product at all we also saw it at 100% of the patient that we've put this on had some type of clinical effect now as you do.
I expect the clinical factor vary from patients Asian, very rarely ever in medicine that we see a product that at least have some appreciable benefit on every single person is try to and in our small sample size. The case. So far so again, just nothing nothing but wonderful things to say so far with this product.
We think it's kind of on top potential going forward that we're all realized.
Thank you Derek and now operator, we'll turn the call back to you for questions.
Thank you as a reminder to ask a question you would need to press Star then one on your telephone to withdraw your question. Please press the pound King.
Our first question comes on the line of David Steinberg with Jefferies. Your line is now open.
Thanks, I had three questions.
First one is maybe both for the Doctor and the company.
It's very early but just curious what the reception is.
On your pricing.
Thank you priced correctly based on the feedback you're getting.
Second thing on a gross margin I note that this quarter it was quite a bit lower.
58% versus previously in the low 70% rates. It should we think I assume that's from product mix.
And should we use that gross margin this quarter for that.
Q3 in Q4, and then finally on your collaboration here at your.
Collaboration with and 10, I'm, just curious being the Premier Ophthalmic company in Japan.
Japan being the number two I care territory in the world.
Have they discussed with you what they think peak sales could be.
I'd, there, Japan or or the Asian.
Asia Pacific area, where they have right. Thanks.
Yeah. Thanks, David.
With regard to pricing we.
I've got a fair amount of market research as you would anticipate and the result is more based on or rooted in the 90 count.
Where the 30 count is going to cost a little bit more for the occasional user.
Frankly for Dr. Cunningham.
You got the product for free so that when paid for it.
Because we don't have it out in in the market just at this point in time, but he's on the line and you can get as impression and.
Perfectly happy to you could tell you what he thinks so Derek you still there.
Yeah on the air interesting because there is nothing we can be directly compare this to in ophthalmology. So far we don't have retail.
Pharmaceutical product that is kind of direct consumer.
Or noninsurance driven so.
[laughter] through our cosmetics market that has been in exploding area with an eye care and I can tell you the cosmetics market tends to probably command more than that this on a monthly basis for other things are done on a monthly basis in the blocker cosmetics.
So from that standpoint, yes, certainly we think I think are my patient base could bear it but again very difficult to say because this is literally first in class in even this revenue model for us.
Got it thanks, yes, so David with what I'll do the Santana answer and then Andy will bounce over to the gross margin answer.
I would say in 10 of course, we have projections, we did projections.
With that outside market research company before we ever entered into the transaction as you can imagine.
We did we did show those when we did our initial IPO.
We are working with San Tan now to reaffirm.
Projections globally.
Also doing a lot more work on what's required from a regulatory perspective, because we know the requirements into different markets are going to be very different.
At a minimum we're gonna have to have some version of a repeat of our phase three trial, hopefully smaller numbers in a lot quicker than what we did and then the you for example may or may not require.
No. One your safety study, Japan may or may not require that in China may or may not require that so.
We are going to spend this quarter locking down those assumptions and then we'll be able to give the street some guidance relative to expectations.
Around what we can expect but if I were to do it now we would be completely under revision. The next time, we spoke so.
I'd like to Bunte on that for now and then within gross margin question.
Andy you want to tackle that sure.
Our gross margin in the in the period as compared to 2019 was affected by largely higher apart from depreciation and amortization, which was lower.
It was also affected by royalty expense on Nitroshure and tone, which we which we launched in the second half of 2019, those royalties were not present in the first in the first half of 2019, so comparable periods also with the with lower sales we did see some higher.
Option costs as well come through.
Great. Thanks.
Thank you.
Our next question comes from the line of Randall Stanicky with RBC capital markets. Your line is now open great. Thanks, I have three questions first can you, perhaps JD walk to the timelines around the different staging and.
What are you looking to learn on the initial on the initial rollout that will help inform on the overall launch and and then the rationale to wait until stage three for DTC. So that's the first question.
Second question is around or back will fit and does the commercial footprint change when it's approved presumably in December and.
Would you be looking to add.
Given that it's a different therapeutic area in terms of building other sales force further.
I guess the question specifically how are you going to leverage the sales force with those two products and different therapeutic areas and I've got one more follow up at all levels Alaska after.
All right Randles, Brian. Thank you, let me start with our back within our back within we'll have to be launched than a different structure than the current.
RBL pharmaceutical structure, so we did create a.
A separate independent subsidiary to How's RBL Pharmaceuticals, our pharmacy at our field force and marketing effort.
So it's free from the constraints that the other sort of if you will mainstream pharma businesses.
Operating under so that will have to be a separate structure that we will address as we go forward and I'm glad you brought it up because we have a goal date at the end of the year and we're quite excited about it so I'll I'll flip it back to JD on the rollout and then we actually will await your third question.
Yeah, Thanks, Brian and thanks for the question Randall So from a timing standpoint, we don't think about these phases as limited to specific.
Windows within the calendar.
And I think Theres a couple of reasons.
Largely driven by kind of the second piece of that question. I think you asked in terms of what are we looking to measure.
So number one.
Early on we are very cognizant of the ongoing pandemic and the impact that that may or may not have depending upon where we are from a promotional reach perspective geographically and what's going on in those areas. The good news on that front is.
This is one of the most innovative front of the API Okcular therapeutics and a long time and the early feedback and enthusiasm from many of these core prescribers. We're focused on early has been incredible receptivity I think the other piece of the.
Early uptake that we're focused on is.
What exactly is happening in these offices with the messaging and the strategies that were employing around re framing ptosis as a condition remember today. This is more often than not the first time, you talk to eye care professionals about ptosis many of them.
Do go traditionally two Oh, yeah, I know doses I see the 10 code.
Maybe made the comment earlier during the presentation that may or may not be covered by insurance and referred out for a surgical console I think for us we're trying to completely re frame that dialogue and narrative around that condition that this is something progressive.
It starts with going back into your practice and simply looking at every patients' lives in that natural environment, which again is also a little bit different for these folks who are you still walking into two and exam room and the next patient interaction getting behind the slit lamp and starting to take.
Deeper look at what's going on within within the front of the on the Okcular surface. So we're going to look for that feedback and receptivity I think you heard from Derek.
A little bit of what were expecting to here and I think those are the pieces that are going to drive the expansion into phase two like I said I would anticipate that happening pretty quickly here in the back half of the year, particularly as this momentum builds with early adoption and prescribers and then.
I think phase three and four is really just marrying up thoughtful investments and the appropriate mix of spend as we see traction and revenue start to roll in to marry with the inflection point of broad enough prescriber base.
The digest the consumer activation piece, so hopefully that helps frame the way in which we're thinking about it and ties a little bit of context to the fluidity.
Yes. It does it might my third question is effectively a follow up from the first to you guys recently raised.
Capital when you add the said 10 upfront payment.
Thats, another 55 million in cash to add to your hundred 40 million.
Our balance I know, some that's going to debt paydown, but.
Brian This does that added financial flexibility at all change or at greater interest.
On your part and looking to bring in another product.
To leverage the infrastructure that you're building out.
Yes, I mean, I think the eye care infrastructure that we have now.
Again, it's.
Our enthusiasm little bit of mitigated by co that in how many people we can really have out they're calling on clinicians and and practices. However.
Going to reach a point in the very near future, maybe maybe it's a year from now I don't have a crystal ball on it where we will have capacity.
And with our.
You know owned pharmacy channel and great customer service, we will be able to run more programs and products through that channel. So.
We will begin to look quite honestly at accretive acquisitions. If we are out there that fit our footprint, but in the very very beginning it's all hands on deck to launch the product.
Fair enough thanks, guys.
Thank you. Our next question comes from the line of Greg Fraser with true with Securities. Your line is now open.
Thank you and thanks for taking the questions.
First on the program I was hoping you could expand on the program in terms of how we should think about the scope.
In terms of volume of samples that will be available to a practice how long you anticipate ran the program just any additional details around that early experienced program.
Sure.
Yes uptake that thanks, Greg.
So look this this up program. This early experience program is really rooted in building a market.
I think we've we've engaged meaningfully without a number of practitioners both kao wells and just every day primary care I care providers and the opportunity to re frame this condition and the new narrative around doses and truly create genuine ad.
Cassie is going to come from the ability to enable seamless diagnosis and treatment and I think thats, where we look at this opportunity and a little bit of up something special an exclusive in terms of packaging and.
Educational materials and some other components contained within that are really going to help to create buzz and excitement within within the office and drive this from a timing standpoint, I think look.
What we're focused on is is this resulting in the desired return and that return specifically is are we seeing the change in behavior from a practitioner standpoint across the entire office, where they're now changing the way that they look at each and every patient and really starting.
Hi, Fi and materialize, a better sense of how big this market can be and if this program is doing what we intended to do and driving that then we're going to continue to support that program here upfront because again there is nothing else and has been nothing else like this for.
The size perspective.
Look if they're going to get behind it and they're going to use it we're going to support their ability to continue to use it I think the focus upfront is going to be that at least a patient at day start looking at their lids, you're seeing in a normal just average practice probably in this.
Permanent still where they've got to be more cognizant of space.
And distancing and how they run patients through.
Maybe about 15 patients a day and Derek might be able to provide a little bit more color on what he's seeing in their practice down in Texas.
But I think that starts to give you a sense as we go from 600 5700 practices over the course of the early part here and expand to 2500 3000 practices. Shortly thereafter through the back part of this year, just the sheer volume of patients and new starts that we're looking to Joe.
Generate from that program.
Got it Thats very helpful. Just a quick follow up on the regulatory path, Japan, China and that is the expectation that you'll need separate phase three studies for each geography or one additional phase three that would be good for all them well the you will probably not require.
A phase three study like ours, but we'll probably.
Look for a one year safety study.
China may want their own, but Japan will certainly want.
Hey efficacy study.
In Japanese subjects now that could be done here can be done in Japan.
And they will want one year safety data. So we're actually going to talk to Santana about collaborating with them on a one year safety study that we could do underwrites each guidelines.
I would accommodate all the markets.
And I believe we'll have to negotiate with each of the regulatory bodies independently to see how many subjects from each key market or geography, they will accept.
So for example, if if Japan will accept the PBM may will accept 30 to 50 subjects from Japan in one year safety study than we know we can go elsewhere for the rest and that'll make accrual to the trials much much quicker and faster so we.
We've got some work to do we've got.
Excellent plans, but until we speak to the regulators and try to negotiate a more expeditious path and something that would be conservative in traditional we really can't share too much more information at this time.
Got it okay.
And with the approval of a beacon with our back within under FD review, you've made a lot of progress this year transitioning the business from the legacy generics and brands to more growth be specialty products clearly those old products dropped out of cash and that's helped fund that transition.
So what's your latest thinking on sort of what's core versus non core and how interested are you in trying to shed non core assets. If you can get and okay return.
Yes, it's a it's a great question and.
Number one the core business or what was the core business.
Does throw off a lot of cash and has been extremely helpful. In funding the growth strategy. So.
Going forward.
The entire emphasis of the company is going to be on growing up make and then growing our back Wilson.
The inline assets, our generic Trojan portfolio is doing great.
We supported we support the products.
If we were to get a very good to offer that beats, our internal cash forecast I think we take a hard look at it and it would make perfect sense.
It was certainly streamline our view to the street shareholders would understand us better because people have been conflicted and trying to understand the story, which in its its core is quite simple right. What we want to do is leverage the assets we have to to fund growth. So when we are on the next earnings call after that.
Third quarter, we'll be talking about what we did to fuel that growth story. So.
Long story short, we would entertain certainly divestitures if it made sense just like any company out there. However.
We're treating it like it's a like a garden and we want to water it take care of it.
And make sure it continues to produce cash and that's how we're treatment.
Got it thanks for taking the questions.
Thank you. Our next question comes on the line of Amy Phadia with SVB Leerink. Your line is now open.
Good afternoon. Thank for taking the question got a couple flawlessly.
Just a question for the Doctor adopter finding that Cunningham.
How do you see the potential for identifying.
Patients who are good candidates forgive me can you talk about what percent of the patients that you see currency.
That you anticipate.
Maybe good candidates and how do you see that.
Market growing as you start to treat patients what you identify them yourself or do you see this mora close that.
Patient none about this and the common asking for the product. So just if you can elaborate on that that would be helpful.
Yes, that's something that we thought in detail about.
So the I think the first thing to understand it because this is a apology that.
Up until this point had no intervention and tell it was extreme point and required surgical intervention.
There is going to be significant mine shaft, and a new education that has to happen with these doctors doctors historically bypass this simply because they think there's nothing there could be done.
To the downplay AD. They go past it. So there is going to be certainly a little bit of a hurdle and re educating physicians as far as what to look for.
The key demographic is going to be Youre acquired blocky photos as likely more bilateral unilateral.
And that's going to be the age related.
And that's something that is a quick and easy educational tool with physicians because you're talking about also our key demographic market that spending the most amount of money on refractive lens exchanges cataract surgeries.
Procedures like this and so there is going to be that demand and that's going to be an easy transition for the practices that are seeing.
Your average baby Boomer type type patient base.
The second really demographic that we don't really know how this is going to transition and took us by surprise at least when we looked at it was the cosmetic side.
And you're talking about a product here that not only raise at the high lit, but why is there as well and so I can tell you I'd already somehow gotten caused from TV personalities that want to use it on air.
On calls from people, who want to and I'm talking about a to anyone I'm not sure Whos got out.
Gone caused by people, who want to use of trading for cosmetic reasons. It and now can be difficult to gauge because we've never had an opportunity to even pose. This question to these to these patients and so on an average practice, you're probably talking about acquired eight related Blucora ptosis.
Three to six patients a day, an average practice will see because these are the patients that require the most I care. These are the patient that started.
Then reading glasses that you're starting to zero cataracts. They all have drivers the there's these type of issues.
So that it's going to be a pretty steady stream of patients for quite a while like I said add to the second market and the one that seems to be more graciously.
After this that that's going to be very interesting to see.
And you had mentioned one other thing that I will mention that there is going to be a reeducation. Because this is something if you heard me talking before.
That's many patients suffer with and do not bring up to their eye doctors. So.
Ultimately down the road, there is going to be greater potential or growth when youre exactly right. There is other DTC or there is ultimately some type of awareness built within the patients where the last the doctor themselves.
Got it that that's very helpful. Maybe your second question for the company just far back then and.
And maybe there's a two part question has it from me.
Oh.
Business sort of strategy and readiness perspective to launch at around the tone of the yes, Brian how do you see.
The focus of the business evolving and do you may also be at a point that you're looking at.
Going to maybe a different states in your strategy for me.
How do you see the business.
Hi, good morning those.
Sort of evolution from the business was maintaining the base business. So maybe some thoughts around that and you said then Paul to what you see the market opportunity filed back Wilson.
That would be helpful. And then I have a quick follow up on the gross margin.
Sure so.
With our back listen.
We were really looking at this quite Opportunistically, our research and development group.
Medical Affairs.
Is quite busy behind the scenes mining all of the data that we've developed through all of our clinical trials because.
I believe we have the world's largest clinical trial data base now on M.S. specificity and the amount of information. We have is enormous so getting that out is going to be very important.
We're not spending any money beyond that effort in pre marketing prepping, the marketing or anything of that nature. We are basically on stand by from a commercials perspective to see how we do with the FDA because remember the asset is handicapped by every.
Body out there and it's a shomi story now so.
It will take a very little for this company to organize itself.
And launched the product into the neuro space with the kind of data that we have to support the asset we have commercially.
Brought up or shrunk organizations for selling and marketing many times.
Only and believe me when I tell you. This omni there will be a lot of highly qualified salespeople available. If we should choose to bring a book team up off the ground again. So we're not there now we are supporting our inline products with very small non personal efforts and telemarketing just like everybody else as they do but with our bad.
Listen, it's all about publishing data getting information out there through the medical channel the R&D channel and looking to expand the label once we get there and we'll get and then we'll see where we are but.
From a market prep commercial perspective, we're not really spending any money right now now the other thing I'll tell you, though that we believe the potential for this asset is enormous.
And we really haven't spent any time on that I know that that.
Theres a lot of.
Different data sources to pull from to verify this but the number of patients with emmis specificity is unfortunately growing.
In prevalence despite the fact that there's many new biologic treatments that are available.
The care so.
With a drug that has better tolerated and given only twice a day.
I think theres, a major opportunity here and so does the organization but.
I think that's as far as we're going to be willing to take it at this time.
Got it.
Thanks, Brian just last clarification on the gross margin.
How do you see progressing in the next couple of quarters. It's.
Level that you should expect it to be I couldn't quite.
Cash everything from the question that was Australia.
Yes, I think I think a couple of things going forward will.
Influenced the gross margin one is as some of the products that are bearing that are heavy royalties like night Nitroshure in total and I mentioned earlier.
You know that.
That will become less of a factor in the future quarters. However.
Neat.
That comes on stream, we do have royalty obligations there that will be.
Replaced with it.
And I think as pricing comes down across the.
Across the portfolio.
I think the unit production cost maybe slightly higher so they'll be a number of things offsetting one another.
As we go forward.
Got it thank you.
Thank you as a reminder to ask the question. Please press Star then one on your telephone.
Our next question comes on the line of lodging facade with Barclays. Your line is now open.
Hi, Thank you good afternoon. Thanks for taking my questions a couple of questions for Delta coming online for the company.
Mostly doctor cleaning and can you drill analogy to any of the products that go scene, which are primarily clinical that an extended lodge in life and is today. So when I asked this question I'm excluding products like you may play a bright ties, which are primarily I think biogen and and you have seen such.
Examples some ideas on the Glen I'll does evolve.
Secondly, any thoughts around the clinical benefit in dry eye patio seating, you'll practices and what will be the mechanism.
Driving such benefit thanks.
Yes excellent questions you know to speak to limit filing reply is really a diluted glaucoma drug that we had all been using for 30 years.
And then what happened was Boston on became aware that we were diluting it in our clinics and giving it out as an eye whitening drop and we've probably been doing that for six or seven years before BNL became aware of that.
And so there was an easy barrier there because every physician to the country was aware of it.
Yeah, we were all using it and relatively high capacity before becoming commercialized product and so.
When they released that they already had two things that were in play familiarity with product in use and the second thing was they were also Boston them being very keen eye care market knew that they had to pre released the products with physicians first in order to gain their acceptance. The one thing doctors do not like.
Is getting blindsided by patient that no more than they do or DTC campaigns that are ahead of Doctor education campaigns.
Most of them to be dismissive of products or just really not to support them. So.
This has some analogy there but.
I think where it ends because.
We have not had any previous experience with this product uniquely in this and this use or in the I specifically besides a diluted version years ago that was in.
Was in the eye whitening formulation.
And then probably the second thing was even when you talk about something like Loomer Fi remembered that went right into the pharmacies and into commercial setting immediately once doctors had early access so doctors had weeks or months of early access before is released into the this stores.
And so this will be different because it is going to be a prescription product and it's going to require approval by the doctor signature.
Scripture signature and so like I said I can't drive direct comparison, there and the second thing was relation to drive your drives a really complex.
Said are basically disease constellation.
And.
When it comes to its growing prevalence and it's growing pharmaceutical market. The one thing. We don't know is how drug interactions work. So I really can't say, how it's going to work.
Radically it's a visa constrictor and I can tell you one of the key complaints symptoms of all dry patient almost all drive efficiencies Red eyes. So certainly they may want to use us for that state.
Equally but that that's not the whole story because of increasing their peak puppy for freezer opening up the eyes that may happen.
Conversely negative effect on dry eye. So these are things that will have to see the clinical studies will really not powered to look at this although they did look and symptoms of dry and they did look at some other unique features that would show up in a short term trial and nothing was really noted two affected positive or negative.
And so like I said interesting question, but.
As I said before I can't see anything thats ever been on the market that has a direct comparison to their products. So it's really hard to forecast.
Thanks, Doug spending and that itself is outflow and for the company, Brian will discuss last month about you expecting there.
Section of the pharmacy by the new does the state as does being achieved.
Secondly, all what kind of perception and all the experience program would consider you change your thoughts around the sales force trend in Asia that action. Thanks.
[laughter].
So with regard to.
The pharmacy any inspection, we had the inspection it went well and will now we're waiting for our license. So it's like any day now.
We have on pins and needles about that.
The other thing just to backtrack, a tiny bit with respect to dry.
When we.
Look through all the clinical trials that we did.
I think we found that the incidence of previously diagnose dry eye coming into active treatment was 45% so 45% of our subjects had a prior diagnosis of dry.
Before entering the trial or trials and then what we found during the trials there was basically a 2.4% incidence of dry eye reported as an adverse event.
So I think this product.
Probably is okay to administer to folks with dry eye.
I think I'm understanding it because the safety profile was relatively the same as vehicle or placebo.
The block I'm, sorry, I forgot your third question.
So what kind of Conceptionally no expedience program would consider going to change your thoughts on fleet for strength in either direction.
Hi.
That's a very good question.
So just to just to clarify velocity the last part of that to change in either direction the progression to stage three and stage for I just want to make sure I know us.
Got it from an Opex perspective to see if you would consider adding field force if you see very strong reception or otherwise.
Yeah I saw it so that's what we were thinking okay. Good so.
We have in our model today a fairly.
Strong feel for what we expect to see and as JD pointed out earlier.
A patient per day from the practices that we're going to be visiting early and I've already agreed.
To meet our sales team shouldn't be that difficult over the over the short term.
Actually we think it's a softball or very low bar that will exceed.
I think what are the other gating factors is depend demick, because we would love to be out in full force in California, and we just can't do it right now and also in the state of Texas.
Dr.
Cutting Ham is is it certainly different than El Paso, and San Antonio So at Houston. So there will roll different than there was also affected differently. So that's part of the gating here. So I think the first space for us is going to be a learning phase.
If you will or an experimental phase, but I think.
You know, it's just it's going to take us time to get to enough doctors.
At enough practices to really dial up the expense.
Should we find that the early reception is better than we thought and.
Early indicators would seem that the receptivity is going to be very high.
Thank you.
Thank you.
This concludes today's question and answer session I would now like to turn the call back over to Brian Moccasins for closing remarks.
Okay. Thanks, everybody for hanging in there with us and.
Welcome to RBL pharmaceuticals, the new future of cosmetic thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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