Q3 2020 Esperion Therapeutics Inc Earnings Call
[music].
The presentation, there will be question and answer session.
Be advised that todays conference call may be recorded.
I would now like to have the conference over to venture investments Investor Relations and corporate communications at this you're young. Please go ahead Sir.
Thank you Patricia good afternoon, and welcome to experience third quarter 2020 financial results and corporate update conference call and webcast.
In church, I'm responsible for Investor Relations and corporate communications years bearing with me on today's call are Tim Mayleben, President Chief Executive Officer, Mark Watson, Chief Commercial Officer, and Rick Bartram, Chief Financial Officer, once you're my callers that the information discussed on the call today is covered under the safe Harbor provisions of the private Securities litigation.
Reform Act like.
I caution listeners that management will be making forward looking statements afterwards adults could differ materially from those stated or implied by our forward looking statements due to risks and uncertainties associated with the business. These forward looking statements are qualified in their entirety by the cautionary statements contained in today's press release, the FCC filings. The content of this conference call contains time.
Sensitive information that is accurate only as of the date of this live broadcast November 2nd 2020, we undertake no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this conference call and webcast.
As a reminder, this conference call webcast are being recorded an archive we issued a press release. This afternoon detailing the content of today's call a copy can be found at www dot experian dot com within the investors and media section.
We will begin with prepared comments and open the call for your questions. Following today's call. The team will be available for follow up questions. Please email investor relations at Experian Dot com to schedule 15 minutes to speak with the team I'd now like to turn the call over to our President and CEO, Tim Mayleben Tim.
Thank you Pat and good afternoon, everyone. We appreciate you joining our third quarter conference call and thank you for your continued interest in it's very odd.
No. It is an incredibly busy and historic week, and we will be watching the election results closely along with the rest of you and in case you need one final knowledge I want to encourage everyone to go vote. If you haven't already.
Today I'll share our progress on our mission to bring new and innovative oral medicines to patients with uncontrolled high cholesterol. Our commitment is to lifted management for everyone and at a high level. We are seeing an increasing need for our medicines report after report higher.
He likes the ever widening you need to refocus and re educate about cholesterol as patients are increasingly neglecting their long term health for a myriad of reasons.
We're seeing significantly fewer visits to primary care physicians and increased reliance on tele medicine, which has limitations in assessing cardiovascular risk factors like bad cholesterol, all while we are often more sedentary than ever.
[laughter] this long term opportunity to improve cardiovascular health of millions of patients continues to energize and motivate us as we navigate through a dynamic environment for companies healthcare providers and patients.
The go to approaches of commercial launch as past or just no longer relevant.
With this backdrop in mind, we believe experian is very well positioned as the only commercial.
Commercialized to public company with a singular focus on lowering bad cholesterol, we haven't tire company waking up every morning to do whatever we can to help patients and their healthcare providers with bad cholesterol.
A key element to building a strong foundation for any commercial launch is educating healthcare providers and patients about our medicines and our company and when we have this opportunity with H.C. piece, we find that we have an interested audience that recognizes the need for our non stat and easy accessible once daily.
The pills and appreciates our focus on battling bad cholesterol.
This was confirmed by a survey we recently conducted with cardiologists and primary care physicians regarding the types of interactions with companies. They prefer when asked if they would rather see a specialist in a disease area with a new medicine or a big pharma reps. It carries a bigger bag base over whelming preferred.
Specialist right now.
It's a small sample, but it gives us tremendous optimism in our near and long term plans to build our company around both innovation and a focus on cholesterol.
[noise] cardiovascular disease remains the number one killer in the World and is the only company truly focused on LDL cholesterol. The bad cholesterol, we have much to contribute to changing this tragic course, the scary reality is that cardiovascular disease is.
In creasing.
In fact in two so 2017, even before the pandemic. The U.S.C.D.C. said they expected debts from cardiovascular disease to increase 25% I 2030.
Despite this there has been a serious lack of innovation in addressing the need for cholesterol lowering especially convenient oral nonstop medicine. So each new medicine that comes to market has the potential to really make a major impact.
We're building a company that knows our focus on bad cholesterol and nonstop medicines will deliver tremendous societal and financial value a company that overcomes adversity, a company that partners with like minded companies at times, but also confidently takes the road alone at other times.
We embarked on this journey over 10 years ago.
Disrupting the neglected area of non stat, and oral LDL cholesterol lowering medicines.
Our goal is to fulfill unmet patient needs not confirm.
Conform to a traditional well worn path.
So with that in mind I'd ask you to consider what short term and long term success looks like in this environment.
In an industry with countless examples of historical launches and launch metrics, how do we measure success when all bets are off.
That's one of the few very few companies truly launching new medicines in this environment, we simply do not have the luxury to keep our customer facing teams at home and a little later in the call. We'll provide you our insights into what short term and long term success looks like.
Right now I.
I ask you to consider the power of momentum.
Well, we are hyper focused on getting our medicines into the hands of all who need them in the short term.
We are facing some temporary obstacles in accomplishing that however, there's a broader story a progress that demonstrates our team's ability to influence key stakeholders and I'd like to highlight a few additional proof points on our progress as a company.
So first.
Today marks the European launch of our medicines.
This is an incredible milestone that expands in fact significantly expands the number of patients that will benefit from our medicines and opens a new revenue stream for us.
We've been working very closely with our partner Daiichi Sankyo, Europe to prepare and share best practices for launching and this unprecedented environment.
Our medicines are now available in Germany, the biggest country in the region. The UK launch is planned for planned for early next year, followed by a staggered launch to the rest of Europe in line with the country by country process for access and reimbursement we participated in their virtual prelaunch meetings, which were attended by their more than.
1000 person European cardiovascular team and one thing is certain.
Yes. He is highly optimistic about the need for our medicines in the E U and extremely well prepared for the launch there.
Next I'd like to share some more news that shows the progress our team is making in the U.S. The a C or the American Association of clinical Endocrinologists recently published their updated look at guidelines, which now include nothing like acid.
As many of you know the incorporation of new medicines like ours and professional guidelines provides a key and enduring source of validation for any new medicine.
This is the first lifted guideline from a major medical society to include that they don't look at it which is an important step in <unk> coalition building I'm also pleased to report that across the board. We are hearing from health care providers to our medicines are meeting or even exceeding their.
Expectations.
Third.
I'm incredibly proud of how we are partnering with patient groups to establish a scary on as a patient centric organization with value in excess value and access as core values all companies say this but.
How many get to start from initial launch like we do.
This is something big pharma is backing into after years of reputation degradation, we are literally rallying around it from the start.
Our purpose as I said earlier is lifted management for everyone and that means we don't stop until everyone has achieved a recommended LDL levels.
Just a couple of examples of our patient group partnerships or work with both healthy women and the F.H. Foundation.
We are generating joint content to reach distinct patients together.
And these patient groups echo the need for additional non stat medicines to fight bad cholesterol, which is a powerful surround sound approach to reaching patients.
And finally I want to highlight that last week, the American Heart Journal published the clear outcomes CV Oki study design paper.
This article underscored the importance of demonstrating cardiovascular risk reduction for patients who are considered staten intolerant.
Have you heard us say for years, nearly 10 million patients in the U.S. with high LDL cholesterol levels are not taking stat earnings due to tolerability issues in fact never before had patients.
Unable or unwilling to take status has been the focus of a cardiovascular outcome study despite the clear need for non stat and treatment options. We believe the clear outcome study will provide added confidence in better delegates its potential for patients and their physicians, who ultimate objective is to reduce the.
Risk of cardiovascular events and this underserved patient population.
Our team, which has a proven record of executing continues to create momentum around our singular purpose.
We're building a company for the long term and have laid the critical foundation on which we can continue to grow.
We can't deny that however that we are facing headwinds in this environment.
But we're keenly aware of the patient need.
We understand the urgency.
We're listening to stakeholders in adapting to the environment and we are confident.
And our path ahead.
So with that I will turn the call over to mark to share more color.
On our commercial efforts Mark.
Thanks, Tim and good afternoon, everyone.
There were many perspective about how our launches going I'm looking forward to sharing month.
Our experienced commercial team, while new is overcoming obstacles to deliver double digit monthly growth.
Is it slower than we'd expect pre cogan, yes are we building steadily growing sustainable business that can quickly accelerate when conditions improve absolutely and I know this our team is out there every day doing absolutely everything they can while many of your peers stay at home along with many of US that's true grit and.
Medication.
Our team tenacity and sense of urgency is paying off.
Last quarter, we highlighted the three pillars, we are building on to drive a successful launch managed care coverage pricing and positioning and health care provider engagement.
We are in a strong position on all three pillars.
We have established brought high quality managed care coverage.
Our medicines have lowest prices aligning with our mission to provide affordable convenient oral once daily medicines to patients.
Regarding health care practitioner engagement.
Important factors to getting a prescription right.
The push can be equated our rep walk into HCP the office.
Medicine supply.
The poll can be represented by patients not at goal and going to the docket for a new approach. The key intersection of this pushed coal is the health care provider and this slide highlights how cold it has hampered both sides of this dynamic.
As you'll see on the left we have the old norm.
A full waiting room, where representative was able to break through a known environment and see the opportunities in the clinic with health care providers were seeing dozens of patients a day.
On the video looping by the side you can see the new door, showing what does become all too familiar to us near empty waiting rooms with reduced capacity to a local allow social distancing and primary care visits down overall.
Additionally, many in person visits are being replaced by Tele medicine, which has limitations in the management of cardiovascular.
This trend was highlighted recently in the Jama study, which showed that cholesterol levels and blood pressure falling through the cracks and virtual interactions.
In fact blood pressure monitoring was down approximately 15% in this in this patient population.
I'll also note that while we saw physician offices reopening in some regions. This quarter. This was off a patient visits and not for industry reps. As a result average weekly interactions were flat from Q2 at about 70% of we would expect the pre cobot levels. The good news is despite these dynamics we are growing.
Matt.
Throughout the third quarter, we saw Macon scripts, but next the toll and next to that as we encouraged our representatives to engage with HCP, where and how they can we.
We have seen consistent double digit prescription growth month after month, which was over 40% for both August and September.
You can see here that in fact corn three script volume in terms of Rps is over 500%. Despite significant headwinds impacting every aspect of the promotion about products, including our own commitment to launch during Q2 and a conscientious manner at the start of the pandemic in the U.S.
Comparison year to date in 2020, the entire LDL cholesterol new to brand prescription market a critical driver of new drug launches are down approximately 30%.
As we think about the launch more broadly there are no analog what we were doing that will accurately capture opportunity, but we remain confident in the long term success of Nexus fall and next was that based on the following.
For starters, our managed care coverage continues to impress.
We have now the majority of payer contracts in place covering 90% plus other commercial and 50% of Medicare part D plans.
We are confident that within a year our initial launch.
Well nearly all relevant mikes will be cover the vast majority of preferred brand tiers with the lowest patient out of pocket costs.
At the last bit of coverage comes on line, especially on the part D side, we expect to see continued improvement in prescription volume and elimination of any friction from prescribing and accessing our medicines.
Second feedback on our medicines continued to be very positive as we shared last quarter. We are hearing a result exceeding label expectation as well positive comments on ease of access and used by patients.
Accordingly early adopting physicians have increased the number of written prescriptions over time, which we believe reflects the positive results achieved by the initial patient they started off therapy.
Third our field force continues to expand the breadth and frequency of their health care practitioner interactions. We are committed to reaching AC piece on their terms as he outlined we launched conscientiously a few months back.
Now would you expect we're especially focused on health care providers in the higher desk style represent most significant opportunity in volume of prescriptions and likely if it's prescribed and we believe we are likely one of the leaders in terms of in person visits right now.
I want to emphasize again, though that our represented the doing this responsibly and following all safety protocols I.
I want to share a couple of additional highlights that give us confidence in our future growth.
In October we introduced an important element to our U.S. launch strategy, our DTC direct consumer campaign, which is named break the cycle.
The campaign and tends to increase awareness of the never ending cycle patient experience with lowering bad cholesterol and how Netflix Hall provides an innovative solution to help break the cycle.
We are very pleased the responses to the DTC campaign, so far and we'll take an adaptive approach to managing the campaign listening to the markets when form strategic decisions on how to advance the program.
As Tim mentioned, another highlight a CE public update to the liquid guideline, giving further credibility and validation Tibet, but don't acids inclusion in the clinical treatment paradigm. We believe this guideline update will not be less.
Overall, this patient population need convenient non stat and oral once daily medicine, such as next the tall nickel that now more than ever it.
Depend Devon has done anything it has brought a heightened sense of focus on the individual health and as the country and world will cover so sue will experience.
We look forward to providing you with additional updates on commercial progress in the months to come with that I will now turn the call over to <unk>.
Thanks, Mark I'll now provide some comments on our financial results for the third quarter ended September Thirtyth 2020, as highlighted in our press release from earlier today.
Total revenue for the third quarter was $3.8 million that includes $3.3 million of net product revenue, which is five times that of the second quarter and approximately half a million dollars in collaboration revenue.
As Tim mentioned, our partner Daiichi Sankyo Europe initiated their launch of Millen, Doe and Mr., Andy in Germany. This week going forward, we expect to recognize increasing royalty revenues tiered sales.
Milestones.
On the execution of our York Pn partner that we are not.
We do not doubt we'll be very successful.
We chose DSE as our commercial partner in Europe due to their long and strong track record in growing cardiovascular medicines and their ability to drive impact with physicians and patients across Europe in the cardiovascular space.
Exemplified by their continuing success with looks the Ana.
We look forward to continuing our successful partnership with them for years to come.
Continuing on R&D expenses for the third quarter totaled $35 million flat when compared to the second quarter of 2020.
We expect R&D expenses to remain at a steady state level for the remainder of 2020 and in 2021 as a result of clear outcomes, becoming fully enrolled in August of last year.
As she and expenses were about $49 million for the third quarter. This was up slightly from the $48 million in the second quarter, reflecting a small increase in selling and promotional activity expenses related to the U.S. launch of Mexico tall and next is that.
Net loss for the third quarter of 2020 was approximately $85 million or a basic and diluted net loss per share of $3.07.
When we look ahead to the full year, we continue to expect R&D expenses will be between $335 million to $145 million as well as SGN, a expenses will be between $200 million to $210 million, which will incorporate costs related to our recently launched DTC campaign.
Additionally, we still expect $30 million of non cash stock based compensation for the full year on top of the previously mentioned amounts.
As a top as a topic I know you are all very interested in its worth noting that generally it is atypical for a company to provide revenue guidance. This early in the launch.
Further compounded by the ongoing COVID-19 pandemic and the resulting uncertainty predictability is limited at this stage and therefore, we do not plan to provide revenue guidance prior to 2022.
On cash resources, we ended the third quarter with about $216 million in cash on hand, and continued to be very confident in our financial strength given the multiple funding sources, we have at our disposal.
As a reminder, we have an existing revenue base funding agreement with our partner Oberland capital.
As part of that agreement there was an incremental $50 million, we expect to become available to us next year.
As we've also over delivered on past X U.S. collaboration agreements.
You should have great confidence in our ability to deliver on the final rest of world agreement or agreements, which remains on track for the end of this year.
As a reminder, the upfront payments from a rest of world deal and the Otsuka agreement put in place in the second quarter are expected to total nine figures.
Similarly, I want to highlight for all of you that Esperion has over $1 billion in future milestone payments from our existing collabra collaborations that will continue to feed our balance sheet as our partners continue to execute overtime.
Of course, there's also the potential to monetize these substantial future milestones overtime as well.
We've demonstrated our ability to fund the company in a very advantageous manner over the last eight years in particular as evidenced by the non equity dilutive funding solutions, we've implemented over the past couple of years.
We will continue to ensure the organization is adequately funded to advance and create value.
With a clear and continued preference for non equity dilutive financing sources.
We are fully committed to maintaining appropriate cash balances through profitability and for the long term business opportunities.
With that I will turn it back over to Tim for closing comments.
Thank you Rick.
So I would just like to close with this you heard us stress a number of times the importance for medicines, such as ours. Our mission is to ensure patients.
Center of what we do or not forgotten.
Those who either cannot tolerate a stat and or require additional non stat LDL cholesterol lowering should be a priority and they are with us they deserve to have an easy once daily oral nonstop medicine that is priced appropriately.
And available to them.
We're driving towards this mission every day.
And third quarter was a continuation of that and we made several steps forward position.
Positioning us very on for long term success.
On our way to becoming the lipid management company.
Before we turn to Q and Amy I, just want to say again stay safe stay.
Stay healthy and go vote.
With that Patricia if you would please poll for questions.
Thank you ladies and gentlemen, if you have a question at this time. Please press the star and then the number one key on your Touchtone telephone.
Yeah.
Your first question comes from the line of Jessica Fye from JP Morgan Your line is open.
Thanks for taking my question. This is Daniel for Jessica Fye.
Last quarter, you stated that the current cash coupled with revenue are sufficient to fund continued operations through profitability. Today's press release, just stay sufficient to fund continued operations without qualifying until when so first do cash and revenue fund EPS bearing on to profitability and second if.
So does that assume you'll have access to the next 50 million milestone from overland.
Thanks, Daniel Rick can you take that one.
Sure Yeah. Thanks, Dana for the question. So you know as we as we stated in the prepared remarks, we ended the quarter with.
Over $215 million. We also stated that we expect that we're going to have access to the.
Additional $50 million under the Oberland agreement next year.
I just want to bring you back to.
Our highly conscious of the burn rate and as we've stated before we have a Midwest conservative mentality.
And we've always managed the burn appropriately for the organization and we've we've.
We've demonstrated our ability to fund the company in a very advantageous manner over the last eight years and then it's most recently evidenced by the non equity dilutive solutions. So.
As of as of the quarter very strong cash balance the additional 50 million from overland we have the rest of world deal proceeding.
Very well, we'll that will yield an upfront payment and then as a stated just as a reminder, we've already received over $360 million in payments from our collaboration and we have another billion dollars remaining of those milestones that are due to us and that's again before any double digit royalties.
Payments that overseas so.
We're going to continue to ensure the organization to adequately funded to create value and with a clear preference for for non equity dilutive sources.
We are committed to maintaining the appropriate cash balances.
Thank you and if I can sneak one more I met you mentioned the how should we think about our R&D next year, but.
In terms of as Jenny how should we think about the run rate into 2021.
Yeah, Rick you want to keep going.
Yes sure.
So Daniel I think on the EPS DNA side.
As you as you've seen this year SDMA has steadily increased some of the spend.
It has been decelerated due to the pandemic, but you know in terms of spend you know next year you can look at quarterly builds.
For our full year guidance to give you estimates for for Nash next year at this time and then you know next year on on the annual.
Ah report will be providing full year burn guidance as we usually do.
Timeframe.
Great. Thanks for taking our question.
Thanks Daniel.
During next question comes from Michael Yee from Jefferies. Your line is open.
Hey, guys. Thanks for the question maybe following along with that you can appreciate that Tim and Rick that there is a focus on the balance sheet and I think what everyone is doing is they're looking at the opex run rate and they're looking at the cash balance and they're suggesting that consensus revenues next year that you're going to.
At least dipped below one year of cash even with all the milestones and the things you've talked about show.
Given that there is sort of a change in wording about the.
Cash sources to profitability, what just one operations can you just clarify that equity financing is available to you that you would consider doing that and maybe just talk.
Talk a little bit about that but that's not ruled out.
Thats question, one and then question two ish, maybe more strategic 10, because as we think about 2021 and who knows what happens with Covanta. It's definitely possible that this could go on for a while and that 2021 and the general trend of a thing and the same I mean are you willing to say that you will you are guys considering everything on the team.
Cable, whether that's a strategic U.S. help or a strategic acquisition or just anything in the best interest of shareholders. Because I think the financing thing. It's a question for Pete bunch could she and I think people wonder how this changes in 2021. Thank you so much.
Sure Mike.
Mike maybe I'll take the first or I'm sorry, the second question first so.
You know I'll say, what what we've said before and you know again I'll highlight as well is that.
That you know the management team here on close to 20% of the company. So.
You know if if anybody.
If anybody doesn't think that we're feeling the same pain as as every other shareholder let's put that aside.
And.
And so you know we have an interest as I I think said repeatedly.
Not just on our most recent called that out earlier in the year as well that we've been running this business for us.
The better part of 10 years now to I think a highlight what Rick just said, which is a weeks.
Weve always funded the company Ah well early on obviously in our development through Mike and she said equity financings.
Over the last couple of years brought in I think Rick said Oh three.
360, plus million dollars of non <unk>.
Equity dilutive cash actually its including the Oberland.
Partnership well over half a billion. So I think we're surprised a little bit that.
That folks are seemingly in the investment community are are focused on equity financing ads.
As the.
The only source of capital available to accompany at our stage of development I think it's.
As Rick said, we have a.
Over $1 billion of future milestones not not counting.
And he's obviously that.
That are available to us so.
I think.
You know we have a lot of optionality here and certainly understand that we have different timelines, perhaps than than the investment community and.
You know will contain.
Continue to.
That gap will continue until until it closes and you know again, but I think as Rick said earlier, we're being very thoughtful about how we approach that.
With respect to strategic Optionality of course, I think we've we've always looked at whether its X.U.S. or U.S., we've always looked at that alternatives for.
For.
Whether its partnering here in the U.S. or whether its partnering X U.S. those are certainly things that oh.
We will consider we have considered and and so I think enough said about that I will.
Turn to Rick to Ah to buy any additional commentary that he'd like to.
Yes, Tim it just to just to add Mike.
You mentioned, you know Theres optionality were working.
We're conservatively managing you know the business, making sure that we have the appropriate cash balances on the balance sheet and we're going to continue to do that like we always have over.
The last last eight years or so.
Thanks.
Uh huh.
The next question is from Geoff Meacham from Bank of America. Your line is open.
Hey, guys. Thanks, a lot for the question.
Just had a couple just commercially can you talk a little bit about the next lives that versus next little split I think if you look at the scripts.
The Oh Nicholas that has been outpacing and just wanted to kind of just a view from the ground up in terms of demand perspective.
And then the follow on a previous question when we when we see the.
The cobot case accelerations of late.
Just help us with some kind of how that informs your investments commercial investments in 2021 do you feel like it's going to be more of the same answer any leverage that you could get.
From brand awareness et cetera, I'm 2021 that you don't kind of have to fight the.
The sort.
Sort of the virtual launch if you will and the investments you have to make there today and just wanted to want to know kind of what that picture looks like commercially twice.
Thank you.
Yeah sure so maybe I will.
Take the second question first and then Mark if you would if you would take the first question.
So you know with respect to the you know your question you know the way the way that we're thinking about.
About the future is I think as both Rick Mark highlighted is.
Cole said 19, the this pandemic that we're all living with.
You know no one [laughter] is working like they did before coated and I think we would expect that like perhaps many of you that pulled ahead. We will continue to have an impact I think like many of you as though we're also expecting that.
That we've all gotten a little bit smarter about how to adapt to.
To this pandemic and you know what's safe.
What are safety protocols, and what are safe activities to pursue and which ones aren't.
And and so I think we'll all smarter about those kinds of things. So I think that as we think about the future. We we think there's there's certainly a degree of uncertainty about the future but.
As much as 21 unfolds I think you heard mark referred to.
When when conditions improve.
This this is really going to be a very strong recovery story because the.
The early indications from physicians, Oh health care providers that are that are prescribing or product is it's easy to use easy to get get approved by payers.
The efficacy that they're seeing is I think both mark and I highlighted as good or better often than than they expected and of course, you know some of the things that we've been talking about for years. Its oral once daily it's a non stat and that doesn't have the muscle aches and pains associated.
With frequently associated with status so.
All of those things are are coming into reality and has the [noise].
As the.
The effects of the pandemic dissipate and I think it's reasonable to expect sometime in 2021. They will then this is really a strong this is really a strong recovery.
Patients will start to go back to their physician as they will as we've been saying pay attention to their cardiovascular health, which they're not doing as much today I think you heard mark.
Mark say that when you look at a script volumes for new script volumes for for Stat, and even they are down 30%.
30% since the beginning I think here if you look at Tcs canine volumes, there are down 40% since pre cove. It so.
So obviously as you know a lot of folks are practicing medical dispensing and in in this area, but it also implies that as this test for page, it's an incredibly strong recovery in some patients and their physicians returned to.
To addressing their their cardiovascular health, so with that I'll turn it back to you to answer the first question.
Sure Thanks, Tim and Jeff Yes. So next was that just to remind everyone. We launched approximately two months after.
Next let's call it the market, despite a slight delay and I'm really that that back.
Delayed also let to managed care, we Didnt go for the managed care contracts. So that's much later as well. Despite that next was that on a weekly basis is approaching 50% of the business and we continue to anticipate.
At year end next month that will be the predominant prescribed a product that much but there's more to it you want from that question. So right now it's approaching 50% is consistently in the mid Fortys. Each week, we went over 50% once or twice. It clearly is going to be the workforce and as managed care catches up to next call. We can expect it to be.
Hillary from there.
Okay, well that's helpful. Thanks, guys.
Got you okay. Thanks, Jeff.
Your next question is from Joseph <unk> from Cowen and company. Your line is open.
Hi, there. Thank you for taking my questions.
The first one is just sort of on the initial patient response in the patients that have received therapy.
The initial population those that want or need additional treatment on top of Staten versus stat, and tolerant how's that mix playing out.
And then in terms of providers in the primary care setting versus specialists are you seeing some that are that are more early adopters than others.
And then one more just on reimbursement are there any hurdle that you hadn't anticipated prior to launch.
That have come up or or is our most patients that want the therapy able to to get it reimbursed. Thanks.
Yeah, Hi, thanks.
Thanks, Justin.
Mark do you want to take all three of those.
Well. Thank you. So first on patient response, it really is a split between physicians were putting patients on very high doses of of.
That and.
We have great responsiveness on top of even 80 of its warm stacked and those.
Those come in fairly regularly from physician and we hear again, just just really incredible results from mumps that naive patients, who just failed or can't tolerate a stat at all we're even hearing anecdotes you know on top of even piece, yet but were actually hearing.
Strong efficacy, regardless of the background Asian, and it's been very consistent.
Throughout the entire country since launch, especially now that that that patient lastly, coming back.
Regarding our early adopters I think.
Cardiologist I think this is a co bid.
Given the cardiologist are definitely earlier adopters right now than primary care.
We would expect typically though.
Higher desktop primary care to be slightly earlier adopters and by early adopters on for instance, how many calls we adoption we are seeing the cardiologist due out each of the desk style adopting quicker than primary care.
Probably starting to catch up there, but I would say clearly that the cardiologist will be early adopters and moving quickly on putting patients on with primary care coming on board a little bit later and then finally your question was regarding coverage.
There is no change.
Patients can and do readily received the medicine on the commercial side.
Both in our coverage and with our $10 maximum co pay card everything is working according to plan no real surprises there I'd say in part D.
It's not really a surprise, but in the current environment, it's definitely a little slower coming on board. The negotiations are pretty much you know exactly we would have expected and I would say the results are very close what we expected. It's just the time with the execution and loading the contract that's been a little bit of a I wouldn't say surprise a disappointment, but absolute.
He tied cobot in fact that folks are not working on in their offices at this point I think I addressed all three any additional questions there.
No that's perfect. Thank you very much.
Well thanks Stephanie.
Thanks Mark.
Your next question is from the line of Smart the Oster from credit Suisse through line is open.
Thank you operator, thanks for taking the call. Most of my questions have been asked I might try a different a different angle and a little bit of Tim first of all thanks for thanks for the shout out to remind everyone to vote I voted early so I'm pretty sure that.
I guess or several the question thing I'm thinking back to Michael's question I guess on the kind of the path forward you, whether you're willing to be out it sounds like you're not really anything out but the best what I can tell from this conversation youre thinking about the potential of equity financing of strategic partnerships. The U.S. a pulling forward future milestone.
Turning to royalties from other territories.
Maybe could you talk about what the timeframe is where you need to make a decision about what to do to ensure adequate capital to kind of achieve breakeven results in the future and then amongst those.
I guess.
Preferentially I I don't know if I have a great feeling for how you're thinking about what the what the kind of better outcomes versus other outcomes or what you are more sensitive to if it's if it's losing some of the longer term value from one of the existing partnerships by pulling forward. Some some some royalty or milestone payments or if it's still.
Strategically you know maybe sharing the U.S. part of this opportunity where are your sensitive points and where do you think.
I guess, what do you think creates the best long term outcome for investors, if that's where your focus it sounds like.
Yes. Thanks.
Yeah. Thanks, Thanks, Marty Rick maybe I'll ask you to to start on this and then I will add my comments as well.
Yeah. So thanks, Marty you know so I think you you rattled off you know a good set of of items.
You know as we said you know our preferences for.
Non equity dilutive solutions, we've been focused on those in the past and we will continue to be focused on those.
I do want to bring everybody back to you know I think the long term view, we are cronk confident that you know the 1.8 million patients that we've stated will be treated at peak with our medicines that remains intact and while you know near term.
Revenue expectations have been.
Adjusted as a result of co, but the long term potential of our medicines still holds true and as a as Mark mentioned ready.
Ready to strike when when the environment returns. So you know we're going to continue to maintain appropriate cash balances.
You know we're actively.
Monitoring those balances on a day state basis.
Not going to comment in terms of timing of when things would happen, but you know just right reminding back we are on track for a rest of world deal by the end of the year, that's going to bring additional funding into the organization.
Just added to the other already in place funding solutions that are that we have so we have a high degree of confidence in the cash runway as well as our ability to execute.
[noise] yeah. Thanks, Rick I think that was that was well said and Marty I think on the you know on the strategic front again I think.
You know in a.
Overtime of course, you know folks will look back on this time and say.
She was all the fuss about because again I think that you know I think as Rick Rick highlighted.
The track record that we have.
Not only executing on on milestones.
You know, saying, what we're going to do in doing those and then keeping keeping the company adequately funded is.
As good as anybody out there again, you know reasonable people can disagree on.
On how that should be done and and when it should be done, but I think again, our track record is such that that we've demonstrated the ability to do that and ER and to do it consistently so so I think.
We feel confident as as Rick said that.
It will be able to continue to do that.
The pandemic it has certainly shifted our plans as it has plans for almost every business and views of of businesses, but you know we will.
Well certainly overcome this just I'm just like the rest of the country is going to overcome the.
The effects of that overtime.
Thanks, Tim I mean again I agree you couldn't you couldn't imagine a more challenging scenario would be launching a sort of drug into.
Just just I'll try one.
Just in terms of the I understand you cant predict the timeline to making important strategic decisions, but do you have any sort of guidance you can offer investors in terms of like what was how you're thinking about kind of quarters of capital on hand to kind of book buttress against.
No kind of.
You covered the you know letting your plans under further or you're not seeing the kind of ramp up you might expect to see next year revenue.
Any guidance you can put around that.
Rick.
Any thoughts on how.
How you'd like to respond to that.
I'm sorry, Marty My my phone was chopping out can you just do the question Yeah. Rick just just was trying to ask a.
Well I appreciate that you can't.
Necessarily you know put a timeline on an important strategic decision. When you got a few options available to you to think about.
I understand that you got projections going forward about how your revenue is going to what your burn rate looks like.
How are you thinking internally about how many you know in.
In terms of trying to fine tune the timing how are you thinking internally about how many quarters of capital you're willing to kind of one down too and I think that it goes back to one of the questions asked earlier, but it looks like you are kind of coming up on your capital or less and I'm trying to understand the urgency with which you're trying to make this decision.
Yeah. So yeah, you know there's lots of precision on quarters of capital on the balance sheet to try to identify.
When additional sources would come in you know again I just want to bring.
Bring everybody back had over 215 $15 million of cash on the balance sheet, we have multiple funding sources in front of us.
Yeah timelines of harvesting those funding sources some of them are very transparent on on the timelines others. You know our are are available to us. So we're going to continue to make sure that the organization is adequately funded we're not going to run the cash.
Balance down to to low levels, and we're going to continue to ensure that we have the ability to execute on the business plan.
Great. Thanks, so much for kindergarten appreciate it.
Hey, Thanks, Mike.
Your next question is from Jason Butler from JMP Securities. Your line is open.
Eighth Roy in for Jason Thanks for taking the questions I had a couple of quick ones. Just curious if you guys have added TV into the direct to consumer initiative, yet or is that.
Coming later this quarter and then I guess I was a little bit.
Maybe puzzle, but the.
Exactly that next lives that could become the front runner looks like the DTC is emphasizing next lutalo does that become confusing later I know says we discussed this a little bit before the launch but any thoughts around that thanks.
Yes, sure Mark can I.
Those to you.
Sure yes. So so we're not we have not introduced not traditional TV into into this we're taking a very smart approach in DTC and there's other aspects will get on localized TV for a different aspect, but not full scale consumer TV like you would expect like watch.
And TBS at nights and it's not it may not be next quarter, either we're still evaluating the right time to come into this and we're looking at how other brands are performing regarding confusion in the market no back.
I think starting the DTC in the campaign for next week's Hall, we do think that position still need to become comfortable.
That's the tall, the innovative product, but as you get more comfortable with next whats all and start with Nexus Hall. They will quickly move to next will that for those patients that aren't goal and then eventually at the comfort grows they'll continue to just start on next was that so I don't think it's any confusion at all we always knew that.
Anytime you have a new product launch and innovative product they do need to become comfortable with that the transition from that was that is happening rapidly and we did anticipate that would happen. So I don't think there's any chance of confusion at all.
Okay that makes sense and make them.
And I just wanted to ask a couple of points. One is again just for everybody's reference that where we're seeing next was that at at about 45%. So almost half of prescriptions are for next slot that now and we've been saying for a couple of quarters now that by the end of the year.
Where we would expect that to be about 50%. So about half by the end of the year will be next will set the other half will be next the tall oak.
All the while we're we're continuing to grow.
So you know.
I think that's important and then long term as Mark was saying.
We expect next lives that to be the.
Dominant medicine, and the franchise, perhaps as much as two of every three.
Prescriptions written for for the products will be for next was that because of the the greater LDL cholesterol lowering efficacy with with that medicine and then the only other thing that I'll leave you with and then we'll take the next question is.
Is that if you recall on our last.
Our last quarterly call in August we we mentioned that we were.
The next let's call franchise was was about 10% of new to brand prescriptions for the non stat and LDL cholesterol lowering.
Medicine class and that has increased now in fact, it's doubled to 20% of new to brand prescriptions. So I think.
Mark spoke in his prepared comments about the.
I don't see a.
Green shoots that we're seeing I spoke about the momentum that we're seeing you know even in the midst of launching in a pandemic.
We are seeing this really nice growth.
And.
In physicians prescribing, our medicines and really increasing numbers so with that Patricia if you would go to our next question.
Your next question is from there aren't a lot from Stifel. Your line is open.
Hey, Thanks for taking the questions and good evening guys. Just two from US I can you just remind us on the overland 50 million are their requirements around revenue thresholds associated with that next tranche.
And then I might have missed this but the step up in SG inane for to you is that the best way to think about the run rate for 2021. Thanks.
Rick that sounds like two questions made for you.
Yeah. So thanks, Derek so on the Oberland, you're correct there is sales requirements.
$100 million of worldwide sales a six months trailing so you know not just those associated with the United States and now that Europe.
Europe is launching those revenues will start to continue to count towards that 50 million, which we're confident will have access to.
To next year.
And then SGN a SNA wise, you know I think I had mentioned.
Sina is is building using the full year sort of a closing run rates should be generally good estimates for you for next year, but obviously next year. When we report year end results will be giving from expense guidance like we are.
These have on both R&D as well as best you know.
Okay, great. Thank you.
The next question is from Chad Messer from Needham <unk> Company. Your line is open.
Hello. This is a go on for Chad and thank you for taking our questions and again congratulations on all the progress.
Maybe a slightly different tack about them opened 19 effect.
Do you guys expect some patient warehousing, you know maybe a bolus of patients appearing.
When things improve is that the kind of dynamic we're thinking of or would it be more gradual.
Yes, Gil interesting that you ask that and Mark do you want to do.
Do you want to take a first crack at that.
I do think.
You know its interesting degree timed question my head of analytics and I were just going through this a little bit earlier today.
When you when you kind of see where where page eight where office visits were you know you see this dramatic drop coming in exactly into coated and this is up from the Symphony Health Cobot update recently up so we do what we have seen this.
This this heavy heavy bit down office visits down to about 25% across and specialty you see this movement to try to get back to normal but it does not take into account is all those visits that were law. So I actually do believe that all those visits loss will create a bolus of people coming back into the office and I think.
It's going to it's going to happen either after you know there's some comfort that this spike is done and completed or a vaccine or something else that these are lost visits and these patients do have to come back and it was a dramatic loss and we do anticipate there'll be some type of bolus. The question is when but I do believe.
Those visits to have to come back at some point.
Thank you that that makes a lot of sense a bit of a housekeeping question. So there isn't a noncash span of.
Of about 30 million as most of that expected in the third quarter, sorry in the fourth quarter and how should I think of the split between <unk> and R&D there.
Rick.
Yeah. So.
Those are full year estimates you know generally straight lined for the for the full year and the general allocation is about one third of that expense hits R&D two thirds of that expense hits US you know.
Thanks very helpful and.
Good luck with the rest of the launch.
Hey, Thanks, guys.
The next question is from Tom Shrader from T.I.G. their.
Your line is open.
Hi, this is going on for Tom. Thank you for taking my question I'm.
I'm curious how much visibility you have on geographic trends regarding in person versus virtual patient visits and how informative. It is this to your sales efforts over the next couple of months.
HM.
Thanks, Thanks, Julien Mark will you take that one.
Oh sure I think to answer the second part of the question first it's not really we're not dependent necessarily on that position patient Tele health aspect you as long as that office could see a rapid outset gets in there the chances of a physician prescribing are much much higher.
So our focus really is on having our representatives focused on the right targets and gain access regardless of what the off with the physician practices looking like at that time.
As far as geographic reach I wouldn't say, we have great visibility because it's changing so rapidly and much of the virtual versus in person health care is actually being driven by health care systems, an IDN not by geographic location. So it's not quite 100% tied to hot spots of spike.
It's really about the governance of the healthcare systems, but as far as we're concerned really most important interaction is representative in the physician and that's where our focus is and there's no doubt we have access and we can gain access on a regular basis, that's where the prescriptions are coming from.
Okay, great. Thank you that's very helpful.
The next question is from Paul Choice from Goldman Sachs. Your line is open.
Good evening and thanks for taking our questions I have two first for Rick just on the Opex with regard to your guidance I'm thinking about next year Oh.
What percentage of your Opex right now is fixed versus variable as an 80 2070 525, and just how much of that can could you discretionary spending could you potentially push off to help the cash position and then my second question is for Mark just with regard to.
Insurance on coverage can you maybe just provide some color as to what are the insurance approval versus rejection rates and do you know how you what the progress has been there over the course of the quarter and looking into into the <unk> This quarter as well. Thank you very much for taking our questions.
Yes.
Thanks, Paul.
Rick Mark.
Yeah. So I'll take that question a one first Oh, Paul So you know to get a good gauge of generally what's fixed and SGN. A you could just generally looking back at prior quarter quarterly reports prior to the launch to get a sense of generally the fix numbers, but.
Overall, the vast majority of costs and as you may have some variable component.
To it but you know, we always manage the business pretty conservatively and making sure that we're very prudent in the spend.
And we have a lot of optionality in.
Ensuring that the that the spends appropriately modulator it.
Mark Mark do you want add up.
So so Paul you want I would say so.
Our approval rate is it's exactly where we would expect to be right now and very much in line, if not better than other recent launches.
Regardless of of industry. So.
We are seeing improvement week by week, both in commercial and part D and again, Paul It's it's.
Well over majority of all prescriptions are being approved and it's pretty much exactly what we would expect to be at this point.
Of coverage and prescriptions being generated.
Thanks, great. Thanks for taking our questions.
Thanks, Paul.
I'm showing no further questions at this time I would like to turn.
Back to the speakers for any further comments.
Hey, Patricia Thank you for for helping us facilitate the call. This evening to everybody listening. Thanks very much for spending some of your Monday before election day with us as I suggested earlier. Please go vote. If you haven't already stay safe through through all of this and we'll certainly.
Be in touch with you again soon.
With our with our Q4 results.
So much Stacy.
<unk>.
Ladies and gentlemen, this conference. These conference calls. Thank you all for joining you may now disconnect.
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