Q3 2020 GW Pharmaceuticals PLC Earnings Call
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded I would now like to turn the conference over to your host Mr., Steven Schultz, Vice President of Investor Relations for GW Pharmaceuticals. Thank you you may begin.
Welcome all of you and thank you for joining us today for our third quarter Twentytwenty results call.
Again, Im Steve Schultz, Vice President of Investor Relations at GW today Im joined by Justin Gover, GW is Chief Executive Officer, Darren Cline U.S., Chief Commercial Officer, Chris Tovey, Our Chief operating Officer, Dr. Volker can efforts, Chief Medical Officer, and Scott Joc of Belo Archie.
Financial Officer.
We hope Youve had a chance to review our press release issued a short while ago, we expect to file our form 10-Q. Later this week before we begin let me remind everyone that today's discussion contains forward looking statements based on the environment as we currently see it and as such does include.
Risks and uncertainties, a list and description of risks and uncertainties associated within investment in GW can be found in the Companys filings with the US Securities and Exchange Commission.
Finally, an archive of today's call will be posted on the GW website in the Investor Relations section.
I'll now turn the call over to Justin Gober, GW is chief Executive Officer.
Thank you, Steve and welcome to all those who have joined us today.
On today's call Darin, and Chris will provide us and European commercial update Volker will provide an R&D update and Scott will then review our financial results.
Overall I'm very pleased to report a strong quarter with total revenue in Q3 of $137 million, a sequential growth of 13% over the prior quarter and 51% over the prior year quarter.
Year to date total revenue is $379 million, representing 87% of growth over the prior year.
While the pandemic makes for a more challenging commercial backdrop. We are confident of Epidiolex has all the characteristics to continue to exhibit strong growth in the months and years to come.
In the close to two years since launch in the US we estimate that Epidiolex has to date achieve penetration of approximately 30% of LDS patients.
40% of dray patients, 10% of TSC patients.
And less than 10% of other refractory childhood onset epilepsy.
While this level of penetration is significant it is clear that there are tens of thousands of us patients remain potential candidates for epidiolex.
In the second half of August our US sales organization started actively promoting the PSC indication.
Receptivity to date has been very positive and we believe that this indication will off a strong support to the commercial momentum of Epidiolex as we move through the remainder of the year and into 2021.
We have also seen important progress in recent months and expanding payer coverage and overall consider ourselves to be very well positioned to deliver on the full potential of episodic.
Outside the U.S EBITDA.
Epidiolex delivered a strong quarter, demonstrating a strong recovery from a co that impacted Q2, and we continue to make important progress in pricing and reimbursement in key European markets.
As we have stated on previous calls we see epidiolex as representing the beginning of a new era for cannabinoid science and we are committed to advancing GW cannabinoid pipeline to develop important new treatments for patients with a particular focus on the fields of neurology and near a psychiatry.
In recent weeks, we have commenced a new phase three program NMS the start of a new phase two program in schizophrenia and the first in human dosing in a phase one trial of a new drug candidates targeting within your Assa khattri.
Notably we announced today that the mix of those phase three clinical program is now underway with the first SMS Spasm study now recruiting patients.
A second phase III study on track to commence shortly and three other studies set to begin in 2021.
As we have previously stated any one of these studies could lead us to an MD a submission with the FDA and data from the first study is expected in 2021.
Let me now hand, the call over to Darren for Us commercial update.
Thank you Jim.
In the third quarter, the U.S. achieved $122 million and Epidiolex net sales compared to 86 million in Q3 of last year year.
Year to date us revenue through September Thirtyth was $339 million compared.
Compared to $188 million in the same period last year, representing an 80% increase.
During the quarter, but the dialects continued to deliver the benefits that our patients and their caregivers have come to depend on patient persistency continues to be a cornerstone of the brand.
Also achieved growth in new patients in Q3 relative to the prior quarter, which was of course, the time Workovers impact was particularly acute.
Dialects continues to have near Universal adoption amongst top prescriber targets with nearly 100% of top tier and approximately 95% of the second tier targets prescribing epidiolex in Q3.
Market research demonstrates that we have significant growth opportunities for new patients to initiate up about ilecs therapy as Justin said in his opening remarks, we estimate that we have achieved penetration to date.
Approximately 30% in LG us, 40% Rebase syndrome, 10% in TSC and while we do not promote beyond those approved indications less than 10% in other refractory childhood onset epilepsy syndromes.
This provides us confidence that there are tens of thousands of patients that remained future candidates for epidiolex.
In this most recent quarter. The sales team has reported an overwhelming positive response to the new TSC data label and the broadening indication given epidiolex had approximately 10% market penetration in CSC at the time of this indication approval as we have guided previously we see this.
His label expansion has very different to Epidiolex initial launch the commercial uptake is in line with our expectations and we are well positioned to execute successfully on the sizable new opportunity.
Active promotion of this indication commenced in the second half of August.
And it is encouraging to note that September virtual sales calls and face to face interactions were up substantially relative to August.
Broad spectrum efficacy amongst a wide range of seizure types and TSC and the ability to treat patients as young as one year of age is resonating well with physicians and has also yielded a reinvigorated excitement around LG us and dramatic.
With all that said these are not normal times and cobot inevitably impacts our sales efforts.
As it is doing more broadly in the field of neurology.
While patient assistance because its have improved from Q2.
We continue to be down relative to pre cobot levels, especially in our pediatric population.
For our sales team, while overall face to face healthcare professional interactions have increased from the second quarter.
We remain far below pre cobot levels clearly there is a difference between the benefits of an office face to face interactions versus virtual engagements.
Rapidly to the virtual environment.
I've been very impressed with the agility of our commercial and medical affairs organizations.
I'll now turn to our payer initiatives, where we have seen important progress in further broadening epidiolex coverage for.
For TSC, we are already at over 90% coverage and should reach near universal coverage levels within the fourth quarter recent.
Recent commercial TSC formulary adoptions include CBS anthem crime, Optum, United and most state Medicaid plans.
One of our goals in 2020 was to share data with payer, it's more broadly in treatment resistant epilepsy, so the payers across Medicaid Medicare and commercial and make informed and appropriate formulary and coverage decisions following promoting purvey, LG us and TSC to physicians.
Efforts have led to a very meaningful expansion in coverage and in total 85 million lives across Medicaid and commercial plans have either no prior authorization requirement or have been assigned a broad HTA with a criteria independent of diagnosis assignation. This.
This is an increase of 47% since the beginning of 2020.
We are seeing meaningful coverage expansion in Medicaid as of today I'm pleased to report that about 55% of the 70 million lives in it.
Hi, there have no prior authorization requirement or have been assigned abroad.
This is up from about 25% at the beginning of 2020.
In the last few months alone approximately 17 million Medicaid lives have experienced a positive formulary change.
Most notably during the quarter, Florida Medicaid updated its formulary I think in electronic look back for any epilepsy, I CD tinto, but.
Virginia, Medicaid move Epidiolex and removed their prior authorization 19 state Medicaid policies now reflect this broad coverage, we anticipate more Medicaid policy changes before the end of the year.
For commercial plans nearly 25%.
185 million commercial lives.
There have no PPA requirement for been signed abroad. PA. This is up from 14% at the beginning of 2020, we are confident that we will see further progress with commercial plans in the coming months.
We recently launched our field reimbursement team, which provides direct national and regional payer policy and patient specific support with providers.
We are seeing a positive impact from this team supporting patients accessing epidiolex therapy, and navigating any plan requirements.
Overall, our results this quarter reflect the continued dedication the us commercial organization and I am proud of our team's commitment to the patients and physicians, we serve while adapting to the challenges of the global COVID-19 pandemic.
We are excited by the tremendous growth opportunities that epidiolex provides and addressing the remaining important unmet needs of patients and our target populations.
In class team in place.
High level of engagement from prescribers, we continue to make meaningful progress with payers and we have an unrelenting passion and focus to ensure patients that can benefit from epidiolex diagnosed in prescribed therapy. Overall, we are extremely well positioned to execute on our plans.
With that I'd like to turn the call over to Chris to discuss our progress in Europe as well as manufacturing.
Thank you Don.
Ex us net sales of Epidiolex in the first three quarters.
The $28 million in Q3 has been our highest ex us epidiolex sales quarter with revenue of $11 million. This.
This is very reassuring following Q2, where we now see the most significant COVID-19 impact.
However, we do expect epilepsy clinics to be impacted by the recent significant uptake in COVID-19 in Europe, and therefore expect European sales growth to be impacted in Q4.
Our European commercial medical customer facing staff are in the majority still working from home and customer engagement is largely through digital channels.
However, during the quarter, we did restart limited face to face through engagement and has made considerable progress in upgrading our digital platforms and channels and transitioning and planned face to face events into virtual loans, which positions us well for the near future.
The only two major countries in which we actively promoted to the in the UK. Hence our activities. This year are still predominantly focused on securing good pricing and reimbursement in the major European markets and we remain on track to secure favorable pricing conditions at.
The dynamics in these markets.
The UK, where we had already received endorsement from nice and central funding for Epidiolex from the NHS, England broad access within hospitals in Scotland was approved by the Scottish Medicines consortium SMC in September meaning that reimbursed access to Epidiolex now exists across the whole of the United Kingdom.
And then another highly respected international reimbursement organization has endorsed the value of Epidiolex.
In Germany, where ethanol Ics enjoys orphan medicines status within the pricing and reimbursement process and where we previously secured a positive GBA benefit rating. We're currently engaged in positive final stages of negotiations that meal launches, which are anticipated to conclude shortly.
In Italy, where Epidiolex received innovation state to send the reimbursement authorities. We're also currently engaged in final stage pricing negotiations with the authorities, which are anticipated to conclude by year end.
In France, the number of Epidiolex patients in the French regulatory agency sponsored 18, you early access program continues to grow.
In parallel with this we are progressing well with final pricing negotiations based on the transparency Commission granted.
Sam off full rating, which recognize the clinical importance of Epidiolex now to conclude negotiations before the year end in France.
In Spain, following some administrative delays due to cold 19, we've now begun discussions with the local pricing and reimbursement authorities and we expect these to conclude in the first half of Twentytwenty one.
In addition to these major European markets, we continue to progress our expansion across the second wave of small a European countries.
We remain optimistic on the potential to be able to launch in most of these countries in 2020, along with favorable pricing and reimbursement conditions.
Outside of Europe in late September the Australian therapeutic goods administration TJ approved epidiolex.
We're now actively progressing pricing and reimbursement negotiations with payback, which should conclude by year end to enable launch in the first half and Twentytwenty loan.
Finally, let me provide an update on global manufacturing and supply chain, which falls under my own assigned.
Following on from the positive situation in the second quarter and manufacturing facility continues to operate at its highest levels of efficiency and deliver against plan production schedules we.
We have been able to build and maintain significant stocks in the us and European product and our supply chain continues to exhibit ongoing resilience to ensure patients supply continuity aid.
Through these recent months of Cobiz restrictions.
Thanks, Keith and let me hand, the call to bokor the his update.
Thank you, Chris and good day everyone.
We are building a robust cannabinoid pipeline at GW across all stages of development and this quarter provide examples of progress across the spectrum of R&D, including the start of a new phase three program for the start of a new phase two program and first in human dosing in the phase.
Phase one trial of a new drug candidates.
We firmly believe that GW has a wealth of opportunity to bring new in the avenue of product to patients within the fields of neurology in neuro psychiatry and expect the pace of pipeline activity to continue to accelerate in the remainder of 2020 and throughout Twentytwenty one.
This morning, we announced that our most advanced pipeline candidate and the big some molds.
Has entered phase three trials in the United States.
As a reminder, we have previously completed three positive phase three trials in Europe and have agreed a path forward with the FDA. So set a positive result in a bond of these five emmis best is to these studies will enable anda submission.
The first of these five studies the 450 patient placebo controlled spasm frequency study is actively recruiting.
We are also working to start the 52 patient placebo control muscle tone study by the end of the year coal with permitting we.
We are also progressing preparations for the three remaining a big some molds and with these two stores next year data from the first the big some modes pivotal study remains on target for 2021 readout and there will be results from the remaining four trials at regular intervals over the course of the remainder of 2021.
2022.
We have chosen spinal cord injuries spasticity, if the second spasticity indication because it is the closest to Fms spasticity from a neera anatomical and pathophysiological point of view with the vast majority of pathology NMS spasticity belief to stem from the spinal cord.
Lesions.
Discussions with the FDA suggests that that abroad specificity indication should be attainable with MSN spinal cord injury spasticity results.
Historical injury program consists of three studies to one observational study into subsequent phase three studies, which we also aim to commencing 2020 one.
US market research shows that there is a very sizable opportunity from the big some molds within the field of spasticity.
As such given the operating environment presented by coal that we have decided to prioritize our focus on the execution of this specificity clinical trial program into pushed back the timeline for non specificity lifecycle trials and specifically our planned post traumatic stress syndrome.
Study, we will review the timing of the PTSD trial in the second half of 2021.
Good Pos in clinical trials caused by the pandemic has also caused us to review our lifecycle focus for IP dialects. Following the successful TSC label expansion, we have decided to commit to further expanding the MP dialects label within the field of epilepsy.
Consequently expect to commence a phase three trial in an additional orphan epilepsy syndrome and 2021.
We also remain committed to more broadly understand the potential of connected noise in neuro developmental disorders until.
Until now these efforts have been centered around the study of Epidiolex in Rett syndrome, and an investigator sponsored trial of CBDV in autism.
The pandemic has caused a meaningful feasibility challenges for the Red study and we have therefore decided not to resumed recruitment into this trial, rather we will further the understanding of the behavioral and cognitive effects of CVD in the broader autism population with a new study.
This new 160 patient too feeble control trial is expected to commence in Q1 2021, and we'll address the core symptoms of autism, where the CBD formulation.
Regarding CBDV and autism spectrum disorder recruitment has resumed in the investigator led 100 patient placebo controlled trial.
During September we were pleased to initiate a phase twob study in schizophrenia.
This randomized double blind placebo controlled trial will investigate the safety and efficacy of GWP for two 003 versus placebo as adjunctive therapy in participants with schizophrenia experiencing inadequate response to ongoing antipsychotic treatments.
Additionally, a study of an intravenous form of Canada dial to treat neonatal hypoxic ischemia consent for Lapa, Theo and HIV continues to recruit.
Finally, I am excited to introduce a new botanical cannabinoid product candidate.
GW five for one.
GW five fold one is a complex botanical formulation that contains many known constituents of the cannabis the tiber planned but differs in connection not composition from the VIX evolves.
The relative amounts of the target cannabinoids have been optimized to treat conditions within the field of numerous psychiatry.
The phase one study to assess the safety Tolerability and pharmacokinetics of GW Pfeiffer one in healthy elderly volunteers has recently commenced.
This is one of several new candidates that our discovery team has been evolving and we expect additional new connected products to enter the clinic in 2021.
Thank you and let me now hand, the call to Scott Chaco Belo to provide the financial review.
Thanks, Volcker and good morning.
I'll now summarize financial results for the quarter and nine months ended September Thirtyth 2020.
More detailed discussion of results will be provided in our 10-Q, we filed later this week.
Starting with revenue.
Total revenue for the quarter increased to $137.1 million compared to $91 million in the prior year quarter due primarily to global Epidiolex net sales of $132.6 million in the quarter.
Total revenue for the first nine months of 2020 was $378.6 million compared to $202.3 million in the prior year period.
Total deductions from gross sales for allowances were $37.1 million for the quarter compared to $18.6 million in the prior year and relate mainly to epidiolex.
Cost of sales amounted to $7.6 million for the quarter or 6% of net product sales compared to $8.2 million or 9% of net product sales in the prior year quarter.
This improvement is due primarily to the substantial increase and up a direct net sales over the prior year period and related manufacturing efficiencies.
Moving to R&D spend.
Research and development expense was 56.9 million for the quarter, an increase of $20.6 million in the prior year quarter and reflects expenses related to the ongoing Epidiolex development program as well as advancing the readiness of the Nixon malls clinical program and our other pipeline programs.
This represents an increase of 11.2 million over Q2, driven mainly by the restart of studies previously on hold due to COVID-19 and startup activities kind of extra miles program.
Turning to ask generic.
Selling general and administrative expenses increased to $85.2 million in the quarter from $64.2 million in the same period in 2019.
This increase is primarily due to costs related to the launch of Epidiolex in the us, including the recent Trc launch and the build out of our commercial operations in Europe.
This has all resulted in a net loss for the quarter of $12.2 million compared to a net loss of $13.8 million in the prior year quarter.
Moving to cash flow for the nine month period.
Net cash used in operating activities for the nine months ended September thirtyth amounted to $33.3 million compared to $107.5 million for the prior year period.
Net cash used in investing activities for the nine month period was $23 million compared to net cash provided by investing activities of $73 million in the prior year period, which included the proceeds from the sale of our priority review voucher.
Capital expenditure for the period was $16.6 million compared to $31.1 million for the prior year period and reflects continued investments in an expansion of our cannabinoid production facilities.
The resulting net decrease in cash and cash equivalents for the nine month period amounted to $56.6 million.
We ended the quarter with cash and cash equivalents of $480.3 million.
Turning to guidance.
As in previous quarters, the extent to which the COVID-19 pandemic will impact our expenditure for the remainder of the year continues to be uncertain.
That said, we are narrowing our guidance range for R&D and SGN expenses for 2020 to $530 million to $550 million from the previous guidance range of $520 million to $550 million.
We are also lowering our range for capital expenditure to $20 million to $25 million from the previous guidance range of 25 to 35 million.
Thank you and I'll now hand, the call back to Justin.
Thank you Scott.
In closing we are very pleased with the performance of GW is overall business in Q3.
Essential elements to support future Epidiolex revenue growth are in place.
Particular, and expanded indication and efficacy profile broadening of payer coverage and near Universal adoption by key prescribed at target.
We fully expect EBITDA likes to follow the same long term growth cost seen with previous highly successful anti epilepsy drugs.
We continue to enhance the exclusivity position of Epidiolex.
In addition to the 13 patents currently listed in the Orange book 12 of which expire in 2035.
To further Orange book listed patents are expected to be allowed or granted by Q1, Twentytwenty, one and additional applications beyond this our and prosecution.
We also believe that the addition of the composition estimates currently under review will provide an additional layer of protection.
And beyond Epidiolex as I mentioned in my opening remarks, we have committed to advancing GW cannabinoid pipeline to develop important new treatments for patients.
GW is the unparalleled world leader in this field of science and our early mid and late stage.
White line taking shape.
This is most evident from the big some malls, where we have multiple opportunities for.
And da submission as early as mid next year.
The commercial potential and long term exclusivity prospects for this product in the us are truly exciting.
In closing I should like to thank our employees for their extraordinary hard work resilience and commitment to outpatient.
Since March 2019 has challenged us all personally and professionally and I remain proud and grateful to our talented staff to continue to ensure that we are making excellent progress in all aspects of our business.
Thank you for your time today, and I look forward to updating you on future progress.
I would now like to open the call for a few questions.
Thank you at this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Information tone will indicate your line is in the question queue.
You May press Star Q, if you'd like to remove your question from Mccann.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.
In the interest of time, we ask that you. Please keep to one question and re queue for additional questions.
Our first question comes from the line of Cory Kasimov with Jpmorgan. Please proceed with your question.
Hey, good morning, everyone. This is Turner on for Cory. Thank you for taking our question. So I just wanted to ask about you are seeing and other childhood Epilepsies I believe you said in your prepared remarks that it's less than 10% or can you provide any more details there just because even 10% of the segment would be a lot and suggest much the higher sales levels. So can you.
Just described these trends you're seeing and if you better define how many patients are was contractually epilepsy not directly covered by the label. Thank you.
Hi, good morning, its Justin here, maybe I'll start and maybe Don you want to add anything I mean clearly.
As you know within the field of epilepsy, when there are multiple.
Orphan syndromes, which together provide a range of different childhood onset epilepsies and of course. This is not an area that we promote so.
So I mean.
We don't wish to provide more color on on that demographic in this call other than to say that it's.
They are up as Youve heard from Darrens remarks coverage plans that allow for those patients.
To to be prescribed EBITDA. Thanks.
In a relatively straight forward way.
But but I don't think we wish to give more more color than than we've given on the call. This morning.
Thank you. Our next question comes from the line of busy Ahmad with Bank of America. Please proceed with your question.
Hi, Good morning, guys. Thanks, so much for taking my question Jeff.
Jeff I wanted to ask you a little bit of color as it relates to that early days of the PSC launch and as far as the contribution to you last sale and three Q can you give us at least directionally.
The weighting of PSC that led to the growth of versus the contribution from franchise they announced the ash and then so far in for Q can you give us some qualitative color on new patient adds are you seeing that trend similar to what you saw in Threeq.
Specifically in the lab on or are there certain improvements that you're seeing thanks.
Hi, dizzying.
We're not going to comment on on for Q today I think.
It's.
In a focus my remarks on on Threeq, if you don't mind.
Darren please add some more color, but I think the high level take dizziness that Q3 was largely and was essentially analogy EPS drove a quarter the TSC launch and payer coverage et cetera really took place.
Towards the end of the Q. So I think it's best for investors to see the Q3 results largely as an LNG sds quarter, but Darren more color.
Yeah, good morning to saying, yes, or the TSC promotional efforts really so.
Hold and launched in mid August.
Post our virtual last meeting we had.
Subsequently TSC the payer coverage really began to kick in during the month of September.
And you know as we've stated before this label expansion is going to differ from the potential initial launch of DS LG us.
And with our.
About 10% Trc market penetration at the approval.
And the initial feedback of the data being very strong.
Very excited about the continued growth of the brand.
Engagements are growing and everything is where it needs to be to see growth from TSC and.
Q4 and beyond.
Thank you. Our next question comes from the line of Salveen Richter with Goldman Sachs. Please proceed with your question.
Good morning. Another question here on key I see I got on.
You are looking at a launch that's in line with expectations and that the that it's different from Atlantic Scottsdale, and dropping could you just explain to us how to sell and what the challenges are here initially with regard to uptake and how confident you are that approval in PSC is going to open up.
Broader focal seizure market for you on the Ford I guess, there just seems to be a disconnect here as to why you're not seeing an initial uptake.
Right off the bat.
Darren you want to take that.
Yes.
I think that we've.
We are very excited about the future I think that CSC.
With the approval of the launch.
Payer coverage kicking in we're starting to see momentum build.
You know as you recall with LG us drove a this was an unprecedented launch with list of patients and.
Not a pandemic I think the feedback from our prescribers has been.
As I noted in my remarks, very well received.
The TSC clinics.
Highly overlap with our our current epilepsy center and our call points.
And as you know we're in full launch execution mode now and so all those.
Variables and give us a tremendous amount of confidence and also all note.
Reiterate.
We had about 10% or so penetration which isn't surprising.
With epidiolex being on the market.
And so we will continue to grow.
This.
The syndication and I think that.
Our broad spectrum.
Data within Trc is resonating with physicians not only our TSC physicians, but.
Our other broader audiences and the ability to dose two down to one so again I think that.
You look at this quarter.
While we were able to deliver in the face of the pandemic.
I noted engagements are starting to increase.
Most notably a face to face and so we're very confident and the continued opportunity with with Trc now added to the label.
And then just to circle back to your premise of your question on the I think TSC is using is rolling out exactly as we thought it would.
I mean its.
And just to emphasize again this is.
Exactly as we had guided in terms of.
Adding an indication and being different since the launch in usage already happening and.
The messaging is is going down very well and I think you are hearing from Dara.
The confidence in how this messaging will result in and future growth.
Thank you. Our next question comes from the line of Phil Nadeau with Cowen and company. Please proceed with your question.
Good morning, let me add my congratulations on a strong quarter.
In light of the circumstances I was curious about a few different metrics that you didnt mention in your prepared remarks, if you could give us any sense of trends in those and those would be things like compliance persistence.
Dosing, particularly in light of the TSV label, having a higher dose.
And.
Also you did mention the penetration estimate from I'm curious if you could give us some sense of.
Where you think peak penetration could ultimately be in those those markets.
Yes.
Hey, Phil it's Justin here.
Maybe I'll I'll I'll go for this line.
We haven't been giving persistence rates.
Just.
It so we're not going to stop now, but I think you've heard from Darren that the retention is is is is consistently been since launch.
A strength products and remain so ever since no one should run rate has been.
Encouraging and has has essentially stayed unchanged.
Dosing, we are and.
Good.
Close to the midpoint of the dose range, but not there yet.
Does continue to creep up.
And we.
Weve penetration rate. So we'll see we chose today to give more color and to really give a sense that business that's still clearly.
A long runway ahead.
Well I don't think we want to.
Suggested they won't repeat is going to be but it's.
Going to be we expect.
Well no.
That's where we are today that you and investors on the call will know that the unmet need.
In these target epilepsy syndromes.
He is very real.
And one would expect over time to see.
The vast majority of patients in this target population.
Big take epidemics.
Thank you. Our next question comes from the line of Josh Schimmer with Evercore ISI. Please proceed with your question.
Thanks for taking the question one related to Phils last questions for any reason the TSC indication can't get to levels of penetration that you're seeing in the cereal Gs currently and then what triggered the decision to start a new orphan seizure study for him, but Alex thanks.
Hey, Jeff.
No I mean, I think what we wanted to do is make sure today that we emphasize that this there is has been TSC usage already is there anything that will be a surprise to you.
For this.
Nothing about the TSC pendant.
Indication with it which would Ics leads us to expect lesser penetration in TSC than than any other target indications.
As it relates to the.
New F.
Epilepsy.
Trial for Epidiolex.
I think weve very committed to the epilepsy spaces, you know disc.
Discussions with patients and physicians continue to.
You know demonstrate that the interest in understanding the broader replicate application of epidiolex within the epilepsy space.
So there's obviously a huge need there are also positive.
Our syndromes, we know less about their seizure types that we know less about as well. So we've seen the benefits with TSC of broadening the profile of the of the.
The medicine within seizure landscape and so we think that an additional trial will enroll we weren't yet disclose what that is but it'll it'll help us not only targeting an additional population within epilepsy, but also different on additional seizure types.
Thank you. Our next question comes from the line of Charles Duncan with Cantor Fitzgerald. Please proceed with your question.
Hi, Jess and then team first of all thanks for taking our question and congratulations on a strong Epizyme next quarter that said I did want to ask some questions on the VIX in malls and saw wrap on several of these up into one and then is relative to the ongoing phase III.
Can you help us understand the baseline screening period, whether or not that's been disclosed.
And also the assumed effect size that you'd like to see that attracts a sample and then whether or not there will be an open label extension to that study.
Volcker would you like to take that.
Yes. So thank you for the questions your interest in the 450 patients study.
No big some loads, there who will address the primary endpoint of spasm frequency and.
We're looking at about a reduction of spasms in the order of two spasms. The baseline spasm frequency that we have seen in prior tile is trials is around eight so that's that's sort of the assumption of the effect size. So that is what we've seen in the European studies that have led to the six.
Full approval there.
And so.
So.
The assessment will be of course, the baseline assessment.
The period I don't think we have disclosed the details of this however, the trial is listed on Clin trials Dot Gov, and then some information David I would like to refer you to that so it is a it is a study that will.
We will address this type of an ultimate effect.
And it's adequately powered with the with the sample size to reach the.
To reach those affect levels.
Regarding open label extension.
The provision for that in the protocol.
Thank you. Our next question comes from the line of Marc Goodman with SBB Leerink. Please proceed with your question.
Thanks.
Morning.
Okay.
Can you talk about.
Yes.
Secondly.
Mark can you repeat that we didnt hear the first part of your question sorry, sorry. The first question has to do with de scheduling efforts for Epidiolex across the states can you just give us an indication of how thats going and if it.
And then secondly can you talk about.
Sativex just the overall strategy we have gotten this question several times still and I just figured it would be good if you could just to straighten this out.
If you only need one additional study.
Why are you doing such a large program. Thank you.
Thanks, Mark and Darren you and say that the scheduling.
Yes, Thanks, Mark good morning, this scheduling effort.
Is going very well in August there was a federal register a de scheduling announcement.
Which really helped the kind of second wave of states and so.
I think were up north of 40, now that have been de scheduled and we anticipate the majority to be converted by the end of 2020 so its.
Thats gone very well.
And we're going to make some malls.
I think the way.
We've laid out a strategy, which I think says a number purposes and clearly.
It provides accelerated timelines for an NDA submission so I think.
The opportunity here given the interactions weve had with FDA defined multiple ways, but.
Bridging from European to the U.S. and just makes a ton of sense to ensure that we have multiple opportunities to do that is.
Such great benefits.
For obviously for a submission to be.
Sooner rather than later, so providing studies of different sizes timelines and addressing slightly different endpoints.
It seems to us to be a very prudent approach to maximizing our chance of success and then minimizing the timeline.
There is also.
As you'll appreciate mark given the history of the mix malls.
Which is essentially largely been a European focused development a benefit too.
Ensuring that the studies.
Our.
In both the us and Europe in this program as well so.
And there you know at this.
There's still so much to learn.
And as we think about spinal cord injury as well a lot, but we will learn from there as it relates to spinal cord injury. So.
Yes.
The backdrop here, we think is a very constructive one from the FDA on.
A compelling so this data set in place.
And studies, which have multiple different ways of achieving the goal of an MD a submission and I'm sure investors would prefer us to ensure that we maximize the chance of success and minimize the timeline here and that's exactly what we're going to do.
Thank you. Our next question comes from the line of Palma teeth with Stifel. Please proceed with your question.
Okay. Thanks, so much and congrats on the on the nice quarter.
Hey, So a couple of quick things I was wondering if you could clarify some of the some of the outside variables that can kind of impact the way we model organic growth. So can you just comment on any changes in inventory ahead of the key launch changes in gross to net and changes in average dose per patient and then just separately as you.
Thanks, Todd of by the penetration to date and TSMC and LG, Yes, how do you kind of handle instincts through the reality that there is some overlap in diagnosis and these populations and how should we delineate that thanks so much.
Thanks, Paul.
Scott would you like to take the first question.
Sure sure. Thanks, good morning.
On the inventory side, Paul there's no material changes in inventory quarter over quarter remember as we said previously we keep a fairly small amount of inventory actually in in the channel. So there is no significant impact quarter on quarter.
Coming from inventory, even with the TSC launch the second part of your question on gross to net.
We did see an increase in gross in that quarter over quarter.
Thats being driven as we've mentioned previously that.
Medicaid mix.
Seems to be increasing which is not surprising.
Given the current economic environment. So we have seen that pick up a major we expect that thats, probably going to continue certainly through the rest of the year.
Thank you and our next question I have held on to say and so that you can you just clarify your second question.
Around the LG as just one of the thing no problem. One other thing just first start on average dose and if that increases at all as as overtime as it has in the past and then my second question. Just on was just on to Rob sorry, LDS versus Ts see there's some literature and tail off feedback that we've heard that I.
I think you've heard as well that there our TSC patients that are also codified are diagnosed as LG EPS patients and I was wondering as you estimate penetrations to date in these populations. How you think about overlapping diagnoses or how you kind of work through delineating that thanks.
Yes, I think on the dose question I think I.
We've seen.
Modest increases in those average dose and since launch but in the.
I think I mentioned earlier were still below the midpoint of the dose range.
With regard to me.
[laughter] overlapping.
No I mean, I think we still are comfortable with the sort of separation if you will of the different.
The.
The demographics that that I think you and others use for your model that we don't see.
The two if you will numbers overlapping.
No I think the there's very clearly TSC senses, where we focus which are clearly TSC patients.
I don't know Darren if you have any particular color on public question, Yes, I think yes, I mean you are.
There is so we've heard this through market research and.
Prior to the approval and you're right the data some data out there, but it's really a minority I think.
Now that we have this trc label.
We're able now to actively promote.
The data and the label expansion.
We feel and distributor of adjusted I mean, there is a clear trc.
Diagnosed and treated patient and those are the majority of our opportunity.
Ahead for the brand. So now again that we can go out and speak specifically to physicians about the specific label and data.
Yes, theres plenty of opportunity.
Had for us for Trc.
Thank you. Our next question comes from the line as Serge Belanger with Needham and company. Please proceed with your question.
Hi, good morning, Thanks for taking my questions.
First one is on the third quarter can you give us some color on the sequential progression through the quarter.
Whereas telemedicine use and.
In terms of and also the cadence of new patient visits.
And have we reached a I guess, a normalized cobot environment that could continue for the rest of the year.
Yes, hi, so its Justin here so.
Sequential progression as it relates to this.
The dynamics of.
Of the Covidien and telemedicine virtual patient visits and so on is that your question.
Yes Darren.
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Yes.
Good morning, Sir Yes, I think you know the phrase is kind of normal.
Yeah.
As Todd, but I think we're in this pandemic, we do see.
You know this pivot back in March to Tele medicine.
I think our our physicians and patients.
Have pivoted, but we're still in the in the pandemic and I think that you look at.
Some third party data and you see that.
Patient visits are down.
Still and then within telemedicine across neurology and pediatrics specifically.
New to brand prescriptions are down so.
I think that we're starting to see.
Some of our.
Offices continue to open.
Some of our epilepsy centers, a minority of them still were not.
Not opened are at full capacity.
But I will say that we are face to face as I alluded to in my remarks.
Our engagements are up as the country starts to open a bit.
On our virtual engagements based on the T_a_c TSC label expansion also drove engagements now as it relates to predicting the future very uncertain as we see cases continue to rise in the U.S. and specifically across different regions.
But we're pleased with what we've been able to do it.
Deliver in the face of this pandemic.
Thank you. Our next question comes from the line of Mena Brito Clark with Citi. Please proceed with your question.
Hi, guys. Thanks for taking my question.
The ask about the Rett syndrome study I know you said that you are facing challenges then you decided not to continue to enroll patients in that study, but I guess could you just elaborate a little bit more on what from the competition you.
You bet you faced work and I thought many of these assessment for essentially patient diary 60 done remotely and I guess do you expect any of those challenges Q can translate into with the CBD formulation study that you're planning to start and talk to them. Thanks.
Thanks, Nina Vulcan.
Yes, so it was a difficult decision for us to stop the study.
As you as you may recall, a rep is a rare almost ultra rare condition that affects predominantly girls and women I think the estimate for the United States. Today is about 16000 total patients prevalent in the United States and so it's a very different proposition.
To try to recruit.
Population that has that is so rare under these conditions. So it was challenging to recruit route before the pandemic started.
And during the pandemic I think the concerns.
Also about the patient safety and bringing patients to the sites for the assessments. Despite our best efforts to try to do things by Tele medicine.
Within within the constraints of the of the protocol and within the constraints of what is actually feasible.
With regards to the guidance is that regulators and the FDA issued on this have really shown to us that this is a study that we don't believe we can recruit in a reasonable timeframe.
Our interest in Red has always been that it's a monogenic disease that has a lot of the features while not the itself and autism spectrum disorder has a lot of the features that are also seen in autism spectrum disorder and after some very careful considerations, we believe the much higher.
Prevalence of both.
Okay, autism spectrum disorder, but will lend itself better to get these very important non seizure neurodevelopmental.
Outcomes for which we have a lot of anecdotal reports.
Especially in the area.
In the some dramatic epilepsies for which we already approved.
Good these non seasonal or developmental features into core features of autism can be addressed there. So it's really a question of of safety.
A question of feasibility and it was a difficult decision to make and.
We are confident that with regards to autism, we have a much better path forward, there and get to some of the similar answers there, but looking forward for the effect of CBD.
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Thank you. Our next question comes from the line of David Lewis with Morgan Stanley. Please proceed with your question.
Hello, Thank you for taking my question.
Okay, how have dynamics change with respect to willingness for.
Physicians to prescribe via a tele medicine and patients willingness to.
Change therapy via telemedicine and has there been different dynamics in the adult and pediatric populations.
Hi, David Thank you add Darren.
Yes, I think there are I mean listen I think there there is.
You know I alluded to it will soon.
Third party data that shows new to brand prescriptions in the telemedicine world is down across.
Morality in pediatrics, and so but I will say that if you look at our top prescribers, which we alluded to in our.
Prepared remarks near Universal writing within the top one and two so a lot of comfort and those physicians.
Being willing to write a script for for Epidiolex, but its still can't take away from the.
Let's face to face patient.
Patient work up but I do think there is if you think about our our pediatric patient population, which is pretty fragile.
We've heard that.
Hi, reluctance to bring those children into the clinic. So therefore, a lot of patient management has done via Tele medicine.
But I think if you look at Epidiolex the characteristics that we've talked about.
You know the.
So really I think clear cut now efficacy and safety profile there.
There is a lot of comfort and the and you look at our persistency as high as it is a lot of comfort in those.
And those prescribers and writing apps.
Epidiolex through this pandemic.
Thank you. Our next question comes from the line of Yatin Suneja with Guggenheim Partners. Please proceed with your question.
Hey, guys. Appreciate you guys, taking my question just two for US quickly on the penetration number that you disclosed could you maybe talk about the base numbers that your views for each of those indication drove an unabashed like TSMC to get to that number any updated thoughts on the prevalence of.
The actual number of patients that are out there and the other question I have is on the European side can you maybe put in perspective the opportunity there.
And should we expect an inflection are.
Are you seeing any use outside Lennox gastaut or drove vein and how big is that opportunity maybe relative to you.
Yes, and then I'm also just for everyone. We're obviously aware we're at the bottom of the hour. So we're we've got a few more questions in the queue model.
Let me address this.
Efficiently.
Yes, I don't think were going to give more on on we've given penetration numbers and we think that that should hopefully be helpful to you in thinking about what's happened so far Chris you want to address the European question.
Yes. Thank you Justin So obviously the European approval came nearly 18 months often use original approval. So Europe is behind and obviously Europe in the first ones to use all of that achieving pricing reimbursement. So far were launched in Germany in the UK.
The only asset related one would be on those two commercial loses his dedication to pricing reimbursement. So I think we said I said in my prepared remarks, there's a lot of effort in Italy in France, and in Spain, and those negotiations will be concluding.
Italy, and France, we hope by the year end and Spain in the first half of next year. So so in terms of seeing an inflection point.
You wouldn't be seeing that.
In the immediate next couple of quarters, because we got to do the commercial launch is off to pricing reimbursement, but those discussions are going really well. So we're optimistic about pricing and reimbursement teams are the major markets in Europe. The population is about the same as the U.S. and see that the DSL Gs TSC opportunities are at or above.
It's the same well that price intense tends to be lower and we are in with the regulatory authorities on t. assays, a TSC is not yet approved in Europe. So a little way to go but there is basically behind us in terms of the curve.
Thank you. Our next question comes from the line of David could Echo what ATP capital markets. Please proceed with your question.
Hi, good morning, Congrats on the quarter and thanks for taking my question a question with respect to how you guys are seeing prescriber habit. So when it comes it for drug. They specifically you know there is a new competitor.
Product in the market so I'm wondering.
Where does epidiolex actually fit from a therapy perspective as a first line. After the majority of your prescribers and what are you hearing overall with respect to that versus the competitor product.
Just being a non canal the noise versus a can avenue. It is there a stigma or are folks when we getting the message that this is a really good therapy. Thank you.
Yeah, well, Steve will comment on our product and not others that Darren any dynamics yet.
Yes, good morning, David I think with you know epidiolex.
Across our.
It's now three labels I think.
Physicians continue to see the benefits that patients can see and I think you know within drove a.
Being on the market approaching two years.
It's a tried and true efficacy and safety profile and I think one that position still very comfortable.
Either de novo patients or adding epidiolex to to the treatment regimen of these.
Pretty sick.
Patient. So yeah, we think the dialogues will continue to play a key role.
Not only would drove a but LG SMTC.
Thank you. Our next question comes from the line of Danielle Brill with Raymond James. Please proceed with your question.
Hi, guys. Good morning, and thanks for the question on two quick one of that 10% of the TSP population that you penetrated what proportion of those who are new start spreads prior off label use theirs.
And can you give us the kind of breakdown of my doubts first pediatric thanks, so much.
Daniela uptick quickly so the 10% number was essentially as a as at the time of the approvals. That's on a post indicate the launch if you will Trc launch number that is that is the temple.
10% is our estimate of TSC patients that have been prescribed EBITDA. Thanks.
Ahead of the indication approval.
And your.
Second question can you just remind me again.
Yep provide the breakdown between adults and teens.
And it's remained pretty consistent.
It's around 60%.
And 40% adult.
Thank you. Our next question comes from the line of France, Bob first of all with Oppenheimer. Please proceed with your question.
Hi, Thanks for taking the question I'll be really quick here I'm. Just you mentioned on coal there just the cases spiking backup in Europe, and potentially the fourth quarter being a little softer is that something that you expect to use to follow or how are you seeing that channel.
Okay.
I think the patent in Europe has become very clear in the last week or two with with National Knockdowns and US is just obviously very different it's much more regional.
And and.
And so in that way, it's actually much harder for us to predict Q.
Q Q4 in the U.S. because of the regional disparities and obviously is a lot of uncertainty is right now about how it is being handled so I think I think.
But today I think it's.
The line of sight in Europe is more straightforward, which is what we've given I think it's I think we just had.
Predicting the world in November and December it's as it relates to compete in the U.S. is more challenging so I just I think we.
We can give you more color today.
Thank you. Our next question comes from the line of Douglas with HC Wainwright. Please proceed with your question.
Hi, good morning, Thanks for taking the questions just really quickly with the PSC approval are you more broadly starting to see adoption in full featured sites.
Yes.
Maybe I'll take that does just I mean, it's.
It's important to stress for investors is the focal seizures, a key part of the Ts C. C. Seizure landscape. We don't promote of course in the broader don't circumcision market and it's not our target market. These are these are the.
The broad spectrum efficacy that we refer to is broad spectrum within the syndromes in which we we promote so.
We we want to and want to make sure we clarify that.
But you know.
Im not sure we should comment more beyond beyond.
Beyond that at this point.
Thank you, ladies and gentlemen that concludes our question and answer session I will turn the floor back to management for any final comments.
Great. Thank you publishes over running a little bit but the other questions to get through today. Thank you for your interest.
Thank you for.
Yes.
I wish everyone well during these times and we're excited about that.
The Q4 ahead and look forward to updating you on our progress in the new yen.
Thank you very much.
Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.