Q4 2020 Xeris Pharmaceuticals Inc Earnings Call
Like to hand, the conference over to your Speaker Allison Wey Senior Vice President of Investor Relations. Please go ahead.
CFO Paul will provide opening remarks, Barry will provide details on our financial results and then we will open the lines for Q&A.
Before we begin I would like to remind you that this call will contain forward looking statements concerning the impact from COVID-19 on apheresis business practices.
For the future expectations plans prospects clinical approval commercialization corporate strategy and performance, which constitute forward looking statements for the purposes on the safe Harbor provision under the private Securities Litigation Reform Act from 1995.
Actual results may differ materially from those indicated by these forward looking statements as a result of various important factors, including the effect of uncertainties related to the COVID-19 pandemic on the U S and global markets their interest business financial condition operations clinical trials on third party suppliers and manufacturers and other.
Factors, including those discussed on our filings with the FCC.
In addition, any forward looking statements represent our views only as of the date of this call and should not be relied upon as representing our views as of any subsequent day.
Typically disclaim any obligation to update for savings.
I'll turn it on the call over to Paul.
Thank you Allison and thank you for everybody for joining us today.
<unk> been able to stay safe and healthy during these challenging times.
My headline for you today regarding <unk> performance in 2020 in the fourth quarter. In particular, you said I believe we achieved a great deal and performed very successfully in the face of multiple headwinds.
Couldn't be more pleased or proud of the efforts of the entire sales team, which enabled us to make great progress throughout 2020 and position us well.
Well for a very strong 2021.
And they did so despite the year long pin debit, which continued and strengthened in the fourth quarter into the first quarter of 2021 periods of civil unrest in nature periodically making happen.
The consistent growth for the <unk> Prefilled syringe and the work done to get tremendous unrestricted payer coverage in the first half of 2020.
Set us up for a great start did you won't hypersound launch in July.
You will hear continued growth in the early stages on the launch during the fourth quarter and into the first quarter of 2021.
I'd like to first point out some for the fourth quarter highlights and recent developments.
In the fourth quarter, we grew chievo prescriptions, 11%, while the glucagon market excuse me actually decline as a function of normal seasonality of the market in the fourth quarter any unusual impact from the research that pandemic will talk a little bit more about that later in my remarks in.
In the fourth quarter, we recorded $7 $1 billion in net sales, which brought us to over $20 million for the full year.
Given the unusual circumstances on 100% virtual nature of our sales effort during the year. We consider this to be a very positive start to our <unk> brand.
We see <unk>.
A positive opinion for <unk>, which is the approved named for ready to use high for Ben.
And more recently final approval in the EU.
We began our ex U S licensing initiatives and entered into an exclusive agreement with a leading Israeli pharmaceutical distribution company to commercialize T Bank in Israel and the Palestinian authority.
We received initial feedback and advanced our discussions with the FDA on three pipeline programs exercise induced hypoglycemia post bariatric hypoglycemia, and our premium type of insulin combination product, which we believe has the potential to be a better mealtime insulin.
We seamlessly moved our R&D facility from San Diego to Chicago, allowing us to be in one city more continuous his team and thus more aligned as a company and we reduced our debt by advertising a significant portion of our convertible bonds Barry will discuss this in more detail in his remarks later on.
Before going into more details on our performance I'd like to share some additional context regarding the overall impact of COVID-19, the overall impact that COVID-19 has had on the pharmaceutical market as a whole I think it's important to understand that the headwinds most all companies are experiencing a real and significant.
Before doing so however, I want to be clear and somewhat reiterate my service headlines. We believe our performance stands out is very positive on the face of what's been happening in the entire pharmaceutical marketplace.
That said a few factoids.
According to recently published report by on QTL, nearly 1 billion expected physician visits did not happen in 2020.
I'd say, we for projects and additional 200 million visits shortfalls from July of this year.
Those missed visits have a direct effect on prescription utilization.
<unk> projects, the $3 5 billion prescriptions that would otherwise have been written will be lost due to the pandemic.
Particularly relevant to <unk> because we are in the very early stages of our new G. Boakye from Penn launched.
Net total prescriptions, and especially new to brand prescriptions across all therapeutic categories declined significantly in 2020 that debt.
A lot to do with the fact that visit for endocrinology offices were down over 44% versus the prior year and established brands weren't as impacted as newer or watch products, because generating new brand awareness in prescribing requires face to face interaction and health care professionals to build initial recognition and recall.
As for the impact on the pandemic had on the group got market specifically I wanted to note debt during the first quarter of 2020 before we were experiencing the impact from stay at home orders and shutdowns and civil unrest Luke.
Luke on market grew 27% year over year.
Thanks entirely to the introduction of new ready to use glucagon products, such as Ebola vaccine.
Conversely from Q2 through Q for the market only grew 6% versus the year current year carried mostly by the launch of GMO Hydro and.
And that growth was concentrated mostly during the summer months as some areas of the country East restrictions and we initiated the <unk> hybrids on launch.
As I've said, despite these headwinds for launches for G bolt on.
Launching Shimon Prefilled syringe and the jumbo Hypo Penn have gone very well.
<unk> prescriptions grew more than 350 per cent from Q1 2020 to keep for 2020.
<unk> total prescriptions grew 11% from the fourth quarter during the traditionally weak glucagon period.
Total prescribers of <unk> grew another 27% in the fourth quarter and total unique prescribers at year end exceeded 5000.
And <unk> share of the expanded we've got market increased nearly 12% by year end 2020.
So how do we do so well on the face of the 2020 challenges at the <unk>.
Initial launch of <unk>, PFS or commercial strategy focused on converting glucagon emergency kits to evoke.
This initial effort and focus paid off and generated momentum for the <unk> brand.
Combined you won't get back CME ended the year with almost 40, 45% share of the expanded marketplace and legacy kits lost 16% of their market share since the launch of <unk>.
We were also able to tap into significant pent up demand from Tivo.
Year to launch virtually in July.
We maintained a very high level of engagement with diabetes community through digital and social media as well as a significant number of online beauty Influencers. We invested immediately on consistently in our team's ability to work virtually and to engage healthcare providers virtually which allows us to steadily grow awareness of G. Both across the prescriber community, even while physician practices.
We are closed for restricting access.
We initially established outstanding payer coverage for Shimon can maintained its agenda for 2020.
Since the second quarter on through today, approximately 80% of patients have unrestricted access to G. Both across all payer types.
We also established and continue to this day, our zero dollar co pay program to eight people with diabetes. During these trying times.
As we look at 2021 and beyond we will concentrate on our promotional efforts on reinforcing for both prescriber and patient community the importance of sharing the ensuring that all patients on insulin therapy for all at risk for severe hypoglycemia have any ready to use glucagon problems such as even more heightened.
Available for rescue in the event on the severe low blood sugar episode.
As a reminder, there are approximately $6 8 million insulin taking people with diabetes in the United States and more than $6 million of them do not have moving down of any kind on hand.
Let's remember the number one side effect of insulin therapy as low blood sugar, which is wide guidelines from the 80, a that anyone at risk of clinically significant hyperglycemia.
Find has blood from coast below 54 milligrams per deciliter be prescribed glucagon.
Only 10% from those on insulin and therefore at risk.
Moving on available.
Sadly as a result, approximately 20 to 270000 people are hospitalized every year of 27000 people every year guidance from severe hyperglycemia in the United States at a cost of over $1 8 billion.
Our promotional mission will focus on increasing prescriber and patient awareness from Chi both to reduce is very real impact on severe hyperglycemia can have on people's lives.
This takes educating health care providers that all of their insulin taking patients with diabetes are at risk and deserve to have a safe and effective and simple who'd gone option available.
Our message to prescribers as clear every prescription written for insulin should be accompanied by a prescription for a ready to use spooked on option license you phone type event.
To aid our effort. We have also expanded our sales organization to reach more on health care professionals from the addition of 40 and totally virtual inside sales representatives.
Also planned to amplify the voices of patients and caregivers who used <unk>.
More of the insulin taking patient populations with non understand the importance of having it on here.
Sure.
As we turn our attention to our fourth quarter financial performance specifically.
You may recall that on last quarter's call. We discussed the disconnect between net sales and total prescriptions as reported by third party vendors, such as IQ via or Symphony, particularly on the launch phase of new products such as <unk>.
We've got a lot of questions on this and I want to provide as much clarity as possible. This.
This is likely due to the estimated a projected nature of prescription volume and prescription growth rather than actual volume.
As expected we experienced a continuation of this disconnect during our fourth quarter.
Just as a reminder, net sales equals shipments to wholesalers not the number of prescriptions.
We have two things that impacted net sales changed from the third quarter for the fourth quarter.
First wholesaler and retailer inventory build in front of the highly anticipated launch of <unk> credit dependent in the third quarter and second the change from a modest Q3 uptick for back to school to low lower than normal Q4 seasonality.
Moving on market is historically lower than the fourth quarter and into the first quarter of these factors will continue to play into the program buying patterns of wholesalers.
Once again my goal here is to just provide context on some of the variability that we're seeing which has a lot to do with the early stage of our launch and lack of buying history.
Over time, this gap should narrow wholesaler buying patterns should stabilize and third party databases.
Database information should more accurately reflect <unk> growth, although probably not in the near term.
That said, we're seeing what we're seeing in the most recent February monthly data is encouraging.
On the leading indicators that could bode very well for beginning momentum into the second quarter include our.
Our share of the glucagon market is up to 16%.
Recent weekly script data is trending up activity in the hub is trending up.
Zero dollar co pay claims appear to be trending up and our field and virtual engagements with healthcare professionals is also trending up.
With that I'd like to move to overflow in the EU.
We serve that we received a positive opinion in the fourth quarter and then the final approval last month from Europe, and overall already use Luke Luke on rescue pen.
As such we are now approved in all 27, EU countries, plus Norway and Iceland.
We're actively seeking a commercialization partner for the EU net.
At launch the launch of vaccine me in Europe, and premium reimbursed pricing their product is being granted as compared to the legacy kits, which we find very encouraging is actually ignited additional discussions with potential partners.
Net added to the fact that we believe we are a better option for insulin taking community in debt, which is at risk is also encouraging.
Simultaneously. However, we are preparing to launch beginning in the fourth quarter on a country by country basis showed a commercial partnership on a licensee not materialize.
Moving on to the pipeline at the end of 2020 and in early January we had as planned our meetings or interactions with the FDA on three of our reserves on programs.
H D IH and Pam insulin.
To align on phase III study designs for each of those programs.
Because of the pandemic these meaningful even telephonic or in writing not face to face for the FDA. We have responded to the initial feedback from the FDA for each program and expect to have final resolutions on the path forward for each in the second quarter of 2021.
Based on that final feedback study design and cost.
He will potentially take either IH for PVH forward into phase III.
From Prem insulin once the phase III plan is clear we will actively seek a partner to further develop and commercialize it.
As we have previously discussed we have an agreement with the FDA for a phase III program for Diazepam and are looking for a suitable partner to advance that program as well.
In summary.
We had an impressive year in spite of the challenges that 2020.
That we faced in 2020.
Even as the challenges are persisting into the first part of 2021, we still expect to steadily grow demand for cheap for the gymboree brand.
Aggressively seek development and commercialization partners for select pipeline programs.
<unk> ready to use glucagon for prevention of hyperglycemia prepared partner <unk> launch.
Low in Europe in the fourth quarter and advance our technology platforms in <unk> through internal development and external partnerships.
Before I turn the call severity I wanted to take a moment to thank the <unk> employees. We've achieved all of this despite the pandemic and had not been for the people and talent we have in place.
B, where we are today.
I'm proud of our team's commitment on our ability to be successful during a challenging year we have.
Prioritized, the health and safety of our employees and the communities, we serve while continuing to execute on our strategy and setting up for a great 2021.
Now I'll turn it over at Barrington go through our financials.
Thanks, Paul.
We commercially launched Chievo pre filled syringe in vivo kaipo pen for treatment of severe hypoglycemia and people with diabetes in November 2019, and July 2020, respectively.
Total net sales of <unk> were $7 $1 million and $1 $6 million for the fourth quarter ended December 31, 2020, and 2019, respectively.
On the Tivo for $22 million on $1 $6 million for the years ended December 31, 2020 in 2019, respectively.
Net sales represent gross product sales less estimated allowances for patient co pay assistance programs such as the zero dollar co pay program implemented during the COVID-19 pandemic on.
Payment and other discounts and rebates charge backs.
Product returns.
All of which are recorded at the time of sales critical.
Critical wholesaler or other customer.
You apply significant judgments and estimates in determining some of these allowances.
<unk> is the first product we have launched we have limited history with regard to these allowances and we'll continually refine our estimates for moving forward as more information becomes available.
Awesome, good $3 $4 million for the quarter ended December 31, 2020, which included <unk> $7 million related to excess and obsolete inventory.
For the quarter ended December 31, 2019 cost of goods sold was $1 $6 billion.
Okay.
On the hold was $9 $3 million for the year ended December 31, 2020, which included $2 $3 million related to excess and obsolete inventory and under absorbed overhead cost of $1 $5 million.
For the year ended December 31, 2019 cost of goods sold was $1 $6 million, which included under absorbed overhead cost per point $6 million.
Battery cost for GE evoke incurred prior to approval on initial commercialization where expense as incurred as research and development.
Total operating expenses were $23 $1 million and $94 $7 million, respectively for the quarter and full year ended December 31, 2020, compared to $33 $1 million and $123 $5 million, respectively for the quarter and full year ended December 31 2000.
19.
Quarter and full year ended December 31, 2020 were $5 $1 million and $20 $9 million, respectively, compared to $12 $4 million and $64 million for the same periods in 2019.
The decrease of $7 $3 million in R&D expenses in the fourth quarter 2020, compared to the fourth quarter of 2019 was primarily driven by decreased expenses associated with our clinical trials and reduction of manufacturing batches and supplies needed for preclinical and clinical trials.
For full year decrease in R&D expenses of $39 $5 million was primarily driven by expenses incurred in the prior year for the manufacturing of <unk> prior to initial commercialization.
Decreased expenses associated with our clinical trials.
A reduction of manufacturing batches and supplies needed for preclinical and clinical trials and an increase on the allocation of certain personnel and facilities costs to cost of goods sold partially offset by restructuring expenses in 2020 related to the relocation of our laboratory from San Diego to Chicago.
2020 clinical trial expenses decreased significantly for both the quarter and full year periods. As we have concluded all ongoing clinical programs and no new studies have been initiated as we finalize our discussions with the FDA on go forward development requirements.
Selling general and administrative expenses were $18 million for the quarter ended December 31, 2020, compared to $20 6 million for the same period in 2019.
Decrease of two points.
I heard on the prior year for the initial launch of <unk> and decreased expenses related to conferences on programs due to the COVID-19 pandemic.
Selling general and administrative costs increased $10 $7 million for the year ended December 31, 2020, when compared to the year ended December 31 2019 the.
The increase was primarily driven by an increase in compensation and related personnel costs due to additional head count to support the commercialization efforts of <unk> and increased FDA registration fees, partially offset by decreases in marketing and selling expenses due to both the cost incurred in the prior year for the initial launch of <unk> and <unk>.
<unk> expenses related to conferences on programs due to the COVID-19 pandemic.
For the one 2020 interest expense increased $3 $5 million in comparison to the year ended December 31, 2019, primarily due to a loss on conversion of convertible debt of $2 $6 million.
Interest on the convertible notes issued in the June 2020, offering of $1 $9 million.
The loss on extinguishment of debt of zero point $7 million and increased borrowing levels under our senior debt facility.
Partially offset by a loss on extinguishment of debt of $2 $3 million in the prior year.
Day, $39 $1 million and principal amount of convertible notes has converted into $13 2 million shares of the company's common stock.
Approximately $37 million on $39 $1 million on has converted debt. So via agreements we entered into with some of the whole there's other debt.
In particular on November 13th zero centered in the separate privately negotiated exchange agreements with certain holders of the company's convertible notes for <unk>.
Moving on to the exchange agreement the company exchanged approximately $37 million in aggregate principal amount of other notes for approximately $10 4 million newly issued shares of the company's common stock.
As of December 31, 2020, the outstanding balance of convertible notes was $47 $2 million.
In October we entered into an amendment to our senior debt facility that provided for an additional $3 $5 million term loan which was drawn in November.
As of December 31, 2020, the outstanding balance under the senior debt facility was $43 $5 million.
Net loss three months ended December 31, 2020, with $21 $9 million or <unk> 41 per share compared to $33 $1 million or $1 23 per share for the same period in 2019.
For the full year of 2020 net loss was $91 $1 million for $2 14 per share compared to $125 $6 million or $4 81 per share for the full year, Inc.
Number 31, 2020, we held $133 $8 million in cash cash equivalents on index.
Compared to $88 $8 million as of December 31, 2019.
The number of shares outstanding as of February 28, 2021 is approximately $59 8 million.
Leave that our cash and cash equivalents on investment and expected revenue from sales of <unk> will enable us to fund our operating and capital expenditure requirements for at least the next 12 months.
Revenue from GE vote will determine when we will be cash flow breakeven.
Now I will turn the call back to Paul.
Thanks Barry.
In conclusion, we had an impressive year in spite of the challenges 2020 represented presented to US in 2021, we still expect to steadily grow demand from the GMO brand as I said previously continue to seek development and commercialization commercialization partners for our pipeline programs.
As I've said advanced ready to use glucagon for prevention of hypoglycemia prepared to partner or launch in Europe and continue to advance our technology platforms through external partnerships.
Looking forward to another year of progress and success in 2021, and I will now ask the operator to open it up for questions.
Yes.
Yes.
Yes.
Yeah.
I would like to take any questions you may have for us today.
Good day.
Right.
One on your telephone keypad.
First question is from David Anderson.
Right.
Thanks, So just a just a few here.
When you talk about.
Unrestricted access G. Though can you just elaborate on maintenance there.
Have you seen any kind of.
Does that mean hassle free are there any real prior offs utilization management.
How should we should we think about that that's number one and then secondly can you elaborate on the 40 additional 40 reps.
How many doctors, they're targeting and sort of how are you envisioning for all of the the expanded.
Sales organization.
And then Lee.
Lastly.
In terms of the trajectory of <unk>.
Can you talk about where inventory levels stand right now and if should we should think about any more destocking pressure.
If at all.
In the first quarter. Thanks.
Thanks, David.
<unk>.
Unrestricted access I'll take that one first.
The unrestricted non restricted.
On prior authorizations, there's no step edits theres nothing to get in the way of a patients ability to get <unk>.
To get 80% or better is about as good as you can do in the industry and just about any therapeutic category.
Rarely will we see upwards of 90% unrestricted coverage there are some.
Small plans that just require profit prior authorizations as a matter of course so that's.
That's almost as good as again.
In terms of the additional representatives.
Our inside sales only there are 100% virtual.
A lot less expensive.
And they are either on the phone on their computers.
E mailing doing facetime doing zoom.
Zoom calls doing teams calls.
And there are combination of either that cover their own white space Places, where we don't have regular field rep or they're partnered with two or three of the field reps to cover additional.
To get more breadth and depth of coverage in our in the field.
We're moving from.
Somewhere in the neighborhood of 11 to 12000 targets with these additional people we can get upwards of 30% to 40000 targets that we can get to buy.
By phone or E mail.
And then in terms of the trajectory of.
Wholesale inventories I think we saw a fairly significant buy in at the beginning of the.
She won't Hypersound launch.
That's worked itself down in the fourth quarter.
We will work its way to the rest through in the first quarter and then we should see things start to get back to normal.
Okay. That's helpful. Thanks.
Your next question.
Feelings.
Yes.
Hi can you hear me okay.
Yes.
Thank you.
Maybe just a follow up from the previous question.
Can you just.
Given the strength.
Whether the tinman free never are.
More in line with where the demand for that.
Or.
You didn't need to.
That would be summer day.
Restocking in the channel on before you get from one.
On a per steady state.
And just separately.
<unk>.
On the pipeline.
On.
Right.
<unk>.
Yes.
Yeah.
Right.
Right.
Thanks.
Thank you.
C C.
Wow.
Thank you.
Yeah.
Net.
I know you were breaking up a little bit, but let me try to answer the second part first.
Our discussions with the FDA on post bariatric hypoglycemia and exercise induced hypoglycemia have gone quite well.
We're in the final stages of trying to get alignment on what the phase III program would look like for both.
Our preference as we've said before is probably to take the exercise induced hypoglycemia program forward.
It is.
Potentially.
Most straightforward study that we can do.
And we'll make that decision in the second quarter.
As far as inventory.
I wouldn't describe it as a large.
Amount of inventory.
It's bled its way through in the fourth quarter and a little bit into the first quarter, we shouldn't we should get back to them tracking pretty equally.
At the end of the quarter this quarter as you know IQ is still understates.
Units.
Anywhere from 20% to 50% and until we have more history and more buying history.
GAAP is not going to narrow, but it will narrow over time.
Okay, great well I have one more question.
Obviously, you put in more resources on the marketing front end.
You've indicated that ultimately this growth.
And then potentially in this market will come from overall market expansion.
Can you talk about.
You are doing to drive that.
Economies that of Goldman Sachs.
Is it from visits start to come back.
Yes.
As we've said in the past.
If you talk to endocrinologists during the pandemic.
They're really focused on a small number of things they're focused on making sure an insulin patients are actually getting their input.
Most important thing they are focused on making sure that if they've got a CGM they are paying attention to their CGM, they're focused on the on people with pumps.
Theyre, just not initiating a lot of new anything.
Is there is very much the maintenance mode trying to take care of patients and if you can imagine the personal diabetes Theres 10 things at least at the physician has to talk to them about.
And now they've got to do a lot of that virtually.
If you go back in time to prevent pre pandemic, when Lily and US were out detailing actively face to face with physicians you saw double digit growth in the market and it was almost 100% new to <unk>.
So we fully expect debt as we get back out into the field hopefully late second quarter early early third quarter that won't be face to face with health care professionals again, and some of that market growth will continue right now most of the change in most of our growth has been converting the legacy.
Yes.
That's been the.
The easiest thing to do when you can't get physicians to do something new.
Got it thank you.
Our next question is from Randall.
Your line is open great. Thanks, Yeah, Hey, Paul just a more specific follow up for the prior question do you expect once the pandemic lifts do you expect the market to go back to where it was.
Pre pandemic or could there be some catch up and greater expansion in particularly ahead of the back to school.
Season in late summer if that's number one number two how are you guys thinking about the impact on pricing from <unk> generic Luke on emergency kit.
And then also what zealand's product coming in potentially later this month I think you've talked in the past about more voices in the market is good but is there a price dynamic that we should be thinking about there as well. Thanks.
Thanks Randall.
In terms of the market.
Assuming that we and Lilly are both back out.
Talking to physicians and helping them understand why.
Interesting both companies are primary message has been.
Patients who are on insulin CASM.
Just for low blood sugar and severe low blood sugar.
And new ready to use options are now available.
Patients should have it.
<unk>.
As long as both companies, including Zealand if that's our message there are 6 million people, who don't have glucagon handy.
So we would fully expect the same kind of dynamic that we saw when before the pandemic.
Wood.
We ignite.
Assuming thats the case, assuming we're all back out talking to doctors again, what you saw in late 2019 in the first couple of months from 2020 was.
Low double digit growth turned into a mid teens growth turned into a low 20% growth and by March it was at 27% and accelerating so we would expect the same thing has happened post pandemic.
Including as far as back to school is concern I think it's going to be really hard for for schools not to reopen.
So we're expecting that the majority of schools that are going to be open again comes at August September.
We're anticipating that if that's the case, we'll have a more normal back to school period.
So that's that's very encouraging.
As far as the new generic.
I guess the only the only way to answer that is the kids have been generic forever.
You've got Lilly, you've got Novo spend the same kit, it's always been the same price.
I think if theres going to be an impact on.
The most recent generic is going to be on Lilly and novo, it's not going to be I don't think its going to have much effect, if any on the new ready to use products.
And yes, I do believe that Zealand enters the market.
<unk> is focused on positioning their products for patients and positioning their products for the 6 million patients who don't have Luke on.
Physicians will then have multiple options for making sure that patients who are at risk for severe hypo have some form of some form of ready to use glucagon.
And in that situation, we believe the G. Hawkeye for patent is the best option available.
Great. Thanks.
Okay.
Your question. Please press star one.
And your next question is from day, one isn't it.
Your line is open.
Good morning, Thanks for taking my question.
Yeah.
Well exercise.
Okay.
Thanks Scott.
Thank you.
Right.
The anticipated for Raytheon.
Right.
Just say I think the.
What kind of trials, we're looking at in phase III.
Probably at least 18 months.
Beginning to end it depends on the final patient numbers depends on recruitment rates.
So I wouldn't see us, finishing that program inside of two years.
Okay. Thank you.
Separate question.
Both debt they're out there.
<unk>.
Convertible debt outstanding do you have plan to write them.
That kind of thing.
So.
There is still.
Big chunk of that convert out there we have no plans at the moment too.
Try to <unk> them.
The conversion date is still a couple of years away.
So we've got plenty of time to decide what to do with those.
And Oh by the way on your first question on the exercise study.
If we get to a final final with the FDA sometime in the second quarter, we Couldnt, even get a study started for the fourth quarter. So it's going to.
So it takes a little time.
Okay. Thank you Paul.
For clarification.
Our next question is from Jim Goss stop it on your line is open.
Good morning. Thank you just following up on a prior call in regards to the convertible debt.
What led you to.
<unk> the initial fees on what.
Preclude you from doing the remainder is it seems like the stock continues to be shorted against that convertible constantly on the Reg Sho.
I appreciate your comments on that.
Yes, there were several factors.
Jim.
The short position on the stock today is relatively low compared to what it was the short position on our stock.
If you were following it obviously you are.
You were.
Our stock price went up pretty aggressively shortly after the convertible deal was done.
That made it.
So that the borrower and our stock was quite high.
We had a number of bondholders, who approached us to convert to <unk>.
Just on.
On their own.
As a result of that we reached out to a few of the larger holders to see if they wanted to advertise early on.
At rates that we thought was preferable to the company.
Several of them chose to do that because once again to borrow was so high and remained high.
So but at the end of the day. They you know a lot of those bondholders did well for people who are currently holding the share in the money.
So it wasn't something we set out to do it sort of came to us by way of the dynamics of the marketplace. The short position was high the borrow was high.
Sure.
Just circumstance.
Thank you.
We have no further questions at this time I'll turn the call back to Paul for closing remarks.
Well I'd like to say thank you everyone for listening. We appreciate you paying attention. We appreciate your interest in the company on your investments in the company.
And we look forward to discussions again in the future. Thank you very much.
Today's conference call you may now disconnect.
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