Q2 2021 BioDelivery Sciences International Inc Earnings Call
Right.
Greetings and welcome to the bio deliveries Sciences second quarter, 2021 and earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please press star zero and.
On your telephone keypad. Please note. This conference is being recorded and will now turn the conference over to Terry play out Executive Vice President and Chief Financial Officer. Thank you you may begin.
Thank you and good morning, everyone welcome to our second quarter 2021 earnings Conference call.
Leading the call today is Jeff Bailey Chief Executive Officer, we are joined by Scott <unk>, President and Chief Commercial Officer.
Following our prepared remarks, we will conduct a question and answer session.
Earlier today by a delivery Sciences issued 2 press releases announcing its financial results for the second quarter 2021, and the acquisition of <unk>.
A copy of the releases can be found on the Investor Relations page of the company's website.
Before we begin I would like to remind everyone that certain statements may be made during this call which may contain forward looking statements such forward looking statements are based upon current expectations and there can be no assurances that the results contemplated in these statements will be realized.
Actual results may differ materially from such statements.
Due to a number of factors and risks some of which are identified in our press release and our annual quarterly and other reports filed with the SEC.
These forward looking statements are based on information available to BDSI today August 4th 2021 and the company assumes no obligation to update statements as circumstances change.
An audio recording and a presentation that accompanies our prepared remarks and broadcast replay for today's conference call will also be available online and the investors section of the company's website.
With that I'd like to turn the call over to Jeff Bailey, our CEO and Jeff.
Thank you very much Terry and welcome everyone to our company's second quarter, 2020.1 earnings call on.
Our business remains strong as our team continues to manage the business very well and our brands are a day on a strong trajectory for growth.
3 main takeaways I want to cover today number 1 our overall business remains robust and the second quarter with net sales growing 13% year over year, including BELBUCA total prescription volume growth growing 11% year over year and.
Net sales growth was aided by increasing face to face interactions between sales representatives and prescribers that resulted from an all time high BELBUCA and total prescription market share and the second quarter, a 4.7% complemented by an all time high and unique BELBUCA prescribers.
And 345, which is an increase of 11% year over year.
This increase and BELBUCA prescribers will serve us very well to drive continued strong growth as the long acting opioid market normalizes with an expected improvement in person patient visits.
Despite the softness on the long acting opioid market during Covid and we remain encouraged that the LBO market grew slightly by 19000 prescriptions.
Quarter over quarter, and the second quarter of 2021, the first time, the <unk> market grew and quite some time, which gives us optimism going forward.
Key takeaway number 2 through a combination and solid execution and prudent management and prioritization of operating expenses, we continue to strengthen our balance sheet ending the quarter with approximately $120 billion and cash.
And the second quarter, we generated $13.1 million and EBITDA with an attractive 32% EBITDA margin.
This was accompanied by approximately $9.2 million and the operating cash flow generation or $12 million, excluding litigation cost, which and.
Tables us to invest and future growth of our business and maximize shareholder value through careful strategic business development.
The third and final key takeaway I am pleased to announce the acquisition on the U S and Canadian rights to <unk>. The first and what we see is a series of steps to build a growth platform and neurology.
Elixir represents an excellent strategic fit for BDSI and attractive opportunity to diversify our product portfolio by expanding into the dynamic migraine market deepening our presence and neurology and <unk>.
Actual adjacency to our pain franchise.
Alex It is the only ready to use oral solution and approved by the FDA for the treatment of acute migraine with or without aura and adults. It has intellectual property protection into 'twenty and 36.
With a planned first quarter 2022 launch Alexa and will participate and so any substantial growing and evolving Y grade market. It is anticipated to drive the company's revenue growth and shareholder value, while leveraging much of our existing infrastructure.
A few other highlights I'm going to share with you on.
The molecule Celecoxib is well known and all.
It isn't a differentiated formulation.
Levered munis and speed of onset and clinical trials with paybacks and she did approximately 60 minutes. Additionally, and the 2 pivotal studies conducted the percentage of patients achieving NPS or most bothersome symptom freedom at 2 hours post dose with significantly greater I'm on patients.
Excuse me the election compared to those receiving placebo.
This study to the percentage of patients achieving headache pain freedom at 2 hours post dose with significantly greater among patients receiving and elixir compared to those receiving placebo.
The acquisition of election, Leverages, our existing infrastructure and will benefit from our team's strong track record of commercial watch success as well as our medical affairs teams expertise and the migraine space.
The agreement has attractive terms and is estimated to be accretive within approximately 24 months from commercial launch which is anticipated to be in the first quarter of 2022.
Importantly, we will be working on various electrical and expansion opportunities, including a potential label expansion for the <unk>.
Treatment of acute migraine and pediatric patients and additional potential indication for the treatment of acute pain and commercialization and Canada.
We anticipate the deal will close in late Q3 early Q4.
Much more to follow and the BDSI, Alex at Investor Day, which we expect to take place early in the fourth quarter.
Before I turn it over to Scott I wanted to provide you with a brief legal update as we shared at our first quarter earnings call. Our 3 day best strive with average is related to the adult apparel paragraph 4 patent challenge included on March the third.
This trial briefs from the parties were completed on May 26th.
BDSI subsequently requested that the court strikes 3 patent invalidity defense is ready for the first time by Albert Chen and his post trial briefs as well as 2 documents that Albert Chen and properly cited.
On June 28, the court agreed with our arguments and granted the company's motion to strike and its entirety and Moreover enjoyed Albert Chen from watching its generic product pending and the trial court's decision on its merits.
We are pleased with the latest developments and the litigation and remain very confident and the strength of our I T and <unk>.
If I did these directionally positive rulings, we can either predictive decision the court will reach nor the timing of the court's decision. We are not able to comment further regarding the ongoing litigation with that I will turn the call over to Scott to provide more details of our performance during the second quarter Scott.
Thank you Jeff the Jeff mentioned during Q2, BELBUCA prescriptions grew by almost 12000 T. Rx is year over year to over 118700 retail mail order and long term care to your excess combined this represents a solid 11, 1% increase and BELBUCA tier access.
Compared to the second quarter of 2020.
And sequential growth of 5.3% compared to the first quarter of 2021.
BELBUCA prescriptions grew year over year and quarter over quarter, Despite a relatively flat long acting opioid market and the second quarter.
The L. A on market has been pressured by lower clinic staffing and fewer in person patient visits which in Q2. According to <unk> were down, 36% and and pain practices compared to pre COVID-19 levels and contrast to visits for all other specialties, which have recovered to near pre pandemic levels.
We remain pleased with BELBUCA has continued revenue and script growth and its rebound in Q2 to a new T. Rx market share high of 4.7% up from 3.8% and Q2.2020.
And 4.5% and Q1 'twenty 'twenty 1.
During the second quarter BELBUCA is new to brand market share of 7.7% grew by 1% from 6.7% and the first quarter and.
And significantly above its tier a share or 4.7%, which means there is still a meaningful opportunity to grow total prescription share as these metrics historically converge.
Importantly, BELBUCA saw on MB Rx count increase of 9.3% from Q2.2020. So the most recent quarter and an increase of 4.4% from Q1 to Q2 of 2021, while the mdx count for the entire market was down 8.2%.
It is and our third consecutive quarter since we implemented the first start and be Rx program.
This program was intended to enable health care providers to efficiently prescribed BELBUCA to appropriate commercial patients for the first time by providing convenient access to BELBUCA, while the HCP staff and securing prior authorization approval.
First start has been and extremely useful tool generating a 29% left and N b, Iraq, and a 16% lift and tier axis and those hcp's participating on the program.
We continue to monitor the impact of this initiative and anticipate keeping it and placed through the end of 'twenty 'twenty 1.
Continuing to build BELBUCA prescriber base is important to the brand's growth trajectory and we are pleased to report that BELBUCA prescribers increased and the second quarter by 11% year over year to 8345 unique prescribers, a new high for the brand.
Sequentially. Our prescribers also grew by 4.5% from the first quarter we've.
And we view this growth is extremely encouraging and expect our prescriber growth to have an increased impact as face to face patient visits improve overtime with M pay and practices.
Our market access with BELBUCA has reached attractive levels.
BELBUCA currently enjoys strong commercial coverage with 90% of lives covered of which 60% are covered at a preferred level, while on Medicare BELBUCA is covered and 33% of lives.
This level of coverage provides a significant opportunity for growth, which is supported by our consistent year over year terex growth across all payer types and new Q2 tier accounts for both commercial and Medicaid payers.
We remain committed to improving access to BELBUCA, while balancing payer coverage and rebate levels, especially in Medicare.
And pro at Q2, 2020, 1 prescriptions grew to approximately 18000.
And an increase of 3% year over year compared to Q2.2020, with a 7% sequential rebound from Q1 'twenty 'twenty 1.
We expect continued growth for some product is our <unk> count increased 7.6% to 10000 and 715 during Q2.
Our new interest count high for the brand.
Some product interact share increased to 13, 8% and second quarter.
Like BELBUCA. Some broke is well positioned with covered status for 89% of commercial lives with 60% and preferred status.
As we stated during our Q1 call, but tomorrow market historically declines and Q1 before rebounding the remainder of the year.
So tomorrow markets rebound during Q2 played a role and its approach renewed growth in the quarter as well as the brand's 26% quarter over quarter increase and prime therapeutics are planned and improve some product coverage during 2020.
The BDSI sales force has done outstanding job pulling through formulary wins, and we expect to reach new T Rx count share highs throughout the year.
As Jeff mentioned, we are very excited to be adding a clinically important product like elixir to our portfolio.
The acquisition of this commercially ready product provides another avenue for growth and is a logical adjacency to our pain franchise.
Moreover, it leverages, our commercial expertise and much of our existing infrastructure and our teams extensive experience with product launches and I'm confident based on our team's proven track record that we will be able to execute a successful launch and Q1 of 2020 to.
Certainly we remain focused on our current portfolio I believe we are well positioned for strong second half of 2021 and beyond.
With that I'll turn the call over to Terry to provide and update on on the financials Teri.
Thank you Scott.
Net revenue for the second quarter was $41.4 million and increase of 13% compared to $36.6 million and the second quarter of 2020 and modestly above the net revenue generated in Q1 of 'twenty 'twenty 1.
BELBUCA net sales and the second quarter of 2021 were an all time high of $36.5 million and increase of 13% compared to $32.3 million and the second quarter of 2020 and modestly above the first quarter of 2021.
As expected BELBUCA gross to net deductions increased and the second quarter as compared to the first quarter of 2021, primarily due to typical increases seen from Medicare coverage gap as well as Q1, having included a 1 time gross to net benefit related to Medicaid it cools.
Net sales for some public and the second quarter of 'twenty, 'twenty, 1 with $4 million, which reflects 18% growth year over year, and a decrease of 9% compared to the first quarter of 2020.1.
As expected so probably question that deductions increased and the second quarter due to the typical increases seen from Medicare coverage gap as well as Q1, having included the benefit of a onetime update to our gross to net channel estimates.
Total gross margin for the second quarter was 90% compared to 85% margin during the second quarter of 2020 and 86% margin during the first quarter of 2021.
Gross margin and the quarter benefited from reduced cost of goods due to the impact of a $1.4 million dollar recovery associated with previously reserved inventory.
We expect a return to a more typical gross margin range and the mid eighties going forward.
Total operating expenses and the second quarter of 2021 were $25.8 million compared to $28.2 million and the second quarter of 'twenty, and $2020.7.8 million and Q1 of 2020.1.
Year to date 2021 operating expenses include higher litigation costs associated with the Pea for case.
As always we continue to closely manage and prioritize the operating expenses.
GAAP net income for the second quarter was $9.1 million or 9 cents per share and increased to $7.9 million when compared to the GAAP net income of $1.2 million and the second quarter of 2020 and an increase of $3.8 million when compared to GAAP net income of $5.2 million or 4 cents per share.
And the first quarter of 'twenty 'twenty 1.
EBITDA in Q2, 2020, 1 was $13.1 million or 32% of net sales.
Paired with $5.1 million or 14% of net sales and Q2, 2020 and $9.2 million or 22% of net sales and the first quarter of 2021.
Non-GAAP net income for the second quarter of 2021 was $12.5 million or 12 cents per share and reflects GAAP net income excluding stock based compensation and non cash amortization of intangible assets.
And that's compared to non-GAAP net income of $9.6 million or 9 cents per share and the second quarter of 2020, excluding the same items as well as excluding the 1 time impact of the CEO transition and that period and certain costs associated with the discontinuation of BUNAVAIL.
Year to date non-GAAP net income through June 30th 'twenty, and 'twenty, 1 is $21 million or <unk> 20 per share.
The company has a strong balance sheet with cash and cash equivalents as of June 30th 2020, 1 of $119.9 million as compared to $111.6 million at year end 2020.
Operating cash flow generation of $9.2 million and the second quarter was partially offset by $5.8 million used to repurchase shares resulting in a net increase and cash on hand of $3.4 million over the first quarter of 2021.
Our share buyback program was initiated late in the fourth quarter of 2020 and we have repurchased approximately 3.3 million shares for Q2, 2021 and an average price of $3.70.
The $12.1 million and share repurchases to date represents 48% of the total authorized amount of $25 million.
This reflects the continued confidence of the board and the management team and the strength and value of our business.
While we are maintaining our full year 2020..1 total net revenue guidance range of $170 million to $180 million. After our observation of the slower than expected normalization of the commercial environment and the L. A and market. This past quarter, we expect net sales in 2020, 1 for BELBUCA to be at the low.
And of the revenue guidance range of $155 million to $165 million.
As previously discussed these estimates incorporate the impact in Q1 from the winter storms.
We continue to estimate our total operating expenses for the ongoing business to be and the range of $115 million to $120 million. Additionally, EBITDA remains on track to be and the $40 million to $50 million range in 2020.1 for the ongoing business.
The company expects to deliver positive operating cash flow in 2020.1.
Electric will be acquired from Dr. Reddy store and upfront payment of $6 million, along with an additional $9 million on August 3rd 2020, 2 and modest onetime sales milestones ranging from $4 million upon achievement of $50 million and net sales of elected up to $100 million upon it.
And <unk> of $1 billion and net sales.
Media side will make tiered quarterly earn out payments on net sales with rates ranging from the high single digits to the low double digits.
The closing of the transaction is subject to satisfactory completion of customary closing conditions, including the applicable waiting period under the Hart Scott Rodino Antitrust improvement Act or the HSR Act.
With these attractive terms for the acquisition of elected this transaction allows the company to maintain a strong cash position and retained financial and strategic flexibility going forward.
The company will share any updates to guidance as a result of the election and the acquisition at a future date.
I will now turn the call back to Jeff for some concluding remarks before we open up the call for Q&A Jeff.
Thank you Terry I want to take a moment and thank our employees for their continued dedication and driving results as.
As a result, the entire team's contributions and our continued success with BELBUCA and some probably we've been able to take this important next step to establish a growth platform within neurology.
Alex It is the ideal assets to form the foundation for future growth and diversification.
We are very excited about this next chapter for patients health care providers, BDSI and our shareholders.
And I will take your questions operator.
Thank you and if he would like to ask a question. Please press star 1 on your telephone keypad and confirmation tone will indicate your line is and the question queue. You May Press Star 2 if you would like to remove your question from the queue.
And for participants using speaker equipment, and it may be necessary to pick up your handset before pressing the star keys. Our first question is from Brandon Folkes with Cantor Fitzgerald. Please proceed.
Hi, Thanks for taking my questions and congratulations on the fourth day and acquisition.
And maybe first and you can go on to the electric acquisition hasn't closed but.
I I heard 6.
You know you're going to be working on it on a label expansion there and it's very.
And encouraging to hear and so just maybe.
On a high level is this a shift and your view towards R&D at all and and then maybe secondly, I just asked my questions upfront and you don't mind.
In terms of patient demand and funnel for both BELBUCA and price are you assuming the recovery.
Happens and some sort of kind of bolus rebound later in the year in terms of your guidance and.
Or do you think it's a more measured return and how these patients are very long day I sort of 12 to 18 months timeframe. Thank you very much.
Hi, Brian This is Jeff how are you doing today.
Great. Thanks, Dave.
Okay.
So when you take a look at.
Alex said.
Yes.
Sorry, I'm going to take.
Your second question first here. So let me just tackle that 1 so when you take a look at the growth coming back with other markets and what we see happening we do see this as a national growth. So just want to make sure that just put that out there that we see this as a gradual growth coming back 4.
For both.
BELBUCA and some profit.
The only other markets has been slow during the during the pandemic and that's something that really came into play, but we do see this as a gradual and pillar, we're really encouraged by the second quarter.
And what's happened the Ohio market.
A gradual and good.
Good afternoon, and some of that and.
The first question could you repeat the first part of your question you cut out on my on the debt when it came to Alexa and so I apologize fresh on that part of it.
No problem and I think you mentioned, you're going to pursue label expansion work on elixir and.
Historically, you BDSI had been a commercial execution company with almost no R&D.
In terms of this label expansion is that sort of the first glimpse and maybe a changing view on R&D longer term for the company strategically just any color around your longer term view with R&D and.
And would be great. Thank you I got it.
Great question, So yeah and label expansion, we're primarily focused on line is certainly about pediatrics and software that's unmet need and it's something that it also is required as part of this as well so growth perfectly and and and so it's 1 where it's at.
FTA requirement, but it's also 1 where you're based on looking at the data and the need for the pediatric heart.
Community to really be a served as a great opportunity I Wouldnt view it necessarily as that were getting deep into the development and to the world and all that and it's 1 where this is the next logical separate likes it and making sure that we really day held as part of it. So it's really about a great market opportunity as far as down the road shows and it's 1 where this is really a great next step for us deepen.
And our focus into neurology, which we're really excited about this really aligns to the strategy that we laid out and over time here with it but as far as right now just really focusing on executing elected official.
Additional.
Label with a pediatric and we also had some optionality as far as it goes also for acute pain down the road, but that's something that we'll just assess as we keep going with that because there's so much mark potentially go after here with electricity with migraine in adults is our first step and then next step obviously will make sure that we do our work on pediatrics, because we see that is on a go.
And really a great unmet need and what's the profile fits very very nicely. So I hope I answered your question Brandon.
How're you doing thanks, very much Jeff and congratulations again.
Okay. Thank you.
Our next question is from Greg Fraser with true Securities. Please proceed.
Good morning, folks and thanks for taking the questions.
And on the chronic pain market recovery and you think the slower than expected rebound is tied to the delta there and in some cases picking up and certain areas or are there other factors at work.
Scott do you want to go ahead and take that 1.
Yeah, great. Thanks, Greg the other question just a little bit on what we're seeing out in the marketplace I guess to give you a background is kind of at the peak of Covid. There was a lot of downsizings that occurred and the pain practices are a lot of staffing reductions and specifically we saw a lot of satellite offices.
On closing as well and as you can imagine we're constantly polling our team and getting you know.
And qualitative feedback from them on this and we see that and then when we go back and triangulate that feedback with the.
The data that we shared with like Cuba, and my prepared comments, where there's patient visits are down quite a bit and paint and still we see and the.
Mid thirties, where the face to face patient visits are down with them paying and that's with mid levels and HCP doctors.
And while there is a little bit more telemedicine and occurring right now, but it still leaves a gap of about 20% and.
Mid twenty's, so what we what we know and the pain space also is that doctors and mid levels are less likely to make changes the patient's treatment regimens and unless they are in front of them without a bears out across all specialties. The that'd be our accents are not as productive.
Via telemedicine. So it's really about I think about staffing trying to staff up I think we're hearing across a lot of sectors.
Challenges and hiring and I think that's bearing out in the space are just not able to open up these satellites as readily as possible. We're encouraged we're starting to see him open up and we're getting access and the losses, we haven't seen.
Maybe on a year, sometimes so we feel like things are going.
Moving on.
And the market itself was up 8%.
Which was the first time and and many many quarters that the market was up the L. A on market, but I think even without being stabilized without patient visits kind of coming back completely I think at least a little bit of a debit so.
Hopefully that's helpful got it yes, that's very helpful. Thank you on the new ask that can you help us understand where you see the oral solution into the acute migraine treatment paradigm and how youre thinking about sales potential.
Yeah.
And we see it's really fitting well, obviously, that's a key part of our diligence as far as if there's something to be really super clear to everybody that we go and eyes wide open into this market as.
It's a very big market over 13 million migraine patients growth, 5% annually, but there's a lot of noise with the CG rfps out there direct to consumer advertising, all that noise, which actually and maybe wage benefits us because it was just a lot of activity as far as and when it comes to patient with <unk>.
And speaking cuts decisions on patients play through but the fact that we are truly we at this point of differentiation and the state is really important and what were the only FDA approved ready to use oral solution for the treatment of acute migraine.
And adults and it really positions us quite well because what we do see is that from our market research that physicians are looking for different mechanisms of action being a cox 2 and differentiates us from that way and also a lot of deliberate and oral solution with the bioavailability and the clinical profile that we see playing out.
And it makes a big difference on that and.
I'd also just want to share great taking your question a little bit farther part of that.
On the experience of our team and I think that they're helping to really for us to be able to put our head around the on where this fits into the marketplace that I'd be remiss and I didn't talk about the experienced and team have you taken a look at the leadership team here at <unk>.
That's 42 product launches either under all 5 of migraine and a couple of examples that we have leadership on the commercial team and his experience in migraine and also our Chief Medical Officer, Tom Smith, and she's a headache, and migraine and physician a key opinion leader and migraine.
He has developed and.
And many products and also launched products and their space.
And the trip and so we have no other market well as key part of our diligence about getting back to your question as far as how this fits in and so many different ways, but also the part with when you take a look at the.
The ability to really know what the key opinion leader and ship that are in this space is super important to be able to really play all that out that Tom has relationships with key opinion leaders, which we tapped into about getting back to answer your question again about how it fits into the marketplace. So we really see that.
On a really a great fit as far as maybe fronts.
And I won't say going a step further again, but it's also that we.
And we really see the opportunity here and a feed off our existing infrastructure, which makes it super efficient a very targeted effort.
That's in play folks that are high decile prescribers and where.
And really fit and also with our expertise as far as.
And it helps and using digital tools, our CRM capabilities, we've proven that with BELBUCA with the uptake of BELBUCA and western playing through on that and so some kimberly and good things there. So hopefully regular takeaway is that it's been a very thoughtful.
Aspect about how we see the product.
And it into the marketplace based on extensive market research.
We both quantitative and qualitative we see that this fits and quite well always through on that and and.
You'll see that the market opportunity is 1 we're looking where other tuck in product thats, something skips and be bigger than.
And some will come back with more refined.
Aspect of that and then we have our we're going to have and elixir there as you mentioned before elixir.
BDSI day that will be in early fourth quarter and really go deeper on some things so more of a fight on some things from a number standpoint for you to answer your question, but I think it was just kind of put this in perspective that the library and market is 1 that.
It's about 30 times bigger than the palm oil market. So certainly this is no tuck in on that and.
And as a gardener.
If you go to the low single digit market share and this market.
Again eyes wide open about this competitive landscape here to have this perspective, but this is a significant amount of dollars out of Chicago and low single digit market share.
Ballpark around 100 billion net revenue so.
And you'll pretty good situations. So you can tell we're pretty excited about it right.
Got it thanks for that and.
And do you plan to add sales reps and reach a broader group of neurologist and you're calling on now I guess, how should we think about the incremental sales and marketing spend tied to the product.
And as well as R&D for the pediatric study.
And when you think about well first of all for this year, it's modest and so I think thats important thing and Terry can elaborate on that and even more so but yes, I think 1 of the great things about this deal is that our current footprint.
And I really serves us well that you take a look at.
Yes.
Right now as far as the total number of sales reps that we need and.
I'll get to that and just a second but the current sales footprint.
It's very much focused on rig count we used to focus on BELBUCA BELBUCA as the mother ship that growth and that we have.
Really we have a lot and experienced about keeping an eye on the on the growth engine of BELBUCA and especially if you want to maintain the critical relationships that we have there. So that's really huge to us on this 1.
These same relationships will serve us very well because it's.
Interesting to see the data and Scottsville and done a great job and the team as far as picking up the data but.
It really nice potential for migraine within our current called on universe. So that's really good so.
Our proximately 118 or so.
And I was territories et cetera, and report place to start.
We do plan on a smaller dedicated sale.
Our sales team that will focus on neurology, but the highest decile migraine prescribers. So.
The absolute highest potential super focused and these are people, who just get up every day and it's just the trigger sleep elixir. So if we could.
Curious with this we also see within that sales force and.
Is that targeted effort that theres. Some BELBUCA potential also so we like that also so that would be able to promote BELBUCA and a second position certain targets paid on Joe what type of patient population you have as well. So that's where we are right now as far as that goes and.
And you take a look at like I said this year a modest spend really you were talking about with the launch the first quarter. That's what we're bringing on the additional sales resources and I just described.
Great. Thank you.
Thanks, Greg.
Our next question is from David and sell them with Piper Sandler. Please proceed.
Hey, Thanks, This is Jack on for David and congrats.
Congrats on the acquisition and the quarter.
Just in light of the likes of acquisition does this transaction and kind of fit the mould.
In terms of the types of other assets you might be looking at so are you generally passing I guess a wide net in terms of what you're looking for within neurology.
So when you take a look at where we are right now that southern neurology is what we've been talking about for quite some time as far as next logical adjacency to pain.
And about the size of the past, it's a great situation and you do like a venn diagram as far as the overlay between pain and neurology and you'll go back to my J&J experience as far as with the total.
Total from Axa and all trends as far as those 2 products. So it's very similar and that way. So we really see that as a really important reason that this fits so well and we know that that is a formula for success and as far as what happened in the past as far as what we see down the road right now from the standpoint of.
And if you have enough to chew on right now.
We're always going to be open minded as far as other things that might come up but as far as the so much of a potential that we see and elixir, but really curious day because it stands on its own very much. So based on what we're seeing but it comes back to shareholder value is something that the only thing I'll look at that really brings shareholder value as far as if there are other asked.
Sets that we come across and will continues you are scanning the world. That's something that we've had really a quite a process that plays through but it's also what we want to make sure that it's something that anything that we do look at brings value. So I wouldn't anticipate that.
There's something else that's going to drop in here.
And Im soon but we won't keep on scanning the universe on that and but its 1 where we have enough right now just to say b.
The value of electricity and what we execute from here.
Certainly something Thats got us very excited and ready to access on that day for sure.
Yeah that makes sense. Thanks, and then if I could sneak in 1 more quick 1 on BELBUCA just on the payer front and on part D. In particular has anything sort of changed philosophically and you were in terms of how aggressively you.
Atlanta contrast here.
Scott do you want to go and take that 1.
Yeah, sure and thanks for questions back.
Think of as I mentioned on my again my prepared comments, we're always trying to balance maintaining appropriate gross to nets with access and when we look and Medicare 1 other things. That's encouraging is we do see over a 90% approval rate and so it's actually if you look at our coverage, where we're 90% covered lives.
And commercial 33% and Medicare part D.
And we actually have a better approval rates and Medicare so patients still have access to it.
And its affordable access as well so I think that's important.
It would open some doors and wherever we've got Medicare coverage, but we were trying to balance.
Making sure that we're not providing rebates that literally we could not make up over time.
And and prescription growth, so we're being thoughtful about that and so that's where it is and we haven't closed the door was still working very hard and trying to find different avenues to getting approval on.
I'm sorry to getting.
Wider coverage.
But nothing to report at this time as you know I I believe you probably know a lot of Medicare.
Words or announced in Q4 is when you kind of worry about those things and usually take effect and beginning of the year typically so but as I said nothing at this time.
Yeah no. Thank you.
Okay.
Thanks, Thanks, a lot for the questions.
And <unk>.
And on what Scott said is that our team has regular and useful.
Moving to match, what really brings impact and it was also the company. So we're very careful about the Hema has a lot of good experience with that so it's on where Youre question is really good 1.
And we do the math all the time, so it's the only ones that really make this a sense. So it's a very prudent process.
Thanks for the question.
Yeah no problem.
Our next question is from Scott Henry with Roth Capital. Please proceed.
Thank you and and good morning, a couple questions on.
I guess first.
Like to give Terry a chance to participate and could you talk about SG&A in the quarter and it was down notably and the question is should we think about as you know first why was it down and then how should we think about it going forward.
Yeah. So thanks, Scott for the question and the opportunity to today and it's just something.
And so the quarter was down I mean, it's a combination of things we've talked about early in the year you typically can have that kind of and.
Investment and marketing spend and that's as you pick up every year and also we've spoken about legal spend with with the <unk> 4 trial being higher.
And the early part of the year as well.
So I think those would have been 2 drivers when you look at last second.
Second quarter compared to let's say the first quarter.
Going forward.
You know, we've given the guidance, where we're still holding the guidance.
And in terms of our SG&A spend I think what you have.
Yeah, I mean, we're still considering that we spend.
And I think we were very prudent and we make sure we're prioritizing spend keeping it in line with how the revenue is tracking as well and you can expect us to continue doing that.
Okay.
Thank you for that color and then shifting gears kind of a tough question.
But you know obviously the BELBUCA patent is a significant event for the company and it seems to be going well, but you never know and and the question is you're doing a share buyback in front of that event is perhaps a little unusual and should we view that inc.
As confidence in front of that case or how should we think about that decision to buy back shares and front of such an event.
Yeah.
And maybe how.
You go first and I don't think I understand.
No I was just going to say on this.
You know reflect our confidence and the business, but go ahead Jeff.
It's very much the cases and the confidence of the business and it goes beyond just the legal aspect that they just generally viewing.
Stock has been and just you take a look at the road in front of US that you know what.
And just that part about just confidence on the legal standpoint also competence and the growth that's in front of us as well. So we just think it was very prudent moves has been a very prudent move to take back and there was some people calculate on our end, but I think youre thinking about the right way Scott.
Okay great.
Great and just a couple of small questions.
And I look at BELBUCA and when it does.
And the script data and the market share.
It kind of slowed down a little bit and in kind of March and and April, but then picked up and in May and June.
Is that noise or should we think about progress and accelerating perhaps penetration there.
And I think I'll go first shot and maybe you build on that but yeah I mean, it's still.
We were really paying close attention to is very much a patients getting back into the office, that's huge to us and pain and.
Scott talked a bit about the capacity challenges that from the offices have run into and it's really the combination that we see this improving which is really huge and it all up and it's about the future of that patient is getting it back into the offices, but also like that really ties back into our representatives getting their face to face on that this is something that is huge to BELBUCA to be able to have that.
Face to face time to sell.
And the new patients getting on and so there's good demonstration about how to use the product and all that stuff like that takes the office staff on the face to face to play through and so what we did was we really are seeing that that towards the back end of the quarter or the month. She described and described it very well I'll start because that is something that we see the ball moving in the right direction. There so I think thats.
Probably something and key that Scott and I spend a lot of time talking about and we closely monitor that because they go hand in hand, and it's something where it's true.
And I think too complicated here that this is really the face to face sell that that's so key that when all representatives, who are really good when they get time in front of the customer and able to be able to connect the dots on that and that makes a big difference and so with that.
Making some positive moves relative to where we were.
Through the pandemic, we really see that encourage and sign going forward. Scott is there anything else you want to add to that as well.
So I agree with everything Jeff said, we do monitor it closely actually on a weekly basis. The activity, we're seeing and we did see a lift and face to face activity by our reps during Q2 versus Q1 actually on a substantial amount and I think that's carried into July as well Scott we didn't share many numbers to that and what this is public but the week of.
July 23rd actually according to <unk>, we had or.
As our second highest week, but I view it as our highest because the week that was higher was the week after all the weather and.
Kind of outages at the end of February.
The first week of March kind of standard all time high but it was kind of artificially inflated and and then even recently we've seen a.
Trs share a 4.9%, which we have reported for southern and and Q2, and then I think even more important our indirect share the last couple of weeks with average 8%.
And that's a really nice spread between MPLX and <unk> share. So we believe that.
Pointing towards a nice growth going forward.
Okay, Great and final question just for clarification, I think with helix. If you you mentioned a smaller sales force potentially targeted smaller sales force and shall.
Should we be thinking about 10 to 20 reps just curious how kind of your defined smaller.
If you think about just a bit bigger than that at this point I think that's probably the right way to think about it it's a.
Yes, it's very targeted.
And to the highest decile and net more refined number will get to you as far as happy election day.
And it will happen early fourth quarter, but I would say just think about it being a bit bigger than what you just described but it's yep that's.
A good way to think about it so I hope I gave you enough for now Scott to give you a perspective.
Fair enough. Thank you for taking the questions.
Thanks for your question Scott.
Our next question is from Tim Lugo with William Blair. Please proceed.
Hey, guys. This is John on for Tim Congrats on the strong execution during the corner and congrats on the Ddos and especially impressive that you were able to get it done while maintaining such strong execution. So just 2 questions from us first and others have mentioned the pain market appears to be returning a little slower than some other pharma market with the pandemic do you have any insight.
As to why that is or what's holding back the overall rebound and second was just wondering if you can give us and updates on the mix of the sales team that's out in the field versus virtual and how you might be planning to manage that at delta potentially ramps up.
Okay.
And I'll have I'll take the first part Scott and you take the second part, but it says something about where we've been from really paying very much attention to us about what's going on but the different therapeutic areas as far as.
Coming back from Covid.
We really did a good baseline and the street day of data out there, obviously that we pay close attention to but patient visits.
Covid versus where it is now and in pain and slacker. It was rheumatology and paying with the 2 that were bloggers before rheumatology seem to be coming back with compared to all other specialties.
Pages, the laggard that side as far as patient visits going back and we did a deep dive on this it's really important to us and they should be understood is that we brought on our sales leadership team together and Terry Scott and I met with them for several hours and really deep into by geography about what's going on with patient visits all the way through and it's something that's true.
On alluded to before is that right.
During COVID-19.
Sales out and some staffing and some different office and also for the satellite offices for pain that were closed down and just because of really managing through COVID-19 and so they really narrowed their focus and a lot of ways. So it's something that we're starting to see that those are starting to come back a bit and we see that as being gradual.
Capacity part about the workload versus capacity workload being patients wanting to get into.
And to see the position and the limited capacity and some areas and some of the key systems of care out there, we do see that starting to come back, but that's really.
John as far as being not really.
What are the key drivers we've seen with that.
Going on behind the scenes here, but we're very encouraged about where for some things are going to go from there.
So hope I answered that part of the question would be just checking with you before I turn it to Scott talking about the mix on promotion, but a chunk and I answer your question Okay.
Yeah that was very helpful. Thank you so much.
Okay, Alright, Scott over to you.
Yeah. Thanks, Jeff.
John on the promotional mix.
That's actually the other part of this that we've seen and improvement in trends and.
Is that.
As things open back up and.
And we have better access we saw our virtual interaction and go down and more face to face. So really every breath on our sales force now without making my life.
And I like presentations and they have really since last year, but the percentage of interaction that have gone to face to face having direct conversations with individuals has really improved and it's up to over over 95% of our interactions are now are done that way and we always have we have a system in place where you can follow up emails.
And things like that that's part of that next season.
That's.
And so you can see a big big portion of our interactions are now.
Live interactions.
Thank you so much.
Youre welcome. Thank you.
Our next question is from Tim Chiang with Northland Capital. Please proceed.
Oh, Thanks, Jeff.
Maybe you could just talk a little bit about what work you think youll need to do on it looks and just to get managed care access and obviously this product will play into it.
Much more sizeable market, but there are a lot of competitors and.
Obviously, you have a well known molecule here and Celecoxib, but I'm just sort of wondering have you guys done quite a bit of work on the managed care side, just so that when you launched this and.
Early 2022, you'll have good coverage.
Hope you're doing well today.
Good question, we did put a work on this you can imagine during diligence and I guess it was stressed and everybody that this is a very comprehensive due diligence process and the team does a lot of experience as far as all different functional areas supply chain to medical too.
Sales marketing and also the payer environment. So we did a deep dive into her own Wil research on this and.
<unk> reached out to our key contacts to really make sure that we were getting ready for this and as far as the way that we're looking at the world going forward with it and so we see that theres, a weighted to appropriately position us well and the payer space and it's just a price.
And that has differentiation, it's 1 way or another.
The key thing that worthy appeal and the only FDA approved ready to use oral solution.
Really.
It makes a big difference for us and so that differentiation is there payors youll see that and Thats something really cheap with us, but also I think it back from our team as far as the relationships.
And it's something where again it gets back to part of the reason this is so attractive to us and we're able to drop.
Our existing infrastructure the expertise of our team and really be able to set us up well there, but it's been very thoughtful piece on on the.
Access from a payer standpoint, and we know that you could have the purchase price and the world, but if you're not able to get that payer access.
It's a challenge, but we've learned and towards the due diligence. We think were you know.
Well positioned there it's 1 of those ones just like every product that's launching and it's 1 step at a time as far as being able to just keep building more access as you keep going here, but we think we're well positioned also when it comes to.
And anything else Scott that you want to add please go ahead way and.
Hello, and thanks for the question Tim.
And we're excited to launch this 1 of the things that was exciting about the asset was the price structure and the rebate.
Platform hadn't been put in place. So we can kind of control that and I think if you look also at what we've done over time with our BELBUCA franchise.
A market. That's also a very large market with a lot of players generics and branded and we've been highly successful and and getting access affordable access for patients and also at a rebate level, it's reasonable so and I think we're really confident like Jeff said and the team and we did a lot of work not only with physicians, but also with payers.
On a quantitative work and then we have a consult and whose.
You know operated on the VP level and <unk>.
Some of the largest payers and the country that helped US work through this and make sure that we understood going on and what it would take them on pricing structure and probably the rebate structure as well so.
And it was very and maybe just.
Quick follow up Jeff I mean, you kind of highlighted and you'll have a small sales force.
On to market it looks it but I guess your existing sales territories that you cover.
And those those will be complementary right with with what you're already selling and BELBUCA.
And some public.
Absolutely.
And that's what really made a distinction specials forces with efficient effective approach that we could half year.
We cannot afford to have disruption with BELBUCA and we're not going to allow that to happen and that's why we're keeping the current territory is very much intact. Those relationships on our rest of worked hard to build those and just to make sure that that connects very well and also the fact that look if we see some potential with elixir that our current footprint and also with.
Neurology and going deeper into neurology BELBUCA potential on that and as well. So it's really a good fit to go both ways, but it's from where we are very very focused on and we've been down and sort of before Scott and I. Both have a lot of experience with this as far as doing something exactly like we're about to do we've been down this road before which is something that on.
I think it really helps us to make sure we keep the focus and execute on everything.
Yeah.
The big 1 of course BELBUCA to keep the momentum going and really grow this thing.
Okay, great. Thanks Congrats.
Alright, great. Thanks, Ken.
Your final question is from Orin Loopnet with H C. Wainwright. Please proceed.
Hi, folks you've obviously.
Dress to some extent this L a on market.
Dynamic, but I was hoping I could press you a little bit more about that you know what do you think is different if anything about that population potentially that might be driving a differential rebound versus most other therapeutic areas. You know would it be fair to speculate at that population was maybe.
Hit harder by Covid with regards to unemployment and lots of insurance you know I'm just trying to tease out if you think there's really and underlying demand change versus just you know.
Capacity and logistical issue that you've mentioned a couple of times you know for example, do you see anything on the IR opioids volume that suggest that you know some of this volume is.
Temporarily been displaced or or shuttled off to something more accessible.
And I do have a follow up.
The Orange and it was really good question, because that's actually why we pulled everybody into the sales leadership team and together to really go deep on that topic and it's such an important part of the thinking so really we.
We were asking the same questions as far as an insurance or there are other underlying issues beyond that and really came back to primarily it was just it's a lot about their capacity and their offices really to handle the volume coming out there and backhaul mindset.
But going into Covid, you would think boy it when people have paid their they're going to find a way to get them get treated 1 way or another and something where the business being down and so on where we do see it coming back because of.
The primary driver, let's put this way and some cases some of the things you mentioned sure are in play, but it's also 1 where at the primary drivers. We've learned from just going deep and stayed very close with weekly calls with our sales leadership team about what are you hearing and the market, what's going on and your geography. Other geographies. There is some capacity challenges there that are impacting some things on that and so.
And that's.
The important thing is really the highlight.
At this point, we do see some encouraging signs, though about where we go from here your point about IR actually Scott and I did a deep dive Scott went back into the data because we were wondering about the same thing as far as are we seeing a change and I are that there may be is happening and the interest not with hardware and <unk>, you'll see a similar situation as far as the trend goes.
So that was just before.
And we try to speculate on everything we possibly could you on that day.
And so that's where we landed on and so hopefully that's helpful.
And I think someone asked earlier I'm not sure if you addressed it or are there meaningful geographic differences.
You know and general and maybe in terms of where you are.
Business is concentrated I know when Texas had the storms you highlighted that that hit us, particularly hard and give it a good.
Hunk of business, there and I'm wondering is are we seeing less of a rebound and the L. A O market and those geographies are on nationwide.
Yeah.
Scott do you want to go and take that 1 as far as what we're hearing from the field team.
Yes, so on and when you look at our the feedback we've gotten from our team as well as the data, there's really not a large discrepancy across the country and.
We did see a very large decline and the first quarter to your point and Texas, Oklahoma area.
When I look at Q2 and now those areas are really rebounded for us as well so.
It's come back in Q2 as the market has so.
And you know the market has declined every year I think the thing that's different right now is that it's the patient visit is way down and the offices, which again changes on the curve to therapy, even if somebody's on short acting and needs a long acting <unk>.
They are just sitting on a lot of short acting right now because they're not getting back into and office capacity wise.
So.
I think that that.
That's the challenge is there reluctance to make large changes and if you think about it if you're switching molecules or delivery systems.
And there will likely change if they're not and public safety.
Okay, and if I may I'm, sorry to drag on here, but real quickly on Alex and I think Tim and kind of touched on it with regard to your current business and it sounds like obviously, you're keeping your eye on the price with BELBUCA, but what sort of overlap with the migraine market is there now and your footprint.
Are you, calling on some neurologists and obviously pain center and treat migraine as well and if you had to ballpark on what percentage of the.
Migraine scripts are alive that are out there now do you think.
Even tangentially covered by your current footprint.
And if promoter and a second position.
Sorry, you guys there.
Yeah, Jeff I think you're on mute.
And I'm sorry about that.
Yeah, sorry about that so that'll truck side.
And we definitely see the potential there Scott has a few numbers you can share but does Scott. Once you go ahead, and just highlight that with our current audience with the potential for migraine.
Yeah happy to do so and so on it.
The high level data, yet and we havent finalized infrastructure, yet or anything like that that'll be fine tuned here, but youre looking at.
Over 6% of the market is captured in our current targets.
Within the current infrastructure.
And that that's a predominantly kind of mid decile migrant prescribers and that space.
And if you look at even if you go back and look at you know, even and and training a lot of times pain lumped with headache and migraine.
So theres a lot of experience within the pain market.
And practices with treating migraine.
And you said 6 zero cost out on the market sorry.
About 6%.
6%.
Yep Yep.
And that's how we would do but we're very focused team that would focus on the highest other prescribers.
Yes.
I think if you look at the way, we built out BELBUCA overtime and its very thoughtful we didn't.
And I've tried to build build things too fast and make sure we have the right market access to support besides other of.
All of our sales team and and whatnot.
Alright, well, thank you for the color.
What's your Investor day.
Thanks, Laura and yet you just add to that is that with those relationships with those mid decile migraine with us to help us. So much that these are relationships that were established over the year. So that's got us excited about something to get us on the gate strong.
Okay. So.
Any other questions I think we need to wrap up we're at the bottom of the bottom of the hour correct. Yes. It is.
Has concluded you may do your closing remarks.
Excellent. So I just want to thank everybody for participating today as you can tell our team is really excited about the road that's in front of us net.
And what we have right now with the addition of elixir there is that our diversified.
Portfolio that includes the growth engines of BELBUCA and its and <unk> and you could tell that we're very focused on keeping that momentum going and we have a strategy in front of us just to make sure that that happens, but also just a great differentiated assets intellectual because that's on the front of us more to follow as far as an early for fourth.
Quarter as far as about the election.
A day I think that you'll find that very helpful. But thank you for participating today and they're good questions and we look forward to speaking to you soon and everybody have a great rest of the day.
Thank you. This does conclude today's conference you may disconnect. Your lines at this time and thank him from your participation.
Okay.
Yes.
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Yes.
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