Q2 2021 Supernus Pharmaceuticals Inc Earnings Call
Operator: Good afternoon and welcome to Supernus Pharmaceuticals' second quarter 2021 Financial Results Conference Call. At this time, all participants are on a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Peter Vazzo of Westwick, the Investor Relations Representative for Supernish Pharmaceuticals. You may begin.
Good afternoon, and welcome to Supernovas Pharmaceuticals second quarter 2021 financial results Conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time as a reminder, this conference call is being recorded I would now like to turn on.
Conference over to Peter Basel for Westway Investor Relations representative for furnace Pharmaceuticals, you may begin.
Peter Vozzo: Thank you, Josh. Good afternoon, everyone, and thank you for joining us today for Sopernas Pharmaceuticals' second quarter 2021 Financial Results Conference Call. Today, after the close of the market, the company issued a press release announcing these results. On the call with me today are Sopernis' chief executive officer, Jack Qatar, and Jim Kelly, chief financial officer.
Thank you Josh good afternoon, everyone and thank you for joining us today for <unk> Pharmaceuticals second quarter 2021 financial results conference call today. After the close of the market. The company issued a press release announcing these results on the call with me today are Super and US as Chief Executive Officer, Jackatar, and Jim Kelly Chief Financial Officer.
Peter Vozzo: Today's call is being made available via the investor relations section of the company's website at ir.supurnus.com. Following remarks by management, we will open the call to questions. During the course of this call, management may make certain forward-looking statements regarding future events and the company's future performance. These forward-looking statements reflect Sopernis's current perspective on existing trends and information. Any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in the Risk Factor section of the company's latest SEC filing.
This call is being made available via the Investor Relations section of the company's website at IR, that's a furnace dotcom.
Following remarks by management, we will open the call to questions. During the course of this call management may make certain forward looking statements regarding future events and the company's future performance. These forward looking statements reflect some furnaces current perspective on an existing trends and information and.
Any such forward looking statements are not guarantees on future performance and involve risks and uncertainties, including those noted and the risk factors section of the company's latest SEC filings actual results may differ materially from those projected and these forward looking statements for the benefit of those.
Peter Vozzo: For the benefit of those of you who may be listening to the replay, this call was held and recorded on August 4th, 2021, at approximately 4.30 p.m. Eastern Time. Since then, the company may have made additional announcements related to the topics discussed. Please refer to the company's most recent press releases and current filings with the SEC. Sopernis declines any obligation to update these forward-looking statements except as required by applicable securities laws. I will now turn the call over to Jack.
All of you who may be listening to the replay. This call is being held and recorded on August 4th 2021, and approximately 430 P. M. Eastern time. Since then the company may have made additional announcements related to the topics discussed. Please reference the company's most recent press releases and current filings with the SEC. So pernice declines any obligation to update these forward.
Looking statements, except as required by applicable securities laws and I'll now turn the call over to Jack.
Thank you Peter good afternoon, everyone and thanks for taking the time to join US as we discuss our 2021second quarter results.
During the second quarter, and we continued to make significant regulatory operational and commercial progress highlighted by the approval of Calgary and its launch at the end of May for the treatment of ADHD and pediatric patients.
Jack A. Khattar: Thank you, Peter. Good afternoon, everyone, and thanks for taking the time to join us as we discuss our 2021 second quarter result. During the second quarter, we continued to make significant regulatory, operational, and commercial progress, highlighted by the approval of Kelbray and its launch at the end of May for the treatment of ADHD and pediatric patients. The early performance of Calgary is on track with our expectations.
The early performance of category is on track with our expectations and health care providers are excited about calibrate as the first novel Nonscheduled medication option for ADHD and over a decade.
Cattle breeds prescriber base is rapidly expanding each week and health care providers expect to increase prescribing significantly as children and get back to school. This fall.
We are encouraged by the early clinical feedback, which has been positive and in line with the results of our phase III clinical trials.
Ports from the field indicate that patients are experiencing demonstrated improvement and ADHD symptoms as early as week, 1 with continued improvement over the subsequent weeks having.
Jack A. Khattar: Healthcare providers are excited about Calvary as the first novel, non-scheduled medication option for ADHD in over a decade. Calgary's prescriber base is rapidly expanding each week, and healthcare providers expect to increase prescribing significantly as children get back to school this fall. We are encouraged by the early clinical feedback, which has been positive and in line with the results of our phase three clinical trials. Reports from the field indicate that patients are experiencing demonstrated improvement in ADHD symptoms as early as week one, with continued improvement over the subsequent weeks.
Having a once daily rapid and extended release Sprinkler Bowl capsule for a full day exposure has been well received and the safety and Tolerability profile is allowing patients to stay on therapy.
Early trends and prescriptions and reflect the heavy sampling programs with patients starting on a 2 to 4 weeks of samples over 25000 and starter kits have been distributed since the launch and in preparation for the back to school season, and we look forward to the back to school season to be in full swing.
So that we can help as many pediatric patients as possible.
And regarding managed care coverage overall more than 60% of lives and the pediatric market have access to calibrate.
After just 3 months on the market and compare to other 3 branded and non stimulants category is edited and advantage or is at parity and more than 80 per cent of the commercial health plans and and more than 90 per cent of the Medicaid plans.
Regarding the adult population, we recently submitted a supplemental NDA for the F. D. A for calibrating for adult patients with ADHD, we expect to hear from the FDA and the third quarter regarding acceptance of the submission and potential could do for a day.
Jack A. Khattar: Having a once daily rapid and extended release sprinklable capsule for full day exposure has been well received, and the safety and tolerability profile is allowing patients to stay on therapy. Early trends and prescriptions reflect heavy sampling programs with patients starting on two to four weeks of samples. Over 25,000 starter kits have been distributed since the launch and in preparation for the back-to-school season.
Turning now to the pipeline the NDA for the April morphine infusion pump or SPN 830 is on track for Resubmission and the second half of this year and the SPN 820 phase II clinical study and treatment resistant depression is on track for initiation by the end of 'twenty 'twenty 1.
Moving on to the commercial products and starting with Trokendi XR and ox stellar XR. We are pleased with the stability of the brands, despite declines and prescriptions and the reduced promotional efforts by the company.
Jack A. Khattar: We look forward to the back-to-school season being in full swing so that we can help as many pediatric patients as possible. Regarding managed care coverage, overall, more than 60% of lives in the pediatric market have access to Calvert. After just three months on the market, and compared to the other three branded non-stimulants, Calabry is at an advantage or is at parity in more than 80% of the commercial health plans and in more than 90% of the Medicaid plans.
Since the launch of calibrating the products have been promoted by a much smaller neurology sales force that is focusing its promotional efforts on supporting the current prescriber base.
For the first half of 2021 and the 2 products combined delivered net sales of $203 million slightly lower than the $206 million and the same period last year.
We continue to see an increase and the average size of a prescription for each product contributing to the increase and the average wholesaler acquisition cost price per prescription.
On a per can we are encouraged with our second quarter performance and have started to see some stability with the brand after the competitive dynamics that have prevailed for the past 9 months.
Jack A. Khattar: Regarding the adult population, we recently submitted a supplemental NDA to the FDA for Calabry for adult patients with ADHD. We expect to hear from the FDA in the third quarter regarding acceptance of the submission and potential pedufa day. Turning now to the pipeline, the NDA for the apomorphine infusion pump, or SPN 830, is on track for resubmission in the second half of this year, and the SPN820 Phase 2 clinical study in treatment-resistant depression is on track for initiating by the end of 2021.
And finally regarding corporate development, we continue to be active and looking for strategic opportunities to further strengthen our future growth and leadership position and CNS.
With that I will now turn the call over to Jim.
Alright, Thank you Jack.
Good afternoon, everyone as for a review our second quarter results. Please refer to today's press release.
I'll begin with our revenue and earnings before turning to discuss operating expenses net.
And as a reminder, in June of 2020, we closed the acquisition of the U S World Med products. This means our prior year comparisons reflect a partial quarter financial impact of that acquisition.
Total revenue for the second quarter of 2021 was $141.3 million and increase of 12% as compared to $126.7 million and the same quarter last year.
Total revenue and the current quarter was comprised of net product sales of $138.6 million and royalty revenue of $2.7 million.
Jack A. Khattar: Moving on to the commercial products and starting with Trucandy XR and Oxtellar XR, we are pleased with the stability of the brands despite declines in prescriptions and the reduced promotional efforts by the company. Since the launch of Calvary, the products have been promoted by a much smaller Neurology sales force that is focusing its promotional efforts on supporting the current prescriber base. For the first half of 2021, the two products combined delivered net sales of $203 million, slightly lower than the $206 million in the same period last year.
Net product sales and the second quarter grew by $14.6 million for 12% compared to the prior year.
Year over year growth for our stellar XR sales and the benefit of a full quarter of sales for a pickin Myobloc Zed doggo.
And was partially offset by a decline in <unk> XR.
Calgary was launched in late May and we're happy to report our initial 300000 and sales for the second quarter of 'twenty 'twenty 1.
Cal Breen net sales include a temporarily high commercial co pay deduction as we support patients during the early launch period, while we continue our commercial contracting efforts to establish access for patients.
Regarding current quarter inventory levels, we saw a decrease of less than $1 million for inventory held by our direct purchasers as compared to the end of the first quarter of 2021 and now this excludes the initial stocking activity for Calgary.
Jack A. Khattar: We continue to see an increase in the average size of a prescription for each product, contributing to the increase in the average wholesaler acquisition cost price per prescription. On Apokin, we are encouraged by the second quarter performance and have started to see some stability with the brand after the competitive dynamics that have prevailed for the past nine months. And finally, regarding corporate development, we continue to be active in looking for strategic opportunities to further strengthen our future growth and leadership position in CNS. With that, I will now turn the call over to Jim.
Operating earnings were $34.1 million for the second quarter of 2021 compared to $45.5 million and the same period the previous year.
Net earnings for $23.7 million for the second quarter of 'twenty, 'twenty, 1 or 43 cents per diluted share compared to $34.7 million or 65 cents per diluted share and the same period the previous year.
As of June 30, 2021 the company had $855.3 million and cash cash equivalence and marketable securities compared to 772.9 million as of December 31, 2020.
Of note, we did see over 40 million favorable impact on.
Jim Kelly: All right, thank you, Jack. Good afternoon, everyone.
On cash, resulting from the timing of payments for Medicaid and managed care rebates that we'd be paid and the third quarter of 'twenty 'twenty 1.
Jim Kelly: As a review of our second quarter results, please refer to today's press release. I'll begin with our revenue and earnings before turning to discuss operating expenses. Now, as a reminder, in June of 2020, we closed the acquisition of U.S. WorldMed products.
I'll now provide some more details related to operating expenses.
Fresh G&A second quarter of 2021 expenses were $69.5 million compared to $48.1 million and the same period last year. This increase reflects our Calgary launch activities and the full quarter impact of commercialization efforts for a beacon said doggo and Myobloc.
Cost of goods sold for the second quarter of 2021 was 25 million a $16.7 million increase compared to the prior year.
Jim Kelly: This means our prior year comparisons reflect the partial quarter financial impact of that acquisition. Total revenue for the second quarter of 2021 was $141.3 million, an increase of 12% as compared to $126.7 million in the same quarter of last year. Total revenue in the current quarter was comprised of net product sales of 138.6 million and royalty revenue of 2.7 million. Net product sales in the second quarter grew by 14.6 million, or 12%, compared to the prior year.
This increase was primarily due to the higher costs recorded in 2021 for the acquired commercial products due to the timing and the U S World net acquisition.
And related to Myobloc inventory rejected lots and the period.
Research and development expenses were $15.5 million for the second quarter of 2021 compared to $22.2 million and the same period last year.
The majority of this decline is explained by the 10 million fee paid to NAV of tour and the second quarter of 2020 for the option to acquire or license S. P and a 20.
In addition, we've we've added expense related to the advancement of our pipeline programs, most notably SPN <unk> 20 for the treatment for.
For treatment resistant depression.
2 noncash items, including included in our operating and earnings are amortization of intangible assets and contingent consideration gain.
Jim Kelly: Year-over-year growth for Oxteller XR sales, and the benefit of a full quarter of sales for Apican, Mioblock, and Zadago were partially offset by a decline in interkendi XR. Calabry was launched in late May, and we're happy to report our initial 300,000 in sales for the second quarter of 2021.
Amortization expense for intangible assets was 6 million for the second quarter of 2021 and increase of $3.5 million compared to the same period the prior year.
Contingent consideration gain reflects the incremental period change to the amount for contingent purchase price milestones, we expect to pay related to the U S World Med acquisition.
Jim Kelly: Calbrine net sales include a temporarily high commercial co-paid deduction as we support patients during the early launch period while we continue our commercial contracting efforts to establish access for patients. Regarding current quarter inventory levels, we saw a decrease of less than a million dollars for inventory held by our direct purchasers as compared to the end of the first quarter of 2021. However, this excludes the initial stocking activity for Kelby.
During the second period of 2021 we recorded a gain of $8.8 million, which.
Reflects a decrease to the expected milestone liability.
Turning now to full year 2021 financial guidance, we reiterate our prior financial guidance, including an increase to the lower and the operating earnings range.
We reaffirmed revenue guidance range of 550 million to $580 million, which is comprised of both net product sales and royalty revenue.
Jim Kelly: Operating earnings were $34.1 million for the second quarter of 2021, compared to $45.5 million in the same period the previous year. Net earnings were $23.7 million for the second quarter of 2021, or $0.43 per diluted share, compared to $34.7 million or $0.65 per diluted share in the same period the previous year. As of June 30, 2021, the company had $855.5.3 million in cash, cash equivalents, and marketable securities compared to $772.9 million as of December 31, 2020.
For the full year 2021 we expect combined R&D and SG&A expenses and the range of 380 million to $410 million and operating earnings between $70 million and $90 million.
The increase to the lower end of the operating earnings range is related to the favorable impact on the contingent consideration gain noted in the current period.
In addition, we expect full year 2021 amortization of intangible assets of approximately $24 million.
Yeah.
Further we expect full year 2021 effective tax rate of 28% to 31%. This range is above our normally expected range.
For this year of 26% to 28% due to a number of discrete items for the year.
With that I'll turn the call back to the operator for Q&A.
Thank you as a reminder, Jack a question you will need to press star 1 on your telephone he was drawn on your question for.
Keith Please stand by while we compile the Q&A roster.
Our first question comes from David Steinberg with Jefferies. You May proceed with your question.
Thanks couple of questions first Jack you mentioned, you've already distributed 25000 starter packs.
Jim Kelly: Of note, we did see over $40 million favorable impact on cash resulting from the timing of payments for Medicaid and Medicare rebates that would be paid in the third quarter of 2021. I'll now provide some more details related to operating expenses. Fresh GNA's second quarter of 2021 expenses were 69.5 million compared to 48.1 million in the same period last year. This increase reflects our Calbury launch activities and the full quarter impact of commercialization efforts for Apicin, Zadago, and Myoblo.
What would be the number before the back to school season starts and.
And and you have any sense of and the initial prescriptions what percent of the scripts are actually conversion from the free starter packs and what percentage of sort of and scripts that started without without a sample and then final question is how long do you expect to sample.
And I when will scripts and when would we be able see the sort of and normal.
And the course of the scripts playing out versus freebies. Thanks.
Yeah sure.
Yeah, the 25000 and starter kits. So that's the you know the.
Jim Kelly: Costs of goods sold for the second quarter of 2021 were $25 million, a $16.7 million increase compared to the prior year. This increase was primarily due to higher costs recorded in 2021 for the acquired commercial products due to the timing of the U.S. Worldman acquisition and related to myoblock inventory rejected lots in the period. Research and development expenses were $15.5 million in the second quarter of 2021, compared to $22.2 million in the same period last year.
Distribution to date toward the high prescribers and our target physicians and the universe that we are targeting for calibration.
This will continue this effort will continue for your question will continue throughout we expected the at least the first 6 months of launching the product until we have a very strong.
Coverage across the board across all the plans are with whom we are currently negotiating and we'll continue to negotiate the contracts. So therefore, there is no specific behind me, which I will stop sampling or not and samples actually will continue not only for launch there will also continue on on ongoing basis.
Nevertheless, a day may not be at the same rate as they are now so we will fine tune on that as time goes on but they will always be that and it is 1 of the advantages. We have currently and the marketplace versus every other company out debt really giving patients a free product to try the product and see for themselves that.
Jim Kelly: The majority of this decline is explained by the 10 million fee paid to Navitor in the second quarter of 2020 for the option to acquire or license SP&A 20. In addition, we have added expenses related to the advancement of our pipeline programs, most notably SBNE20, for treatment-resistant depression.
Performance of the product so we're very.
Are you pleased with the fact that we can actually sampled the product we're happy to do that we want to help patients to get on the product and continue to do that.
As far as you had questions on conversion and scripts with and without samples I mean, we have a very small database right now so it's not like we have a lot of data points a weekend.
Sites from but as time goes on and we can certainly get a better feel for it. So I don't have any specific.
And number that can give me or can be a good predictor for the next 3 months, which are really the most important months, which is the back to school season.
Jim Kelly: Two non-cash items, including interoperating earnings, are amortization of intangible assets and contingent consideration gain. Amortization expense for intangible assets was $6 million for the second quarter of 2021, an increase of $3.5 million compared to the same period the prior year. Contingent consideration gain reflects the incremental period change to the amount for contingent purchase price milestones we expect to pay related to the U.S. WorldMed acquisition.
Thank you and as a reminder, John Great question, and you'll need to press Star 1 on your telephone. Our next question comes from David on Amazon with.
Piper Sandler and proceed with your question.
Okay.
Hey, Thanks, and just a couple on on Kalgoorlie So.
Jack you mentioned.
And covered losses.
And just did and what kind of utilization management.
You're seeing I know these are the.
It is early days, but.
Are you are you.
Are you seeing on.
Or do you have contracts in place where.
They or situations, where players and making patient slept for other non stimulant like sheets are so low and just talk about just generally what utilization management is looking like or what you think will look like.
Jim Kelly: During the second period of 2021, we recorded a gain of 8.8 million, which reflects a decrease in the expected milestone liability. Turning now to full year 2021 financial guidance, we reiterate our prior financial guidance, including an increase to the lower end of the operating earnings range. We reaffirm our revenue guidance range of 550 million to 580 million, which is comprised of both net product sales and royalty revenue. For the full year 2021, we expect combined R&D and SG&A expenses in the range of 380 million to 410 million and operating earnings between 70 million and 90.
Over time, and then secondly regarding co pay and full songs.
I know you mentioned how that and.
The net sales number on the quarter, but but going forward.
And I'm, assuming you're going to be.
Subsidizing out of pocket expenses on a significant way so what implications does that help for the gross to net and and what's your latest thinking on the gross to net.
Yeah sure.
Yes, clearly I mean, the the various components within the gross to net and.
On the lifecycle of a product they always shift around and at the beginning when you have a launch like this there there's a heavy emphasis on the co pay and the patient assistance to get patients to their medication and help them you know.
And with the cost of the medication until the coverage becomes and gets the 11th World. We're pretty pleased with so certainly at this point as Jim pointed out and as you've mentioned and your question you know the co pay is a big component of the gross to net overtime of course, as we have more contracts in place the rebates for them <unk>.
Jim Kelly: The increase to the lower end of the operating earnings range is related to the favorable impact of the contingent consideration gain noted in the current period. In addition, we expect full year 2021 amortization of intangible assets of approximately 24 million. Further, we expect a full year 21 effective tax rate of 28 to 31 percent. This range is above our normally expected range for this year of 26 to 28 percent due to a number of discrete items for the year. With that, I'll turn the call back to the operator for Q&A.
From a bigger piece and the copay starts going down as part of the gross to net and they hopefully balance out each other at a point, where the total gross and net on an ongoing basis will decline overall.
So these are all the different moving parts clearly with different on parts being heavier upfront behind the launch behind the trial and making sure the patients get access to the product until later on when we have the contracts in place that will pick up.
Some of that gross to net them and the pes are and that will depend on the utilization to your question and a lot of these plants. So the heavier the utilization obviously.
The bigger the rebate a portion will be but also will it be the lower the co pay portion.
Regarding the kind of coverage we have so for.
It really is a mixed among so many of the plans. There is step edits are some of them have won some of them have to some.
Some of them on a stimulant and somewhat non stimulant and so it's really a mixed bag at this point and we're working through all that we have bids for many many plans out there. So we are and a fairly late stage and negotiations with a lot of the contracts and the plans and we're working pretty hard to secure as many contracts as possible.
Operator: Thank you. As a reminder, to ask a question, you'll need to press Star 1 on your telephone. To withdraw your question, press the pound key. Please stand by with the Compile the Q&A roster. Our first question comes from David Steinberg with Jeffries. He may proceed.
And as early as possible. However, our plan has been from the beginning that the first 6 months I mean, we were willing to do what it takes from a patient perspective to keep their medication and the marketplace with access where patients can actually try it and see for themselves and the performance because we.
David Steinberg: Thanks. A couple questions. First, Jack, you mentioned you've already distributed $25,000 in starter packs. What will the number be before the back-to-school season starts? And do you have any sense of, in the initial prescriptions, what percent of the scripts are actually conversions from the free starter packs and what percent are sort of scripts that started without a sample? And then the final question is, how long do you expect to sample, i.e. When will scripts, when will VLC sort of the normal course of the scripts playing out versus the freebies? Thanks. Yes, sure. Yeah, the 25,000 starter kits. That's the plan.
Thing at the end of the day utilization and the actual prescriptions will drive the coverage eventually and that's why we are extremely pleased and excited about the early yet. It is early of course, the early clinical feedback from the marketplace.
And that the product actually is delivering on what we saw and the phase III clinical results, it's delivering exactly the kind of results that we have seen and the clinical studies.
Matching the profile that we saw and nickel and nickel studies and as.
As far as how quickly it's working how well it is working and also as importantly, how well it is being tolerated. So we're very pleased with that.
Although it is early but still you know these are very encouraging signs and we've seen and so forth.
And the market place and if that holds and definitely we expect utilization to accelerate as I mentioned in my remarks.
A lot of physicians that have already indicated to us that their intent is to increase significantly the prescribing of <unk> as you know the back to school season kicks and.
Jack A. Khattar: Yes, sure. Yeah, the 25,000 starter kits, that's the distribution to date to the high prescribers and our target physicians in the universe that we are targeting for Kelbrie.
And higher gear going on in the next few weeks are clearly so we will be looking forward to it.
That as well.
Okay.
Okay. Thanks Jack.
Thank you and I'm not showing any further questions. At this time I would now like to turn the call back over to Jack the tower for any further remarks.
Jack A. Khattar: This will continue. This effort will continue to answer your question. We'll continue throughout, we expected at least the first six months of launching the product until we have very strong coverage across all the plans, across all the plans with whom we are currently negotiating and will continue to negotiate the contracts. So therefore, you know, there is no specific timing.
Thank you.
Remain very focused on the launch of Calibrates, especially as we head into the back to school season.
In addition, we continue to advance SPN 830, along its regulatory pathway towards potential approval category and SPN 830 represent a very important growth drivers for the company and we're committed to progressing them towards commercialization and market success. Thanks again for joining US today, we look forward to.
Jack A. Khattar: We say we'll stop sampling or not, and samples actually will continue. They're not only for launch. They will also continue on an ongoing basis. Nevertheless, they may not be at the same rate as they are now, so we will fine-tune that as time goes on. But they will always be there.
Dating you on our progress throughout the year.
Thank you for this concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
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Jack A. Khattar: And it is one of the advantages we have currently in the marketplace, versus every other company out there, really giving patients a free product to try the product and see for themselves the performance of the product. So we're very pleased with the fact that we can actually sample the product. We're happy to do that. We want to help patients get on the product and continue to do so. As far as your questions on conversion and scripts with and without samples, I mean, we have a very small database right now, so it's not like we have a lot of data points that we can cite from, but as time goes on, we can certainly get a better feel for it. So I don't have any specific numbers that can give me or can be a good predictor for the next three months, which are really the most important months Okay.
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Operator: Thank you, and as a reminder, to ask a question, you'll need to press Star 1 on your telephone.
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Unknown Executive: Hey, thanks, and just a couple on Calgary. So, Jack, you mentioned covered lives. I'm interested in what kind of utilization management you're seeing. I know these are early days, but, you know, are you seeing, or do you have contracts in place where, you know, or situations where payers are making patients step through other non-stimulants like Shatera or Intuniv, and just talk about just generally what utilization management is looking like or what you think it will look like over time.
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Unknown Executive: And then secondly, regarding co-pay assistance, I know you mentioned how that impacted the net sales number in the quarter, but going forward, I'm assuming you're going to be, you know, subsidizing out-of-pocket expenses in a significant way. So what implications does that have for the gross to net and what's your latest thinking on the gross demand thing? Yeah, sure.
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Unknown Executive: Yeah, clearly, I mean, the various components within the gross to net, in the life cycle of a product, they always shift around. And at the beginning, when you have, you know, a launch like this, there is a heavy emphasis on the co-pay and patient assistance to get patients the medication and help them with the cost of the medication until the coverage, you know, becomes and gets to a level where we're pretty pleased with. So certainly at the time.
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Unknown Executive: This point, as Jim pointed out, and as you mentioned in your question, the co-pay is a big component of the gross-the-net. Over time, of course, as we have more contracts in place, the rebates then become a bigger piece, and the co-pay starts going down as part of the gross-the-net, and they hopefully balance out each other at a point where the total gross-to-net, on an ongoing basis, So these are all the different moving parts, clearly.
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Unknown Executive: Regarding the kind of coverage we have so far, it really is mixed among so many of the plans. There are step edits. Some of them have one, some of them have two, some of them are stimulants, some are non-stimulants.
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Unknown Executive: So it's really a mixed bag at this point, and we're working through all that. We have bids for many, many plans out there, so we are in a fairly late stage in negotiations with a lot of the contracts and the plans, and we're working pretty hard, you know, to secure as many contracts as possible, as early as possible. However, our plan has been from the beginning, you know, that for the first six months, we're willing to do what it takes from a patient perspective to keep the medication in the marketplace with access where patients can actually try it and see for themselves the performance because we think, at the end of the day, utilization and actual prescriptions will drive coverage eventually.
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Unknown Executive: And that's why we are extremely pleased and excited about the early, yet it is early, of course, early clinical feedback from the marketplace, that the product actually is delivering on what we saw in the phase three clinical results. It's delivering exactly the kind of results that we have seen in the clinical studies, matching the profile that we saw in the clinical studies, as far as how quickly it's working, how well it is working, and also, importantly, how well it is being tolerated.
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Unknown Executive: So we're very pleased with that, although it is early, but still, these are very encouraging signs that we have seen so far in the marketplace. And if that holds, definitely, we expect utilization, you know, to accelerate. As I mentioned in my remarks, a lot of physicians have already indicated to us that their intent is to significantly increase the prescribing of Calgary as, you know, the back-to-school season kicks in in higher gear in the next few weeks. So we will be looking forward to that as well.
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Operator: Thank you, and I'm not showing any further questions at this time. I would not like to turn a call back over to Jack Qatar for any further mark. Thank you.
Jack A. Khattar: Thank you. We remain very focused on the launch of Calabry, especially as we head into the back-to-school season. In addition, we continue to advance SPN-830 along its regulatory pathway towards potential approval. Calbri and SPN-830 represent very important growth drivers for the company, and we're committed to progressing them towards commercialization and market success. Thanks again for joining us today. We look forward to updating you on our progress throughout the year.
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Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
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