Q3 2021 BioDelivery Sciences International Inc Earnings Call
Greetings and welcome to the bio delivery Sciences third quarter 2021 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 first star zero on your telephone keypad. Please note. This conference is being recorded.
Now I'll turn the conference over to your host Terry Coelho Executive Vice President and Chief Financial Officer, you May begin.
Thank you and good morning, everyone welcome to our third 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 bio delivery Sciences issued a press release announcing its financial results for the third quarter of 2021.
A copy of the release 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 November three 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 in the investors section of the company's website.
With that I'd like to turn the call over to Jeff Bailey, our CEO Jeff.
Thanks, very much Terry and walk everyone through our company's third quarter 2021 earnings call.
It gives me great pleasure to speak to you again today following closely after our recent Investor day, I hope that we were able to convey our excitement about our newbuild allergy vertical as well as our overall outlook for the future of BBSI.
Before we delve into the details of our earnings call I want to thank Terry.
For her dedication and service to our company as CFO over the past three years and wish her well in her next role shifting.
She leaves behind a strong balance sheet and a well managed financial organization.
At the same time, we are pleased to welcome John <unk> as our new CFO, a former colleague Chris served as CFO at three of my prior companies and who brings over 30 years of financial and operational expertise to BDSI.
John Ely, our well calibrated to each other and we are fortunate to have him on the team.
The freedom takeaways I want to can coupled with you today number one strong business growth.
Let's continue to reach new highs in the third quarter with product net sales growing seven 5% year over year, including BELBUCA T Rx volume growing close to 8% year over year.
I am, particularly proud of this growth despite the unexpected and unfortunate situation with Albert yet, which was described in the 8-K, which we submitted to the SEC on September 21 2021.
More on that to follow.
Credibly proud of our nimble team responding to action immediately to stem losses to our business.
We are just now beginning to see a rebound in BELBUCA prescriptions as a result.
We provided guidance on September 21 of an estimate of total company net sales range of $38 million to $42 million.
Quarter in connection with the outages situation I am confident that the quarters performance would have been even stronger but for the issue with Allergan.
Despite these unexpected headwinds BELBUCA reached an all time high <unk> market share in the third quarter of four 9%.
Added by an all time high and unique BELBUCA prescribers of <unk>.
<unk> 8639, which the increase of 11% year over year.
We're really seeing this broadening of the base of prescribers of BELBUCA is such an important driver for continued future growth.
Also signals a stabilization in the long acting opioid market.
<unk> will walk you through what Youre seeing and that gives us this optimism.
Number two as far as takeaways go operational strategic efficiency, we've been prudently managing our expenses in the quarter. It continued to generate healthy operating cash flow.
In the third quarter, we generated $11 1 billion in EBITDA with an attractive 27% EBITDA margin.
And GAAP EPS of seven assess ahead of market consensus of five shows this.
This resulted in generating approximately $7 million operating cash flow, which enables us to continue to invest in the future growth of our business here to maximize shareholder value.
This quarter, we repaid $20 million debt, thereby saving $4.4 million in future interest expense payments.
We also made a $6 million upfront payment the doctor readies for likes it.
And we ended the quarter with approximately $101 million in cash.
Italy, we strengthened our supply chain by moving to a new logistics distribution partner and we expanded from wants to distribution center for our products in order to de risk our business by reducing our reliance on a single location. This is an important move to support our continued growth.
Moreover, we have started to invest behind the elixir launch while also keeping our finger on the pulse with respect to other business development opportunities.
I made opportunistic about identifying additional neurology products. If they are a good fit with our existing portfolio.
The final key takeaway, Alex supervised product diversity and as a third growth driver with an estimated peak year revenue.
$350 million to $400 million.
We are incredibly excited for the future BDSI, we're poised for growth with an established pain franchise.
Dissipate with strong momentum with the addition of <unk> to our neurology franchise, a logical adjacency to our current product portfolio and paid the elixir of acquisition Diversifies, our portfolio would be all paid by establishing a dedicated neurology sales force and allowing us to leverage our current infrastructure. They manage the addition of <unk> and a very efficient way.
Yes.
It's also important to note that we have a strong team that has significant watch experience, including experience in neurology and migraine.
We have been energized by the positive feedback from clinicians and the opportunity to get further integrated into the neurology community.
We held a successful key opinion leader Advisory Board meeting in Chicago last month, and who are their thoughts about the clinical profile, Alex a place in the market and the potential prescribed but like I said as the only ready to use oral solution for migraine approved by the FDA.
This has only increased our enthusiasm about <unk> that we will be launching in the first quarter of 2022.
I also wanted to mention to you that we were pleased that election was nominated for the prestigious Prix Dalian Award, which recognizes innovation to improve human condition and the best pharmaceutical product category.
On the legal front, we remain confident in the validity of strength of BELBUCA is intellectual property.
We can neither predict the decision the court reached regarding the <unk> patent litigation, nor the timing of the court's decision and not able to comment further regarding the ongoing litigation.
Separately I wanted to call your attention to an 8-K submitted to the SEC September 21, 2021, BDSI disclosed that it had filed a motion for order to show cause in the United States District Court the district of Delaware.
Why allergan should not be held in contempt violate any of the court's order of June 28, 2021, the court ordered the allergen not to launch generic product until it could reach a final decision on the merits and the pending for case, we can turn that Albert Chen violated the order in or about August 20.
'twenty one by among other things offerings generic product for sale to five compelling price reporting services.
<unk> and emotion after outages product watch certain payers began declining insurance coverage for BELBUCA interacting use of outages.
Substitute and or making it more difficult for patients to obtain insurance coverage for BELBUCA.
Helps you withdrew its compared to your product listings on or about September nine 2021.
<unk> motion to hold allergenic content for lunch is generic product remains pending before the court.
With that I will turn the call over to Scott to provide more details of our performance during the third quarter Scott.
Thank you, Jeff as Jeff mentioned during Q3, BELBUCA prescriptions grew by almost 8700 <unk> year over year, the new high over of over 121100 retail mail order in long term care <unk> combined.
This represents a solid seven 7% increase in BELBUCA <unk> compared to the third quarter of 2020.
And sequential growth of 2% compared to the second quarter of 2021.
BELBUCA prescriptions grew year over year and quarter over quarter.
We remain pleased with BELBUCA continued revenue and script growth in its improvement in Q3, so new Trs market share record high of four 9%.
Up from four 1% in Q3 of 2020.
Four 7% in Q2 2021.
During the third quarter BELBUCA, new to brand market share of seven 6% was generally flat relative to seven 7% in the second quarter.
And remained significantly above its terex share a four 9%, which means there is still a meaningful opportunity to grow total prescription share.
These metrics historically converge.
<unk> talent was similarly flat from Q3 year over year, while the <unk> count for your entire market was down by six 3%.
We believe that the MBR X numbers this quarter were negatively impacted by formulary changes, resulting from allergists compendium listings, which have now been withdrawn.
Continuing to build a buccal prescriber base is important to the brand's growth trajectory and were pleased to report that BELBUCA prescribers increased in the third quarter by 11% year over year to 8639 unique prescribers, a new high for the brand.
Sequentially, our prescribers grew by three 5% from the second quarter.
We view this is extremely encouraging and expect a prescriber growth to have an increased impact of space the pace patient visits improve overtime within pain practices.
Now moving onto this approach.
Q3, 2021 support prescriptions also grew to a record high of approximately 19200, <unk> or an increase of seven 6% year over year compared to Q3 2020 with a 7% sequential improvement from Q2 2021.
We expect continued growth for some pro act as our <unk> count increased nine 8% from Q3 2020 to 11163, a new <unk> high for the brand. This significant increase in <unk> count led to a new record some product <unk> share a 14, 3% in the third quarter.
As compared to Terex, there of just over 13, 3%.
This difference between <unk> share and <unk> share should lead to continued momentum in Q4 and beyond.
Like BELBUCA, some product is well positioned with covered status for 89% of commercial lives with 61% of preferred status.
Ability of the commercial team to consistently pull through the 2020 formulary wins with Cvs and Prime Therapeutics, where we've seen a 26% increase in tier access from the Q1 to Q3. This year has been an important part of our growth.
The growth in these plants as well as the new formulary win effect of Q4 2021 were some coverage improved from non preferred non covered with a step through mobile tier two preferred status with no step through required.
And access to approximately 800000 lives gives us confidence in attaining new Trs count share highs as we finished 2021.
As we discussed on our October 14th Elixir of Investor call.
We're actively preparing for Q1 2022 launch with.
We're planning to leverage an efficient structure and our commercial organization that will allow for a little promotion within our current BELBUCA sales force as well as with the highest potential prescribers and a dedicated <unk> sales force.
During the fourth quarter. The BDSI team is busy preparing for the planned first quarter launch, including supply chain preparedness hiring for the expanded sales force conducting training and preparing marketing materials.
In addition, we are focused on establishing relationships with migraine key opinion leaders and we will be attending the American Headache Society conference. This month.
We are incredibly excited to be adding a differentiated and high potential products like elixir to our portfolio.
Large market with over $2 billion of annual sales, which represents a logical adjacency to our pain franchise.
As Jeff mentioned that Leverages, our commercial expertise much.
Much of our existing infrastructure and our teams extensive experience with over 40 product launches.
I am confident based on our team's proven track record that we will be able to execute a successful launch in the first quarter of 'twenty two.
And look forward to sharing additional information in the future.
With that I'll turn the call over to Terry to provide an update on the financials Teri.
Thank you Scott.
Total net revenue for the third quarter was $41 1 million, an increase of 4% compared to $39 $4 million in the third quarter of 2020 and generally in line with the net revenue generated in the second quarter of 2021.
This was at the upper end of the $38 million to $42 million guidance range recently provided for this quarter.
Total net revenue growth year over year for the third quarter was 29% when excluding the beneficial impact of the Q3 2020 channel refresh and BUNAVAIL net revenue.
Total product net revenue growth for BELBUCA, and some probably combined was seven 5% year over year or growth of 32%. Excluding the Q3 2020 gross to net accruals related to the channel estimates refreshed in that period.
It is important to note that there was a favorable impact to our product net revenue associated with the transition to our new logistics distribution partner.
Certain wholesalers increased their short term inventory positions to ensure supply continuity.
Dubuque net sales in the third quarter of 2021 set an all time record of $36 $9 million, an increase of 6% compared to $34 8 million in the third quarter of 2020.
33% growth when excluding the beneficial impact in Q3 2020 of the channel refresh.
As expected BELBUCA gross to net deductions increased in the third quarter of 2021 as compared to the second quarter of 2021, primarily due to typical increases seen for the Medicare coverage gap.
Net sales for some <unk> in the third quarter of 2021 were $4 1 million, which reflects 20% growth year over year.
As expected and purely question net deductions also increased in the third quarter due to the typical increases seen for the Medicare coverage donut hole.
In the third quarter of 2021, we had $20000 of royalty revenue, whereas in the third quarter of 2020 royalty revenue was $658000 and in the second quarter of 2021 royalty revenue was $916000. Additionally, third quarter 2020 net revenue included 574.
$4000 for BUNAVAIL sales.
Total gross margin for the third quarter was 85% compared to the 86% margin during the third quarter of 2020 and 89, 7% in the second quarter of 2021.
As a reminder, the second quarter of 2021 gross profit included approximately $1 $4 million in recovery or inventory related costs, which helped to increase gross margins in the second quarter.
We expect gross margins to be in the mid eighties range going forward.
Total operating expenses in the third quarter of 2021 were $25 5 million compared to $22 5 million in the third quarter of 2020, and $25 8 million in Q2 of 2021.
Year to date 2021, operating expenses of $79 million compared to $77 $4 million for the third quarter year to date 2020 period include higher sales and marketing costs and higher litigation costs associated with the pay for case, partially offset by reduced G&A spend in 2021 compared to the prior year.
Which included cost associated with the CEO transition in the second quarter of 2020.
As always we continue to closely manage and prioritize the operating expenses.
EBITDA in Q3, 2021 was $11 $1 million or 27% of net sales compared with $13 4 million or 34% of net sales in Q3 2020.
Year to date through Q3 of 2021, EBITDA was $33 4 million or 27% of net sales compared to $26 $2 million or 23% of net sales year to date through Q3 of 2020.
GAAP net income for the third quarter was $6 $7 million or <unk> <unk> per share compared to the GAAP net income of $9 4 million or <unk> <unk> per share in the third quarter of 2020.
The seven cents per share EPS for the third quarter was <unk> <unk> per share ahead of market consensus of <unk> <unk> per share.
Non-GAAP net income for the third quarter of 2021 was $10 $3 million or <unk> 10 per share and reflects GAAP net income excluding stock based compensation and noncash amortization of intangible assets as compared to non-GAAP net income of $12 7 million or 12.
<unk> per share in the third quarter of 2020, excluding the same items.
Year to date non-GAAP net income through September 30 of 2021 is $31 $3 million or <unk> 30 per share excluding stock based compensation and noncash amortization of intangible assets as compared to non-GAAP net income through September 32020 at $36 million.
Or <unk> 29 per share excluding the same items as well as excluding the financial impact of certain one time items that are nonrecurring, including the discontinuation of BUNAVAIL and costs associated with the CEO transition in the second quarter of 2020.
The company has a strong balance sheet with cash and cash equivalents as of September 32021 of $107 million as compared to $111 $6 million at year end 2020.
Year to date operating cash flow through Q3, 2021 was $27 3 million compared to $14 million for the same period in 2020, an increase of $13 $3 million.
For the third quarter total cash on hand decreased by $19 1 million from $119 $9 million on June 32021, with operating cash flow generation of $7 million being partially offset by $20 million used towards an early penalty free debt prepayment of our term loan and a six.
Upfront payment to Dr Reddy for Alexia.
As Jeff mentioned earlier, the $20 million prepayment will result in approximately $4 4 million of interest savings over the course of the remaining loan period.
Turning to full year 2021 guidance. The company is lowering its full year 2021, total net revenue guidance range to $162 million to $167 million from $170 million to $180 million previously.
The situation with Allergan with just discussed is a meaningful factor contributing to our amended guidance.
We expect net sales in 2021 for BELBUCA to be in the range of $144 million to $148 million as compared to the range of $155 million to $165 million previously.
We continue to estimate our total operating expenses to be in the range of $115 million to $120 million, including prelaunch investments to support the Q1 2022 launch of <unk>.
We expect EBITDA to be at the lower end of the range of $40 million to $50 million for ongoing base business.
EBITDA is expected to come in below $40 million when including the listed investments.
Finally, the company continues to expect that it will deliver positive operating cash flow in 2021.
Now, let's turn to some of our expectations for Nixon our projected long term outlook for <unk> net sales in the range of $350 million to $400 million, including.
Preliminary estimates for the potential pediatric label expansion.
As most of you know today marks my last day with BDSI.
It has been exciting to be a part of the leadership team that has driven tremendous growth in the transformation of BDSI over the past three years.
It's truly been a pleasure working with this team and accomplishing as much as we have.
I'm also very proud to be leaving BDSI with a strong balance sheet based on profitability and solid cash flow generation and thoughtful financings at the right times and it's been a pleasure interacting with the equity research analysts and so many of our investors.
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 this is really transformative quarter for BDSI from a few different perspectives.
First our growth continues as we hit new record highs in market share and script volume for BELBUCA is in progress and record net sales for BELBUCA.
<unk>.
With the acquisition of <unk>, we expanded and diversified our product portfolio into the exciting neurology sector focused on the multibillion dollar market for acute migraine products strategic fit between pain and neurology allows us to leverage our current structure and manage elixir that a very efficient way.
US greater breadth of business development opportunities going forward.
Third our employees to answer the call to maintain operational excellence and build further growth.
Let's take a moment to thank our employees for their continued commitment to strong execution.
We are very optimistic about the company's next chapter for patients providers employees and our shareholders. We'll now take your questions operator.
Okay.
Thank you.
At this time, we'll be conducting a question and answer session.
Can I ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question in Q U.
You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your answered before Christmas turkeys.
One moment, please while we poll for questions.
And our first question is from Brandon Folkes with Cantor Fitzgerald. Please proceed with your question.
Hi, Thanks for taking my questions and congratulations on good results, obviously with the tech sector.
So I guess, maybe just firstly.
I just wanted to delve a little bit into the pad I guess <unk> actions in the market in the 8-K that you could file earlier in the year. When do you believe you are seeing a continued disruption in the BELBUCA market.
Got it.
That disruption do you think we'd move cost that disruption down the sort of back to a bit of a closer to a normal environment.
And then secondly, maybe just sort of it goes hand in hand orchid.
Can you just parse out the impact that you've seen can be chronic pain space in general.
Yes descriptions across the board do you seem to be a little bit depressed.
Ah patients just staying on their current therapy is the hesitancy to change therapies in the current environment and if so is this kind of patient by the physician side.
It really just took a lot of patients.
Any color there would be helpful. Thank you.
Well first of all good morning, Brandon and thanks for the question is always hope you're doing well.
Yes, let me take the first part this is Jeff and then I'll turn it over to Scott for talking about just the long acting opioid market on the Allergan front.
Yes, we still see some effect and we see it dissipating at this point.
Which our team I could not be more proud of that when the issue came up when we became aware of the outage in action in the marketplace with <unk>.
Dumped on that immediately back in the middle of August and just to remedy that as quickly as possible and then eventually of course, Albert Chen removed their pricing for the compendium. So our team has been all over that so that was really helpful on the.
Created a <unk> a bit in the quarter, but.
We've really made great progress since then we do see some residual effect, but.
We believe it's on the lower end at this particular point.
Where are the good side of all of that so that's really important that we're seeing.
A return to growth.
All time high of product market share and stuff like that come into play so.
Thats been managed really well I really so proud of our team as far as the execution and what's playing through there was a real curveball that just something that very unusual in the marketplace and also reflect on just part of that all of the different players when it comes to like the electronic medical records folks with payers et cetera, they've never seen anything like that before so our team really had to break.
New ground as far as being able to remedy that so some really good stuff based on the execution by Scott's team as far as to be able to manage that so that.
Hope that answers your first part of your question as far as that right now.
There is some effect thats ongoing but that's all.
We should have been on the minor and based on the work so far so.
Let me turn it over to Scott to answer the second part of your question about the overall market question.
Scott All yours, Thanks, Jeff Good morning, Brandon.
First of all I think what we see as a positive in the L. A market right now is that it seems to have really stabilized on the Trs side of.
The market. So for example, I think if you recall Q1, there was a very large decline in the marketplace itself almost down 6% quarter over quarter and then what was encouraging to see was actually a bounce back in Q2, almost up 1% and only down about one 3% quarter to quarter.
In Q3, so when you look at the three quarters of sequentially, it's pretty flat so that stabilized in.
That's encouraging because even in past years.
Seeing larger declines in that quarter over quarter. So that's a positive I think the one thing, though that is still a headwind as patient visits face to face patient visits.
Based on IQ via data recent data the pain market is still really trails dramatically a lot of the other therapeutic areas. So if you look at for example September was down over 40% face to face visits.
Verse versus pre COVID-19 levels baseline levels and then.
There are telephone tells us it's also telling us embedded visits as well, but those haven't compensated for that fully so so that is a little bit of a headwind I think mid year, we started to see things trend back up where we felt like it was improving and I think COVID-19 spiked again, and it's probably had another impact on it and so because of their decline and face.
The face visit.
Pain physicians tend to want to make changes in therapy face to face a lot of time so.
We do think that.
Face visits are critical and as that goes up we should start seeing are the.
The market reflect that as well.
Positive we brought up in our script was the all time high and prescribers and we saw a pretty nice jump and prescribers for the for the quarter one of the largest ones. We've seen in the last six to eight quarters.
And I think that's important so the patients go back into these offices for face to face visits that should play well for scripted.
Alright, Thanks, Adrian cover what you're looking for there.
You did very very well. Thank you I appreciate the color.
Great. Thanks, Brian Thanks, Brandon.
And our next question is from Scott Henry with Roth Capital. Please proceed with your question.
Thank you and good morning, and Terry Good luck, it's been a pleasure working with you.
Past couple of years.
I've got a couple of questions.
The first do you have any color on how we should think about the <unk> ramp.
So when it comes to the ramp next year I think it's what you would expect during the first quarter. When we do launch there's going to be it's going to be a lot about just getting the payers onboard.
As we see it as a steady climb.
Next year to be able to get through the fourth quarter by that and I think that's where we really see that we'd be getting some traction in the marketplace. So we're not giving specific numbers yet Scott you'll get from that from US early next year.
But it's one where it's also something that really gets us really excited here at the ongoing market research when it comes to us and our confidence in this only continues to grow we had just done as Scott highlighted.
A major venue with a few sessions with key opinion leaders in Chicago and it was really really just got us even more excited about what this thing is going overall so.
We're not in a position to give you the specifics yet, but it's one where.
We're really feeling good about where we get as time goes on with that with Alexa. So hopefully that's helpful. Scott.
That was helpful. Thank you.
And then just shifting to the model.
The one thing that jumps out at me. The most is the operating expense guidance of $1 15 to $1 20 would seem to imply a significant boost in fourth quarter.
Is that the case or maybe I'm misinterpreting the guidance in some way.
Yeah, So hi, Scott.
So it's in line that's the range, we've been guiding towards all year.
I think we've been able to very effectively manage our spend even as the revenue has been a little bit softer than we had expected, but we are we are preparing for launch where.
You'll see a slide in there where we're talking about a number of things we're hiring for the expanded salesforce, we're getting all the marketing materials ready training materials for the first of all the sales force to take on.
I think our supply chain preparedness, so theres a number of different areas that.
That were getting spending to get ready for the launch.
Okay. Thank you for that color and Terry I guess, it would only be appropriate that my last question for you.
When you would expect to report as a fully taxed company. We've got two years of positive quarterly numbers typically one would take a gain for the tax and start taxing fully I just wanted to get a sense, where would you expect that to happen in 2022, and I promise I won't ask you. This question.
Yeah.
You won't be able to.
Asking John that question.
Otherwise the room as well.
But Scott.
Look we're looking at it for sure it's a consideration.
It could be this year it could be next year.
But it is something that we are keeping a close eye on.
Okay. Thank you for taking my questions.
Absolutely. Thank you Scott.
And our next question is from the line of Tim Lugo with William Blair. Please proceed with your questions.
Hey, guys. This is lachlan on for Tim Thanks for taking the questions.
I guess first of all Terry I think you mentioned that there was some inventory build but also it was in the quarter ahead of the sort of transition distributed can you maybe quantify that at all just help us think how much.
So pull forward that was from the fourth quarter potentially.
And then on the topic of the.
Should launch in.
I think Jeff you mentioned getting payers on board in the first quarter and so on.
How much is.
On the topic of how much can you.
Dawn ahead of the first quarter I mean will you be on formularies.
By the time, you launch or is that really not going to start happening until you actually launch in the first quarter.
Talking about going forward, yes, so Scott and I will take the second place yeah. So I'm just.
Just on the it was a little bit.
Your voice had cracked out a little bit so I think I captured your question, but.
We.
We did have some of the a couple of the wholesalers buying a little bit just wanted to make sure. They have been through transitions like this in the past where companies have had glitches and they wanted to make sure. It was.
Not very large the impact we're not giving exactly how much it is but they are.
A few of them bought into the first week of October just to be actually not even a few a couple of them to just to be sure. They would have enough to bridge any glitches that could happen.
That address did I, you said something about the fourth quarter, but okay alright.
That's helpful. Thanks.
And then the second part of your question I believe is tied to.
What do we expect as far as on formulary when it comes to Alexa.
The uptake there so a lot of great work has been going into that by Scott's team.
As you can imagine with the major players I think we've also have this really interesting seat to be able to see data and see how some other players have approached it in the migraine space. So it's kind of need to see the kind of a framework a playbook in front of us so that had a sequencing. So I want make sure everybody's really well aware of that that were really in tune on that and it also.
Our leadership on the.
On the managed market side is really top notch and very experienced and so I'll, let Scott go ahead and weigh it about timing and things like that but it's also we do see some impact potentially in the first quarter, but as the year goes on that Thats, where you would expect more lettering and Scott you want to go and just to expand on that.
Hi, Lachlan so we've been working hard since the deal closed.
Unfortunately, there is a short time frame to a window that we have to launch so.
What's been a very positive as we've already had clinical reviews two large pbms.
Actually one of them just did a second review also on that side.
We're actually getting an expedited review and one of the payers that literally a lot of times won't even review for the first six to 12 months. So that's been pulled forward. Our goal is to bring them on as far as fast as our system can while making sure we have a contract that makes sense for us.
We are very encouraged we feel like we're gonna be able to contract with the three largest commercial payers.
And it will probably be staged over time, so one could possibly be near at or near to launch very near launch.
Probably a little bit more later in the year and then possibly 2023 the last one come on board, but we're going to do everything we can pull this forward.
I think.
The way to look at this though is we're going to have a very robust patient services program in place.
We wanted to assure that a commercial patient that gets prescribed elixir have received it so.
Early in our launch even if we don't have all the commercial coverage lined up.
It's going to be about prescript.
Patient trials building prescriber bases, and making it as seamless as possible. So that they don't even feel that there may not be coverage yet so.
So that will require us having some robust programs in place that over time as we add the formulary coverage will those will get pulled back.
But in a way that again, the patient or the health care providers don't don't don't feel or see that.
Sure.
So that's the way to work for us.
Awesome. Thanks.
Youre welcome. Thank you.
Thank you.
Our next question is from Tim Chiang with Northland Capital. Please proceed with your question.
Hi, Thanks.
Jeff I think you mentioned or maybe it was Scott you mentioned that face to face physician visits are down 40%.
What do you see that figure next year, I mean, do you see it still being down considerably.
2022.
Yes, I'll, let Scott.
More detail on that but I think it's something that.
It is quite unique about the pain market compared to other specialties. So as far as that goes and it comes back to some things we've seen like during Covid, where some of the capacity has been reduced with some satellite offices are closed but also some of the mid levels like the nurse practitioners and physician assistance a transition from pay into some other space, So theres less capacity there.
We think that Thats in play we.
We do see that there are some things in the market that will bring back more capacity to that world, but it's also one where I think we need to make sure that.
We're doing everything possible to maximize what we have there. So I think going forward that it seems that it's trailing other specialties, but I want to bring it back to you.
Point about what.
But we are seeing which is really encourage you at our analyst base of prescribers that are using BELBUCA is growing so nicely you probably saw from the one slide during the presentation that.
What we're doing in spite of the patient face to face visits being down we're getting a broader base. There. So that's really helping drive us to new volume highs in market share high is the fact that we're getting a much better stronger breadth of prescribers that are coming into play so.
Rowing the breadth of prescribers by 11% over one year is a piece of my past experience is quite remarkable and the trend is consistent that we're seeing that's coming to play so getting more prescribers and that so what we're doing also within the framework to say look it's a market dynamic that we don't control, but what do we control is getting more prescribers using our products. So that's also the combi.
And Asian of not just what our reps are doing the field to do an outstanding job, but on our marketing and our CRM database bases are growing so nicely, but we are doing with with prescribers and also with patients that's really helping us kind of behind the scenes. So it doesn't get get back to hopefully you see where our team did we just don't report like what's going on.
Do you do about it and so we're growing both share and volume. Despite the fact those business are down as Scott do you want anything else you want to add to that yes.
I think Jeff touched on a little bit, but we do feel like some of the capacity for example satellite offices.
Some of the some of the practice of scaled back a little bit, especially on the mid levels.
The nurse practitioners and physician's assistant so I do believe.
That the patients are still out there and that over over time, especially with Covid.
Cases continue to decline.
There'll be they'll get busier again the offices.
If patients are stable right now they are less likely to go into the office based on current Covid dynamic but.
I think we're confident again as Jeff said, we're building a prescriber base the market starts coming back that that will have a nice impact positive impact on our business going forward.
And maybe just wanted to follow up I mean, obviously, there's been this boom in telemedicine.
What sort of leverage.
You have next year 40, elixir launch I mean is it possible.
Partially launched <unk> through a telemedicine channel.
So it's great question, and we're not giving a.
Although specifics on our tactics and strategies, but what I will share with you is that we are looking to actively partner with different telemedicine platform specifically those that are working in the migraine space. So.
Youll see us actively pursuing those channels.
I think the product profile fits nicely to your question. So yes.
We're excited about that.
And part of our World.
Getting locking on telemedicine and spaces. If you don't have we think samples will be crucial which we'll be sampling very generously. So.
But there is a lot of telemedicine youth in the space and we're aware of that.
Again, we will be partnering there.
Okay, great. Thanks.
Thanks, Tim Thank you.
And just as a friendly reminder, if you have any questions. You May press star one on your telephone keypad doing so I'm sure you saw any Q&A queue.
Next question is from David <unk> with Piper.
Sandler. Please proceed with your question.
Hey, everyone. This is <unk> on for David Thanks for taking my question. So just another one from me following up on the chronic pain market discussion do you guys see telemedicine, having a meaningful role in this market even once we get past the pandemic and if you do how do you how does that.
Impact your commercial and promotional efforts for BELBUCA going forward.
<unk> thanks for the question.
Interesting in this space in your market research keeps on playing back that for patients switches to a new medication.
For most prescribers it requires a face to face they want to see the patient face to face and telemedicine here. So I think it will learn as it relates touch point, but.
The real changes to that medication actually really to play off the patient visits so going forward, we didn't tell Denis and plays a role in this market, but it's not one that's the primary driver because cable coming back to that those face to face that you've seen so much and especially with BELBUCA, where it's not only just.
The switch, but it's also like the demo that takes place. These offices are really going to get our reps have really done a great job as far as training the staff about how to go ahead and use the product and all that stuff, it's very simple to use but it needs to be demonstrated for like a new patient. So the face to face means a lot to us specifically so telemedicine in general in this marketplace is just.
Different than some other therapeutic areas, where it's a touch points all of medicine is but not really with the switches take place Scott anything else you want to add to that I do think it's valuable for a patient that stable doing well on therapy already that's a good touch point to follow up on.
All of the data suggests that the <unk> productivity of the telemedicine call is nowhere near a face to face not just our product but others.
In all markets for the most part are that way so.
As far as like driving growth, it's still going to be that face to face because the majority of the time.
Just reiterating.
Probably I'd always mentioned before exactly our SAR tactic within that the fact that you're there.
It will switch necessarily on telemedicine and face to face or down, but we are still excited about the fact that our strategy has been to broaden the breadth of our prescribers and that's growing so nicely and that really helps us as far as to counter that part about the business whats been going on so it's working for us as far as when you take a look at our share of volume growth.
That continues despite that market dynamic is that the one thing I'll add on the telemedicine side, while we havent partnered with any platforms there.
One of the things we've done over time here are our marketing our digital marketing has become quite sophisticated and we actually know.
Where.
The pain management prescribers, where they go digitally and we're actually advertising in those locations to impact those that might be doing more telemedicine. So so it's not like we're not in the area, but we actually do focus on some.
Non personal and basically digital promotion in those spaces were telling doctors around telemedicine platforms actually go for their information.
Okay.
Okay, Great that makes sense and then just one quick follow up on that then what is alright mix.
Salesforce.
Sales force detailing that is being done in person versus virtual as of now is that still down versus pre pandemic levels.
Yes. So we're still we're still think based space visits down anywhere from like 12 months to 15% over where we were before but.
Probably 95% to 97% of our interaction and face to face.
Very very little virtual detailing going on on our part right now.
Sure.
The early part of Covid the offices are super receptive to virtual because I got to say look at it. It's a different interactions took place I think what we've learned from the field is that.
The offices become fatigue by that by that sort of approach now that they have the patient flow and certain practices coming through it's back to face to face. So it kind of came on from that perspective first.
Or down a bit.
For Rep to prescriber, but its very high percentage is almost 100% as Scott said being face to face now.
A lot of offices closed down to us access lines, but maybe frequency is impacted a little bit maybe you can't go and they are quite as often.
Office by office basis.
The territory managers have to decipher and worked through.
No questions.
Thank you so much.
I appreciate it.
Our next question comes from the line of Oregon, Loopnet with HC Wainwright. Please proceed with your question.
Thanks can you hear me.
Yeah, Yeah, great great great well first I just want to say so long in this area. It's been it's been Grand Good luck in your next endeavor.
Thanks Darren.
So.
Just to talk about the dynamics I know you've touched a couple of times on how telemedicine isn't really so.
Efficient to drive therapeutics switches and you start that totally makes sense, but that reminds me of that.
A couple of years ago, we were talking when you had an investor day in New York. So earlier in the launch you were talking a lot about.
What the process is to switch a patient from let's say another long acting opioid or from IR to ER and I'm. Just curious what is the current state of the art.
Regards to necessary down titration, an up titration.
Existing opioid treatment I'm, just curious how easy is it to switch now how hands on to the process needs to be and I have a follow up.
Scott you want to take that one yes. Thanks for the question Oren. So we obviously, we have our label prescribing information so that has not changed one bit.
So depending on the level of opioids are on <unk>.
Prior to switching to us.
They will get get tapered down to an appropriate dose and then basically the they'll get transitioned over to BELBUCA and then they can they can either come off their other opioid or they may be on a low dose of it and then they will titrate up over time and a lot of times, what they'll do.
Get down the 30 MSC.
Be placed on BELBUCA, and then with the goal of even further lower lowering their short acting opiates.
Titrate up so.
So.
It's definitely different than you see with other products.
Switching from our like molecule for like molecule from short acting to long acting.
It isn't always as complex as that so that's why that face to face is that I think is important and also if you remember obviously the delivery system here using a film versus taking a tablet is quite different so it's making sure the patient knows how to apply it and whatnot.
<unk> gotten very skilled I think the nuance youre sharing here maybe the question behind the question is there are a lot of physicians that are very comparable now and transitioning patients it's easy.
But when they have a new patient who has not had the had BELBUCA before and had a film product.
They want to be able to demonstrate that for them or have them in their office do that so.
That's where it becomes important.
Okay and.
Just to follow up on the <unk> launch so it sounds like you guys will be quite focused on minimizing friction so to speak and making sure. Whoever writes this sampling even aside whoever right. This drug will hopefully get to the appropriate patients.
So should we just assume I don't know if its even though pricing it I could have missed it but should we assume that gross to nets in the early days sort of regardless of where do we see the scripts going that we should assume sort of realized net value per script will be.
Im quite depressed early on.
Okay.
Ill take that one.
Yeah.
Yeah, I'll go and take that one yes. So just as you would expect again, we're following the playbook, it's amazing the data out there to watch some of the other players that are out there that you just launched over the last couple of years. So as you would expect I think that if you take a look at some of their numbers.
We feel that we'll be mimicking that so yes, the gross to nets will be high in the early innings of this as we get deeper into the year next year, we see that dissipating eventually normalizing too.
But what we're used to as a company over time, but it's one we're in the early innings it'll be.
I guess, if you take a look at some of the other products recently launched if we see something very similar on the gross to net as far as that goes. So I think I think you have it right or as far as the way to think about that so anything else Scott Terry.
No.
Just spot on and it's exactly what I stated earlier, we will see.
As we pull back our able we're able to pullback our services as we bring formularies online than the growth and Thats will improve based on that and we're really going to be focused on again patient trials getting exposure to the product to patients appropriate patients and adding prescribers.
In the short run here, that's really what it's all about.
And I Havent missed any pricing announced that hasnt happened yet correct.
No we have not we haven't provided that externally to anybody yet again.
Great Alright, thanks, I appreciate it.
Thanks Darren.
And we have reached the end of our question and answer session. I will now turn the call back over to Jim Daly for any closing remarks.
Well, thanks, everybody for participating today and hopefully you saw there is a lot of good stuff that we were able to accomplish in the third quarter with some interesting things happening in the marketplace.
I'm just really proud of our team have always played through or just the fact that our products are hitting new volume and market share highs just something really special I think it won't take that away and the other one is about <unk> of that you can see we're really setting up for a really outstanding launch with a really using the experience of the team to play through so.
Really the next chapter of our company. We're so excited about this about where we are where we go in so many ways.
As we wrap up just once again, thank Terry for all the impact that she has had also welcome to John who is also in the room here, it's a smooth transition between the two team members there and just thank you. So much for your participation today, everybody have a great rest of the day. Thank you.
And this concludes today's conference and you may disconnect. Your lines at this time. Thank you for your first for your participation.
Yes.
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