Q3 2021 OptiNose Inc Earnings Call
Ladies and gentlemen, thank you for standing by and walk through the Q3 2021 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you need to press star one on your telephone if you require any further assistance. Please press star Zero I would now like to turn the call over to your host John.
Neely VP Investor Relations you may begin.
Good morning, and thank you for joining us today as we review at the note the third quarter 2021 performance and our plans for the remainder of the year.
I'm joined today by our CEO, Peter Miller, our President and Chief operating Officer, Rami, My mood and our CFO Chief go to Keith go Dan.
The slides that will be presented on this call can be viewed on our website at <unk> dot com in the investors section before we start I would like to remind you that our discussions during this conference call will include forward looking statements. All statements that are not historical facts are hereby identified as forward looking statements forward looking statements are subject to risks and uncertainties that could cause actual results to differ material.
From those indicated by such statements.
Additional information regarding these factors and forward looking statements are discussed under the cautionary note on forward looking statements section of the earnings release that we issued last night as well as under the risk factors section and elsewhere not to notices most recent Form 10-K and Form 10-Q.
Filled with the SEC and available at their website SEC Gov and on our website at <unk> Dot Com you are cautioned not to place undue reliance on forward looking statements forward looking statements. During this conference call speak only as of the original date of this call or any earlier date indicated in such statement and we undertake no obligation to update or revise any of these.
Statements.
We will now make prepared remarks, and then we will move to a question and answer session with that I will now turn the call over to Peter Miller Peter.
Thanks, Jonathan Good morning, everybody.
We appreciate you joining us today, we have important information to share regarding our commercial and clinical progress and third quarter.
Expectations for full year, 2021, and a comprehensive plan to address our financial profile that we announced last night an updated this morning, however, I'd like to start today by providing perspectives regarding the longer term potential for our business because of our significant clinical milestones in the first half of 2022 that I believe create an imperative to first.
I appreciate the business we have today.
Second understand how approval of its hands as the first ever FDA approved drug treatment for people with chronic sinusitis could create significant new opportunities and the magnitude of those opportunities.
Turning to slide four.
We believe the potential for our business as it is as it exists today is attractive.
Today, we promote ex hands for its current indication of nasal polyps tumor audience of largely E&P and allergy specialist physicians.
Nasal polyps is an indication for which up to approximately 1 million diagnosed patients are treated annually.
And our target audience, despite continuing challenges created by COVID-19 environment.
<unk> continues to be a growth brand expected to produce 71% to $75 million in net revenue for full year 2021 or growth of 47% to 55% compared to full year 2020.
And there are factors that we believe will continue to support growth, including a leading target physician preference share and substantial headroom and our market share.
Our current efforts continue to drive adoption of VIX hands, and there was early recognition and our target physician audience of the important role <unk> can play in a logical step care paradigm for patients with nasal polyps.
Turning to slide five.
If we are successful in developing sense as the first FDA approved drug treatment for chronic sinusitis, our business will have multiple new opportunities for growth each of which is significantly larger than the current market opportunity.
Promotional <unk>, we continue to produce strong growth and have succeeded in achieving a leading physician preference share for its hands among our target audience for treating patients with nasal polyps.
Although it is hands is already used off label by some physicians for chronic sinusitis, we are not permitted to promote its use for this indication and some payers limit coverage to nasal polyps.
There was abundant headroom in market share to support strong continued growth. However, these dynamics highlight substantial future opportunity with a new C S indication.
Notably without changing the size of deployment of our current sales force and without disrupt disrupting current physician relationships are chronic sinusitis indication would have potential to triple the number of patients for whom we actively promote expense.
Going a bit deeper.
Today, we promote its hands for nasal polyps to E&P analogy special specialist physicians.
That is an indication for which approximately 1 million diagnosed patients are treated each year.
And our target universe, we have established a leading physician preference share for a chance for nasal polyps and the strong strong positive physician preference in the nasal polyp population is important for the specialty business we are building.
The future opportunity for <unk> within the specialty business is that there is a much larger total number of patients approximately 3 million, who have either nasal polyps or chronic sinusitis and who are also being treated by specialty physicians.
<unk> development and <unk> will enable us with our current sales infrastructure to extend the physician preference share. We have successfully established in nasal polyps to this greatly expanded patient population.
It would also enable us to pursue importantly expanded insurance coverage based on the new first in class approval is the only drug indicated for chronic sinusitis.
Based on our experience and an electronic medical record data, we believe that many physicians can more readily diagnosed chronic sinusitis and nasal polyps.
And in insurance environment, where some payers ask physicians to test their patients are being treated for the indication on the label the value of label expansion is not just in promotion.
It is a factor that has potential to open prescribing by physicians, who want or need the label to match with a diagnosed to satisfy the demands of payers.
Turning to slide six.
<unk>.
In addition to the major growth opportunity that would be created in our specialty business. We have found that there were potential partners that have a primary care promotional infrastructure and crude sales deployment and already has a high audience cross match with expense targets.
These partners could efficiently expand promotion of chance to reach up to 30 million patients.
That is because there are an incremental six to 7 million patients with chronic sinusitis currently treated in primary care.
We believe this is a particularly receptive setting where today a primary care physician has few options other than referral for patients who continue to have symptoms on generic nasal steroid treatment.
Further there are an additional 20 million lapsed patients that could be activated.
More specifically for the six to 7 million patients that are currently being treated in primary care. We believe there are $50 to 60000 primary care physicians with high potential value as targets we.
We analyze the overlap of these physicians with current sales efforts are potential partners and believe that there are multiple organizations to create substantial value for both themselves and <unk> through partnering.
[laughter].
In addition to the opportunity created by the six to 7 million patients currently treated in primary care I alluded to approximately 20 million patients who are believed to know they have chronic sinusitis symptoms, but who have stop seeking regular care from a physician for nasal symptoms.
A novel chronic sinusitis indication could enable activation by a primary care partner of these dissatisfied but lapsed patients through direct to consumer promotion.
Turning to slide seven.
One of the reasons, we are highlighting <unk> today is the top line results from reopened one and we opened two are two chronic sinusitis pivotal trials are expected in the very near term.
In fact, it is possible that topline results from reopened one will be available to announce before our next call when we announce our fourth quarter and full year 2021 earnings.
With the recruitment phase for both trials behind us our clinical team is now focusing on successful completion of both trials and plans to have topline results from reopened one in the first quarter of 2022 and reopened two in the second quarter of 2022.
Turning to slide nine.
With respect to our Q3 2012 performance I would like to highlight four key takeaways from today's presentation.
First consistent commercial execution drove strong year over year growth in third quarter of 2021.
Across the board on revenue prescriptions and our top physician.
Prescriber segment, <unk> delivered strong double digit growth rates.
Despite that the strong continued growth I'd like to note that the pandemic related environment is continuing to limit growth that we believe would have otherwise that we otherwise would be achieving most notably restrictions are continuing to meaningfully limit sales territory manager access to target physician offices.
That is why we believe volume trends, particularly in our fall season of September and October did not emerge as anticipated.
That is why we are adjusting guidance today for the full year of 2021.
Keith will have more about that later.
Second there are factors that we believe will.
Support continued growth of <unk> for example, as I referred to earlier there is an increasing recognition in our target physician audience of the important role <unk> can play in a step care paradigm for nasal polyps.
The consensus algorithm published in a major specialty journal Ifr by a panel of experts. This past June is featured prominently this fall and discussions with our target audience.
Increased patient flow and improved physician access are still potential drivers for future growth.
Market conditions have improved this year over 2020, but the number of diagnostic visits by patients to E&P and allergy offices and as I just mentioned our sales representative access to those physician offices remain below pre pandemic norms.
Although the future is not entirely clear, we believe our specialty physician environment will slowly improve with respect to both patient volumes into physician offices and with respect to our representatives access to those physicians.
Given the historical high promotional response, we've seen with <unk>. We believe this could be beneficial in driving future growth.
Another example is a factor we believe will support future growth as potential for improvement in the average number of prescriptions filled per year because of the refinements, we continue to make to our copay assistance program.
Third we are adjusting our financial guidance for full year 2021.
While lower than previously than previously expected the year over year growth rate implied by the new range for <unk> full year net revenues remains robust ranging from 47% to 55%.
The changes we are making reflect current business conditions with ongoing endemic related business influences again, Keith will have more on financial guidance later in the presentation, including changes that mitigate the operating income and cash effects of the new revenue range.
And fourth getting both chronic sinusitis trials enrolled was a key objective for our organization. This year is.
As highlighted earlier, we successfully completed that objective and are on track for top line data in Q1 and Q2 'twenty two.
Turning to slide 10.
We had strong performance in the third quarter 2021, and I will briefly touch on year over year growth highlights one this in the next slide.
In the third quarter 2021, there were approximately 27900, new prescriptions for <unk>, a 22% increase compared to third quarter 2020.
While the market increased only 9% over the same period.
We remain pleased with the relative strength of new <unk> prescriptions.
What is important is.
Is that in addition to increasing the number of new prescriptions. We've also improved the quality of our new prescriptions due to changes in our co pay assistance program.
This has increased the proportion of covered patients filling first prescriptions, which is improved average revenue per prescription.
Covered patients also tend to have higher refill rates are benefits. It takes some time for us to realize but we're seeing signs of improvement there as well.
The total number of <unk> prescriptions in the third quarter of 2021 was approximately 86300.
This represents 25% growth over the third quarter of 2020 in a market environment, which increased only 4% over the same period.
Turning to slide 11.
<unk> market share increased from four 9% in the third quarter of 2022, 6% in third quarter of 2021.
As market volumes potentially grow in the future. We are focused on whole we are focused on holding on to and continuing to grow our market share.
Breadth and depth of physician prescribing as measured by the total number of physicians, who have patients filling <unk> prescriptions and the numbers of prescriptions filled for writing physicians, respectively increase from third quarter 2020 to third quarter 2021 as well.
Regarding breadth.
In third quarter of 2021, approximately 7200 physicians.
Had a patient fill at least one prescription analytics, hence an increase of 12% compared to third quarter 2020.
Regarding depth the number of physicians, who had more than 15 <unk> prescriptions filled by their patients in a quarter has grown even faster with that number increasing by 27% from third quarter of 2020 to third quarter 2021 with more than 1400 physicians now in this segment.
In a few moments I'll provide some closing remarks, but I will first turn the call over to our CFO Keith <unk> for comments regarding third quarter 2000, <unk> third quarter 2020 results and perspectives regarding our corporate guidance.
Thank you Peter and thanks to everybody for joining us this morning.
Turning to slide 13.
As we reported <unk> recognized $21 $8 million of expense net revenue this third quarter, an increase of 41% compared to the third quarter of 2020.
Year to date 2021, <unk> net revenue stands at $51 1 million, an increase of 56% compared to the nine months ended September 32020.
Turning to slide 14.
Based on available prescription data purchased from third parties and also on data we received directly from our preferred pharmacy network.
Average net revenue prescription for the third quarter of 2021 was $253 an increase of 13% compared to $224 of revenue per prescription in the third quarter of 2020.
Year to date 2021 average net revenue per prescription is $211 and reflects an increase of 21% compared to $175 for the nine months ended September 32020.
We believe year to date is a better measure for evaluating long term performance.
So focus on that for a moment.
We believe the 21% increase in year to date revenue per prescription is driven in large part by changes earlier this year to a co pay assistance program.
The absence of.
The essence this year of the onetime assist program that was available to patients in the second and third quarters of 2020 also contributes to the year over year increase.
The changes to our co pay assistance program are important going forward as they are intended to increase ongoing revenue per prescription by reducing the rate of growth in prescriptions filled by commercially insured patients and plans that do not cover <unk>, while sustaining the growth rate in covered plans.
We believe the change has had the targeted effect and we expect the benefit.
The benefits to revenue per prescription to continue going forward.
Turning to slide 15.
We are changing our financial guidance for full year 2021.
The totality of the changes will result in similar use of cash through 2021, as we prepare for significant clinical trial data readouts in the first two quarters of 2022.
First as Peter noted, we're continuing to be negatively influenced by the impact of the COVID-19 pandemic on its hands.
<unk> prescription growth.
And the resulting net revenues, most notably with respect to restrictions and limitations on territory manager access into physician offices and patient flows which remain below pre pandemic norms.
Although a negative impact today improvement in these areas as a potential driver of future growth.
Based on the second half market and promotional environment. We've experienced to date, we now expect <unk> net revenue will be between $71 million to $75 million for full year 2021.
I will note that this year over year growth.
The year over year growth rate for the fourth quarter of 2021 implied by that range is 27% to 53%.
Second with respect to <unk> net revenue per prescription we are increasing our expectations for full year 2021.
We now expect <unk> net revenue per prescription to exceed $210.
Previously, we expected full year 2021 to exceed $200.
As discussed we're confident that the changes we made to our co pay assistance are having the intended effects and driving sustainably more profitable prescription growth.
Finally for full year 2021, we now expect total operating expenses to be lower in the range of $132 million to $137 million.
Of which approximately $10 million is expected to be stock based compensation.
Total operating expenses, excluding stock based compensation are therefore expected to be in the range from $122 million to $127 million.
The $5 million decrease in expected full year operating expenses is primarily a result of lower volume based third party costs combined with reductions in other general and administrative expenses.
Turning to slide 16.
Okay.
We've experienced strong growth rates in our business and we're taking steps to add cash to our balance sheet and revise the terms of our outstanding debt.
Terms, which were broadly speaking so prior to the COVID-19, pandemic and under very different assumptions about the business conditions in both 2020, and 2021 that affected the promotion and sales expense as well as our ability to recruit our phase III chronic sinusitis trials.
This morning, we announced the pricing of an offering of <unk> common shares.
That upon closing will produce $40 million of gross proceeds.
Upon the closing of the offering the minimum trailing 12 months <unk> net product sales covenants associated with our outstanding debt will be reduced.
See the new covenants on the slide for.
For reference some of the changes over the next five quarters include reductions from $80 million to $68 million for.
For the 12 month period ended December 31 2021.
From 90 million to $70 million.
For the 12 months period ended March 31 2022.
And from $106 5 million to $90 million for the 12 months period ended December 31 2022.
Also effective upon the closing of this offering.
That modification will allow for a nine month extension and the interest only period alone from December 2022.
September 2023.
I will now turn the call over to Rami to discuss our development programs.
Thank you Keith turning to slide 18 regarding.
Regarding the two pivotal trials, which comprise our chronic sinusitis registration program I first like to share that in October we completed recruitment for the second trial study $32 six or reopening to COVID-19.
With recruitment complete in both trials, we are firmly on track to deliver topline results from reopened one and reopened two in the first and second quarters of 2022, respectively I'd.
I would like to thank our clinical team are participating investigators and our other partners for their efforts, particularly in the face of the unique challenges created by the pandemic they've.
They made it possible to successfully complete recruiting for both trials most of all I'd like to thank the patients that are participating in this important research as we seek to develop the first ever FDA approved medicine for the treatment of chronic sinusitis.
Second I'd like to remind you that we previously reported having performed a preplanned blinded interim analysis to compare the observed variance in the co primary endpoints from study <unk> hundred five or reopened one to the variance that had been assumed during initial trial design.
In the third quarter of this year, we performed similar analysis for study three to six or reopening to these.
These analyses were similarly intended to assess whether the variance assumption in our op priore sample size calculations were consistent with the actual variance observed in the trial.
The analyses were performed unblinded interim data from patients for whom full data was available for the composite score of nasal symptoms data was available for approximately half of patients projected to complete the study and for the average percent of pacification of volume by <unk> data was available for approximately one third of the.
Patients that are projected to complete the study.
The difference in data availability is primarily accounted for by one endpoint being observed at four weeks, while the other isn't captured until 24 weeks.
The result was that the observed variance for both endpoints was lower than the variance that had been assumed for the purposes of sample size estimation. During the initial study design.
Given this result, we reduced sample size from 399% to approximately 210 patients in trials <unk>, while maintaining our full originally targeted statistical power for the final analysis.
I'll now turn the call back over to Peter for closing remarks Peter.
Thanks, Rami before moving to Q&A I'll take a moment to reiterate that overall, we're pleased with progress. We have made in third quarter of 2021 and are laser focused on continuing to grow X hanse and completing our chronic sinusitis trials.
Thank you and now I'd like to open the call for Q&A.
Ladies and gentlemen couple of questions or comment at this time. Please press. The Star then the one key on your Touchtone telephone. If your question has been answered or you wish to move yourself from the queue. Please press the pound key.
Our first question comes from Gary Nachman with BMO capital markets.
Hi, guys good morning.
Sure.
Based on your revised full year guidance of <unk> $71 million to $75 million.
<unk> could potentially be down at the lower end of it sequentially. So just a little bit more Peter on why that would be.
Are there also some dynamics with inventory drawdowns or something specific here with net revenue per prescription in the fourth quarter that we should consider.
Because I thought those are excess should be seasonally higher and up sequentially.
I have a couple more I mean, Gary I'll start and I'll, then, let Keith jump in but if you take the midpoint of the range. We are going to have growth in fourth quarter. This year.
Of about 40% versus fourth quarter last year and.
What we do see.
You've seen our prescription trends, we feel good about how we're growing the business right now we do have some price dynamics that come into play in December that I'll, let Keith talk to so Keith I'll, let you pick it up yes, and I'll just deal. In addition to the Peter kind of called out the midpoint of the range.
Represented about 40% growth year over year I'll also comment that at the midpoint of the range, it's greater than 50% growth full year over full year.
So that'll be the first point.
Second what Peter was just referring to you know there are.
You know Gary in the beginning of every year in January.
We typically see what we call it the year beginning effect where are we.
Patients' high deductible resets.
As well as out of pocket maxes reset.
And because of that we contribute more to their co pay assistance.
As has been the case in 2000, 22019, and probably will be the case going forward, we see in a lower average net revenue per prescription in the.
The first quarter.
So that means as we anticipate that and we value our inventory that we anticipated in the channel in the fourth quarter, we have to revalue that inventory at what we expect to receive.
For that inventory when we sell it so that causes some pricing pressure every December and again, that's not an optimized effect.
The pharma industry effect, so Gary summit by saying.
With respect to Q4, we believe net revenue per prescription is more likely to decrease sequentially and that prescriptions are more likelihood to increase from Q3.
Okay. That's helpful. And then I guess, what's the level of in person detailing now coming out of the pandemic, it's obviously hampered but to what extent and maybe talk about how the <unk> co promote is helping and as youre cutting back expenses are you actually making any changes.
To the sales force at this point, a really trying to keep it intact.
Any benefit from when we fully come out of the pandemic hopefully soon.
So Gary on the first question relative to Rep access.
It's hard for us to have exact numbers for this in some of the regions based on the Rep side talk to you see access only about 50% of what it was pre pandemic. So there's just no doubt that despite real changes in the environment.
We all see and we're just not seeing the same level of change in rep access to physician offices that we anticipated frankly, so that's relative to the first question relative to Clio, Gary and this was released in our Q. We have mutually agreed to terminate that agreement effective December 31.
2021.
The issue here was largely we expected recovery.
Pre pandemic relative to Rep access and we just didnt see that with the <unk> reps in terms of their access to physician offices.
So we've made a decision that it's in the best interest of both parties to terminate that.
Relative to our sales deployment, we feel very good about our deployment right now the thing. We know is we have a very promotional sensitive brand that continues to be very true when we make calls on doctors, we see real benefit in terms of promotional response, so no changes relative to <unk>.
Our reps and if the environment does see improvement, we think we can benefit from that improvement environment.
Okay.
Okay.
Rami It sounds like you feel pretty confident I guess the confidence that you could be given how enrollment has gone for the tutsis studies. So.
Why are you guys raising equity now in front of that data, we're not that far off I mean, it sounds like it might be related to the debt and the covenants.
But maybe you just want to elaborate on the timing of that a little bit more thank you.
Gary This is Keith if I can take that one.
I think you hit the nail on the head.
Pharma Con amendment that we.
We announced this morning was contingent upon the closing of this financing.
But that said the additional cash.
Definitely strengthens our balance sheet as we move into the two pivotal data events in the first quarter and second quarter of next year.
And Gary I'll say.
Rami can jump in but there is no new information about success or likelihood of success of the trials.
So with this this raise was done as Keith said.
Largely because of the issue Keith mentioned relative to the Pharmacon debt agreement.
Okay, but I just wanted to make sure I heard correctly. Ron you said that you did lower the number of patients that you had to enroll because of the interim analysis.
I mean, I guess that's what.
Positive signal.
Yes, so as Peter said, we really don't have new information that informs the likelihood of success of the trials, but we were able to lower the sample size, while maintaining the fully estimated fully planned originally estimated Sam power to detect a difference in treatment.
So it's good that we were able to do that and Thats what gives us confidence that we can complete the trials and produced topline results in the timeframe that we just talked about.
Okay got it thanks guys.
Thanks, Gary.
Our next question comes from David <unk> with Piper Sandler.
Hey, Thanks, So just had a few so Peter you had mentioned that.
<unk> plans were restricting coverage to patients with nasal polyps I was wondering if you could elaborate on that.
How widespread.
Is that.
And is that become more widespread.
The footprint of <unk> has grown just wanted you to touch on that.
And then <unk>.
Secondly.
You and I apologize if I missed this can you just talk about the mix between Paul up in non polyp pay.
Patients.
Currently.
And how that's trended and then and then I have a couple of follow ups. Thanks.
Yes.
What I would say David Thanks, David for the questions and well, it's relative to nasal pilot restrictions.
You know from our prior calls that we really have very good commercial insurance coverage, 80% roughly is our commercial insurance coverage and while.
The majority of the plans don't have a prior authorization in place we do have priorities <unk> in place.
With a reasonable number of of our prescriptions by by the payers and as.
As I mentioned on the call David and we are seeing a situation that some payers don't want to be clear, it's not all payers, it's not all plans, but some payers do require.
And it's attestation, if you will by the physician that the patient has nasal polyps and we're finding that that's limiting.
Bunch of physicians, who.
It's not for medical reasons that theyre, not writing broader and I want to be clear, we will never promote off label. So we're only promoting based on the nasal polyp indication, but because of these payer issues. We believe there are a large reasonably large number of group of physicians that are not limited to use the nasal polyps and the point I'm, making that David.
Is that.
And I said it in the script, but I'll reiterate it we have a nice business in this current market Theres roughly 1 million patients who are diagnosed with nasal polyps you guys know that we get four prescriptions per patient per year and about 200 net revenue per patient. So the tangible value of $800 per patient per year is 1 million patients you have in.
$800 million Tam and a nasal polyp only diagnosed patient population and we're building a nice business there, but it does highlight.
The real potential value of the <unk> indication and if it's positive.
Not only would be we'd be the first product approved for C assets are very strong efficacy message, but this issue was significantly mitigated relative to the payer issues.
Regarding your second question, David I'll turn it to Rami to talk about sort of where prescribing is today relative to on indication and authentication.
So all of our promotion is of course on label, we have a healthy skepticism about IQ via data about the indication for which the product is used.
Some challenges to capturing that kind of distribution, having said that we know that.
Nasal polyp promotion, there's a subset of doctors and you saw that on an earlier slide who will choose to use the product broadly and those are the earliest adopters and and they give a certain sort of distribution across diagnoses.
Growing the product and expand to a larger and larger number of physicians.
We are encountering more and more physicians, who don't feel the same way about the breadth of prescribing that they choose to choose to use for the product. So the impact of the constrained by indication becomes more evident in the larger population of doctors beyond that and so the shift in prescribed.
Proportions by indication will become more evident as we have more and more prescribers.
Okay. That's helpful. And then if I may just sneak in.
Another question just with the raise this morning.
And I know you had.
Could you explain the rationale, but I wanted to sort of ask a hypothetical to the extent that the non pilot studies are successful.
There's obviously going to be some commercial implications. There can you just talk about your cash runway in the wake of this raise how youre thinking about.
Spend on the commercial organization, obviously, you've thought about potential co promote but just help us understand the ROI.
Road ahead, particularly with this morning's rates. Thank you.
David This is Keith I'll take that couldn't focus this morning.
I'll make a couple of comments.
First I'll refer back to something that Peter said earlier in his comments and that is that we think for the specialty business that our company is focused on the etiology that we're appropriately sized today.
I'll emphasize that point by saying if you look back over our operating expenses sales and marketing G&A R&D over the last three years, it's relatively consistent so we're getting additional leverage off of our fixed infrastructure every year that we continue to grow its hands.
Including this year midpoint of the range just over 50% growth year over year in an environment, which Peter mentioned, we're still seeing some pretty significant restrictions.
The second point I'll make and when we commented on this in our second quarter earnings call in August is that.
We have significant cost over the past few years that have been focused on the conduct of our phase III clinical trial seeking the indication expansion for <unk> into chronic sinusitis.
We are completing our guidance is that we are to complete the <unk> portion of the inpatient portion of those trials in the first half of the year, we'll obviously have costs in the second half of the year.
<unk> medical writing <unk>.
Gary to submit this NDA, but on a go forward basis, we don't have a clinical program behind.
Behind the <unk> indication for its hands.
Such that one could see a change in our P&L and a reduction in those R&D costs on a go forward basis. So hopefully.
I've answered your question in a roundabout way, we don't provide specific cash guidance.
But hopefully that paints a picture of how we're thinking about it.
It does thanks guys.
Thanks, David Thanks, Dave.
Our next question comes from David Steinberg with Jefferies.
Thanks, Good morning couple of questions. The first thing.
You guys had talked about this new <unk>.
Algorithm.
That you thought we'd really.
Accelerate.
Utilization of <unk>.
Is that how has that started yet.
Is it having any impact or.
Do you see the impact coming next year and then secondly on the last call you guys were really optimistic about securing corporate partnership.
Recall, the exact words, but it seems like there was a lot of interest.
Are you still seeing the same high interest level in a partnership.
For GPS assuming.
The data is good.
The CF indication.
Yes, David I'll take both of those nice to hear from you. This morning relative to the algorithm as you're as you're aware it was published in the June timeframe.
You know that summer is a little bit more difficult normally in terms of promotional with doctors because of vacations of reps and doctors. So the fall is when we really geared up relative.
Relative to broad dissemination to doctors of the algorithm, we did stuff by the way in June over the summer.
And there's no doubt David we're seeing impact, but it's going to take some time for that as we get to doctors. We are again limited because of the pandemic. Our reach is not as broad and the physician audience that we had anticipated, but I have no doubt that it's going to continue to be something that really could help us grow.
The business.
The current footprint that we have.
It is by the way, it's we've seen real nice gains in our preference share which is market research of doctors interest in writing the product for patients with nasal polyps. So that has that takes a little bit while to translate into prescribing, but feeling very good about.
That document and the ability to continue to drive awareness of it relative to partnership.
I still remain very optimistic of a partnership so nothing's changed there.
As I mentioned on the call there are multiple pharmaceutical companies that have deployment already against the doctors that we believe we're going to be high prescribers of <unk> with the <unk> indication. So yes, I feel very good about it.
You probably noticed David typically deals are done post data.
So I wouldn't read into that anything.
Anything relative to timing.
But as I said I continue to feel very good that if we are to get positive data.
We feel very good about the possibility of a partner in primary care.
And just to follow up.
Typically partnerships.
Can often.
Get non dilutive financing.
Whether it's an equity stake or upfront or more upfront and lower back again, so just curious vis vis.
The equity raise you Justine.
I mean, you basically get diluted shares by 50%, which is really meaningful dilution.
So I guess my question is if you've had a number of companies are interested in is done their due diligence.
Even though the data is not out yet.
As some sort of partnership been much better for the P&L of the company.
50% dilution.
Or will you bought to face covenants that were tripped and you basically had to do it.
Near term.
I think David I'll say, it's a combination of factors I want to clarify first that the dilution is about a third.
So I want to be clear on that 25 million shares issued.
Roughly so.
Relative to <unk>.
Things that we considered.
Keith mentioned that we believe the raised now.
It was important to deal with the revise the debt covenants. The revenue covenants that we have with farm economy overall Pharmacon agreement so.
And I'm not going to comment David on <unk>.
How we weighed potential partnering discussions and how that played into it other than as I said, we feel very good about productive discussions with partners. You can imagine there is a real trade off that you make relative to potentially encumbering. The asset pre data. There is a lot to be considered that goes into a decision on the partnering front and as I said I feel.
Very confident that we'll get a partnership I think this raise was something we felt we had to do now and.
Feel very good about the long term prospects.
Isn't it 50% dilution 50 million shares 25 $25 million in Towell, Yes, I am sorry, David It depends on how you think about it I guess I was thinking of it as the denominator being ultimate shares that are ultimately outstanding as opposed to <unk>.
Okay. Thanks.
Our next question comes from Ken Cacciatore with Cowen.
Hey, good morning team. Thanks for taking the question along similar similar lines you all are kind of single product companies.
It's going to be tough, even if your partner to really leverage that sales force and spending.
You did choose to do the equity offering now just trying to understand the thought process behind staying standalone and to what degree this upcoming Reeves.
A review and hopefully great data and then picking a strategic partner what would be the impetus to stay stand alone at this point not sure. How you would leverage your own sales force, maybe we're jumping the gun we have to see the data, but won't want to hear you talk about really at this.
Maximizing shareholder value.
Getting this product into as many hands as you can would seemingly be better.
Someone else then with yourselves. Thanks, so much.
I mean, I'll say this Ken I mean, we're going to evaluate in a positive trial scenario.
And by the way and in a negative data data scenario that we don't expect by the way we think theirs.
Reasonably good chance of positive data scenario.
We're going to look at all options Ken.
What I'll tell you we will look at strategic options, we will look at.
Other options, but the thing that is clear in your question is that we have to find a way to create a greater leverage of the organization.
On both sales force and infrastructure. So I'll just stop there and say that it's absolutely something that will be considered obviously I talked a lot about the potential opportunity that opens up both in our anti allergy audience as I said three times the number of patients who are.
Being treated by the same number of doctors.
With our current footprint of sales force and obviously the big opportunity in primary care.
Thanks, so much.
I'm not showing any further.
Yes about the Canada question, So I want to thank everybody for joining the call. This morning I appreciate the questions and.
We look forward to our next call.
Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.
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