Q3 2021 Osmotica Pharmaceuticals PLC Earnings Call
Okay.
Good afternoon, ladies and gentlemen, and welcome to the ups Monica Q3, 2021 earnings call. At this time, all participants are in listen only mode.
Later, we will conduct a question and answer session and instructions will follow at that time.
If anyone should require assistance during the conference. Please press Star then zero on your Touchtone telephone.
As a reminder, this conference call is being recorded.
I would now like to hand, the conference over to your host Ms. Lisa Bolton Ma'am you may begin.
Thank you Christian.
And two is medical Pharmaceuticals third quarter 2021 business update call. This is Lisa Wilson Investor Relations for as Monica.
With me on today's call are asthmatic as Chief Executive Officer, Brian <unk>, Chief Operating Officer, J D shop, and Chief Financial Officer, Andy Einhorn.
This afternoon, the company issued a press release detailing financial results for the three months ended September 32021.
This press release and a webcast of this call can be accessed through the investors section of the asthmatic website and this is Monica dot com.
Before we get started I would like to remind everyone that any statements made on today's conference call that express a belief expectation projection forecast anticipation or intent.
Future events and the company's future performance may be considered forward looking statements as defined by the private Securities Litigation Reform Act.
These forward looking statements are based on information available to us because management as of today and involves risks and uncertainties, including those noted in this afternoon's press release and our filings with the SEC.
Such forward looking statements are not guarantees of future performance.
Actual results may differ materially from those projected in the forward looking statements.
As Monica, specifically disclaims any intent or obligation to update these forward looking statements, except as required by law.
During this call we refer to non-GAAP measures such as adjusted EBITDA for.
For a reconciliation of adjusted EBITDA to net income or loss. Please see the tables at the end of our press release.
The archived webcast of this call will be available for 30 days on our website osmotic dot com for the benefit of those who maybe listening to the replay or archived webcast. This call was held and recorded on the December 15th 2021.
Since then osmotic or may have made announcements related to the topics discussed. So please reference the company's most recent press releases and SEC filings.
And with that I'll turn the call over to us Marika CEO, Brian market them.
Thank you Lisa and good afternoon, and thank you for joining us on our call today.
We are pleased to share that the strong response and momentum we noted for uptake on our last earnings call has continued.
Feedback on <unk>, the first and only FDA approved ophthalmic solution for the treatment of acquired Blepharoptosis or low lying lids continues to be uniformly positive and today. We are excited to share some of the latest metrics and update you on our commercial program.
With the midyear divestiture of our legacy business now in the rearview mirror, we are singularly focused on growing our <unk> franchise and creating what is essentially a brand new category of ocular aesthetics.
We have seen tremendous growth in the year since we first introduced up leak into the eye care market through September we had over 9800 unique prescribers with optometry now accounting for just over 60% of our customer base. This is exactly where our market research indicated we would be.
On September 13th we introduced our direct dispense program to eye care practitioners in those territories, where it is permitted and early responses are highly encouraging.
We will be introducing a virtual version for most of the remaining states, particularly New York and Texas in January. This program has already begun to revolutionize our relationship with providers, allowing us to partner directly with our customers as they serve their patients.
While our initial focus has been on building a market in eye care and establishing safety and efficacy for <unk>. We believe that ocular aesthetics offers a similar if not larger market opportunity our medical aesthetics business unit is well underway for our build.
And we're starting the onboarding of a highly experienced sales leadership team in Q4, we will begin piloting our approach with a full launch expected early in the first quarter of 'twenty two.
Our recently announced debt and equity financings were essential to help us unlock the value of up Nique and as we streamline the company all of our energy is directed to growing this one of a kind asset.
Also with respect to our baclofen last month, we received a constructive response from the FDA to our special protocol assessment submission for a new phase III trial of our baclofen extended release tablets.
We are encouraged by the feedback and we will continue to work with the agency to come to an agreement on a path forward for the development program. It appears that the next trial will be focused primarily on improvements to spasticity as a primary endpoint.
What I'd like to do now is turn the call over to Andy to discuss our financial results. Thank.
Thank you Brian.
Similar to last quarter, our financials do not break out the results of our legacy business, which in accordance with the accounting rules is collapsed into a single line items on our financials.
Our 2021 operating results generally consists of revenue and expenses related to <unk>, including the general and administrative expenses of running the business or 2020 results. Also include the results for <unk>, which we sold in early January 2021.
Third quarter 2021, total revenues were $2 2 million consisting entirely of uptake sales, which grew approximately 47% over the second quarter of 2021.
Total revenues in the third quarter of 2020, or $25 8 million, which included $25 million of milestone revenue from the <unk> license to Santana Pharmaceuticals, and approximately 600000 of product sales substantially all of which related to Arsenal acts.
As a reminder, <unk> was launched late in the third quarter of 2020 to a limited number of eye care professionals.
Cost of goods sold were $1 1 million during the third quarter attributable to us knee gross profit for the quarter was $1 1 million.
Selling general and administrative expenses consisted of promotional activities related to the <unk> launch and the running of the company SG.
SG&A expenses during the third quarter, reflecting expansion of our field force in the second quarter of 2021, and greater marketing spend as we expanded launch of uptake and rolled out the direct dispense program to eye care professionals.
The increase in SG&A expenses also reflected an increase in share compensation expense triggered by the divestiture of our legacy business.
Going forward, we expect uptake promotional expenses to increase in the quarters ahead, as we deepen our penetration of the eye care market and launch into the medical aesthetics channel. Additionally.
Additionally, the divestiture of the legacy business is providing us an opportunity to comprehensively review, our non promotional spending to ensure that as much of our resources as possible are devoted to the commercialization of up nique, while efficiently and appropriately supporting the operations of a single product company.
Research and development expenses of $1 4 million in the third quarter consisted of project spending on our baclofen and a follow on Rvs 12 O. One candidate which include and also included the acceleration of share comp inspect compensation expense as noted earlier.
Net income from the discontinued operations of our legacy business was $8 5 million in the third quarter. While overall, we had a net loss of $26 3 million.
Adjusted EBITDA loss from our continuing operations for the third quarter of 2021 was $20 3 million compared to adjusted EBITDA from continuing operations of $9 1 million for the third quarter of 2020.
As of September 32021, we had cash and cash equivalents of $8 4 million at approximately $30 million aggregate principal amount borrowed under our term loans in October 2021, we refinanced our term loans with the issuance of $55 million aggregate principal amount of senior secured notes and.
Only $35 million gross proceeds of ordinary shares issued in our follow on offering.
With that I'd like to turn the call over to J D.
Thanks, Andy and good afternoon, everyone.
Today I'll update you on the recent highlights with our launch of up Nique and provide additional details on volume trends and market insights.
We continued to meaningfully expand our prescriber base with cumulative prescribers since launch totaling over 9800 at the end of the third quarter, an increase of more than 2670 prescribers over Q2.
Our recent data point continues to highlight the growing awareness and market opportunity and as of last week that number has grown to almost 11000 since launch.
We are still seeing 35 to 41st time prescribers per day on average and we would expect that trend to continue over the course of this quarter as well.
As Brian alluded to earlier and as expected we continue to see an increasing proportion of our prescriber base coming from optometry.
Similarly, total prescriptions in Q3 grew about 30% over Q2 totaling almost 12000 for the quarter.
We are seeing prescription mix still hover around 60 40 between 30, count and 90 count and are also continuing to see a growing stickiness from refills.
Though still early to have a holistic view on patient utilization. The first cohort of patients those who build their first prescriptions in September October and November of last year are averaging about 120 paid days of therapy per start.
Importantly, we delivered another key milestone with the rollout of the direct dispense program in the third quarter.
As we've previously described we're allowed practices now have the ability to purchase product directly from us and in turn provide uptake prescriptions directly at the point of care. The early receptivity has been tremendous and we continue to see this capability as an inflection point in our market.
<unk>.
After a small pilot early last quarter, we began the rollout in earnest during the last two weeks of September and as of the end of Q3 had enrolled more than 400 eye care practices in the program and overwhelming response and just a couple of weeks' time.
Of those initial practice partners about two thirds are optometry a spa.
Specialty that we see as a meaningful driver of continued growth for the brand.
For added context much of the Optometric community is also still excluded from this current model by law in early next year, we expect to expand this capability to include a virtual option whereby optometrists can leverage RV all pharmacy is a dispensing partner.
While maintaining a virtual inventory with us similar to how many patients received contact lenses in this practice setting.
Obviously, we're thrilled by the overall adoption and early utilization by so many of our ECP partners and moving forward remain focused on continuing to reach an expanding group while at the same time working with existing prescribers and practices to help them implement formal.
Yes, and protocols directed at systematically screening for ptosis, and assessing lid position as a daily routine.
Beyond the numbers, we have also seen an increased level of interest that recent scientific meetings with multiple posters case studies and educational events around ptosis and up nique indicative of the profound impact of sneakers, having within the eye care community and the more than 25000.
Patient starts since launch.
All of our efforts through the first year have us poised to accelerate the build in eye care and imminently in aesthetics.
With regards to aesthetics, we are quickly building another best in class business unit as we have recently on boarded the entire sales leadership team, representing an incredible breadth and depth of experience.
Over 95 years of direct aesthetic experience from some of the most well respected organizations in the industry.
Over the next eight weeks, we intend to complete the build out of our approximately 50 person sales team many of whom have already accepted an offer to start.
Moreover, we have been deepening our engagement level with a growing group of influential clinicians across the core and non core specialties.
Theyre shared enthusiasm combined with their insights and feedback helping to sharpen our launch strategy has us well positioned to execute on this expanded launch.
Gary actually this quarter and towards the end of January with the entire sales team on boarded and trained.
As we look ahead the continued expansion of our direct dispense capability, both as is and with the introduction of a virtual component.
Bind with the expanded share of voice from our static launch are expected to further accelerate growth and expand market penetration in.
In closing with the full weight of our organization behind up Nique, a strong foundation from our early launch in place. We are excited to expand the market build and continued to deliver on the incredible opportunity in front of us with that I'll turn the call back to Brian.
Thanks, JD, thanks, Andy so operator with that that concludes our.
Prepared remarks, and we'll turn it over to you for Q&A.
Ladies and gentlemen, if you have a question at this time. Please press Star then the number one key on your Touchtone telephone.
Again that is star one will possibly just a moment to compile the Q&A foster.
Your first question is from David Steinberg from Jefferies. Your line is open.
Yeah.
Okay.
David are you on the line.
Yes can you hear me.
Yes, now we can hear you.
Okay sorry.
And many times those away.
So now that the product has been out there for a number of quarters of unique that is.
Could you talk about and you mentioned J D that you are seeing some resales do you have a better sense of how many prescriptions per year a patient might.
Patient might use.
And secondly, with regard to price you have a three months supply in a one month supply.
Do you feel like you have the right price or is it something where there's flexibility to go higher.
And then thirdly with regard to the buy and Bill can you give us some more granularity on that.
How that will work, particularly for cosmetic dermatologists.
How.
How much money will they make on it how much money, where you make on it.
And would this be a similar approach to say botox, where they where they buy in bulk, particularly the high prescribers and then.
The market up for their patients and how much do you didn't go market up biotechs.
Alright, so David what I'll do is I'll answer the middle question first because that's the easier one and then I'll turn it over to J D for number one and three so with respect to price.
We're very comfortable that the price we have out there today is pretty solid.
And we also believe we have room to go up as well.
And we are exploring that option.
Real time, and we May take a modest increase in the not too distant future, we've had very little to no pushback on pricing.
And then I think your first question David was around refills and what we're seeing.
Sure.
Look I think it's something we pay attention to in terms of the forward looking value potential beyond just new patient starts what we have seen.
And I alluded to this.
Briefly.
In prepared remarks that first cohort of patients. So if you think back to September October and November of last year. When we were just starting to get underway.
Who have now had looking back 12 months since.
That first prescription was filled on average that group of patients.
As paid for about 120 days of therapy per start.
So I think that's sort of the working assumption that we're using right now we look at it every month both.
Just to get a sense for the average patient as we move forward over a 12 month period, but similarly, I think the the lifetime value of a patient becomes a really important metric as we get out.
More than another few quarters as well.
And then I think your third question was around a little bit more granular on the buy and bill and pricing.
So look I think specific to the aesthetic channel.
That will be.
The commercialization foundation the.
The entire model for the aesthetic launch will be buy and build direct dispense partnerships with the practice I think the importance of the virtual model there in key states like New York, and Texas are really important as well.
And from a margin standpoint, I think we're going to be right in line with a lot of products that.
These clinicians are already using both from an in office treatment standpoint, but also from a retail medicine standpoint be it.
Hi, and skin care or even products like LATISSE were somewhere between 75, and 100% margin dependent upon the volume running through an office.
Okay, great. Thank you very much.
Okay, David Thanks.
Later next question please.
Your next question is from Louise Chen from Cantor Your line is open.
Hi, this is the way towards the east Congrats on all the progress this quarter and thank you for taking our question.
Just a couple from me. The first one is if you could provide us some updates on your <unk> partnership what is the latest progress, India, China, Japan, and EMEA market and well only be looking at <unk> therapeutics.
Looking to Fedex as well and then maybe another housekeeping question is if you could tell us.
Tell us a little bit about the how we should think about the operating expense for the remainder of this year and maybe into 2022.
Thank you.
Okay, great. So fan-tan is.
Marching along with their commitment to develop and commercialize <unk>.
We know they were down at the recent eye care meeting in New Orleans talking to some of our Kols they're.
They are preparing regulatory.
A discussion for the EU they've had a great meeting with the.
Japanese regulatory authorities and have a actually a more simplified phase III primary endpoint than we did.
They only have to look at <unk>, one and its improvement.
Baseline versus placebo.
Whereas in the U S. We had the Leicester peripheral field test as our primary <unk> one is our secondary so.
They are also moving aggressively into other territories, possibly Korea Vietnam.
So they are full speed ahead, great partnership thus far in <unk>.
Been very thoughtful in putting together their development plans and.
Getting really good input from Kols with experienced J D. I don't know if you want to add to that at all or no I think the <unk>.
All I would add Wayne as I think we with sand 10 <unk>.
This as a global brand and by that I mean, I think their intention is both foundational as a first in class treatment and eye care.
But also <unk>.
The more mild end of the ptosis spectrum.
As an aesthetic treatment as well and so we're excited to work with them to see that through both regulatory and clinical development in those markets, but also support their efforts from our learnings and experience here in the U S. So that they can position themselves for success abroad.
And.
Wayne I'll take the second question, which talks about the Opex for the remainder of the year basically the fourth quarter.
And we would see that coming.
Coming out at just a slightly lower level than what we saw in the third quarter I think in our.
Disclosures and in my remarks, I mentioned, a couple of one timers.
At the same time, where we are ramping up the field force and getting ready to launch.
You have puts and takes in that direction, but I think.
I think thats basically what you should expect for the balance of the year.
And then way if you go to the.
Investor website for Santana and their R&D section you can see.
The ptosis indication.
How they've listed up neat there where they've started preparation for filing in Asia. So.
Pretty far along with those guys.
Got it thank you so much.
Thanks Wayne.
Operator next question.
And as a reminder, if you wish to queue up for a question that is star then the number one on your telephone keypad again that is star one.
Your next question is from Greg Fraser from <unk> Securities. Your line is open.
Yeah.
Good afternoon folks thanks for taking the questions.
And congrats on a great.
Yes, so on the sales force expansion can you speak to the background of the folks that you're interviewing and how much prior experienced mistakes.
You're looking for it sounds like the leadership team is very experienced but curious to hear about the reps.
Yep.
So either way, it's a great question.
Look I think we've gone into this with a very specific profile in terms of the <unk> experience.
I think obviously.
<unk> experienced direct aesthetic experience as a plus and what I would tell you.
Through the first handful plus or a couple of handfuls of territories, where we've got.
An offer letter signed we're seeing an incredible amount of aesthetic experience and not just years on paper, but successful ecstatic experience and I think were drawing from.
A number of different players in the aesthetic industry.
And really.
Look I think it's one of the things that that continues to excite us about what we're building here is our ability to attract that type of talent.
And I would I would expect a larger number of that team to have recent direct aesthetic experience, whether it's from some of the injectable companies.
Or some of the high end skincare companies that employ <unk> business models with these practices as well.
Got it that's very helpful. I'm not sure if I missed it JD, but did you comment on prescription demand so far in the fourth quarter.
Okay.
We have not commented yet on the fourth quarter, but.
What I can tell you is we are seeing meaningful growth already over the prior quarter.
So we're pretty excited about that but we're tempering our enthusiasm you know we've got a lot of holiday time coming up so are we.
We will see growth for sure.
Just need to see how high is up yes, I think the helpful context.
For you Greg would be this growth in prescriptions is also occurring against the backdrop of an expanding group of writers who are now opting to purchase from us directly and dispense out of their office. So I think look as we go through the next couple of quarters.
Or is there is going to continue to be a shift from prescriptions traditionally through the pharmacy to prescription demand being generated directly at the point of care with our offices and early on given what I think we've seen from the first 400 plus accounts and the.
Back to what would've been prescribing behavior to see continued growth here through the first four five weeks of the fourth quarter into the pharmacy is really really encouraging about just underlying momentum.
Got it okay.
And then just a couple of.
Questions for Andy and following up on the expense question it.
Has your view on operating expenses for 2020 to change from the range that you've laid out.
Months ago, and then what do you expect gross margins to reach over time as volumes grow.
Sure Greg.
Generally our view on operating expenses for 2022 have not changed.
That said.
As I mentioned in my remarks, now that the divestiture of legacy is behind us that does provide us an opportunity to really critically review or.
Our spending in non promotional areas to see where we can be more efficient.
And to see where we can devote more more of the spend to the commercialization of up knee and really drive growth. There. So that's.
Those are projects plural that we're undertaking now and we will continue to undertake to see where we can drive spending efficiency.
And then in terms of the gross margin.
Yes.
As volume increases on <unk> of course, they are more of the fixed costs that do get absorbed where we see gross margins heading is probably more towards the mid seventies from where it is today, which I think it is.
Is 50%.
Thank you.
And I'm showing no further question at this time I would like to turn the call back to CEO, Mr. Brian Morrison for any additional or closing comments.
Operator, thank you.
And thanks, everybody for joining us today, we're thrilled with the progress that we have made and are making with <unk>. We're really at the beginning of this journey.
It's exciting.
And we are looking forward to continue to grow this story and partner with the eye care and aesthetic community. Thank you all.
Yes.
Ladies and gentlemen, this does conclude today's conference. Thank you for your participation and have a great day.
Okay.
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Good afternoon, ladies and gentlemen, and welcome to the ups Monica Q3, 2021 earnings call. At this time, all participants are in listen only mode.
Later, we will conduct a question and answer session and instructions will follow at that time, if anyone should require assistance. During the conference. Please press Star then zero on your Touchtone telephone.
As a reminder, this conference call is being recorded.
I'd like to hand, the conference over to your host Miss Lisa Bolton Ma'am you may begin.
Thank you Christian.
I'll come to Us medical Pharmaceuticals third quarter 2021 business update call. This is Lisa Wilson Investor Relations for as Monica.
With me on today's call are asthmatic as Chief Executive Officer, and Brian Martin Chief Operating Officer, J D shop, and Chief Financial Officer, Andy Einhorn.
This afternoon, the company issued a press release detailing financial results for the three months ended September 30th 2021.
This press release and a webcast of this call can be accessed through the investors section of the asthmatic website that is Monica dot com.
Before we get started I would like to remind everyone that any statements made on today's conference call that express a belief expectation projection forecast anticipation or intent.
Regarding future events and the company's future performance may be considered forward looking statements as defined by the private Securities Litigation Reform Act.
These forward looking statements are based on information available to us not because of management as of today and involves risks and uncertainties, including those noted in this afternoon's press release and our filings with the SEC.
Such forward looking statements are not guarantees of future performance.
Actual results may differ materially from those projected in the forward looking statements.
As Monica, specifically disclaims any intent or obligation to update these forward looking statements, except as required by law.
During this call we refer to non-GAAP measures such as adjusted EBITDA.
For a reconciliation of adjusted EBITDA to net income or loss. Please see the tables at the end of our press release.
The archived webcast of this call will be available for 30 days on our website osmotic dot com for the benefit of those who maybe listening to the replay or archived webcast. This call was held and recorded on the member 15th 2021.
Since then.
I may have made announcements related to the topics discussed so please reference the company's most recent press releases and SEC filings.
I'll turn the call over to Us Marika CEO, Brian <unk>.
Thank you Lisa and good afternoon, and thank you for joining us on our call today.
We are pleased to share that the strong response and momentum we noted for uptake on our last earnings call has continued.
Back on the first and only FDA approved ophthalmic solution for the treatment of acquired Blepharoptosis or low lying lids continues to be uniformly positive.
We are excited to share some of the latest metrics and update you on our commercial program.
With the midyear divestiture of our legacy business now in the rearview mirror, we are singularly focused on growing our <unk> franchise and creating what is essentially a brand new category of ocular aesthetics.
We have seen tremendous growth in the year since we first introduced up leak into the eye care market through September we had over 9800 unique prescribers with optometry now accounting for just over 60% of our customer base. This is exactly where our market research indicated we would be.
On September 13th we introduced our direct dispense program to eye care practitioners in those territories, where it is permitted and early responses are highly encouraging.
We will be introducing a virtual version.
For most of the remaining states, particularly New York and Texas in January. This program has already begun to revolutionize our relationship with providers, allowing us to partner directly with our customers as they serve their patients.
While our initial focus has been on building a market and eye care and establishing safety and efficacy for <unk>. We believe that ocular aesthetics offers a similar if not larger market opportunity our medical aesthetics business unit is well underway for our build and we're starting with the <unk>.
On boarding of a highly experienced sales leadership team in Q4, we will begin piloting our approach with a full launch expected early in the first quarter of 'twenty two.
Our recently announced debt and equity financings were essential to help us unlock the value of up make and as we streamline the company all of our energy is directed to growing this one of a kind asset.
Also with respect to our baclofen last month, we received a constructive response from the FDA to our special protocol assessment submission for a new phase III trial of our baclofen extended release tablets.
We are encouraged by the feedback and we will continue to work with the agency to come to an agreement on a path forward for the development program. It appears that the next trial will be focused primarily on improvements to spasticity as a primary endpoint.
What I'd like to do now is turn the call over to Andy to discuss our financial results.
Thank you Brian.
Similar to last quarter, our financials do not break out the results of our legacy business, which in accordance with the accounting rules has collapsed as a single line items on our face financial statements.
Our 2021 operating results generally consists of revenue and expenses related to <unk>, including the general and administrative expenses of running the business. While 2020 results also include the results for <unk>, which we sold in early January 2021.
Third quarter 2021, total revenues were $2 2 million consisting entirely of uptake sales, which grew approximately 47% over the second quarter of 2021.
Total revenues in the third quarter of 2020, or $25 8 million, which included $25 million of milestone revenue from the uptake license to Santana Pharmaceuticals, and approximately 600000 of product sales substantially all of which related to <unk>.
As a reminder, <unk> was launched late in the third quarter of 2020 to a limited number of eye care professionals.
Cost of goods sold were $1 1 million during the third quarter attributable to underneath gross profit for the quarter was $1 1 million.
Selling general and administrative expenses consisted of promotional activities related to the <unk> launch and the running of the company.
SG&A expenses during the third quarter, reflecting the expansion of our field force in the second quarter of 2021, and greater marketing spend as we expanded launch of uptake and rolled out the direct dispense program to eyecare professionals the.
The increase in SG&A expenses also reflected an increase in share compensation expense triggered by the divestiture of the legacy business.
Going forward, we expect uptake promotional expenses to increase in the quarters ahead, as we deepen our penetration of the eye care market and launch into the medical aesthetics channel. Additionally.
Additionally, the divestiture of the legacy business is providing us an opportunity to comprehensively review, our non promotional spending to ensure that as much of our resources as possible are devoted to the commercialization of up nique, while efficiently and appropriately supporting the operations of a single product company.
Research and development expenses of $1 4 million in the third quarter consisted of project spending on our baclofen and a follow on Rvs 12 O. One candidate which include and also included the acceleration of share comp in spec compensation expense as noted earlier.
Net income from the discontinued operations of our legacy business was $8 5 million in the third quarter. While overall, we had a net loss of $26 3 million.
Adjusted EBITDA loss from our continuing operations for the third quarter of 2021 was $20 3 million compared to adjusted EBITDA from continuing operations of $9 1 million for the third quarter of 2020.
As of September 32021, we had cash and cash equivalents of $8 4 million at approximately $30 million aggregate principal amount borrowed under our term loans.
<unk> 2021, we refinanced our term loans with the issuance of $55 million aggregate principal amount of senior secured notes and additionally, $35 million gross proceeds of ordinary shares issued in our follow on offering.
With that I'd like to turn the call over to J D.
Thanks, Andy and good afternoon, everyone.
Today I'll update you on the recent highlights with our launch of up Nique and provide additional details on volume trends and market insights.
We continued to meaningfully expand our prescriber base with cumulative prescribers since launch totaling over 9800 at the end of the third quarter, an increase of more than 2670 prescribers over Q2.
A more recent data point continues to highlight the growing awareness and market opportunity and as of last week that number has grown to almost 11000 since launch we.
We are still seeing 35% to 41st time prescribers per day on average and we would expect that trend to continue over the course of this quarter as well.
As Brian alluded to earlier and as expected we continue to see an increasing proportion of our prescriber base coming from optometry.
Similarly, total prescriptions in Q3 grew about 30% over Q2 totaling almost 12000 for the quarter.
We are seeing prescription mix still hover around 60 40 between 30, count and 90 count and are also continuing to see a growing stickiness from refills.
Though still early to have a holistic view on patient utilization. The first cohort of patients those who filled their first prescriptions in September October and November of last year are averaging about 120 paid days of therapy per start.
Importantly, we delivered another key milestone with the rollout of the direct dispense program in the third quarter.
As we've previously described we're allowed practices now have the ability to purchase product directly from us and in turn provide uptake prescriptions directly at the point of care. The early receptivity has been tremendous and we continue to see this capability as an inflection point in our market.
<unk>.
After a small pilot early last quarter, we began the rollout in earnest during the last two weeks of September and as of the end of Q3 had enrolled more than 400 eye care practices in the program and overwhelming response and just a couple of weeks' time.
Of those initial practice partners about two thirds are optometry, a specialty that we see as a meaningful driver of continued growth for the brand.
For added context much of the Optometric community is also still excluded from this current model by law and early next year, we expect to expand this capability to include a virtual option whereby optometrists can leverage RV all pharmacy is a dispensing partner.
While maintaining a virtual inventory with us similar to how many patients received contact lenses in this practice setting.
Obviously, we're thrilled by the overall adoption and early utilization by so many of our ECP partners and moving forward. We remain focused on continuing to reach an expanding group while at the same time working with existing prescribers and practices to help them implement formal.
And protocols directed at systematically screening for ptosis and assessing lead position as a daily routine.
Beyond the numbers, we have also seen an increased level of interest that recent scientific meetings with multiple posters case studies and educational events around doses and up nique indicative of the profound impact of <unk> as having within the eye care community and the more than 25000.
Patient starts since launch.
All of our efforts through the first year have us poised to accelerate the build in eye care and imminently and aesthetics.
With regards to aesthetics, we are quickly building another best in class business unit as we have recently on boarded the entire sales leadership team, representing an incredible breadth and depth of experience.
Over 95 years of direct aesthetic experience from some of the most well respected organizations in the industry.
Over the next eight weeks, we intend to complete the build out of our approximately 50 person sales team many of whom have already accepted an offer to start.
Moreover, we have been deepening our engagement level with a growing group of influential clinicians across the core and non core specialties, they're shared enthusiasm combined with their insights and feedback helping to sharpen our launch strategy has us well positioned to execute on this expanded launch.
<unk> experiential this quarter and towards the end of January with the entire sales team on boarded and trained.
As we look ahead the continued expansion of our direct dispense capability, both as is and with the introduction of a virtual component combined with the expanded share of voice from our static launch are expected to further accelerate growth and expand market penetration.
In closing with the full weight of our organization behind up need a strong.
Foundation from our early launch in place we are excited to expand the market build and continued to deliver on the incredible opportunity in front of us with that I'll turn the call back to Brian.
Thanks, JD, thanks, Andy so operator with that that concludes our.
Prepared remarks, and we'll turn it over to you for Q&A.
Ladies and gentlemen, if you have a question at this time. Please press Star then the number one key on your Touchtone telephone.
Again that is star one we'll pause for just a moment to compile the Q&A Foster.
Your first question is from David Steinberg from Jefferies. Your line is open.
Yes.
David are you on the line.
Yes can you hear me.
Now we can hear you.
Okay sorry.
And many times zones away.
So now that the product has been out there for a number of quarters of leak that is.
Could you talk about and you mentioned J D that you are seeing some resales do you have a better sense of how many prescriptions per year a patient might.
Patient might use.
And secondly, with regard to price you have a three months supply in a one month supply.
Do you feel like you have the right price or is it something where there is flexibility to go higher.
And then thirdly with regard to the buy and Bill can you give us some more granularity on that.
How that will work, particularly for cosmetic dermatologists.
How how much money will they make on it how much money, where you make on it.
And would this be a similar approach to say botox, where they where they buy in bulk, particularly the high prescribers and then.
The market up for their patients and how much do you think the market up buybacks.
Alright, so David what I'll do is I'll answer the middle question first because that's the easier one and then I'll turn it over to J D for number one and three so with respect to price.
We're very comfortable that the price we have out there today is pretty solid.
And we also believe we have room to go up as well.
And we are exploring that option.
Real time, and we May take a modest increase in the not too distant future, we've had very little to no pushback on pricing.
And then I think your first question David was around refills and what we're seeing.
Sure.
Look I think it's something we pay attention to in terms of the forward looking value potential beyond just new patient starts what we have seen.
And I alluded to this.
Briefly.
In prepared remarks that first cohort of patients. So if you think back to September October and November of last year. When we were just starting to get underway.
Who have now had looking back 12 months.
That first prescription was filled on average that group of patients.
<unk> has paid for about 120 days of therapy per start.
So I think that's sort of the working assumption that we're using right now we look at it every month both.
Just to get a sense for the average patient as we move forward over a 12 month period, but similarly, I think the the lifetime value of a patient becomes a really important metric as we get out.
More than another few quarters as well.
And then I think your third question was around a little bit more granular on the buy and bill and pricing.
So look I think specific to the aesthetic channel.
That will be.
The commercialization foundation the.
The entire model for the aesthetic launch will be buy and bill direct dispense partnerships with the practice I think the importance of the virtual model there in key states like New York, and Texas are really important as well.
And from a margin standpoint, I think we're going to be right in line with a lot of products that.
These clinicians are already using both from an in office treatment standpoint, but also from a retail medicine standpoint be it.
Hi, and skin care or even products like LATISSE were somewhere between 75, and 100% margin dependent upon the volume running through an office.
Okay, great. Thank you very much.
Okay, David Thanks.
Later next question please.
Your next question is from Louise Chen from Cantor Your line is open.
Hi, this is the way towards the east Congrats on all the progress this quarter and thank you for taking our question.
Just a couple from the the first one is if you could provide us some updates on our sinton partnership what is the latest progress, India, China, Japan, and EMEA market and well only be looking at therapeutics. They will look into that as well and then maybe another housekeeping question. If you could tell us.
Yes, it's a little bit about the how we should think about the operating expense for the remainder of this year and maybe into 2022.
Thank you.
Okay, great. So San Tan is marching along with their commitment to develop and commercialize <unk>.
We know they were down at the recent eye care meeting in New Orleans talking to some of our Kols.
They are preparing our regulatory.
A discussion for the EU they've had a great meeting with the.
Japanese regulatory authorities and have a actually a more simplified phase III primary endpoint than we did.
They only have to look at <unk>, one and its improvement.
Over baseline versus placebo, whereas in the U S. We had the Leicester peripheral field test as our primary <unk> one is our secondary so.
They are also moving aggressively into other territories, possibly Korea Vietnam.
So they are full speed ahead, great partnership thus far in <unk>.
Been very thoughtful in putting together their development plans and.
Getting really good input from Kols with experienced J D. I don't know if you want to add to that at all or no I think all I would add Wayne as I think we with sand tern view.
View this as a global brand and by that I mean, I think their intention is both foundational as a first in class treatment and eye care.
But also along the more mild end of the ptosis spectrum.
As an aesthetic treatment as well and so we're excited to work with them to see that through both regulatory and clinical development in those markets, but also support their efforts from our learnings and experience here in the U S. So that they can position themselves for success abroad.
And.
Wayne I'll take the second question, which talks about the Opex for the remainder of the year basically the fourth quarter.
And we would see that coming.
Coming out and just a slightly lower level than what we saw in the third quarter I think in our.
Disclosures and in my remarks, I mentioned, a couple of one timers.
At the same time were.
We are ramping up the field force and getting ready to launch.
So you have puts and takes in that direction, but I think.
I think thats basically what you should expect for the balance of the year.
Yes.
And then if you go to the.
<unk> Investor website for Santander and their R&D section you can see.
The ptosis indication.
How they've listed up neat there where they've started preparation for filing in Asia. So.
Pretty far along with those guys.
Got it thank you so much.
Okay. Thanks Wayne.
Operator next question.
And as a reminder, if you wish to queue up for a question that is star then the number one on your telephone keypad again that is star one.
Your next question is from Greg Fraser from <unk> Securities. Your line is open.
Good afternoon folks thanks for taking the questions.
And congrats on great.
Okay.
So on the sales force expansion can you speak to the background of the folks that youre interviewing and how much prior experienced mistakes.
That you're looking for it sounds like the leadership team is very experienced but curious to hear about the reps.
Yep.
Either way, it's a great question.
Yeah.
Look I think we've gone into this with a very specific profile in terms of the <unk> experience.
I think obviously aesthetic experienced direct aesthetic experience as a plus and what I would tell you.
Through the first handful plus or couple of handfuls of territories, where we've got.
An offer letter signed we're seeing an incredible amount of aesthetic experience and not just years on paper, but successful ecstatic experience and I think were drawing from.
A number of different players in the aesthetic industry.
And really.
Look I think it's one of the things that that continues to excite us about what we're building here is our ability to attract that type of talent.
And I would I would expect a larger number of that team to have recent direct aesthetic experience, whether it's from some of the injectable companies.
Or some of the high end skincare companies that employ <unk> business models with these practices as well.
Got it that's very helpful. I'm not sure if I missed it J D. But did you comment on prescription demand so far in the fourth quarter.
We have not commented yet on the fourth quarter, but.
What I can tell you is we are seeing meaningful growth already over the prior quarter.
So we're pretty excited about that but we're tempering our enthusiasm you know we've got a lot of holiday time coming up so.
We will see growth for sure.
Just need to see how high is up.
The helpful context for you Greg would be this growth in prescriptions is also occurring against the backdrop of an expanding group of writers who are now opting to purchase from us directly and dispense out of their office.
So I think look as we go through the next couple of quarters. There is going to continue to be a shift from prescriptions traditionally through the pharmacy to prescription demand being generated directly at the point of care with our offices and early on given what I think we've seen from the <unk>.
First 400, plus accounts and the impact to what would've been prescribing behavior to see continued growth here through the first four five weeks of the fourth quarter into the pharmacy is really really encouraging about just underlying momentum.
Got it okay.
And then just a couple of.
Questions for Andy here and following up on the expense question it.
Has your view on operating expenses for 2020 to change from the range that you've laid out.
Months ago and then.
We expect gross margin to reach over time as volumes grow.
Sure Greg.
Generally our our view on operating expenses for 2022 have not changed that said as I mentioned in my remarks, now that the divestiture of legacy is behind us that does provide us an opportunity to really critically review.
Our spending in non promotional areas to see where we can be more efficient.
And to see where we can devote more more of the spend to the commercialization of up Nique and really drive growth there. So that's it.
Those are projects plural that we're undertaking now and we will continue to undertake to see where we can drive spending efficiency.
And then in terms of the gross margin.
Yes.
As volume increases on <unk> of course, they are more of the fixed costs that do get absorbed where we see gross margins heading is probably more towards the mid seventies from where it is today, which I think it is.
Is 50%.
Thank you.
And I'm showing no further question at this time I would like to turn the call back to CEO, Mr. Brian <unk> for any additional or closing comments.
Operator, thank you.
Thanks, everybody for joining us today.
We're thrilled with the progress that we have made and are making with <unk>. We're really at the beginning of this journey.
It's exciting.
And we are looking forward to continue to grow this story and partner with the eye care and aesthetic community. Thank you all.
Yes.
Ladies and gentlemen, this does conclude today's conference. Thank you for your participation and have a great day.