Q4 2021 Heron Therapeutics Inc Earnings Call
Good day, ladies and gentlemen, and thank you for standing by and welcome to the Heron Therapeutics Q4, 2021 earnings conference.
Operator: Good day, leaders and gentlemen, and thank you for standing by. Welcome to the Heron Therapeutics Q4 2021 Earnings Conference. As a reminder, this conference is being recorded. Now, I would like to turn the call over to David Szekeres, Executive Vice President, Chief Operating Officer. Please proceed. Thank you, Buena.
This conference is being recorded now I would like to turn the call over to David Schick Harris Executive Vice President Chief Operating Officer. Please proceed.
Thank you point out good.
David Szekeres: Good afternoon, everyone, and thank you for joining us. With me today from here on our very court are Chief Executive Officer and Chairman John Point, President and Chief Commercial Officer, Kimberly Manhard, Executive Vice President of Drug Development and Board Director, and Chris Torgars, our Chief Medical Officer. For those of you participating via conference call, the slides will be made available via webcast and can also be accessed by going to the Investor Relations page of our website following the conclusion of today's call.
Good afternoon, everyone and thank you for joining us.
With me today from here and are very court, Chief Executive Officer, and Chairman, John <unk>, President and Chief Commercial Officer.
Kimberly made Hart executive Vice President of drug development, and Board director and Chris <unk>, Our Chief Medical Officer.
For those of you participating via conference call. The slides are made available via webcast. It can also be accessed by going to the Investor Relations page of our website following conclusion of today's call.
Before we begin I would like to remind you that this call will contain forward looking statements concerning <unk> future expectations plans prospects corporate strategy and performance.
David Szekeres: Before we begin, I would like to remind you that this call will contain forward-looking statements concerning Heron's future expectations, plans, prospects, corporate strategy, and performance, which constitute four forward-looking statements for the purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these four forward-looking statements as a result of various important factors, including those discussed in our follow-up of the SEC.
Which constitute forward looking statements for the purposes of the Safe Harbor provision under the private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those indicated by these forward looking statements.
As a result of various important factors, including those discussed in our filings with the SEC.
In addition, any forward looking statements represent our views only as of the date of this webcast and should not be relied upon as representing our views as of any subsequent date.
David Szekeres: In addition, any forward-looking statements represent our views only as of the date of this webcast and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update such statements.
We specifically disclaim any obligations to update such statements now ill turn the call over to Barry.
Barry: Now, I'll turn the call over to Barry. Thank you, David. Welcome everyone, and thank you for joining us. 2021 was one of the most important and productive years in our company's history. We obtained initial approval and successfully lodged it generally for post-operative pain in the United States. And only five months after launch, we obtained approval for a substantially expanded indication, which greatly improves our ability to commercialize the product. With our CINV franchise, we stabilize revenue in a predominantly generic market and see a path to modest growth in the future.
Yeah.
Thank you David.
Welcome everyone and thank you for joining US 2021 was one of the most important thing productive years in our company's history.
Barry: We also filed an NDA for our fourth commercial product, HDX-019, for post-operative nausea and vomiting, or PONV, which has the potential to be many times larger than our CINV business. Lastly, we have also focused our energies on both cutting costs, such as eliminating more than half of our leased office space, and partnering ex-US territories for Zin Relief to extend our cash run. As we reported in December, in a little over two months from submission, the FDA approved our first of two planned supplemental NDAs to expand the indication statement for Zen Relief to cover approximately 7 million procedures compared to only about 2 million in the original label.
Barry: The first supplemental NDA approved by the FDA in mid-December broadened the label to include foot and ankle, Small to Medium Open Abdominal, and Lower Extremity Total Joint Arthroplasty Surgical Procedure. The FDA also agreed to the contents of the second Supplemental NDA to broadly cover orthopedic and soft tissue surgical procedures. Status of the FDA-agreed studies for this second supplemental NDA is listed on slide five. The endpoints in these studies are pharmacokinetics and safety. Demonstration of efficacy is not required for approval.
We obtained initial approval and successfully launched Xen relief for post operative pain in the United States.
And only five months after launch we obtained approval for a substantially expanded indication statement, which greatly improves our ability to commercialize the product.
With RCI and the franchise, we stabilize revenue and a predominantly generic market and see a path towards modest growth in the future.
We also filed an NDA for fourth commercial product HD X O. One nine for post operative nausea, and vomiting or P. O N V.
Which has the potential to be many times larger than our <unk> business.
Lastly, we are also focused our energies on both cutting costs, such as eliminating more than half of our leased office space and.
And partnering ex U S territories for Zen relief.
Extend our cash runway.
As we reported in December and a little over two months from submission. The FDA approved our first of two planned supplemental NDA is to expand the indication statement for Zen release.
Cover approximately 7 million procedures compared to only about $2 million and the original label.
The first supplemental NDA approved by the FDA in mid December .
<unk> label to include foot and ankle.
Small to medium open abdominal and lower extremity total joint arthroplasty surgical procedures.
The FDA also agreed to content of the second supplemental NDA to broadly cover orthopedic and soft tissue surgical procedures.
The status of the FDA agreed studies for this second supplemental NDA.
Are listed on slide five.
The endpoint in these studies as pharmacokinetics and safety demonstration of efficacy is not required for approval.
Barry: We expect to submit SNDA number two late in the second half of this year. Approval of SNDA No. 2 should expand the label to cover essentially all 14 million target procedures. In addition, the FDA also approved our manufacturing supplements for a secondary supplier of our proprietary polymer and significant increases in batch size for both Synrelief and Synvon. These approvals are critical to allow us to manufacture sufficient quantities of these important products at a significantly lower cost of goods. Overall, the fourth quarter and 2021 as a whole were outstanding for Heron. I will now turn the call over to John to review our achievement of important commercial and corporate milestones in 2021. Thank you, Barry.
We expect to submit NDA number too late in the second half of this year.
<unk> of S. N DAA number two should expand the label to cover essentially all 14 million target procedures.
In addition to S. N da one the FDA also approved our manufacturing supplements for a secondary supplier of our proprietary polymer and significant increases in batch size for both and relief and Slovakia.
These approvals are critical to allow us to manufacture sufficient quantities of these important products at a significantly lower cost of goods.
Overall fourth quarter and 2021 as a whole were outstanding for a for Harris.
I will now turn the call over to John to review, our achievement of important commercial and corporate milestones in 2021.
Okay.
Thank you Barry I'm excited to share our fourth quarter commercial results.
John: I'm excited to share our fourth quarter commercial results. We continue to make significant progress with launching Zen really. During my presentation, I'll start with a number of updates on key metrics and also expand our reporting with new metrics related to Zen Relief, Demand Unit Volume, with hospitals and ASC. I don't want to finish up with an update on our commercial results with our oncology care. On slide number seven, I'll start by summarizing the Xen Relief launch highlights today.
We continue to make significant progress with launching generally.
During my presentation I'll start with a number of updates on key metrics and also expand our reporting with new metrics related to its been really good.
<unk> unit volume with hospitals and AFC.
And I'll finish up with an update on our commercial results with our oncology care business.
On slide number seven I'll start by summarizing the Zen relief launch highlights to date.
Our first two quarters of launch have been challenging with an initial FDA label indication, what's the one week three.
John: Our first two quarters of launch have been challenging with an initial FDA label indication for only three specific procedures and the continued impact of COVID-19. Nevertheless, we've made incredible progress with a number of leading indicators, which gives us confidence that ZinRelief will eventually become the market leader in post-operative pain. We continue to gain formulary approvals for Zen Relief and targeted hospitals and IVNs at a rapid rate, and this represents our pipeline for growth.
Features.
The continued impact of COVID-19.
Nevertheless, we've made incredible progress with a number of leading indicators, which gives us confidence that didn't really equal eventually become the market leader in postoperative pain.
We continue to gain formulary approvals for Zen relief and targeted hospitals in ibm's at a rapid rate.
This represents our pipeline for growth.
John: We are very pleased by the growth and the number of unique ordering accounts, and importantly, we're also seeing excellent growth in the reorder rate. In addition, we're seeing significant growth in the volume of demand units for XenRelief on a quarterly and monthly basis. I'll share specifics on all these metrics later in the presentation.
We're very pleased by the growth in the number of unique ordering accounts and importantly, we're also seeing excellent growth in the reorder rates and.
In addition, we're seeing significant growth in the volume of demand units for Zen relief on a quarterly and monthly basis.
I'll share specifics on all of these metrics later in the presentation.
As we announced in December our R&D team worked with the FDA to gain significant label expansion and release indicated some features in record time.
John: As we announced in December, our R&D team worked with the FDA to gain significant label expansion and release indicated procedures in record time to expand the target market from about 2 million surgical procedures to approximately 7 million surgical procedures. We are already seeing the initial impact of this expanded label with increased syndrome relief usage with existing surgeons. As we expected, the third quarter ended with excess initial stocking inventory and the discretion change.
This expands the target market from about 2 million surgical procedures to approximately 7 million surgical procedures.
We're already seeing the initial impact of this expanded label with increase in relief usage with existing surgeons.
As we expected the third quarter ended with excess initial stocking inventory and the distribution channel.
John: Some the fifth time, we've made meaningful progress in burning through that inventory, based on increases and generally demand unit volume sales. Finally, our team has done an outstanding job increasing the separate reimbursement for XenRelief outside the surgical bundle. Now, let's dive into the details.
First time, we've made meaningful progress and burning through that inventory based on increases in generally demand unit volume sales.
Finally, our team has done an outstanding job, increasing the separate reimbursement for Zen relief outside but surgical bundle.
Okay.
John: Slide number eight highlights the rapid progress that in relief is making with formularity. At the end of October, we reported 126 formularity. This number has more than doubled and grown to 264 mpg through February 25th. Our success with formula is even more impressive considering the large number of delays that have resulted due to COVID. [inaudible] And those accounts actually making P&T decisions; over 90% of hospital P&T committees are adding generally to forms.
Now, let's dive into the detail slide number eight highlights the rapid.
Progress with Zen relief is making with formulary groups at the end of October we reported 126 formulary approvals. This number has more than doubled and grown to 260 formulary approvals through February 20.
Our success with formularies is even more impressive.
Considering the large number of delays.
That have resulted due to COVID-19 .
And those accounts are actually making P&C decisions over 90% of hospital Pnp committees are adding general weak to formulary.
John: Importantly, over 60% of our formulary approvals are for unrestricted usage at Fenville. These unrestricted formulary approvals create a significant growth opportunity with the broader label approved by the FDA in mid-December. The key drivers continue to be superior clinical data versus the standard of care of bupivacaine, demonstrating XenRelief's pain reduction for 72 hours and a significant reduction in opioid use. When we combine the most effective product with Xen Relief's outstanding value proposition, led by our pricing strategy and reimbursement progress, these messages are clearly resonating with targeted accounts. The remainder of the first quarter will remain very busy, with over 100 additional P&T committees scheduled for reviews and release before the end of the quarter.
Importantly over 60% of our formulary approvals are for unrestricted use of centrally.
These unrestricted formulary approvals create a significant growth opportunity with the broader label approved by the FDA in mid December .
The key drivers continue to be the superior clinical data versus the standard of care is again, demonstrating Zen reliefs pain reduction for 72 hours.
Difficult reduction in opioid usage.
When we combine the most effective product with Zen reliefs outstanding value proposition led by a pricing strategy and reimbursement progress. These.
These messages are clearly resonating with targeted accounts.
The remainder of the first quarter will remain very busy with over 100 additional PMT committee scheduled to reviews and really before the end of the quarter.
New formulary approvals help us establish a critical pipeline for news and released business and remain a key priority for our commercial team.
John: New formulary approvals help us establish a critical pipeline for news and relief business and remain a key priority for our commercial. Next, I wanted to highlight a key top-down strategy of targeting Integrated Delivery Networks (IDMs), or IBM, to create new system-wide opportunities for Therapeutic Interchange from XBRL to XenRelief for Indicated Procedures. Thus far, 34 IDMs have added Xen Relief to their These IBM systems include nearly 270 institutions in their systems, with 41% of approvals for unrestricted use, etc.
Next I wanted to highlight a key top down strategy targeting integrated delivery networks or ibms to create new system wide opportunities.
John: In addition, these 34 IBMs account for an estimated $520,000 annual in Zin Relief Indicated Procedures and $61 million in XPRL sales. Our success with IDNs allows us to work with senior-level decision makers who are evaluating switching from XBRL to ZinRelief for indicated procedures. Their rationale for a potential change is simple.
Our therapeutic interchange from EXPAREL to generally for indicated procedures.
Thus far 34 IBM to that it generally to their formularies. These.
These IBM systems include nearly 270 institutions in their systems.
41% of approvals for unrestricted use of centrally.
In addition, these 34 Ibm's account for an estimated 520000 annual relief indicated procedures and $61 million of EXPAREL sales.
Our success with Ibm's allows us to work with senior level decision makers, who are evaluating switching from EXPAREL to generally for indicated procedures.
The rationale for a potential change of simple generally has demonstrated superior clinical results to the standard of care bupivacaine, but the.
John: Zin relief has demonstrated superior clinical results to the standard of care bupivacaine with a cost savings of 25 to 32 percent based on wholesale acquisition costs and a savings of 42 to 48% based on our 340B price offering versus XRP. With Zimmerleaf's expanded label indication, it's not surprising that IDNs are looking to save millions of dollars for a product that actually lasts up to 72 hours. On slide 10, we benchmark the number of unique ordering accounts during the first six months of launch based on Symphony Health data.
Cost savings of 25% to 32% based on wholesale acquisition cost.
The savings of 40% to 48% based on our 340 b price offering versus EXPAREL.
Zimmer weeks expanded label indication, it's not surprising that idms are looking to save millions of dollars for a product that actually lasts up to 72 hours.
On slide number 10, we benchmark the number of unique ordering accounts during the first six months of launch based on Symphony Health data.
We are gaining significant traction what's been released in the first six months of launch.
John: We are gaining significant traction within Relief in the first six months of launch, with 309 unique ordering accounts, which is up from 160 unique ordering accounts in the first three months of launch. In the past two years, three non-opioid analgesics, Zinrelief, Zerichal, and Engizo, have launched during the COVID era. Zen Relief's unique number of ordering accounts is over four times greater than the next closest competitor in GISA. In addition, Xen Relief had 73% of accounts reordering during the first six months, the greatest reorder percentage for all four products benchmarked in this analysis. We believe this is an excellent indication of the strong real-world experience that surgeons are having with their patients.
309 unique ordering accounts, which is up from 160 unique ordering accounts in the first three months of launch.
During the past two years three non opioid analgesics literally.
Zero call <unk> launched during the Covid era.
Zen reliefs unique number of ordering accounts is over four times greater than the next closest competitor and GSO.
In addition, generally have 73% of accounts reordering during the first six months.
Our greatest reorder percentage for all four products Benchmarked in this analysis.
We believe this is an excellent indication of strong real world experience, but surgeons are happening with their patients in.
John: In addition, we feel the initial ZEN relief results are outstanding, considering our launch began with only three indicated procedures in the label and the impact of the COVID surge on hospital launch. While the initial and relief results are strong, aggressive expansion in the number of awarding accounts is a key priority in 2022, and we continue to make strong progress on this goal during the first quarter. Slide number 11 highlights the continued progress that we've made with the number of unique ordering accounts.
In addition, we feel the initials and relief results are outstanding considering our launch began with only three indicated procedures in the label and the impact of Covid surge.
Hospital launches.
While the initials and really for all <unk> are strong.
<unk> with expansion in the number of ordering accounts is a key priority in 2022, and we continue to make strong progress on the school during the first quarter.
Slide number 11 highlights the continued progress that we've made with the number of unique ordering accounts.
John: Slide 12. Slide 13. Slide 14. Slide 15. Slide 16. Slide 17. Slide 18. Slide 19. Slide 20. Slide 21,. Slide 22. Slide 23. Slide 24. Slide 25. Slide 26. Slide 27. Slide 28. Slide 28. Slide 29. Slide 30. Slide 30. Slide 31. Slide 32. Slide 33.
John: And for the first time, reports are generally demand unit volume. The number of unique ordering accounts has grown from 309 at the end of December 2021 to over 400 accounts through the end of last week. Thin relief end unit volume grew by 126% in the fourth quarter over the third quarter.
And for the first time reports are generally demand unit volume.
The number of unique ordering accounts has grown from 309 at the end of December 2021 to over 400 accounts through the end of last week.
Similarly, and unit volume grew by 126% in the fourth quarter over the third quarter.
However, it's important to recognize that the Covid omicron search stunted that didn't really growth in December and January .
John: However, it's important to recognize that the COVID Omicron Surge stunted Zen Relief growth in December and January. During these two months, our customers were faced with delays and elective surgeries as a result of policy decisions, such as the positive Patient Pre-Op COVID Test and staff shortage.
During these two months our customers were faced with delays in elective surgeries as a result of policy decisions.
Positive patient Preop, Covid test and staff shortages.
So unexpected surge was certainly detrimental to the positive news we received in mid December described earlier by Barry.
John: This unexpected surge was certainly detrimental to the positive news we received in mid-December, as described earlier by Barry, which expanded FinRelief's label indication to approximately 7 million surgical procedures. Fortunately, the COVID Omicron surge appears behind us, and we've seen a significant increase in Zen Relief Demand Volume in February, with a 42% increase from January levels, with three fewer days. Importantly, since the inception of our launch, 77% of the demand SKU volume has been for our 400 mg product, which sells at nearly twice the price of our 200 mg SKU.
Which expanded 10 release label indication to approximately 7 million surgical procedures.
Fortunately the Covid omicron surge appears behind us and we've seen significant increase in Zen relates demand volume in February with a 42% increase from January levels with three fewer days.
Importantly, since the inception of our launch 77% of the demand skewed volume has been for our 400 milligram product, which sells at nearly twice the price of our 200 milligram SKU.
We believe that our broad expansion of generally label indications combined with the stabilization of the impact of Covid.
John: We believe that our broad expansion of Xen Release label indications, combined with the stabilization of the impact of COVID, sets us up for a strong finish to the first quarter and results for the remainder of 2022. On the prior slide, I described XenRelief's significant demand unit volume growth on both a quarterly and monthly basis. We believe that a large portion of this growth is being fueled by our expanded indication. As evidence, in mid-January, a pulse survey was conducted with 129 orthopedic surgeons with prior use of Xen Release and TKA procedures.
Sets us up for a strong finish to the first quarter.
And results for the remainder of 2022.
On the prior slide describes in really significant demand unit volume growth on both the quarterly and monthly basis.
We believe that a large portion of this growth is being fueled by our expanded indications.
Is that guidance in mid January a pulse survey conducted with 129 orthopedic surgeons with prior use of generally and Teekay a procedures.
John: Over 99% of surgeons surveyed were still using XenRelief for their patients. Then we asked them if they had used XenRelief in total hip replacement cases prior to the label expansion in mid-December. Only 29% of surgeons indicated they had used it in THA.
Over 99% of surgeon surveyed were still using Zen relief for their patients.
We ask that they had used Zen relief and total hip replacement cases prior to the label expansion in mid December .
Only 29% of surgeons indicated they had used it and THX.
And the one month since the FDA approved the expanded indication that percentage had grown to 48% of surgeons using Zen relief and THF.
John: In the one month since the FDA approved the expanded indication, that percentage had grown to 48% of surgeons using XenRelief and THA. Importantly, 91% of those who have not tried it in relief in THA cases plan to use it within the next one to three months. Of note, there are over 600,000 THA procedures annually, so this is an excellent illustration of how our expanded indication will allow us to accelerate Xen release growth.
Importantly, 91% of those who had not tried and relief in th aid cases plans to use it within the next one to three months.
Of note there are over 600000 th ey procedures annually. So this is an excellent illustration of our expanded indication will allow us to accelerate <unk> growth.
One of the most frequent questions we receive on the level of inventory on the distribution channel.
John: One of the most frequent questions we receive is on the level of inventory in the distribution channel. As we expected, the third quarter ended with excess initial stocking inventory in the distribution channel. Since that time, we've made meaningful progress in burning through that inventory based on increases in general relief demand unit volume sales. Fourth quarter net sales were $844,000 as we drew down the initial stocking inventory based on demand orders from hospitals and ASCs.
We expect that the third quarter ended with excess initial stocking inventory in the distribution channel.
Since that time, we've made meaningful progress and burning through that inventory.
Based on increases in general leaf demand unit volume sales.
Fourth quarter net sales were $844000 as we drew down the initial stocking inventory based on demand orders from hospitals and ASC.
John: We currently have 85 distribution centers, which are selling generally well. In order to better understand the inventory level and the distribution channel, we are reporting the X factory reorder rate based on demand units for both SKUs. Ultimately, our goal is to have X factory orders at 100% of demand unit volume, meaning a distribution channel is replenishing their inventory for every unit sold to a hospital or AFC. Through February 24th, we've made outstanding progress towards this goal, with the 400 milligram SKU reorder rate at 96% of demand unit volume. We expect to reach that 100% reorder rate target by the end of the first court.
We currently have 85 distribution centers, which are selling generally.
In order to better understand the inventory level in the distribution channel. We are reporting ex factory reorder rate based on demand units for both F. Skus.
Ultimately our goal is to have X factory orders at 100% of demand unit volume.
Meaning a distribution channel.
Plummeting their inventory for every unit sold to a hospital or ASC.
Through February 24th we've made outstanding progress towards this goal with the 400 milligram SKU reorder rate at 96% of.
Demand unit volume.
We expect to reach that 100% reorder rate target by the end of the first quarter.
With respect to the 200 milligram SKU the reorder rate is currently 40%, indicating theres some excess 200 milligram inventory in the distribution channel.
John: With respect to the 200mg SKU, the reorder rate is currently 40%, indicating there's some access 200mg inventory in the distribution channel. This isn't surprising with the 200 milligram SKU accounting for 23% of the total Zin relief demand unit volume. We've already observed significant improvements in the 200 milligram X-Factory reorder rate during the first quarter, and we expect additional improvements through the remainder of the first quarter based on the new procedures utilizing 200 mg doses.
This isn't surprising what the 200 milligram SKU accounted for 23% of the total Zen relief demand unit volume.
We've already observed significant improvements in the 200 milligram ex factory reorder rate during the first quarter and.
And expect additional improvements through the remainder of the first quarter based on the new indicated procedures utilizing 200 milligram dose.
Yeah.
We've already seen tremendous early results on reimbursement coverage from commercial and Medicaid payers.
John: We've already seen tremendous early results on reimbursement coverage from commercial and Medicaid payers. We've already obtained separate reimbursement outside the surgical bundle payment for Zin Relief in more than 120 million covered lives in ASEs, and in some cases, it's also separately reimbursed, and the Hospital Outpatient Center.
We've already obtained separate reimbursement outside the surgical bundle payment for Zen relief and more than 120 million covered lives and ASC and in some cases, it's also separately reimbursed.
Hospital outpatient setting.
John: A key component of our pricing strategy is even without separate reimbursement. Our lower acquisition costs, benefits, and customers across all settings of care, where the drug may be paid for under the surgical bundle payment. In the fourth quarter, CMS issued ZinRelief a specific C code, C9088, for separate reimbursement in the AFC set of care effective January 1st, 2022.
A key component of our pricing strategy is even without separately separate reimbursement.
Our lower acquisition cost benefits customers across all settings of care or the drug may be paid for under the surgical bundle payments.
In the fourth quarter CMS issued generally five specific CCAR see 90884 separate reimbursement in the ASC setting of care effective January one.
2022.
John: This will have a meaningful impact on general, and will have it since it will have separate reimbursement outside the surgical bundle in the ASC market beyond the typical three-year pass-through period. CMS is still reviewing our pass-through application, and we expect pass-through for separate reimbursement of Zin relief for Medicare patients and the hospital outpatient setting of care to be effective April 1st, 2022. This would be significant competitive damage since the ex-girls' pastor status and the hospital-assisted patient setting of care expired years ago.
This will have a meaningful impact on generally.
And have it since it will have a separate reimbursement outside the surgical bundle under ASC market beyond the typical three year pass through period.
CMS is still reviewing our pass through application and we expect pass through for separate reimbursement are generally for Medicare patients.
Hospital outpatient setting of care could be effective April one 2022.
This would be a significant competitive advantage since EXPAREL as pass through status in the hospital outpatient setting of care expired years ago.
Okay.
John: On flight 15, I'll close the Zoom Relief section with our key priorities for 2022, top priorities to leverage the new indication for even faster growth. This will be accomplished by expanding existing surgeon usage and new procedures. This is consistent with the example I shared earlier demonstrating orthopedic surgeons expanding from TKA cases alone to also include THA.
On slide 15, I'll close the Zimmer leaf section with our key priorities for 2022 of our top priorities to leverage the new indications.
For even faster growth.
This will be accomplished by expanding existing surgeon usage and new procedures.
This is consistent with the example, I shared earlier demonstrated demonstrating orthopedic surgeons expanding from Teekay eight cases alone to also include <unk> patients.
John: In addition, we are working with accounts with an existing Zener Relief Formulary Approval to remove restrictions and allow usage in all of our newly indicated surgical procedures. Finally, we're beginning to gain traction with both IDNs and hospitals to revisit therapeutic interchange by switching Expirel to Xynrile for indicated procedures, which could potentially save millions of dollars per year. Our second priority is to increase usage within ordering accounts by increasing the number of surgeons routinely using ZinRelief. Many ordering accounts initially evaluated ZinRelief with two or three surgeons from a larger practice.
In addition, we are working with accounts within existing literally formulary approval to remove restrictions and allow usage and all of our newly indicated surgical procedures.
Finally, we are beginning to gain traction with both IBM and hospitals to revisit therapeutic interchange by switching EXPAREL doesn't really for indicated procedures could potentially save millions of dollars per year.
Our second priority is to increase usage within ordering accounts by increasing the number of surgeons routinely using generally.
Many ordering accounts initially evaluated generally.
With two or three surgeons from a larger practice.
John: Based on the excellent outcomes with their patients, we are actively utilizing their experience to support expanded usage of XenRelief by their colleagues for gaining momentum with this approach. Our third priority is to continue to gain formulary approvals at new targeted IBMs and hospitals. Increased access is our pipeline for growth and allows our sales reps to expand their volume once other accounts are in service and converted to Zenrists. Finally, we'll continue to maximize our separate reimbursement outside of the surgical bundle payment for XenRelief in the AFC setting of care.
Based on the excellent outcomes with their patients we are actively utilizing their experience to support expanded use usage of generally with rig counts.
We're gaining momentum with this approach to increase usage.
Our third priority is to continue to gain formulary approvals at new targeted Ibm's and hospitals increased access is our pipeline for growth and allows our sales reps to expand their volume once other accounts are in service and convert it to <unk>.
Finally, we will continue to maximize our separate reimbursement outside of the surgical bundle payment for generally in the AFC setting of care.
John: We remain optimistic that we will receive path to status for Zen Relief for Medicare patients and help the hospital outpatient setting as care effective April 1st. In summary, we've made incredible progress with a number of leading indicators, which gives us confidence that 2022 will be a year of significant growth. Now I'd like to shift gears and review the fourth quarter results of our Oncology Care Franchise. Applied 17, the fourth quarter was another solid performance for CIMV franchise products with net sales of $19.9 million.
We remain optimistic that we will receive pass through status for <unk> relief for Medicare patients.
And how the hospital outpatient setting of care effective April one.
In summary, we've made incredible progress with a number of leading indicators, which gives us confidence that 2022 will be a year of significant growth presumably.
Now I'd like to shift gears and review the fourth quarter results of our oncology care franchise.
Flight 17, the fourth quarter was another solid performance for <unk> franchise products with net sales of $19 9 million.
John: Significant headwinds remain in the marketplace with the impact of COVID decreasing cancer screening and new patients starting. In addition, CMS's oncology care model and other value-based contracts support community oncology practices move towards cheaper generic and biosimilar products. Finally...
Significant headwinds remained in the marketplace with the impact of Covid decreasing cancer screening and new patient starts.
In addition, CMS oncology care model and other value based contracts support community oncology practices moved towards cheaper generic and Biosimilar products.
Finally competitive products were maintaining high value or net cost recovery gynecology practices with.
John: Competitive products were maintaining high value or net cost recovery in Genecology practice with aggressive pricing. We believe that a number of these headwinds will begin to turn around in 2022. On slide number 18, during 2021, our team did an excellent job of stabilizing our CIMD portfolio sales and markets dominated by generic competition. More specifically, we've generally stabilized Imbanti demand unit sales at 98% of the 2020 level. In addition, we started the process of growing Sustol following the refresh program we implemented in 2019.
With aggressive pricing.
We believe that a number of these headwinds will begin to turnaround in 2022.
Yeah.
On slide number 18 during 2021, our team did an excellent job of stabilizing our <unk> portfolio sales in markets dominated by generic competition.
More specifically, we have generally stabilized symbiotic demand and net sales.
At 98% of 2020 levels.
In addition, we started the process of growing softball, following the refresh program we implemented in 2019.
John: We believe our products are poised for moderate growth in 2022. Our belief that both Simbhanti and Sustel are poised for moderate growth in 2022 is based on two key factors. First, we will experience improving reimbursement tailwinds as generic fossil profit and average sales price reimbursement decreased to $20.50 in Q1 2022, and effective January 1st, separate reimbursement in the hospital outpatient segment ended, which will bring some bounties. Value Proposition, Much More Tractive in 2022. In addition, IV Akemzio ASP reimbursement has decreased by over $190 in the past year. So there's less value they can offer, benefiting both softball and some bonds.
We believe our products are poised for moderate growth in 2022.
Our belief that both symbiotic and tough dollar poised for moderate growth in 2022 based on two key factors.
First we will experience.
Improving reimbursement tailwind as generic foster prop at an average sales price reimbursement has decreased to $20.50.
In Q1 2022.
And effective January one separate reimbursement.
In the hospital outpatient segment ended what Youll make some bond T V.
Value proposition.
More attractive in 2022.
In addition, IV Kenzo ASP reimbursement has decreased by over $190 in the past year.
So there's less value they can offer benefiting both soft all anti <unk>.
During the first quarter of 2022, we expect our <unk> net product sales to be in the range of $20 million to $22 million.
John: Through the first quarter of 2022, we expect our CINB net product sales to be in the range of $20-22 million. A potential tailwind is the IV bag shortage some accounts are experiencing, which benefits Zimbante as the only NK1 that doesn't need an IV infusion bag. In addition, there is a backlog of oncology patients as a result of COVID, and we believe that both products can be used in HEC and the majority of MEK regimens.
A potential tailwind as the IV bag shortage. Some accounts, we're experiencing which benefits. Some bonding is the only NK one that doesn't need an IV infusion bag.
In addition, there is a backlog of oncology patients as a result of Covid and we believe that both products can be used in tech and the majority of Mec regimens as new patients reenter ecosystem per treatment. These new patients will create a growth opportunity for both our products.
John: As new patients re-enter the system for treatment, these new patients will create a growth opportunity for both our products. Finally, I wanted to close with an overview of Heron's commercial strategy. We have two primary components to our strategy. First, we want to establish Heron as a leading company in acute care.
Okay.
Finally, I wanted to close with an overview of parents commercial strategy. We have two primary components of our strategy first is to establish here on as a leading company in acute care.
John: As I described earlier, Xen Relief is clearly off to a fast start despite headwinds, and it's growing rapidly. I previously shared our agreement with the FDA for the expansion of our label indication, which will accelerate Zin release growth in the future. Finally, we're in an enviable position to potentially add a second commercial product, HTX-019, for PONB in the fourth quarter of 2022. This product will allow us to optimize our acute care resources with the same commercial team and Customer Target. The second component of our commercial strategy is to return growth and maximize the profitability of the Oncology Care Business.
As I described earlier Zen relief is clearly off to a fast start despite headwinds and it's growing rapidly.
Barry previously shared our agreement with the FDA for the expansion of our label indications.
We'll accelerate Zins Zimmer lease growth in the future.
Finally, we're in an.
Enviable position.
To potentially add a second commercial product H T X 019 for P. O N b in the fourth quarter of 2022.
This product will allow us to optimize our acute care resources, what's the same commercial team.
And customer targets.
The second component of our commercial strategy is return growth and maximize the profitability.
Oncology care business we.
John: We have stabilized sales in a competitive generic market and are poised for moderate growth in 2022. In addition, we have taken important steps to maximize the profitability of our oncology care products. The first step is to invest in larger-scale manufacturing for the bond, which will significantly reduce COGS in 2022.
We have stabilized sales in a competitive generic market and are poised for moderate growth in 2022.
In addition, we have taken important steps to maximize the profitability.
Of our oncology care products.
First step is invest that larger scale manufacturing for <unk>, which will significantly reduce cogs in 2022.
John: And we've also better aligned our resources to support maximizing profitability with a significant cost reduction and Advanced Savings. That completes my prepared remarks, and I'll now turn the call back over to Barry. Thank you, John. I would now like to take a few minutes to discuss our pending NDA for HTX-019. Post-operative nausea and vomiting is a large and important new market for Heron, but beautifully aligned with our current commercial efforts in the post-operative pain space and builds on our extensive knowledge of nausea and vomiting.
And we've also better aligned our resources to support maximizing profitability with a significant cost reduction.
And expense savings.
Barry: The PONV opportunity is about 25 times the size of CINV, and HDX-019 has substantial advantages over available products. The FDA has accepted our filing and given us a September 17, 2022, PDUFA action date. So we could be launching HDX 019 in the fourth quarter of 2022 with the opportunity for several hundred million dollars in sales at P. An easy initial target for commercialization is conversion of over 500,000 oral prepotent pills predicted to be sold in 2022 for PONV. The growth of oral prepotents for PONV tells a compelling story about the opportunity for HDX-019.
With pain space and builds on our extensive knowledge of nausea and vomiting.
The <unk> opportunity is about two five times the size of <unk> and <unk> nine has substantial advantages over available products.
The FDA has accepted our filing and given US a September 17th 2022, the <unk> action date, so we could be launching <unk> in the fourth quarter of 2022 with the opportunity for several hundred million dollars in sales at peak.
Yeah.
And easy initial target for commercialization is conversion of over 500000 oral aprepitant pills per day.
<unk> to be sold in 2022 for NV.
The growth of oral Aprepitant for NV tells a compelling story about the opportunity for <unk>.
Barry: An easy-to-use IV form of a PrEP, although even without promotion and with significant limitations due to the oral route and a high acquisition cost. Oral prepotent has grown nicely over the last few years, including 25% growth last year. We will aggressively go after these units after approval. Throughout the call today, you've heard the commercial numbers from both our product franchises. But to wrap up on our financials, I'll quickly recap these numbers and provide a little more detail on our overall financial profile.
And easy to use IV form of Aprepitant.
Even without promotion and with significant limitations due to the oral route and a high acquisition cost oral aprepitant has grown nicely over the last few years, including 25% growth last year.
We will aggressively go after these units after approval.
Throughout the call today, you've heard the commercial numbers from both our product franchises.
Barry: Our net product sales for the fourth quarter of 2021 for both our commercial franchises were $20.7 million, compared to $20.6 million for the same period in 2020 for Zen Relief. 0.8 Million dollars in net product sales for the fourth quarter of 2021 were interleaved to man units, increasing by 126% over the prior court. For Cervanti, net product sales were $17.4 million for the fourth quarter, compared to $20.3 million for the same period in 2020. For Sesto, our product sales were $2.5 million for the fourth quarter of 2021, compared to $0.3 million for the same period in 2020.
To wrap up on our financials I'll quickly recap these numbers and provide a little more detail on our overall financial profile.
Our net product sales for the fourth quarter of 2021 for both our commercial franchises was $27 million.
Compared to $20 6 million for the same period in 2020.
Presenting relief Rerecorded.
$8 million in.
And net product sales for the fourth quarter of 2021.
Ms inner leaf demand units, increasing by 126% over the prior quarter.
<unk> net product sales were $17 4 million for the fourth quarter compared to $23 million for the same period in 2020.
Were assessed though our product sales or $2 $5 million for the fourth quarter of 2021 compared to <unk> 3 million in the same period in 2020.
In the first quarter of 2022, we expect net product sales.
Barry: In the first quarter of 2022, we expect net product sales for the oncology care franchise to range between $20 and $22 million. As of December 31, 2021, David Szekeres, David Szekeres, We had cash equivalence and short-term investments of 157.6 months. In terms of our operations, net cash used for operating activities for the year ended December 31, 2021, was $203.4 million, compared to $184.8 million for the same period in 2020.
<unk> care franchise to range between 20 and $22 million.
As of December 31, 2021.
We had cash cash equivalents and short term investments.
$157 6 million.
In terms of our operations net cash used for operating activities for the year ended December 31 2021.
Barry: The increase in our net cash used for operating activities was predominantly due to changes in working capital related to the launch of Zen Relief in July 2021, including manufacturing of commercial industries. We expect net cash used for operating activities of $44 to $48 million in the first quarter of 2022, which includes 8.5 annual expenses that don't re-acquire and sub-sequence. We anticipate that our net cash usage will moderate lower in 2022 as net product sales increase and we realize the benefits of our cost-saving measures, including reduced expenses in the oncology care franchise, reduced lease expense, reduced investment in manufacturing, now that the most important improvement has been FDA approved, and from Reduced Cogs with larger scale manufacturing for both Zen Relief and Zimbabwe. Slides 25 and 26 contain important safety information for Zin relief.
Was $203 $4 million compared to $184 8 million for the same period in 2020.
The increase in our net cash used for operating activities was predominantly due to changes in working capital related to the launches and relief in July .
2021 include.
Including manufacturing of commercial inventory.
We expect Nast net cash used for operating activities.
<unk> $44 million to $48 million in the first quarter of 2022.
Which includes $8 five annual expenses that don't reoccur in subsequent quarters.
We anticipate that our net cash usage will moderate lower in 2022 as net product sales increase and we realize the benefits of our cost saving measures, including reduced expenses in the oncology care franchise reduce lease expense reduced <unk>.
<unk> and manufacturing now the most important improvements.
Have been FDA approved.
And from reduced Cogs with larger scale manufacturing for both Zen relief and student body.
Slides 25, and 26 contain important safety information present relief the slides are available on our website.
Operator: The slides are available on our website. With that, we're ready for your questions. Operator?
With that we're ready for your questions operator.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pad.
Operator: As a reminder to ask a question, you will need to press the star one on your telephone. To withdraw a question, press the pamphlet. Your first question is from Brandon Folkes of Cantor Fitzgerald. Your line is open. Hi, thanks for taking my questions. Maybe just two for me.
Yes first question is from Brandon Folkes of Cantor Fitzgerald. Your line is open.
Alright, Thanks for taking my questions, maybe just two from me.
Brandon Folkes: Can you just elaborate a little bit on the process of maybe removing the usage restriction that may have been placed ahead of the label expansion, so maybe some of the approvals you got before that expansion, just so that you could get, you know, 100 percent or maybe close to that of the formulary approvals mirroring the label. Give us any comments on how long you expect that to take, how you would describe that process, and when we will see the pull through on the revenue side. Barry, I appreciate your commentary at the end on the cash and capital situation. Any thoughts or opportunities beyond what you mentioned to make sure that I can extend that runway?
Can you just elaborate a little bit on the process of maybe removing the usage restructuring restriction.
It may have been placed ahead of the label expansion. So maybe some of the approvals you've got before that expansion just so that you could get.
100%, so maybe close to that of the formulary approvals meru. It mirroring the label just any color in terms of how long you expect that to take.
How would you describe that process and when we will see the pull through on the revenue side and then Barry I appreciate them.
Your commentary on the cash and capital situation just.
Any thoughts on opportunities beyond what you mentioned to make sure that I can extend that runway. Thank you.
Sure. Thank you Brandon I appreciate it.
Brandon Folkes: Thank you. Sure. Thank you, Brandon.
John: I appreciate it. John, why don't you respond to the question on pull-through of the expanded label and the formularies? Yeah, absolutely. So, as I indicated in the presentation, we have 260 formulary approvals as of the end of last week, February 25th, with 65% of those being for unrestricted usage. So, in those accounts, Brandon, we're already able to really promote the full label that we have. The other 35%, I think, are the accounts that you've indicated that we have a restricted label.
John why don't you respond to the question on pull through and of the expanded label in the formularies.
Okay.
Yeah, absolutely so.
You indicated in the presentation, we have 260 formulary approvals.
As of.
At the end of last week February 25th.
With 65 of the percent of those being unrestricted usage. So in those accounts Brandon we're already able to.
Really promote for the full label that we have the other 35% I would think are the accounts that that you've indicated that we have a restricted label and we are working with those accounts, we started working with them to expand the ability to use and relief.
John: And we are working with those accounts. We've started working with them to expand the ability to use them for relief. And I would say that right now, based on the feedback that I've seen, probably about 50% of those accounts have expanded to unrestricted usage.
And I would say that right now based on the feedback that I've seen probably about 50% of those accounts have expanded to onyx unrestricted usage. So we are seeing very good results on that the other ones are in process and I would hope probably by the end of April .
John: So, we are seeing very good results on that. The other ones are in the process, and I would hope, you know, probably by the end of April, that we'll be in a position where the vast majority of accounts would allow for unrestricted usage of Zin relief based on our new broader label. Great, thank you.
That will be in a position where the vast majority of accounts.
Allow for unrestricted usage are generally based on our new broader label.
Great. Thank you.
Barry: And obviously, in terms of the CAST position, we're very focused on expanding the runway and making sure that we can get to profitability. We're looking at not only the potential for partnering activities that have significant interest in partnering the product in several regions, as well as, you know, a host of other approaches. We won't go into further detail on that here, but look for something to be done in terms of shoring up the balance sheet here very soon. Great, thank you very much. Your next question is from Boris Peaker of Cohen. Your line is open. Boris, your line is open, Boris? Boris?
And yes, obviously in terms of the cash position.
We're very focused on expanding the runway and making sure that we can get to profitability.
Looking at not only the potential for partnering.
Activities that have significant interest.
And partnering the product in several regions.
As well as a host of other Oh.
Approaches.
But we won't go into further detail on it here, but look for something something to be done in terms of shoring up the balance sheet here very soon.
Okay, great. Thank you very much.
Yeah.
Your next question is from Boy Speaker of Cowen Your line is open.
Yes.
Yes.
Oh Morris your line is open.
Worse.
Okay.
Yeah.
Boris.
Operator, do you want to go to the next one.
And we'll come back to Brazil.
Yesterday, and we have a question from search Ballengee.
Operator: Operator, do you want to go to the next one? and we'll come back to Boris. Yes, sir. And we have a question from Serge Belanger, I mean, Josh Schimmer of Abercore. Your line is open. Great, thanks for taking... But at the end of the day, the reporter tells her, if they tripled them, they'd still be rather modest.
I mean, Josh Shanker of Evercore. Your line is open.
Great. Thanks for taking the questions. So you provided all sorts of encouraging details on this in relief launch, but at the end of the day. The report itself or we're fairly negligible, even a kid you tripled them they'd still be rather modest maybe you can help us zero in on the nature and timing of the step functions in demand either through the idms or elsewhere that would put suddenly put them more.
Josh Schimmer: Maybe you can help us zero in on the nature and timing of the step functions in demand. They're through the Adi- Promising Trajectory, which, given the financing over here, monetizes the CIN franchise, and if so, would you be able to carve out, And then the last question. I'll answer the last one, and no, we do not have to identify a going concern issue after a thorough assessment of finances based on the reductions in our expenses, some of which I noted.
Promising trajectory that's number one number two given the financing overhang is there an opportunity to monetize these C. I N franchise and if so would you be able to carve out a one nine separately from that and then the last question is do you expect to report as a going concern in your 10-K. Thank you.
Well I'll answer the last one.
And no we do.
Do not have to identify a going concern issue.
After a thorough assessment of of <unk>.
Finance is based on.
The reductions in.
Our expenses some of which I I noted.
<unk>.
John do you want to talk about trajectory.
Josh Schimmer: John, do you want to talk about trajectory? Yeah, sure. So, you know, for the first time, Josh, what we did is we provided what the demand units look like. And, and, you know, clearly, you're seeing very strong growth. Unfortunately, right at a point where we were looking at, you know, really accelerating that growth is when the Omicron surge hit, which impacted both sales in December and January. And that's the same time that we got the FDA expansion.
Yeah sure. So you know I think for the first time, Josh what we did is we provided what the demand units look like and then quit.
Clearly youre seeing.
Very strong growth.
Unfortunately, Brian at a point, where we were looking at you know really accelerating that growth is one the omicron search it which impacted both.
John: So we were expecting to see, you know, very meaningful growth there. And what we are seeing is, you know, between February and January with a 42% increase in three days left, that it's starting to ramp up more at a rate that we're comfortable with. I think that the key functions will really be, you know, looking at those priorities, making sure that we're expanding usage with the current users of the product, also looking to expand to other, you know, surgeons within the practice. But I think your point about therapeutic interchange is really a good one.
Our sales and in December .
December and January .
That's the same time that we got the FDA expansion. So we were expecting to see very meaningful growth there and what we are seeing as you know between February and January with a 42% increase in three days, while that it's starting to ramp up more in a rate that that we're comfortable with.
I think the key functions really will be looking at those priorities, making sure that we're expanding usage with the current users of the product are also looking to expand to other surgeons.
Surgeons within the practice, but I think your point about therapeutic interchanges is really a good one.
John: And we are already talking with a number of accounts that, you know, can convert millions of dollars worth of XRL business to Xen Relief very quickly. The most advanced ones are already doing trials within their institutions that would allow them to move very quickly on making that switch to Xen. But it's, it's a bit hard to tell what that timing looks like.
And we are already talking with a number of accounts that are you know can convert millions of dollars worth of EXPAREL business to generally very quickly.
Advanced ones are already doing trials within their institutions that would allow them to move very quickly on I'm, making that that switch to generally but it's it's a bit hard to tell what that timing looks like as you might imagine that's been one of our greatest challenges is there's a dynamic.
John: As you might imagine, that's been one of our greatest challenges is it is a dynamic time, and it's difficult to project what that ramp up rate will look like, especially when, you know, we're just seeing the major growth between January and February. So we only have a single data point. But, you know, it's something that we'll continue to track very closely. And I would hope, you know, within the next quarter or so, we'd be in a position to get more guidance on what direction the growth rate looks like for Xen Relief. And then in terms of monetizing the CIN franchise.
Time, and it's difficult to project, what that ramp up rate will look like especially when you know we're just seeing that the major growth between January and February somewhere you only have a single data point, but you know it's something that we'll continue to track very closely and and I would hope within the next quarter or so we'd be in a position to get more guy.
And so what direction.
Right, what's like for Zimmer life.
Got it and then in terms of monetizing the CIA and franchise, yeah, absolutely, obviously thats certainly one.
Barry: Yeah, absolutely. Obviously, that's certainly one area that we are exploring in substantial detail and have had significant discussions related to it. And yes, we could carve out HDX 019. It's actually a relatively straightforward opportunity that has been discussed as well.
One area that we are exploring in substantial detail in our head.
Significant discussions related to it and yes.
We could carve out.
HD X O one nine it's it's actually a relatively straightforward.
Opportunity.
That has been discussed as well so as I said our goal is to resolve the financial overhang.
Barry: So, as I said, our goal is to resolve the financial overhang here reasonably soon, and that certainly is one of the options on the table. Thank you. Your next question is from Serge Belanger of Needham. Your line is open. Hi, good afternoon.
Here reasonably soon and that certainly is one of the options on the table.
Super Thanks, so much looking for updates from the rest of the year.
Thank you.
Your next question is from search Malanje, you need him. Your line is open.
Hey, good afternoon.
Serge Belanger: A few questions on Xperil for me. First, on the inventory. You mentioned you had burned through a significant part of the initial channel inventory. Just curious where it stands now and when it will normalize and reflect that the man of the product.
A few questions on unexplored for me first on the inventory you mentioned you had burned through a significant part of the initial channel inventory.
Just curious where it stands.
Now and if when will it normalize and reflect that.
The demand of the product.
Secondly.
Serge Belanger: Secondly, can you give us an idea of the average price per unit? So we can kind of calculate the current run rate in revenues based on the demand unit. And thirdly, and the last one, I guess for Barry, I think in the past you've given your unofficial guidance for Zinrulef was to beat out Xperil sales for the first six quarters of launch. Trist, where do you stand on that, now that we're..., one third into that?
Can you give us an idea of the average price per unit. Just so we can kind of calculate the current run rates and in revenues based on the demand units.
And thirdly on the last one I guess for Barry in the past you've.
Your unofficial guidance for us and were left with too.
EXPAREL sales for the first six quarter of launch just curious where do you stand on that now that we're.
One third into that into that thanks.
Okay.
Yes of course, thanks, there's I'll I'll turn the first question over to.
Barry: Thanks. Yeah, of course. Thanks, Serge.
To John I'll, just point out that that he identified.
John: I'll turn the first question over to John, but I'll just point out that he identified that we are essentially at a neutral point in terms of inventory for the 400 milligram vials. So based on virtually all of the distribution centers reordering, we're very close to it. That's certainly by the end of the quarter, we anticipate being at a point where use and ordering should be close to one for the 400, and 200 is somewhat behind. 200 is a smaller percentage of the overall use in the original launch of the product because of the three specific indications.
That we are essentially at neutral point in terms of inventory.
For the 400 milligram vials so.
Based on virtually all.
<unk> of the distribution centers reordering and Oh, we're very close to it that certainly by the end of the quarter. We anticipate two to be at a point, where our use and ordering should be close to one for the 402 hundred is somewhat.
Behind 200 is a smaller percentage of the overall use.
In in the original <unk>.
Launch of the product because of the the three specific indications.
Now with the expansion of the indications, there's many more indications where the 200 milligram vial as appropriate. So we expect that to start moving up and start burning through that inventory.
Barry: Now with the expansion of the indications, there are many more indications where the 200 milligram vial is appropriate, so we expect that to start moving up and start burning through that inventory over the course of the next quarter. John, anything to add? Yeah, I think Barry summarized it very well, and I completely agree that we think from a 400 standpoint that it's going to be on a unit of demand equaling a reorder, so that's already normalized.
Over the course of the next quarter.
John .
Anything to add.
Yeah.
Yes, I think Barry you summarized it very well and I completely agree that we think from a 400 standpoint that it's going to be on a unit up demand equaling a reorder so that's already normalized.
Barry: What we have seen with the 200 milligram skew surges, if you look at where we were in January with 388 units compared to 761, the 200 milligram skew is growing more rapidly, and while at the end of last week we were at a 40% reorder rate, we expect to be making very substantial progress on that between now and the end of the quarter. So I think we'll get close.
What we have seen what the the 200 milligram SKU surgeons. If you look at where we were in January of 388 units compared to 761. The 200 milligram SKU was growing more rapidly and while at the end of last week.
We're at a 40% reorder rate, we expect to be making very substantial progress on that between now and the end of the quarter. So I think we will get close I'm not sure we'll get quite there, but I would expect that it would probably be.
John: I'm not sure we'll get quite there, but I would expect that probably to be somewhere north of 80% of the reorder rate that we'll see as we go forward by the end of this quarter. So I think by the time we get into the end of this quarter, you're going to start seeing numbers that are much more reflective of actual demand and net sales based on X factory sales. Yeah, going to the second question, you know, look, the way that we think about the launch is, as John indicated, we've had really significant success with formularies getting into facilities. But with COVID and with the very limited initial label, it has really been a significant impediment in terms of uptake in those facilities.
Somewhere north of 80%.
Of the reorder rate that will see us as we go forward by the end of the quarter. So.
By the time, we get into.
At the end of this quarter Youre going to start seeing numbers that are much more reflective of actual demand.
Net sales based on ex factory sales.
Yes.
Yeah, I'm going to the second question.
Look the way that that we are we think about.
The launch is as John indicated we've had.
Really significant success with formularies.
Getting into facilities, but with Covid.
And with the very limited initial label.
It has really been a a significant impediment in terms of of uptake in those facilities.
Barry: So, in a sense, we really look at the beginning of this year as a relaunch of the product with a significantly expanded label, now with COVID starting to wane in terms of its impact on us getting into P&T committees and utilization of the product. And we certainly look at the six quarters starting from January 1st as an opportunity to, in fact, meet and exceed that same uptake curve for experiment. I think we're already starting to see signs of that in terms of significant increases in utilization just in the second half of February.
So in a sense, we really look at.
The beginning of this year has a relaunch of the product with.
<unk> significantly expanded label now with Covid, starting to Duane in terms of its impact on us.
I was getting into a PNT committees and utilization of the product.
And we certainly look at the six quarters, starting from January 1st as an opportunity to in fact meet and exceed that that same that same.
Take curves for EXPAREL.
I think we're starting to see signs of that already in terms of significant increases.
In utilization just in the second half of February .
Barry: And so we're very excited looking forward to being able to demonstrate the commercial value of the Xen Relief during the rest of this year and going forward. I think Serge had one additional question, which was, what should be the estimate that you use from a modeling standpoint and kind of net sales per unit. And if you look at the ski mix between 400 and 200 and combine that with the roast to death discount, Serge, if you use somewhere around $200 per unit, that would be a pretty good number to use for a model.
And so we're very excited looking forward.
To be able to demonstrate the commercial.
Value of the.
Generally in the rest of this year and going forward.
I think search had one additional question, which was what should.
The estimate be used for them, a modeling standpoint, and kind of our net sales per unit.
And if you look at the the SKU mix between 402 hundred and combined that with the gross to net discount.
Serge if you use somewhere around $200 per unit that would be a pretty good number to use for modeling purposes.
Yeah.
Okay.
Great. Thanks for answering my questions.
Your next question is from Kelly <unk> of Jefferies. Your line is open.
Barry: Great. Thanks for answering my question. Your next question is from Kelly Shee of Jeffries. Your line is open. Thank you for taking my question. My first question is, do you see any risks that Zarella has not granted pass-through status to?
Thank you for taking my question. My first question is do you see any risks that does not.
Not a granted a pass through status.
Kelly Shee: to support HOPB adoption by CMS on April 1st. I also have a couple of follow-up questions. Sure, well, with the expanded label, we don't see any reason that there would be any further delays in approval. We're not aware of any.
Apart H O P D adoption by CMS on April 1st.
I also have a cup of coffee a lot. Thanks sure.
With the expanded label, we don't see any reason that a that there would be any further delays in approval we're.
We're not aware of any.
The CMS has indicated they have everything they need from us.
Barry: The CMS has indicated they have everything they need from us. And so we're just waiting for the notification. Great, thanks. I also have a couple of questions regarding the Xeron LF growth trajectory. The first question is, I think it was just mentioned the 47% increase in demand in February from January. I'm wondering if you have, have you observed a similar level of demand increase from last December to this January?
And so we are we're just waiting for the notification.
Great. Thanks.
Kelly Shee: I apologize if I missed that. And the second question is, in terms of unique ordering accounts and reordering accounts, do you see the same level of growth? increase overtime.
Is the government right.
Ah I also have a couple of questions regarding their L Africa.
That's the cost trajectory. The first question is I think it was just mention the 47% increase of demand in February from the January I'm wondering if you have have you observed at a similar level off at the amount of inquiries from Alaska December to January I apologize if I missed that.
And then second question is in terms of a unique ordering accounts and the reordering accounts do you see the same level of growth.
In case overtime. Thank you.
Thanks, Kelly in terms of the first question.
Kelly Shee: Thank you. Thanks, Kelly. The first question I'll take, and that is, no, it was relatively flat December to January, and that was right in the heart of the Omicron surge, where, you know, we know quite personally that many, many surgeries were postponed because if it wasn't an issue of the hospital having to reduce surgeries, it was, in some circumstances, half the patients that were scheduled for surgery ended up testing positive for COVID when they came in So, January was flat, and then as the COVID surge started to wane into February, we started to see surgeries pick up and a very nice increase in utilization of Xenotoxin.
<unk> taken that is.
No. It was relatively flat December to January .
And that was right in the heart of the Omicron Serge.
And where are you.
We know quite hands on that many many surgeries were postponed.
Because if it wasn't an issue of the hospital, having to reduce surgeries. It was in some circumstances have the patience.
That were scheduled for surgery.
Ended up testing positive for Covid.
When they came in a day or two before.
Or some of the staff testing positive in those surgeries having to be.
Host bone. So January was flat and then has the COVID-19 surge started to wane.
In and into February we started to see surgeries pick up and a very nice increase in utilization of Zen relief.
Barry: John, do you want to take the second question? Sure. From a reordering perspective, at the end of Q3, our first quarter of launch, we had a 50% reorder rate that grew to 73% during the fourth quarter, our second quarter of launch. We would expect that number to continue to grow over time. You know, as you're always adding new accounts to those that are ordering, it's going to be tough to ever get to 100%. But as we go through time, we would expect that rate to continue to increase, certainly not at that same percentage since there's less percentage to work with.
John do you want to take the second question.
Yeah.
Sure from a reordering perspective at the end of Q3, our first quarter of launch we had a 50% reorder rate.
<unk> to 73% during the fourth quarter or second quarter of launch we would expect that that number to continue to grow over time.
You know as you're always adding new accounts into those better ordering it's going to be tough to ever get to 100%, but as we go through time, we would expect that that rate to continue to increase I'm certainly not at that same percentage sensors, there's less percentage to work with but we think well.
We continued to see good growth in that to Kelly.
John: But we think we'll continue to see good growth in that too, Kelly. Okay, thank you very much. Okay, operator. We have a, OK. There are no more questions, and I would like to turn the call back to Barry for closing remarks. Thank you. Thank you again for joining us on the call today. We're really pleased with the progress this quarter and look forward to keeping you updated. Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect. [music]
Thank you very much.
Okay.
Yeah.
Okay.
Okay operator.
Yeah.
Yes, we haven't.
Okay.
No more questions and I would like to turn the call back to Barry for closing remarks.
Thank you.
Thank you again for joining us on the call today.
Pleased with the progress this quarter.
And look forward to keeping you updated.
Yeah.
Yeah.
Ladies and gentlemen that concludes today's conference call. Thank you for thank you for your participation you may now disconnect.
Yeah.
[music].
Thanks.
Okay.
Okay.
[music].
Okay.