Q2 2022 Novan Inc Earnings Call
Hello everyone and welcome to the Novant Incorporated quarterly update conference call and webcast.
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Joining us on today's call from the Novant Leadership Team are Paula Brown-Staffer, Chairman, President and Chief Executive Officer, John M. Gay, Chief Financial Officer, and John A. D'Onofrio, Chief Operating Officer of Novant and President of EPI Health.
I'd now like to turn the floor over to Paula Brown Stafford, Chairman, President, and Chief Executive Officer. Please proceed. I'll now turn the floor over to Paula Brown Stafford, Chairman, President, and Chief Executive
Thank you, Jamie. Appreciate that. Good morning and thank you for joining our corporate update, including Novant's financial results for the second quarter of 2022.
I want to start off by stating that we remain steadfast in our belief that Novant remains a compelling investment opportunity, and I look forward to sharing with you during this discussion exactly why.
As a reminder, on March 11th, we announced exciting news for Novant. We closed on the acquisition of EPI help, truly a foundational leap forward for Novant.
We've created a medical dermatology company that has the capabilities to discover, research, develop and commercialize innovative therapies bringing medications to patients with diseases of the skin.
We've made solid progress and have great momentum going into the second half of 2022.
We've delivered strong volume growth for our promoted products.
We're very proud that in July , the results from our pivotal phase 3 study, Be Simple 4, were published in the JAMA Dermatology Journal, authored by Dr. John Browning and others.
and it was preceded by an editorial titled Molluscum Contagiosum Therapeutics, New Options May Be Around the Corner, written by Dr. Vikash Oza.
Also in July , we paid off our promissory note for EPG.
with EPG for our $16.5 million, saving the company nearly $11 million of future expense with no securitization of the company's marketed assets.
We're pleased to share that we're tracking toward our target submission date of no later than the end of 2022 for our NDA for girdazemir gel 10.3% as a treatment option and potentially the first FDA approved treatment for molluscum contagiosum.
And finally, we're actively exploring partnership opportunities for Rofade, our product for rosacea, in ex-US territories.
Our commercial platform is focused on execution, field readiness.
high engagement among our customers and employees.
with strong performance management across our organization to ensure we deliver value to the patients we serve and to our shareholders.
We've demonstrated a commitment to the medical dermatology community with our diverse promoted product portfolio and with our strong development pipeline.
Our commercial platform is built to expand disease states within the medical dermatology area, such as molluscum, and into other specialty areas, such as pediatrics.
Our commercial organization is focused on expanding our promoted products in three of the top four dermatology markets through seven key mandates that you see here.
We continued to execute on these commercial initiatives in the second quarter of 2022.
toward helping to grow our commercial business.
We hired our national sales lead, Carolyn Durasimo, in May and I couldn't be more thrilled.
And we completed the integration of our Novant Legacy and EPI Health Leadership Teams at the beginning of July .
We've also made good progress in nearly all of the remaining mandates.
We are holding off on hiring into new territories at this time, based on our current momentum that we have as is.
In the second half of 2022, we'll remain focused on driving awareness of our brands, continuing to invest in our people, and as I mentioned, exploring ex-US opportunities.
Speaking of brand awareness, we've been busy promoting our product brands via sales and marketing and our product candidate, SB206, via medical education.
Our commercial team and our medical affairs team have been supporting medical meetings and or contributing to scientific publications sharing our data and our approved messages.
Now, let's discuss at a high level how we performed in the second quarter of 2022. I'm pleased to report continued growth and total prescriptions for three of our four promoted products. Overall, double digit growth.
from quarter one to quarter two.
For row fade, we're excited to close quarter two with again the strongest quarter in the history of the brand, now with over 40,000 prescriptions.
which is a 33% increase above the prior year for the same period and 10% over the previous all-time high quarter of Quarter 1.
When ZORA, which was launched in mid-2021, has shown consistent growth month over month and quarter over quarter since launch,
26% growth in the second quarter compared to the first quarter.
Menelera also had strong growth, nearly 50% growth compared to the same quarter in the prior year, with 38% above the previous quarter.
Cloderm prescriptions remain down over the last quarter and the last year, but this is to be expected as Cloderm is not our focus.
And as we ready our infrastructure for the potential addition of SB 206 into the mix, if it's approved for molluscum.
So overall,
you see 50% growth in total scripts comparing quarter two of 2022 to quarter two of 2021.
So, in summary…
We're really pleased with our performance and a quarter that met our internal expectations in terms of total prescriptions.
Looking at Rofade specifically, the market in the US is around 16 million people. Our Rofade product is the number one prescribed product for the treatment of persistent facial erythema or facial redness.
Broth aid is fast acting and improvement persists with regular daily use over 52 weeks.
We have driven growth in total scripts since early 2020, as you'll see here to the right, after acquiring the product in late 2019.
Now on to Winzora. We have a strong partnership and a collaboration with NC2 Therapeutics for the commercialization of Winzora in the US for plaquesoriasis.
This is the first and only water-based combination product of CalCIP Triang®
and betamethasone to propionate cream.
ideal for knees, elbows, and scalp. We launched just over a year ago and have seen the number of prescriptions and prescribers grow quarter over quarter since launch.
On to the middle era.
Menelira is a menocycline for the treatment of acne.
and it's the first ever biphasic delivery system for Acne.
offering functional scoring, weight-based, flexible dosing.
Here on the right, you can see that we've also seen solid growth in prescriptions over the prior quarters and years.
Now transitioning to our development focus.
Our lead product candidate is Birdosomer Gel 10.3%, or SB206.
a potential topical prescription treatment, and likely the first FDA-approved treatment for molluscum pentagiosum.
In 2021, we reported robustly positive efficacy results from our pivotal phase 3 study known as B-simple 4.
And recently, these results were published in JAMA Dermatology, as I mentioned.
Molluscum is a highly contagious condition, primarily in children aged 1 to 14, for which there is no FDA-approved prescription treatment.
Dermatologists and pediatricians remain concerned with the top probability of the currently sought office-based procedures.
Our pivotal Phase III study, Be Simple 4, demonstrated clinical and statistical evidence of efficacy with our primary and secondary endpoints and a favorable safety profile.
So what now?
We are now preparing for our potential NDA submission. As normal course of business, we are completing customary stability testing of our GMP batches of drug, substance, and drug product.
Importantly, we remain on track to meet our targeted submission date before the end of the year.
We have been planning toward the potential launch of Birdasomer JL 10.3% or, if approved, Consolus. You can also download Birdasomer JL 10.3% or, if approved, Consolus.
We identified a path.
the best and the most compelling path that delivers value.
And that was to acquire an established business. API Help
This season's commercial team will launch and promote bradazemir gel 10.3% if approved.
In the meantime, we've developed a launch plan with key activities ongoing in preparation for a potential launch.
These include our commercial-scale manufacturing capability, a pricing and reimbursement strategy, and continued outreach to our key opinion leaders through our medical affairs team and medical education.
At Novan, as we've said many times before, we plan for success and a product launch is no different.
I'll now turn to John Gay, Novant's CFO , for our financial highlights.
and CFO for our financial highlights. based on.
Thank you, Paula. Good morning, everyone. We appreciate you joining our call today.
This quarter represents the initial quarter in which we have fully consolidated results from our commercial business. As such, my comments will focus primarily on this quarter's activity as it represents the first data set regarding the performance of our commercial business on a full quarter basis.
Before I touch on some of the key data points for this quarter, I would like to remind our participants that we are not yet in a position to provide guidance as it relates to 2022 revenues or EBITDA. However, as Paula noted, we certainly see opportunities for growth in our promoted product portfolio.
For the second quarter ended June 30, our commercial business reported total revenue of $5.5 million.
As you can see, year-to-date total revenue for our commercial business was $6.8 million.
I will remind our call participants that the first quarter included only 20 days of activity for our commercial business based upon the March 11th acquisition date of EPI Health.
Net product sales of row fade included in the commercial business's total revenue was 4.3 million and 5.1 million for the three and six months ended June 30, respectively.
Row fade prescriptions have continued to grow with a year-over-year increase of 39% for the six months ended Q2 and a year-over-year increase of 33% for the three months ended Q2.
In addition, we continue to see opportunity for improvement in Wazora, which launched in Q3 of last year.
I will now provide a bit more detail in our Q2 financial results, which expands and provides context for the information presented and complements the financial data presented in this morning's press release.
Commercial product cost of goods sold was $2.6 million for the three months ended June 30. Cost of goods sold includes the cost of procuring finished goods from our third-party manufacturers, in addition to sales-based royalty and milestone expenses and third-party IP licensing costs.
Our R&D business incurred research and development expenses of $3.1 million for the three months into June 30, compared to $5.3 million in the prior year period. The decrease of $2.2 million was primarily related to the SB206 clinical program based on timing of the Be Simple IV trial.
On a consolidated basis, SG&A expenses were $8.6 million for the three months ending June 30, compared to $2.4 million for the prior year period.
The increase of $6.2 million was primarily due to $3.3 million of selling, general, and administrative expenses related to EPI Health's commercial operations.
$0.6 million of transaction-related expenditures related to the acquisition, and a $1.2 million increase in investment costs related to the SB-206 prelaunch strategy and commercial preparation.
On a consolidated basis, total net loss was $8.9 million for the second quarter as compared to $6 million for the prior year period.
Net loss for our commercial business was 0.5 million for the second quarter compared to 0.7 million for the first quarter of this year. However, as I mentioned, the first quarter only included 20 days of activity.
As you can see, a 28% year-over-year growth in our marketed portfolio prescriptions, excluding RINZOR, which launched last year, coupled with a comparative improvement on the bottom line for the commercial business from Q1, gives us the opportunity to continue to drive optimization of our commercial business while at the same time investing in and looking forward to the potential launch of SB206.
As it relates to our balance sheet, as of June 30, we had a total cash balance of $37.3 million and an accounts receivable balance of $18.2 million.
We expect that we will need additional funding to support our planned and future operating activities and make further advancements in our product development programs.
We do not currently have sufficient funds to complete commercialization of any of our product candidates under development.
Therefore, we are pursuing a broad range of financing strategy and other strategic alternatives that could be used to extend our ability to continue investment in our SP206 product candidate.
With that, I'll turn it back to Paula.
Thank you, John , for providing the detail behind the highlights.
We are pleased with Novant's progress in the second quarter, on the heels of good progress in the first quarter.
We have commercial momentum here at the front end of the second half of 2022.
We continue to advance our efforts toward an NDA submission in 2022, having our drug substance and drug product now up on stability. We are planning for success and preparing ourselves for a potential product launch of Birdosomir Gel 10.3% if approved.
We continue to pursue, evaluate, and consider collaborations that could expand our existing commercial products beyond the US.
and we continue to explore our proprietary development pipeline for future growth opportunities.
In closing, the full Novant team remains energetic.
focused and we've never been more excited for our future than we are today.
So, thank you. And operator, I'd now like to turn it to you to facilitate our Q&A session.
Thank you.
Ladies and gentlemen, at this time we'll begin that Q&A session. To ask a question, you may press star and then one using a touch tone telephone.
To withdraw your questions, you may press star and 2.
If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the numbers to ensure the best sound quality.
Once again, that is star and then one to join the question queue. We will pause momentarily to assemble the roster.
And our first question today comes from Jeff Jones from Oppenheimer. Please go ahead with your question.
Good morning, guys. Congratulations on a great quarter on the consolidation of the businesses. A couple of questions. I guess as we look forward on the commercial programs, should we be looking at or considering any seasonality? We know looking at those prior quarters, row fade has been a little tough in the third quarter.
Minnowlyra is trended relatively fast except for this quarter.
And on the FDA submission of SB 206, are there any items we should be looking for as we head into the end of the year target? Thank you.
Thank you, Jeff. I'm going to take the SB-206 NDA question. I'm going to ask John D'Onofrio here to take the Rofade question. So, maybe I'll just start with the NDA, just in terms of any other items. You know, really, the......
There are a number of activities. There are different modules being obviously prepared for the NDA, and we feel like we have everything in progress. There are ongoing interactions with the FDA in terms of how to present and share different information, but all of that is...
as I say, customary and in progress, so we feel confident that we're gonna have all that needs to be, you know, in order to submit before the end of the year. We are working, as noted on one of the slides, with third-party vendors with our analytical testing, so we're working with them to ensure that we get everything when we need it.
And so we don't feel like there are any other items that are gaining our submission.
Thanks, Paula.
Good morning, this is John . Hope you're doing well. We definitely will see functionality in Q3.
on in rosacea typically July August timeframe Due to vacations summer summer vacations July 4th and back to school You see some leveling off in rosacea, but we still continue to see some levels in rosacea.
expect momentum and growth of just the overall growth rate brand but you will see some seasonality. And then in regards to seasonality around our Acne in Minneleara, even though it was flat last year, I think you'll expect just with the back-to-school season and schools kind of back you know in full force kind of you know post environment.
normal act
in the back to school seasonality in the acne market and we'll expect Minnelira to follow that trend. So, you know, it's not exactly on rophage just due to the summer months, but with acne season in school, you should see a little bit of an uplift from that perspective of seasonality.
Thanks, Sean. I'll hop back into the queue.
Our next question comes from Kemp D'Oliver from Brookline Capital Markets. Please go ahead with your question.
Great, thank you.
as we head into the second half of the year.
There will be managed care.
formulary changes are your contracts multi-year and the reason I ask is that there are several competing
products that have popped up on the market in the last 12 months that do not have formulary coverage and presumably are knocking on managed care's doors to get physicians.
So how do you protect yourselves from...
their efforts.
Yes, great question and yes, our care contracts are multi-year. Some are reviewed annually even though they are multi-year contracts. It is an ongoing annual process and as products leave and enter the market, you continue to see ongoing negotiations.
We've been fortunate with Rofade to maintain the coverage across all our plans, and we'll continue to see that as we head into 2023. And we've still seen very similar trends for Minneleira and CRIAS as we're actively negotiating and going through category reviews with the payers as we speak. And I think the entrance of some new players, I think, has generated some excitement and positive stories around topical treatments and psoriasis.
and we feel like this only helps enhance our position to show the benefit of topicals and not just systemics and biologics in the topical space. So it's an ever-ongoing discussion and opportunities and challenges.
But right now we solidified coverage that built up over the years and we're continuing to look to add more as we negotiate and further come forward.
Thank you, that's helpful. The second question relates to the rophade outlicensing. Are there, I mean you obviously have a Japanese partner who is an obvious target for discussions, but how do you view opportunities beyond Japan? There's obviously Europe where you haven't outlicensed anything yet I believe even with the legacy portfolio.
broadly how are you thinking about the
non-US markets.
Yeah, thanks, Kim. We're really focused on Japan, Europe , Canada, primarily. We're having good discussions. As you know, it's a process, it's a selling cycle with multiple discussions and multiple parties and multiple regions and territories. So we're encouraged with our conversations, but we'll share more details along the way. Thank you.
if and when a or
A or deals are agreed.
Okay, thank you
Thank you.
And our next question comes from Jonathan Ashcroft from Ross. Please go ahead with your question.
Thank you. Good morning folks. I was wondering is the developmental pace of 204 you know slowing down because I no longer see it associated with a timeline to start phase three at least as per the press release.
Yeah, thank you. Thanks, Jonathan. As we previously shared, we prioritized our pipeline and SB204 is our second priority product candidate for acne. As we focused on our commercial activities in the NDA for SB206, that's our current focus. But SB204 remains a compelling opportunity for us. We really are excited.
to, you know, hopefully get back there. We're poised to initiate a final pivotal phase 3, potentially in 2023, given adequate funding.
So SB204 is a new mechanism of action compared to anything on the market today for acne. We are excited to potentially advance SB204 and potentially submit a second NDA with our nitrosyl technology. It's really a funding and timing issue for us. Other than that, we remain excited about the product.
Okay, thank you. You know, is SB019 being retargeted to other viruses, you know, more so because you see less of an opportunity in COVID? Would that be more accurate or not?
Yep, you're exactly right. We're evaluating SB019 for just general respiratory diseases. You know, all the nitrosyl technology products that have been in the clinic today are all a topical formulation, either gel or cream. So, we've been focused on a non-topical formulation for respiratory diseases. So, you know, the COVID market is pretty crowded at this point. But it behooves us to look at the broader risk...
for SG&A, especially since you didn't terminate anybody from EPI, why is that down 14% sequentially and what should we expect of that going forward, those two main expense lines?
Thanks, Jonathan. So as it relates to R&D, you know, the two expense line items, you know, R&D really has ratcheted down. And as it relates to the continued progression of getting 206 in through from a regulatory perspective, you know, that is kind of more of a normalized level once you take out the clinical trials. So really R&D, you know, is down and...
as we continue to progress to a six, we'll stay more in that range if there's an opportunity for 204, like Paula just mentioned, that could change in the future. As it relates to SG&A, you know, there's a lot of variables now in SG&A. You know, historically, Novant had general and administrative expenses, and now with the EPI acquisition, the lion's share is now selling. So as it relates to period over period, you know, if you take out the activity from
the SG&A or the selling expenses from EPI Health, really there are other activities that are going through there from a legacy Novant business relate to the acquisition, which are one-time type of expenses. So as we look forward to SG&A in the future, obviously we'll look to optimization of certain cost areas, but there are some anomalies that you will, from a period of a period perspective, primarily generated from the EPI Health acquisition.
Okay, thank you very much for that. And thank you guys for being one of the only people who actually put your press release out a useful lead time before a conference call. I really wish you could spread that philosophy.
John was up early. You're welcome, Jonathan.
Take care guys.
Thank you.
Our next question comes from Oren Livnath from HC Wainwright. Please go ahead with your question. Are there any conditions of fear?
Thanks for taking the questions. I have a few. I think there's piggyback on John's question about SG&A. I think he was remarking on how low it was, which I think surprised us and the street with regards to the incremental addition of EPI selling expenses. I think you said it was only about $3.3 million and profitable in the quarter. That's I think significantly better than I had modeled. Just going forward, is that the expectation that that business is going to be able to
profitable and staying profitable on an operating basis, you know, the standalone business. And I have a follow up.
Yes, certainly, good morning. Thanks for the question. As it relates to that, as we said publicly before, we're really looking toward improving the contribution margin of the commercial business. We saw that in this quarter. On a go-forward basis, that line item of expenditures is really going to be part of a continuation, but also as it relates to some of the mandates that Paula touched on in the prepared remarks, continue to drive the script volume. So...
At the end of the day, that will vary based upon either some of the mandates that we are rolling out and continuing to pursue, or it could be managed from an optimization standpoint. So, again, from a kind of a quarter over quarter rate, this is the first quarter that we have, a full quarter of EPI health. So, on a go-forward basis, we'll see, but I think that this is a baseline that we can certainly measure against in the future.
Okay, and just one more question on EPI before I ask about 206. Was there a change to revenue recognition with regards to WinZora? I think did something move out of collaboration and into product revenue and does that hit margins, I think gross margins.
We're about 55%, which is down quarter over quarter, and I'm just wondering what we should think about going forward.
on the market side.
That is a good question, Oren. There was a, again, with only 20 days of activity, there was not a whole lot of activity from a revenue perspective related to the MC2 agreement. But yes, there has been a slight change in presentation with regards to the LNC or the license and collaboration revenue. That adjustment was roughly.4 million for this quarter, three months ended. On a go-forward basis, this is a one-time adjustment, if you will. So going forward as it relates to kind of the, regardless of...
The impact of net income is zero regardless of how the presentation is shown for NMC2 revenue recognition, but now yes, we are showing the gross sales of Wenzora in top-line revenue and in product revenue rather than as part of a licensing fee in LMC revenue.
Okay. And the growth margin profile on that business in general now and going forward.
Yeah, so gross margins get interesting as it relates to the MC2 agreement because effectively we are commercializing and distributing that asset on behalf of MC2. So I think if you look at the core business of the assets that we own, you would have to kind of calculate or back calculate a margin with respect to that. So I think looking primarily at you know, Rofade, Cloderm, Minolera.
seeing that net product revenue and looking at that is probably more indicative of true impact in the future as it relates to cash flow. So, the gross margins are a bit skewed for this quarter, but on a go-forward basis, we expect it to be, you know, this to be the baseline and this to be expected going forward.
Okay, and then on SB 206.
Thanks for taking all these questions. There is material year over year spend pre-commercial I think you called out. I do appreciate all the detail you guys have provided in general across the business.
potentially a month away from a filing and then you have another year review. Between now and potential launch of this product, how much pre-commercial activity is available?
Do you think you'll be engaged in you know how much investment ahead of you know building a sales force? And launching this product should we be thinking about?
No, that's a great question, Oren. As we said, currently we don't have the funds to get us to full commercialization of any of our product portfolios. So a lot of that will be determined upon our access to capital and different financing strategies. But preparing for a new product launch, as you know, is a multivariable equation. So part of it will be the ability to access capital.
But really, we've already solved a part of the equation with the infrastructure and salesforce that we have with EPI help. That's kind of already in the bag, if you will. So, but as we continue to prepare the market, educate the market, and launch that robust plan to really try to benefit the max upside for the launch of the console as approved, that can be a variable amount, again, based upon the availability of capital. There's what we would like to do, and that's what we're pursuing to do.
But again, there's a lot of variability based upon our ongoing operations and our ability to access capital.
Okay, thanks.
Thanks, Juan.
Thank you, Erin.
Our next question comes from Jennifer Kim from Cancer Fitzgerald. Please go ahead with your question.
Hey, thanks for taking my question. So I have a couple here. The first is on real estate. How much more opportunity do you see in terms of uptake for that product? And this relates to what you said about SG&A this quarter being a good basis going forward. Is the expectation that you can continue that growth without adding promotional or selling investments? And then my second question is, I know you talked about active engagement with potential partners for...
Can you just outline how you view the rosacea opportunity in the EU and how that...
The size of that is relative to the US. Thanks.
Hey Jennifer, this is John Nafria. I'll take the US opportunity for Rofate and then I'll pass it on to Paul and the rest of the world. From a Rofate perspective in the US, we expect growth in the brand throughout the patent life cycle. There's a tremendous opportunity for us to expand the treatment.
of neurovascular dysregulation in every rosacea patient. We're a category leader in persistent clear athena redness. When you look at the components of a...
When we look at the two components of rosacea, you've got the inflammation and then you've got the treatment of persistent facial erythema. Our goal here is to continue to have each and every patient be treated for persistent facial erythema and the underlying treatment of neurovascular dysregulation. So if we look at that opportunity and look at the market size, we have about 95% of the PFE market, but we just have a small amount of
portion of the inflammatory market. So, if we look at it being multifactorial and actually getting every rosacea patient on rophate for the treatment of PFE, we see still an opportunity. So, we'll see that we expect that to continue to grow as we continue to evolve that message throughout the life cycle and do not see or expect a dip from that perspective.
And, Jennifer, on the partnerships, I think you're specifically asking about Europe . Certainly there is rosacea in Europe . The size of the market depends on the country. And the PFE, as John mentioned, being what we are primarily targeting.
There is, and certainly in specific countries, there's more PFE than in others. So, you know, we're not...
Those are ongoing conversations with different partners in terms of that potential market. So I don't want to project what we believe the market to be at this time, but we do believe there's an opportunity.
And then just add that, sorry Jennifer, with respect to SG&A again to clarity, you know, with 3.3 million this quarter, it's a baseline that will basically vary with the execution of some of the other mandates as Paula talked about. So I think it's again a baseline, but as we continue to make some investments that can vary in the future based upon the level of that investment related to those mandates.
referring to its That's nice.
Thanks, guys.
Our next question comes from John Vanermosen from Zacks. Please go ahead with your question.
Hey, Paula and John . Good morning to you guys. I wanted to ask about just the post-pandemic demand, perhaps, for dermatology products. You know, you've seen pretty strong growth, and I'm wondering if you sense that it might be coming from that source.
You know, definitely also the summer perhaps, you know, people are outside more outside of the house
Yeah, well maybe I'll start and then John D'Onofrio maybe can add again about the seasonality with the different products. But in terms of post-pandemic, you know, I mean I'm…
you know, I think everybody saw a little bit of a dip in 2020 and things were coming back in 2021 as doctors' offices, you know, were really opening back up in 2021. So I think from, you know, certainly 2020, you know, we've seen a post-pandemic demand, but, you know, 2021 and 2022, you know, are more comparative, but, you know, I think starting in 2022 is when we've seen...
things get, you know, pretty normal, you know, for all of us. And, you know, I think that the growth you're seeing from quarter one to quarter two has everything to do with our...
our efforts and our growth mandates that we put in place to drive the increase in sales.
Anything you want to add?
Yeah, I would agree, Paula. Obviously, there's some small dynamics, just things opening up a little bit more. But John , what we'll look at, too, to support that is we've seen an increase in volume, but we're also seeing a significant increase in riders. So if we saw the same amount of riders year over year and just increased volumes, you're going to attribute that to patient access and more patients coming in. And I think what we're seeing is both...
volume and scripts and then in new writers as well and in across the each one of the the categories in psoriasis, acne, and rosacea.
So, you know, we are seeing better access to services now so we can continue to vote and get more education to our healthcare practitioners. So that's also a piece that's driven by…
COVID opening up, if you will, but I think, as Paula mentioned, the volume based on the metrics we're looking at, based on the new riders and the productivity of the new riders, is as much on execution as it is just a COVID dynamic.
Okay. And on DTC advertising, is that something you'd consider, and do you think that would be effective here since, you know, it's a lot of times consumer driven?
When you look at DTC, obviously when you look at the big brands and the big biologics, the big pharma companies, we won't look at it from a direct to consumer advertising, commercials and TVs and so forth, but there is absolutely awareness we can do from a different perspective that we have programs for that will educate patients on rosacea, persistent facial erythema and in our other disease states.
effective ways that will get the message across for our particular products.
It seems like a digital campaign might be a really effective use of your spending for that. It sounds like that's the direction you're going.
Yeah.
Okay, and last question, just on inflationary pressures, product inputs and perhaps other things. Any comments on that? And if you see them...
tapering off, slowing down, or you know, what direction do you sense in terms of inflationary pressures on the income statement items.
Yeah, good morning John , thanks for the question. We really, really haven't noticed any inflationary pressures one way or the other. We've talked about in previous quarters, the general economic environment, supply chain and stuff has been more of an issue in the past, but as it relates to the inflation in the current market, we're not really seeing anything that's driving one way or the other.
Okay, great. Well, John , Paula, John , thank you so much for taking my questions. Appreciate it.
Thank you, John .
And our next question is a follow-up question from Temp D'Olivere from Brookline Capital Markets. Please go ahead with your follow-up. Please go ahead with your follow-up.
Great, thank you. How are you thinking about the competitive situation when you launch Consolos?
How are you thinking about the competitive situation when you launch Consolus?
I think if we were going back a year ago, it was a fair assumption that you were going to be second to market, and now given the changes and the dynamics, you could effectively be going head to head at the time of launch. How is that influencing your thinking with regard to your launch tactics and strategy?
how you might be working with plans to get formulary coverage. Yeah, thanks Kemp. You know, we've always contended that the market has room for both the Verica product and the Novan product. Our treatment is a prescription treatment that would be used at home. And Verica product is an in-office medical treatment. And we think that they are complementary.
So we've always had that in our...
assumptions that there would likely be the two in the market. And so, we'll still plan for that. I think whether they go first or we go first, hopefully we're both going forward and both get approvals. For us, it really doesn't change because...
We, you know, will be in the doctor's offices already. We're already there with our Salesforce, and we'll just put this in the bag and begin having those conversations very quickly. So we think that we have a very accelerated launch with our commercial platform ready to go and regardless of whether we're first or they're first.
A good question. Thank you.
Good question, thank you. Great, thank you.
Operator, anything else?
And ladies and gentlemen, at this time, in showing no additional questions, I'd like to turn the floor back over to you, Ms. Brown-Staffer, for any closing remarks.
Okay, thank you, April . Quarter two, as you saw, was another positive step forward for Novan and, we believe, for our shareholders. So, we've got a first-class commercial team and supporting infrastructure to propel us forward, further forward. And so, in summary, Novan has still five product candidates in our development pipeline. We've got four products promoted by our commercial team. We've got three near-term value creators.
two priority products and one lead product candidate. We've got two business units, and we've got one NDA submission targeted before the end of 2022. So, we're excited for the remainder of the second half of 2022 and going forward. So, thanks, everyone, for attending the call, and thanks to our analysts for some great questions. Have a great rest of your week.
And, ladies and gentlemen, with that, we'll conclude today's presentation and conference call. We do thank you for joining. You may now disconnect your lines.