Q3 2023 Seres Therapeutics Inc Earnings Call
Welcome to the series Therapeutics third quarter 2023 financial results Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero after today.
His presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Kevin Mannix head of Investor.
Relations. Please go ahead.
Thank you, Dave and good morning, everyone. Our press release for the company's third quarter 2023 financial results and business update became available at seven a M. Eastern time. This morning, and can be found on the Investor and news section of the company's website I'd like to remind you that we will be making forward looking statements, including the availability of cash.
To fund operations the potential sales for valves.
The timing and results of clinical studies, our ability to achieve sales targets and other statements, which are not historical fact actual results may differ materially.
Additionally, these statements are subject to certain risks and uncertainties, which are discussed under the risk factors section of our SEC filings any forward looking statements made on today's call represent our views as of today only we may update these statements in the future, but we disclaim any obligation to do so.
On today's call with prepared remarks, I'm joined by Eric Shaff serious Chief Executive Officer, Dr. Terry Young Chief Commercial Officer, and David <unk>, Chief Financial Officer. In addition, Dr. Matthew <unk> Chief Scientific Officer Dr.
Dr lease up on Mulkey, Chief Medical Officer, CMO and Dr. David Icke, Chief Technology Officer will also be available to address questions with that I'll now pass the call over to Eric Chef Eric Please.
Thank you, Kevin and good morning, everyone.
By now I Hope you have all had the opportunity to read our press release, including the continued strong launch performance and our decision to implement our strategic restructuring.
Since the beginning of the year, the innovation and perseverance of our team has been extraordinary culminating with the approval and commercialization of <unk> in collaboration with Nestle Health Science.
Everything we do at Sirius has and always will be driven by a desire to support patients with unmet medical needs.
It is our hope and resilience of each patient and their families that inspires us and drives us to fulfill our mission.
<unk> is the perfect example of this.
In <unk>, we have developed an incredible and unique option for patients battling recurrent C diff infection.
One with a strong efficacy and safety profile as well as mode of administration.
Today ballast is changing lives.
It is improving the lives of not just the patients we serve but their families.
Now with a significant success that we have had without there also comes a profound responsibility to ensure that our ability to help recurrent C. Diff patients is preserved.
This has required us to make commitments, particularly in CMC and quality to continue and expand our ability to deliver value to patients.
Yeah.
The environment, we find ourselves operating in coupled with our desire to help patients in need has resulted in our making the difficult decision to implement a significant corporate restructuring.
We've been very thoughtful in our analysis and after a thorough review we believe that a substantial reduction in expenses and the streamlining of our organization is the best way for series to prioritize value and support the company's longer term business sustainability.
David is going to discuss the financials surrounding the restructuring, but I would like to touch on what it means for the series workforce.
We are reducing the size of the current staff by approximately 41%.
This is not an action that we take lightly.
We have an extremely dedicated and talented team at series, many of whom had been pioneering microbiome therapeutics for more than a decade, and who have been responsible for the construction of an unprecedented platform and knowledge base in microbiome therapeutics.
We are deeply appreciative of the dedication and invaluable contributions of our colleagues who have worked tirelessly and have successfully brought valves to the market as the first ever orally delivered microbiome therapy.
Although the decision to restructure the organization is a difficult one it is essential for positioning series optimally for the future.
We believe that starts without which today is the first and only FDA approved orally administered microbiome therapeutic our teams are continuing to work alongside our collaborator Nestle health science to execute our launch strategy and together we have successfully delivered on the first full quarter of launch.
While laying the foundation for valves to become standard of care for preventing further CDI recurrences.
We are seeing.
Seeing continued strong demand from a broad set of health care practitioners and across the recurrent CDI patient pool.
Terry will cover our commercial metrics, but I am extremely proud that we achieved the 1000th valves the patients start in early October.
We see substantial opportunity for growth given the broad label and robust clinical profile of valves.
Which makes it an appropriate choice for so many of the estimated 156000 cases this year alone in the U S.
We see the potential potential for valves to reach significant levels of peak annual net sales, including as we have previously said the potential to reach or surpass the highest sales based milestone threshold in the 2020, one Nestle co commercialization agreement of $750 million of sales.
We've also announced our plans to support our ongoing SER 155 phase one B study two and anticipated clinical dataset.
Expected in the third quarter of 2024 with approximately 50 subjects expected to be enrolled in cohort two.
Tier 155 is a cultivated microbiome therapeutic candidate that is designed to prevent infections and or gvhd in patients undergoing H S E T.
You will recall in May we reported highly promising phase one b cohort, one clinical data with SER 155, well tolerated and highly immunocompromised HFC patients and in enteric pathogen overgrowth in only a single patient.
Leading to a culminate cumulative incidents that was markedly lower than that observed in a larger referenced cohort of patients.
Look forward to data from the placebo controlled cohort two next year to confirm these results meaningful findings and to gain insights on clinical outcomes and translational biomarkers that one for a phase III study.
These results if favorable.
We'll provide another opportunity to create value for all stakeholders, especially patients.
I would like to pass the call over now to Terry to cover the significant progress we've made bringing <unk> to patients in Q3.
Thank you Eric I'm pleased to report that along with our collaborators at Nestle Health Science, we made significant progress on our launch priorities in the third quarter building upon the already strong momentum from the previous quarter.
These encouraging results support our view south can become a foundational treatment fabric C diff infection, and a highly significant commercial opportunity overtime.
In fact, with a strong HCP demand and patient access terrible, it's clear that faustus already changing of course.
For many patients caught in a vicious cycle of our CDI just months after a trip.
Today I'll provide an update on our four focus areas scaling HCP education efforts.
And positive customer experience.
Establishing payer coverage and optimizing capital outflow.
First I'll describe our HCP education efforts, which are focused on the importance of microbiome restoration and our CDI.
And the unprecedented efficacy and safety profile of the house.
We have made significant progress in this area supported by the promotional efforts have been necessary field team, which has now been deployed a full six months is suffering at all.
Last month, we also participated along with our collaborators and both the infectious disease week and the American College of Gastroenterology Conference.
We took the opportunity to broadly engaged many of our leading kols at these conferences and the feedback. We are hearing continues to embody excitement and a high level of interest in balance.
As a result of our successful HCP education efforts, we've seen demand question. If it came late in Q3 as reported to us by Nestle Health Science.
In total across the second and third quarters.
We received 1513 completed prescription enrollment forms for <unk>, including 1215 in the third quarter alone.
Of the total second and third quarter enrollment nine.
934 culminated in new patient starts.
Cleaning 837 in the third quarter alone.
We received prescription enrollment forms from 698 unique prescribers between approval in September 30th with a continued split.
Approximately 70% from gastroenterology and the remainder from other specialties.
In the previous quarter, we continue to see balanced prescribers, who were not on the necessary field sales teams calling.
In line with the high unmet need and strong awareness across the provider and patient community.
Of the 698, HCP, Sheila prescribes out 129 of them.
South to more than one patient.
As expected the majority of utilization for <unk> and the early launch period has been in the multiply recurrent patient right now.
Demand was also observed in patients with a first of a hurry and.
And we expect this to grow over time as Hcp's gain experience with an entirely new modality and develop an understanding of the foundational and distinct role that valve plays in preventing recurrence after completion of successful treatment with antibiotics.
Our message to meet that market research supports this view and tells US. The HCP is expect to continue to increase their use of <unk>.
To grow a breadth of deals for valves, we continue to scale promotional efforts to deepen the understanding of the bowl of house across the recurrent CDI population.
For example, I D week, we launched an updated branding campaigns for Val and subsequently trained the necessary field teams and redeployed them to educate their hcp's accordingly.
We are also increasing our investment speaker program given the high level of interest we've seen from providers.
We expect these efforts to translate into further growth in demand and importantly earlier, Houston and recurrent cycle over time.
In terms of providing a positive experience for patients and providers. Our valves voyage hub continues with its mission of providing a high level of patient treatment and financial support.
As expected that's the way it has significantly increased its successful conversion of enrollment to new patient starts in Q3.
In terms of free drug utilization, we saw approximately 48% of the 934 second and third quarter, new patient starts to spend.
Via our free drug program.
Use of free drug with mostly due to patient affordability challenges with co pays or other cost sharing requirement.
After the prescription was approved by their insurer.
Our third focus area is engaging payers to ensure access and to date, we have been pleased with the broad patient access we are seeing.
In fact more people have already gained access to balanced than we had anticipated at this point in our launch with the vast majority of patients able to gain access to about through their insurer.
As of September 30, we had received coverage for valves across approximately 50% commercial and 35% of Medicare part D lives and estimate that the remaining plans will issue coverage policies in the coming quarters.
To date, we are seeing some coverage policies for mouse that are quite broad for the approved indication and others with some utilization management restrictions.
Through September 30th we saw 52% of our 934, new patient starts reimbursed through the patient's drug benefit.
Our gross to net rate remains modest with minimal discretionary rebates at this stage of the launch.
David will say more about our <unk> rates.
<unk>.
In summary.
Vast majority of patients who are prescribed valves are able to obtain approval for the product either through the medical exception process prior to a policy being issue or via via a prior authorization.
First the current demand for valves builds we will continue to work with prominent payers to ensure that we preserve the broad patient access to valves that we are currently observing.
Finally, the hospital selling team continues its efforts to enhance hospital lapsed <unk> and we believe that these efforts will begin to bear fruit later this year and into 2024.
As of September 30 at the hospital team has successfully engaged approximately 350 of the top volume hospitals more than once a month.
We believe these conversations are critical to ensuring structural modifications to how our CDI patients are discharged.
Education of hospital based Hcp's and development of protocols for our CDI that include valves will enable more consistent consideration of house as patient flow from the inpatient to the outpatient setting.
Ultimately the hospitals will benefit as fewer patients return with recurrent chest, especially during the 30 day window after initial discharge, where CMS financial penalties could be applied.
These result, representing our first full quarter at the launch so that we are off to a very strong start with the <unk> launch.
While we are not completely surprised at the speed and magnitude of this early uptake given the unmet need in the robust profile about these results have exceeded the company's expectation across multiple dimensions.
We along with our collaborators at Nestle Health Science will continue our focus on HCP education customer experience payer coverage and hospital outflow and expect to see continued acceleration of demand and progress on our key priorities as we move through the coming quarters.
For 2024, excluding any one time charges.
The savings will be realized by reducing our workforce by 41%, which results in the elimination of approximately 160 positions across the organization.
Significantly scaling back all Nonpartnered R&D programs and activities other than the completion of this year 155 phase one B study.
Annualization of savings relates to closing one of our three donor facilities supporting bouse manufacturing that we announced earlier this year and continuing to drive bouse manufacturing efficiencies.
Reducing G&A expenses, and consolidating office space, including planned sub leasing of existing space.
And the elimination of non essential operating expenses.
Sirius anticipates incurring a one time charge of five to five and a half million dollars in the fourth quarter of 2023, primarily related to the workforce reduction.
We believe the restructuring will yield significant savings for the company and position it for longer term business sustainability.
We ended the third quarter of 2023 with $169.9 million cash cash equivalents and investments we anticipate that this cash balance in conjunction with the savings from the restructuring and the expected receipt of the $45 million tranche be under our existing term loan facility.
[noise] with Oak tree.
Will support our operations into the fourth quarter of 2024.
You are eligible for this traunch be until September 32024, and it's based upon the achievement of trailing six month bouts net sales of at least $35 million and other applicable conditions.
I would now like to discuss our financial performance for the third quarter, starting with fast.
Whereas remind everyone that series does not recognize perhaps net sales and its financial statements, but instead, we share equally with naturally in the commercial profits and losses and we record our share in collaboration profit and loss sharing related party.
Profits or losses are determined based on perhaps net sales cost of goods sold in sales and marketing expenses.
Thousand net sales for the third quarter, we're very strong at seven $6 million based on 560 units of vows sold during the period to especially pharmacies and distributors.
The net sales reflect estimated gross to net reductions of approximately 14% primarily due to returns reserve prompt payment discounts statutory discounts and rebates and limited discretionary commercial rebates.
Gross to net reduction is an estimate based on certain assumptions and limited information will be refined over time as additional information becomes available.
Series is responsible for supplying vows inventory to next week.
We received payments from Natalie related to their vows supply purchases to meet market demand.
During the third quarter naturally purchased approximately $24 million about supply from us and we received approximately $14 million in payments from Nestle during the third quarter related to these in second quarter purchases.
Yes, dumais that at the end of the third quarter, there was less than two weeks of bouse inventory in the channel at the specialty pharmacies based on forward demand, which is typical for this stage of the launch and consistent with what we saw at the end of the second quarter.
The total bounced loss in the third quarter was $12.9 million and hour share of that was $6.5 million. This amount our share of the vows loss for the third quarter is recognized and our P&L in the operating expense section is collaboration profit or loss sharing related party for the third quarter. We also.
Recognized as collaboration profit or loss sharing related party at 7.3 million profit on the transfer about inventory to Nestle and this amount serves to offset the six and a half million that I, just mentioned, which is our shared with about operating loss.
This profit on the transfer about inventory represents a supply price to nestle.
Net of the cost of the inventory for the units sold at free goods distributed by naturally during the quarter because the vast majority of this vast inventory was manufactured prior to approval. It's costs was largely previously expense and therefore, the inventory value is low resulting in the profit on the transfer of the vast inventory that's <unk>.
Close to its supply price over time as the vows preapproval inventories consumed the magnitude of this profit component from the transfer of inventory will diminish.
Given that the third quarter was the first full quarter. Following the approval about I wanted to spend a little bit more time, reviewing our financial results for the quarter.
Theories reported a net loss of $47.9 million for the third quarter of 2023 as compared to a net loss of $60 million for.
For the same period in 2022.
Total operating expenses for the third quarter of this year were $47.7 million as compared to total operating expenses of $62.6 million for the same period in 2022 $76 $9 million for the second quarter of this year.
Significant sequential quarterly decline of approximately $29 million is primarily driven by an 18 and a half million dollars decrease in R&D expenses, and an $8 $1 million decrease in G&A expenses.
R&D expenses for the third quarter of this year, where $28.3 million as compared to $43.1 million for the same period last year and $46.8 million for the second quarter of 2023.
Year over year in sequential decreases are primarily driven by vows commercial manufacturing costs no longer being recognized in series P&L following product approval, but instead capitalize and recognized on the company's balance sheet.
The sequential quarterly decrease was also driven by lower stock based compensation expense in the third quarter of 2023 as the second quarter of 2023 reflected meaningfully higher stock based compensation expense, primarily due to awards with performance conditions had either started vesting or vested upon past approval.
G&A expenses for the third quarter of this year or $20 million as compared to $18.4 million for the same period last year and $28 $1 million for the second quarter of 2023.
As we discussed during our last earnings call.
G&A expenses for the second quarter of 2023 reflected meaningfully higher stock based compensation expense, primarily due to stock awards with performed conditions that either started investing or best it upon vast approval as well as approximately 4 million of one time transaction in milestone payments due to third parties as a result of the.
F D a approval of bass.
Thank you and I will now turn the call back there.
Thank you, David and thanks to everyone for listening in.
Before opening up the call for Q&A I.
I would like to say that we could not be more pleased with the initial performance of mouse since its launch in June.
And we were very excited to be bringing such an important medicine patients in need.
As I said at the start of the call. It is the desire to assist patients that drives everything we do at series.
I have I continue to believe that if the company can softly create value for patients.
[noise] value will be recognized by other stakeholders, especially our shareholders.
Unquestionably, we are creating value for patients.
It is or a golden aimed at through the prioritization of the house and the deliberate actions announced today.
Value will be recognized.
With that I will conclude our remarks and open the line for our questions.
We will now begin the question and answer session to ask a question you May press star one on your telephone keypad, if you're using a speaker phone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then too at this time, we will pause momentarily.
To assemble our roster.
The first question comes from Joseph Thorn with T. D. Talon. Please go ahead.
Are there good morning. Thank you for taking my questions. Congrats on the progress and and best of luck of the teen and those impacted by restructuring.
A challenging day.
Maybe the first question I know it was mentioned maybe that there were some utilization management restrictions and some of the the pairs that you're working with maybe if you could elaborate that on on a little bit more and then second just in terms of the prescriber base, maybe who are these early adopters maybe that are using and.
More than one patient they kind of fit a certain mold and based on your field conversations how are they using bounce versus maybe like a <unk>. Thank you.
So Joe good morning, and thank you for the questions and utilization Prescriber base, maybe I can ask Terry to come in.
Right. So I think I'm gonna start by just shuffling down on on a key concept that I put forward in my prepared remarks, which is that we are very pleased with the patient access that we are observing during the first six months of launch a vast majority of patients are able to obtain the needed approval for.
<unk> through their ensure either by at the medical attached and process. If there's not a policy in place yet or via a prior authorization process adherents account coverage policy. So that for US is the most important outcomes and in fact that out time it has exceeded the expectations that <unk>.
He had coming into the launch in Atlanta key drivers of a launch performance.
So in terms of the coverage policies that we're seeing I I shared them at the pampered remarks that percentages across commercial and apartment Park Tad D.
We have some policy that's H Philly next we have some policies that contain little to no utilization management, while others had ear ache restrictions and they they really are sort of a mixed bag.
But I think really the most important piece is that these claims are coming through they're being approved and if you can see in our demand results in a new patient <unk>, they're being defence either via three you know reimbursed claims from the payer or by our free drug program, if the patient can't afford the cost sharing.
Hi, <unk>.
I think that's the most important piece for US you asked about tower Prescriber base again, we continue to see a very broad prescriber bank. That's a cross specialty gets a shared.
As well as across called on in non called <unk> and number of peat prescriber basis also very broad.
We are seeing needle <unk> across the patient based as well so there's nothing.
Particularly distinctive are unique about the repeat prescriber base other than as in with any launch you just get people who were ahead of the curve there change agents I'm willing to try new therapies.
And those are the conditions that we're seeing.
Great. Thank you very much.
Next question comes from Edward.
10 thoughts with paper Sandler. Please go ahead.
And I'm really impressed by the laws are the ones, but I mean, it looks taken place so far.
Mm mmm.
Oh sure, yes, as you look up the market.
You know what.
What is the opportunity to really expand outreach here and is there anything else. She does think he can be doing just to to access more patience like I know the strategy is to really get these symptoms are coming out of the hospital. So impressed by the long so far and just wanted to know if there's any changes to how you doing.
Great.
That's it. Thank you for your question and good morning, I I think that there's there's different phases that we think about and we've talked about that in the past. We're pleased with where we are in this first phase where the profile of the drug really is leading us and I think it was Terry is talked about in the past.
<unk>.
Pleased with the breath of a prescribers that we've seen which suggests to us that some of the efforts that we've done including maybe there's some of the publication work is really kind of coming home. So but you know keep in mind, there's there's additional opportunity without an array there's additional opportunity for for continued expansion.
And maybe I can ask <unk> to to comment further.
Sure. Thanks for that question Cat you know a few things that I mentioned in my prepared remarks, I would just remind everybody at the fact that we were able to launch our branded campaign. The full launch campaign on the back of a.
Pre review that we did a pre clearance with the F. D. A does is very typical for lunch. We were able to do that I think quite quickly out of the gate and <unk> said launching that justice or sorry last month's now in October training, the representatives very quickly and getting that failed, including a full digital campaign.
And now that digital president.
And definitely had that full capability around that's right because they're not only in <unk>, there used to reaching consumers effectively and engaging them and eight C pieces, while we levers that capability.
So that campaign is very strong and we're scheduling it fully and that's important because of being utilization that we're seeing outside as they field Representatives call list. So we want to continue to engage the physicians effectively. We're also scaling are patient campaign, and you'll see a new patient campaign rollout imminently.
<unk>, Eric mentioned, the Iras <unk> those are <unk> near term efforts that the team is taking to really scale the outreach and engagement that we have with our key customers. The I R. A Eric mentioned that some more medium term opportunity we expect to see the use of our income qualified free drug program drop as those irate provisions come.
Online in 2025, and more pain patients coming through and more demand coming through from the Medicare practice segment.
That's super helpful color. Thank you so very much.
So the question says.
Our next question comes from John Newman with Canaccord Genuity. Please go ahead.
John Your line is now lives.
Why don't we move forward and we can come back to join the later in the queue. The next question comes from tests Romero with J P. Morgan.
Please go ahead the money.
Morning, Thank you for taking my question.
Can you clarify for the three largest P N what progress you'd need and are you able to give us a sense of Caden 70 expect a decision.
Based on their cycles, and and more broadly where would you say pair coverage is tracking compared to your target.
Thank you.
Tests good morning, and thank you for the question, let me ask her to comment.
Sure Uhm tests I'll, just reiterate once more that you know we're very focused on the end outcome for patients and we're very very pleased with the patient access we're seeing in in the approval rate through patients insurers today in an overall patient access.
With respect to coverage as I outlined we're seeing Ah Ah Ah next very little or no utilization management across health plans and Pbms to some utilization management ton and you asked about expectations. This is very much as we expected we did an enormous amount of payer engage.
<unk> prior to the launch so we're feeling very good about the coverage that we're getting.
As you might imagine Nestle, it's still in active discussions with many of these plans, including the Pbms and we wouldn't want to share additional details today that would disrupt those efforts in any way, but I'll tell you we may consider providing more granularity in the future. Once we have further progress on this front.
Thank you for the question.
Thank you.
Our next question comes from Jeff Jones with Oppenheimer. Please go ahead.
Good morning, and thanks for taking the question.
Can you give any additional granularity on how we should think about the savings breakdown that you described for 2024 in respect of Orange D versus G&A spend.
And then a second question is there any guidance on how we can think about a breakeven point in terms of net sales for the profit share calculation. Then of course as you mentioned, that's changing dynamically as your.
Yes, your inventory calculations and accounting is changing now thank you.
Yes, Jeff Good morning, and thank you for the questions. Let me, let me start and then I'm Gonna ask David to comment further, but as it relates to the breakdown of the savings I would say that.
With a with a 40 per cent cut it it's a pretty deep cut in just about all.
Groups within the the enterprise were impacted were affected and contributed to that cut I would say it was not an across the board cut we did take a disproportionate focus on in particular areas of G&A in areas of R&D with the idea of preserving and protecting.
Our ability to not just support vows, but continued to supported a growing top line. We have been incredibly pleased with what we've seen so far in terms of the track and as we mentioned are prepared remarks actually even exceeded our expectations in terms of in terms of the lunch so from an R&D perspective.
As we noted in the comments.
We are focused on continuing to support the cohort two part of the phase one study from 1552, a readout, which we expect in the third quarter. We saw some incredibly interesting data from the first cohort if we're able to replicate what we saw in the first cohort and the second cohort in together between.
The two we we think that's interesting for that indication, but also to open up other areas within.
For instance, a Omar that said we are incredibly focused R&D in R&D on that so we are positive or activities elsewhere. We do think there is an opportunity to to reengage, but for the time being our focus is really on bounced and maybe I can turn it over to David.
Yes, Thanks, Jeff Thanks, Eric Jeff, Let me give a little bit more granularity.
So the reduction in force.
Is generating have about $75 million to $85 million in 2024 cash saving it's generating about $35 million of it. So that's about 40% of that total range.
Another 40% is coming roughly is coming from R&D expenses.
And then the remaining 20% coming from G&A expenses and other other activities.
As it relates to I I can also add just provide a little bit more color on your break even question.
If we just look at if we just look at the Q3 results as we talked about.
About collaboration had a total loss of $12.9 million and that was on a base of $7.6 million in sales. So cogs in sales and marketing expenses for the quarter were about $21 million.
So that's just one quarter, our first full quarter, so I would caution folks and.
Extrapolating that extensively but it just gives gives you some additional insights on the level of support required to drive sales early in the launch.
Great Thanks to us.
Thanks for the question.
Our next question comes from Kia K with Chardan. Please go ahead.
Oh, yeah. Thanks cancer two questions for in terms of the reimbursement discussions is there.
Specific areas, where do you hope to see some.
The next tranche of wins and then the second question.
With respect to the next tranche.
The the facility.
The sales metric any other.
Conditions.
Notable that's you need to qualify under in order to get the <unk>.
Yeah, Good morning, and thanks for the question on the reimbursement piece I think Terry.
Did that before him, but maybe a quick response from Terry and then I'll ask David to comment on the <unk>.
So I guess, one thing to add it in our Tech S. As a reminder has it really been on the commercial plans in the commercial business because of the party mandated contracting cycle and then the contacting window. They are having passed firm for 24.
So we're very sad cause some commercial then and those particular plans.
You know, it's not like there's a whole list of them come online at any given time they they.
They come online month by month by month, So we expect to continue progress.
Cross the commercial space, if we knew three Q4 in the first half of next year with a steady pace.
Leave it on the on the that question.
Yeah, there's there's really no other meaningful applicable conditions. There is a requirement of of low single digit quarter over quarter sales growth, which were in obviously ramp.
Ramp mode here as it relates to the bass lines. So we do not do that is particularly notable.
[noise]. Thank you.
Thanks for the question.
Alright next question comes from Chris C. Boutin E with Goldman Sachs. Please go ahead.
Good morning. This is Stephen on for Chris We had a couple of questions first one the vows longe can you comment on the utilization trends, particularly thinking about the split of patients between the inpatient versus outpatient setting and then if there is a differential response from hers approving reimbursement and those two <unk>.
<unk> and then on the restructuring.
Hearing some cognitive dissonance given that you're framing the malfunctions very successful but on the other hand is restructuring. So is this more coming from the pipeline just not generating more near term commercial opportunities some color around that would be helpful. Thank you.
Even maybe I can ask Terry to hit the first one that I I'm happy to answer the second one.
Sure.
Flavors sexual reimbursements.
Again, I keep emphasizing the outcome. We're so pleased with the vast majority of patients can get access to vast via their ensure today, we're very pleased with that exceeded our expectations.
With respect to inpatient and outpatient yes, even the inpatient segment that we are still kissing on the hospital team is focusing on creating access for those patients received south through the outpatient drug benefit so they're really in terms of reimbursement in the drug benefit they don't behave any differently.
Then a true outpatient who is both diagnosed and fully treated in the outpatient setting the same set of insurers.
So that that patient access again, we continue to be very pleased with.
And then Steven on the second question you know maybe I can just sure how I think about this and certainly.
The notion that that we're not pleased with the productivity and the and the R&D side of things is absolutely not the case.
And I think <unk> is our best example of why.
We did not have a straight line with Ross from from Phase one to phase III, but you know.
We had.
Incredible science incredible commitment perseverance through adversity, including the pandemic and ultimately we believe that we're changing patients lives and their family's lives because of that so we absolutely believe that there is a utility robar technology, well beyond recurrences different infection and the <unk>.
Step of that we believe is is 155 with some really interesting early data that we saw earlier this year.
But we are in an incredibly challenging and environment and we think that the responsible thing for us to do as a team is to ensure that we're focusing on <unk>, which by the way. We think has a particularly attractive return profile given the lunch directory and also being really cautious and careful and focus this.
How we're deploying find out resources and.
Perhaps when the environment and Bruce we'll think about broadening the aperture, but we think that's the responsible thing to do right now for shareholders are for patients. So that's that's the that's the <unk>, that's the underlying thinking behind our action.
Got it thank you.
Thanks for the question Steven.
The next question comes from John Newman with Canaccord Genuity. Please go ahead.
On your line is now arrive.
John.
It sounds like we're having some trouble with with audio, but we're happy to connect with you and take your question anytime.
Alrighty. This concludes our question and answer session I would like to turn the conference back over to management for any closing remarks.
Well, thank you, Dave and and thanks to everyone on the line for your attention. This morning, we look forward to keeping you updated on our progress. We hope everyone has a good week, thanks very much.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.