Q3 2023 Better Therapeutics Inc Earnings Call
Good day, and thank you for standing by and welcome to the better Therapeutics third quarter 'twenty to 'twenty three business update call.
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After the speaker's presentation, there will be a question and answer session.
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I would now like to hand, the conference over to your Speaker today, Mark Heiman, Chief Executive Officer. Please go ahead.
Thank you operator, good morning, everyone and welcome to the better Therapeutics Conference call.
Our press release was issued this morning. It can be found in the investors section of our corporate website, better TX Dot com.
Joining me on the call today is freight carve out our president and Chief Executive Officer, Dr. Marc Berman, our Chief Medical Officer.
Diane Gilman, Spanish our chief commercial officer.
During today's call, we will provide a business update and a financial overview of the third quarter of 2023.
A Q&A session will follow our prepared remarks.
Before we begin I'd like to remind everyone that any statements, we make or information presented on this call that are not historical facts are forward looking statements that are based on our current beliefs plans and expectations.
Made pursuant to the Safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Actual events or results may differ materially from those expressed or implied by any forward looking statements.
With that I'll pass the call over to Frank right.
Thank you Mark and good morning, everyone. Thanks for joining us on the call today.
I am delighted to start this call with the exciting news that aspire Rx is now available for commercial use we started receiving prescriptions and if patients on active treatment.
Over the past quarter, we have made substantial progress following the news in July that the FDA authorized aspire or act as a class II medical device indicated to treat adults with type two diabetes.
Our team completed development work to prepare the products for commercial release.
Establishing the necessary organizational infrastructure to launch a regulated prescription product into the market and continued engaging payers to obtain coverage.
Our first opportunity to engage directly with health care providers, what's at this year's American College of lifestyle Medicine annual meeting a couple of weeks ago.
It was exciting to see the strong interest in our spy Rx.
I believe we are truly at an inflection point with a possibility of commercial success now within our grasp.
Now a few months ago I laid out the three areas, we need to de risk in order to successfully advance better therapeutics, one obtain FDA authorization, which of course, we have.
To demonstrate commercial traction and three improve our financial position.
Yeah.
In October we raised approximately $3 million through our aftermarket or ATM facility at an average price per share of <unk> 42 cents.
We intend to further strengthen our financial position in the coming weeks and extend our runway sufficiently to first demonstrate meaningful commercial traction, particularly in our initial launch geographies to inform the full commercial potential of aspire X and then second advance discussions with Payors insecure initial coverage.
As you will hear from Diane we are confident both can be accomplished.
I would now recap other accomplishments in the third quarter in October of this year.
In September we announced the completion of enrollment of 1000 participants in our clinical programs evaluating the long term effectiveness of aspire X in type two diabetes.
Also in September our patent matching lifestyle and health interventions with predictive analytics was issued in the European Union.
Now this is our second patent issued four four patent families fightback better therapeutics covering the breadth of a novel method of delivering cognitive behavioral therapy.
<unk> use of patient engagement data and AI methods, such as machine learning to predict outcomes and adjust treatment.
In October we announced the pre print publication of the results of lifting the liver study and gastro Hap advances a peer reviewed journal produced by the American Gastroenterology called Association or a G E.
Office concluded the totality of positive efficacy safety and usability data indicates the potential of better therapeutics digitally delivered GBT to help address the significant unmet clinical needs observed and metabolic dysfunction associated.
Yeah, Ptotic liver disease, Maserati and metabolic dysfunction associated Seattle hepatitis.
Or Nash now these other newer terms now for Nash and Maserati.
Okay.
Also in October we announced new data from a subgroup analysis that revealed that adjunctive use of spy Rx with standard of care, including <unk> one receptor agonist.
Leads to a substantially greater clinical improvement compared to control participants who use GOP once but did not incorporate aspire X each of their regimen with.
We plan on submitting this data for peer review and publication.
Okay.
With health care providers.
Prescribing aspire X in patients engaging in the <unk> treatment.
We have now transitioned from an R&D organization to a fully integrated commercial one.
Our focus for the remainder of the year is to further lay the foundation for successful commercial launch.
And in doing so we have the benefit of incorporating lessons learned from those that came before us.
Okay.
We are pursuing a very targeted go to market strategy with the objective to demonstrate meaningful commercial traction in our initial launch geographies to inform the full commercial potential of aspire X, which would then allow us to rapidly expand our commercial footprint to other parts of the country.
Over the past few months, we have and we continue to prioritize our market access activities with a goal to chief payer coverage.
These discussions have progressed in a positive direction and combined with overall feedback received thus far we are confident payer coverage will be obtained.
As with any new product launch, particularly in a new category like Pdt's payer coverage of course, it will take time to ramp up.
And in the meantime to ensure physicians can gain clinical experience with aspire X and that eligible patients have affordable access to aspire X, we're offering a self pay option for a limited period of time.
Now I'll address the question of revenue guidance and our plan is to begin sharing guidance. Once we have obtained a solid understanding of our launch dynamics, which we expect to take at least two to three quarters of commercial experience.
Now with that.
Hand, it over to Diane to provide a commercial update.
Dan.
Thanks, Brian It is exciting to be at this point launching aspire RF into the market and continuing to build out our commercial footprint to drive awareness and educate provider.
And with that I thought I'd start by sharing initial reaction since our market release.
The news of inspire our active commercial availability was picked up by over 20 news outlet.
And this included aspire RFP will feature in the medical breakthroughs in diabetes section in the October November issue of AARP.
We think beauty via RF at the American College of lifestyle Medicine in 2023 annual meeting in Denver, giving us the opportunity to engage with hundreds of health care provider share our clinical data demonstrate our product and educate providers on how to prescribe aspire RF.
Providers reacted positively to aspire RFP ingots main benefits.
Helping patients make lifestyle changes and provider resource constrained environment.
Complimenting existing diabetes care management program and addressing a gap in care in a scalable way.
A combination of the pivotal clinical trial data, including Aon's, the efficacy reductions in adverse events and fewer increases anti hyperglycemia medication. We're excited as compelling reason to prescribe aspire RF and this reinforces our findings from our market research that we completed last quarter.
And providers, we're pleased to hear about our efforts to seek coverage by payers and we're complementary of our affordable self pay option for patients until broader insurance coverage is available.
I will now share our progress with payer.
Since our authorization in July we have engaged with 21%, which includes both national and regional payers and thus far 13 of those engagements have progressed to clinical presentation with two more scheduled before Thanksgiving and so far seven have advanced the deeper product and clinical.
<unk> discussion furthering potential coverage decisions.
In general there is great receptivity and willingness for payers to engage with us.
Managing costs associated with type two diabetes is a top priority for payer due to the escalating costs associated with this disease and they are seeking solutions.
And given the positive feedback we recently on boarded additional payer field resources to broaden our outlets.
While payers may have different processes, we have been successful in meeting with key decision makers and gaining support to facilitate reviews with broader critical team.
We have also published a price in all major compendium and we expect to be able to announce a payer agreement by year end.
Overall payers continue to be impressed by the size of the design of a randomized controlled trial, including the diversity and the hard to treat uncontrolled patient population.
The study is clinically meaningful endpoint and the quality of clinical evidence that we've generated.
We have reacted positively when hearing about our development of health economic model and we recently submitted our comparative effectiveness analysis for peer review publication.
As a reminder, a CEO to evaluate the long term or lifetime economic impact of an intervention with an incremental cost effectiveness ratio, which describe the cost per quality adjusted life year gained.
And we look forward to having this manuscript reviewed.
Moving to an update on the VA, we have submitted our federal supply schedule application and are waiting to be assigned the contract negotiator and once on FSS aspire Rx would be available to be prescribed to veteran that receive care via the VA network and as a reminder, according to veterans.
Diabetes affects nearly 25% of the VA patient populations.
With our product now in market, we are focused on building out our commercial organization to support the initial phase of our launch our new head of sales is onboard and together we are placing field sales personnel and our focus initial geographies to begin educating targeted providers about fire RF.
We are also deploying medical science liaison into our target market to support scientific exchange meeting and engage with key opinion leader.
And for prescribers outside these geographies, we have internal virtual resources, our customer service group and fill our pharmacy partner, who can support prescribing with interested provider.
As a reminder, our initial launch geographies in early adopter target are informed by type two diabetes patient volume and associated prescription count the providers associated with these patients and an overlap with top health systems and payers.
A heat map of the highest concentration of targeted provider has informed the locations and initial focus for our sales team in the northeast stretches down the mid Atlantic announced the Midwest.
We have identified a total of 4300 target provider tied to about 15 million diabetes prescriptions a year.
Increase from pandemic Arab data, we previously acquired.
This cohort represents innovator and early adopter segments of providers, who are more willing to prescribe new medications and devices to treat type two diabetes and are already actively using technology, including in their practices.
Together with over 200 leads from the recent <unk> meeting we are focused on driving provider awareness and adoption as we begin to expand our sales rates with targeted provider, including in the VA invest further in our medical affairs organization activate a targeted.
Provider Omnichannel approach to include digital awareness campaign and establish our presence at key diabetes conferences for the first half of 2024.
To support decision prescribing, we're tracking availability in electronic health record system since submitting inspired Rx information to all major coupon beer and physicians are already successfully E prescribing.
Before I finish I will touch briefly on a couple of recent developments in the industry that acknowledged prescription digital therapeutics are gaining awareness among key stakeholder to open up future growth opportunities.
In October the FDA announced the formation of a digital health Advisory Committee to support safe and effective regulation of digital health technology, while encouraging innovation. This committee will advise on FBA policies or regulations, providing relevant expertise to approve the fda's understanding of the benefits risks in clinic.
Outcomes associated with the use of digital health technology.
In addition, the SBA recently issued draft guidance title regulatory considerations for prescription drug use related software, which provides the agency's views and intent to consider the combined effectiveness of pharmaceuticals, and digital therapeutics solution, we're making drug labeling decision.
Net on CEA.
Regarding the bipartisan bill to provide Medicare and Medicaid patient access to prescription digital therapeutics.
In September the House Energy and Commerce Committee held a subcommittee hearing in which they reviewed the PDP bill in.
In addition, a congressional budget office floor has been requested for the PDP Act this year.
We were also pleased to hear at the most recent academy of managed care pharmacy networks, meaning that the pending bill and the new SBA Digital Health Advisory Committee, our top policy priorities for AMC.
Before passing on to Marc let me finish by saying Aspire Rx is now commercially available and providers are prescribing through our pharmacy partners Bill RF, we have had positive reactions among providers highlighted by feedback we received at our first industry conference.
And we are confident with the level of engagement, we have had with payers and the progress we are making towards gaining commercial coverage for buyer RF and we expect to announce at least one agreement by year end.
Mark <unk>, our Chief Financial Officer will now review, our third quarter 2023 financial results Mark.
Thank you Diane.
I'll begin with a discussion of our operating expenses for the third quarter of 2023.
Our overall operating expenses declined to $5 3 million in the third quarter compared to $7 million in the second quarter of this year.
$11 million in the third quarter of last year.
Lower operating expenses are primarily the result of the cost savings initiatives, we announced earlier this year.
Research and development expenses were $1 8 million for the quarter compared to $5 5 million for the same period in 2022.
The decrease was primarily due to a $2 million decline in clinical study costs.
We completed the beta 001 pivotal trial in the third quarter of 2022, and a $1 8 million decline in personnel related costs as a result of the restructuring in the first quarter of 2023 and other cost savings initiatives.
Sales and marketing expenses were $1 4 million this quarter compared to $1 6 million for the same quarter last year.
Personnel related costs increased 200000, as we prepared for the October commercial launch of Aspire Rx.
This was offset by a 300000 decline in real world evidence costs as we completed the enrollment in this study.
G&A expenses for the quarter were $2 1 million compared to $4 million for the same period in 2022.
The decrease was the result of a $1 1 billion decline in personnel and consulting costs related to the cost savings initiatives I previously mentioned and a <unk>.
700000 decrease in business insurance costs.
Interest expense for the quarter was 500000 compared to 400000 for the same period last year.
The increase was the result of higher interest rates associated with our secured term loan agreement with Hercules capital.
Net loss was $5 9 million compared to $11 4 million in Q3 last year.
On a per share basis net loss was <unk> 15 for the quarter compared to 48 last year.
The decline in loss per share is related to the previously mentioned cost savings initiatives and an increase in weighted average shares outstanding.
Moving to our balance sheet cash and cash equivalents were $6 6 million as of September 32023, compared to $15 7 million on December 31, 2022 and.
In addition in October 2023, we raised $2 9 million through our ATM facility. So on a pro forma basis, taking into account the ATM utilization cash and cash equivalents was $9 5 million at the edge.
End of the third quarter.
Our lower cash burn in the recent utilization of our ATM extends our cash runway into the first quarter of 2024, allowing us to make several key fourth quarter milestones.
I'll now hand, the call back over to Frank for some closing remarks.
Thank you Mark before we wrap up I want to address what the upcoming milestones that Mark just alluded to.
As we've shared we have advanced conversations with a number of regional and national payers to gain commercial payer coverage and we expect to be able to announce our first agreement by the end of the fourth quarter. This year with more expected to follow a course in Q1 and beyond.
Following the successful completion of the Lithia deliver study and publication of the results in the peer reviewed journal Gastro <unk> advances, we intend to submit a request to the FDA breakthrough device designation for investigation of PDT in massive and mesh also by the end of this year.
Currently there is no FDA approved treatments for these diseases, which affects approximately one in four Americans.
Similar to type two diabetes behavioral change is foundational to addressing the root cause of these conditions.
To support the commercialization of Aspire X, we expect to announce a business development partnership by the end of this year.
Lastly, we expect to further strengthen our financial position before the end of the year to extend our runway. So that we can demonstrate meaningful commercial traction both in terms of payer coverage as well as market adoption of spy Rx.
Yeah.
I recognize our market capitalization and share price significantly depressed and how frustrating that is for our shareholders.
But the fact is that we have made substantial progress over the past year and getting FDA authorization for our first product and making it commercially available.
We are confident.
We can obtain payer coverage and.
And we're excited by the initial feedback from providers.
And as we look ahead.
We believe we will be able to demonstrate the commercial potential of aspire X over the next few quarters.
There remains a huge unmet medical need in type two diabetes.
Our product has a broad label that has utility across the entire disease spectrum.
It fits into the existing provider workflow.
Our motive action is already embedded in the type two diabetes treatment guidelines.
With solid clinical evidence and our AQR models suggest that aspire Rx has the potential to demonstrate cost savings for payers and health systems.
Our primary focus now is on successfully executing our commercial launch.
Getting our product to the millions of patients who can benefit from it.
I am proud of our team.
And grateful for their dedication to our mission.
And persistence and pursuing it.
What got us to this point in our evolution.
And with that we're now ready to take your questions. Thank you.
As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced so we're drawing a question. Please press star one again.
Please stand by while we compile the Q&A roster.
And for your first question comes from the line of Thomas Flaten from Lake Street Capital Markets. Your line is open. Please go ahead.
Hi, Good morning, everyone. I appreciate you taking the questions. Diane you mentioned that you've hired to do sale ahead of sales and Youre, placing field reps could you maybe quantify that in regards to your kind of goal and also maybe layer in the MSL coverage you have currently versus what your goals are.
Okay.
Go ahead Dan.
Okay, Great comments. Good morning. Thank you for the question, Yes, we're really pleased with where we are in placing our team as you saw from our heat map there and our plan is really to build teams as we built momentum with our targeted providers payers and health systems and we are strategically placed sandys first resources in <unk>.
I already geographies and so when we look at this initial team. This quarter. We are really looking at about 10 to start made up of sale.
From Stephens help experienced medical science liaison and of course as I referenced we have also outsource.
Additional payor resource group that will aid us in starting our.
Our efforts in the marketplace.
And maybe on that strategic placement, how how are you guys thinking about placing those post coverage in that territory or are you kind of assuming that those will align over the coming I don't know six to 12 months.
Yeah, Great question, so as we've been talking over the last year. Our strategy has always been to be extremely focused.
Or really carefully managing our our resources and so the work that we've done has really been to identify.
The highest concentration of high volume targeted provider or are we expect to be the early adopters of aspire Rx given all of the research and the segmentation work that we've done. So it was really important to start where we are utilizing our resources efficiently in these marketplaces that you saw in the Max.
I also wanted to clarify from a coverage perspective that our engagements have actually been across the country. We continue to be really encouraged by the number of conversations the level of conversations we've had immediately post SBA authorization. So those engagements are across the country and not limited to the geographies.
And as we advance with our payer coverage effort clearly that's an opportunity for us to ensure that we are mapping.
Our sales focus to those efforts as well.
Got it and a quick one for Mark.
Yes.
I believe payments against the Hercules loan were scheduled to start November one could you just confirm that's happening and over what time period, those prepayments are being made.
Go ahead Margaret.
Yes, sure Thomas Thanks, and thanks for the question.
Yes.
Just starting on November one.
As we've mentioned in the past Hercules has been a great partner to us and we continue to have discussions with them about.
Potential future amendments to the agreement.
Got it excellent I appreciate you guys, taking the questions. Thank you.
Thank you Thomas.
Thank you one moment for your next question.
And your next question comes from the line of Rob a little rock kit from lifestyle capital. Your line is open. Please ask your question.
Hey, guys. Thanks for taking the questions.
I was just wondering if maybe you guys give us an update on what youre thinking or what is the ASP.
P and had a pocket cost for aspire Rx.
Hi, Raul good morning. Thanks for your question, Yes, we are.
Absolutely.
You can talk to that.
<unk> do you want to do you want to take that.
Sure.
As a reminder, in prior call. We did set our wholesale acquisition costs or our list price at $750 for a 90 day treatment for one cycle of treatment of aspire RF.
You heard from our prepared remarks today.
And.
As previously announced we do have a self pay option that is available for patients if they're if they are not covered by their insurer and so that price is $65 for a 190 day treatment period.
And feedback from providers has actually been complimentary on this price point, recognizing what have been central to our mission here at better therapeutics, which is about providing its by Rx at an affordable price with a commitment to ensure the broadest access.
Our new innovation and so that is the price that we set from the.
Self pay option and I do think that it's important to note here that while we are not yet aware of what payers will set for their co pay we do expect that this is a reasonable.
Our assumption for co paper appear to address.
Got it really appreciate that color. Thanks, Danny why have you you mentioned that you're in.
Got into deeper conversations with certain payers around coverage you maybe outline for us the remaining steps in this process that need to happen for you guys to get to the point of a coverage decision from where you are currently.
Yes.
Go ahead, Frank do you want to Sir.
You go down okay.
Great question, Roland I'll start by saying that you know getting to payer coverage. It is a process and it does involve multiple stack since it takes time and each payer has their own process, but we continue to be encouraged by the fact that the front end of our funnel, meaning that the total number of payors that we're engaging with and discussions continues to grow.
Pretty steadily here.
And what we see is that when we have the opportunity to review aspire Rx and the clinical data as I mentioned, we're being successful in getting to some of these key decision makers.
Success in advancing those conversations payers find aspire erect compelling for several of the reasons previously outlined related to the data the quality of data that we've generated.
But that said the PDP category as a whole is still very novel and while payers recognize that prescription digital therapeutics are here and offer a long term proposition. There are some that are more willing to another to be a leader in that innovation and jump right in.
So for US we continue to be really encouraged by advancing these reviews with additional broader team members as the payers are working to figure out how to operationalize them.
Really engaged with them on I'm thinking through all of that.
Yes.
I might just add you've seen the slides that we presented this morning that gives you a sort of a summary of the funnel.
As Diane said I mean, we're encouraged by.
The front end of the funnel continuing to grow meaning we have continued to engage with more and more payers.
And we're encouraged by how these discussions have progressed over the last few months and as you can see a number of payers have now progressed to sort of the latest stages in the process and some are approaching the final steps, which is why we're confident that we'll be able to announce the first agreement to this quarter.
Alright, that's helpful as well I appreciate that and then I guess just one more for me if I can I don't know if we've spoken about this yet but the recent PD urs guidance from from the FCA.
How has that if at all kind of impacted your conversations with potential partners and are you also just seeing generally greater urgency from.
Some of the pharma players in this space to create these partnerships now that they've seen this guidance from the FDA.
For taking the questions.
Yes, thanks for that question or so.
Yeah.
This is the guidance you're referring to right.
Opens up the possibility of expanding drug labeling to include the increased benefits patients may experience, while also using a prescription digital therapeutics.
And.
We think that has a number of benefits.
We strengthened drug labeling.
It has to potentially raise awareness about the concurrent benefits.
The pvt can provide alongside pharmacotherapy and that of course enables providers to improve clinical outcomes.
This differentiation in the label may be particularly relevant.
In.
Let's say the <unk> one market, it's a massive market with a lot of competition in this category and we have a dataset that.
We have announced publically a few weeks ago that shows the added benefit that.
Aspire X can provide when combined with standard of care, including GOP once.
And we think.
That offer us an opportunity to differentiate.
Labels in this highly competitive marketplace and we think this.
<unk> provides a basis for having some productive discussions with the.
Pharmaceutical players in this space.
Got it that's helpful. Yeah, I guess I was just wondering what you have.
Full select data coming up later this weekend.
Questions around whether payers are going to be strict on covering <unk> ones are not also just what the longevity.
Impact of those drugs are without you know sustainable behavioral modification, if theres samaritans here.
And the large opportunity for you guys, Scott I'm, sorry yourselves there.
Yes, I think.
Yes.
There's a number of benefits that just go beyond just what we talked about.
Maybe differentiating the label.
I think that.
The key benefit ultimately is to provide better clinical outcomes and that can come through a variety of different ways.
I think it is well known that many patients do not.
Fully achieve.
The therapeutic dose.
GOP once that they're on.
We might be able to help with that.
Keep in mind when you combined.
Pharmaceutical drugs, where the PDT theres not only maybe the benefit that lets say the behavioral therapy can provide there's also the benefit that the product itself can provide for example, and maybe supporting medication adherence.
There's a number of things that ultimately we believe have the potential to generate better clinical outcomes than other products alone.
That makes sense. Thank you.
Ladies and gentlemen, there are no further questions at this time. Thank you for participating in today's conference. This concludes the program you may now disconnect and have a wonderful day.
Thank you very much everyone bye bye.
Okay.
Okay.
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Yes.
Okay.
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