Q4 2023 Verrica Pharmaceuticals Inc Earnings Call
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Operator: Good morning, ladies and gentlemen, and welcome to the Verica Pharmaceuticals fourth quarter and year-end 2023 Corporate Update and Earnings Conference call. As a reminder, this conference is being recorded. I will now turn the call over to our host, Kevin Gardner of Lifesci Advice. You may begin your presentation. Thank you, operator.
Good morning, ladies and gentlemen, welcome to D C cause long speech coast fourth quarter.
2023, corporate update and earnings conference call.
As a reminder, this conference this being recorded.
I will now turn the call over Josh given Gardner of lifestyle advisors, he might be getting your conference.
Thank you operator.
Kevin Gardner: Hello, everyone, and welcome to Verica Pharmaceuticals' fourth quarter and year-end 2023 Corporate Update and Earnings Conference Call. With me on the line this morning are Ted White, President and Chief Executive Officer of Verrica Pharmaceuticals, Joe Bonaccorso, Chief Commercial Officer, Terry Kohler, Chief Financial Officer, Dr. Gary Goldenberg, Verrica's Chief Medical Officer, and Chris Hayes, Verrica's Chief Legal Officer As a reminder, during today's call, management will make forward-looking statements. These statements may include expectations related to the launch and commercialization of Wycanth for the treatment of molluscum contagiosum in the United States, regulatory developments, the development of Verrica's product candidate, our expected cash runway, as well as our overall business strategy and planned operations. These forward-looking statements are based on the company's current expectations and involve inherent risk and uncertainties. And based on those risks and uncertainties, Verrica's actual results and the timing of events could differ materially from those anticipated in such forward-looking statements.
Hello, everyone and welcome to Verica Pharmaceuticals, fourth quarter and year end 2000, twenty-three corporate update and earnings conference call.
With me on the line this morning, or Ted White, President and Chief Executive Officer of America Pharmaceuticals.
Giovanna Corso, Chief commercial Officer, Terry Kohler, Chief Financial Officer.
Dr. Gary Goldenberg, America's Chief Medical Officer, and Chris Hayes America's Chief Legal Officer.
As a reminder, during today's call management will make forward looking statements. These.
These statements may include expectations related to the launch and commercialization of why can't for the treatment of molluscum Contagiosum in the United States regulatory development.
The development of America's product Kennedy.
Are expected cashed runway as well as overall business strategy and planned operations.
These forward looking statements are based on the company's current expectations and involved inherent risks.
And uncertainties.
And based on those risks and uncertainties <unk> actual results and the timing of events could differ materially from those anticipated and such forward looking statements.
Kevin Gardner: Please see Verrica's SEC filings for important risk factors. Verrica cautions you not to place undue reliance on forward-looking statements and undertakes no duty or obligation to update any forward-looking statements as a result of new information, future events, or changes in expectations. In addition, during today's call, we will discuss certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their closest GAAP equivalent.
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Berwick of costumes, you not to place undue reliance on forward looking statements.
And undertakes no duty or obligation to update any forward looking statements.
As a result of new information future events or changes and expectations.
In addition.
During today's call, we will discuss certain non-GAAP financial measures. These.
These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with gap.
There are a number of limitations related to the use of these non-GAAP financial measures versus their closest gap equivalents.
Kevin Gardner: Our earnings release that we issued today includes GAAP to non-GAAP reconciliations for these measures and is also available on the investor relations section of our website. I'll now turn the call over to Verrica's president and CEO, Ted White. Thank you, Kevin. And good morning, everyone.
Our earnings release that we issued today includes gap to non-GAAP reconciliation for these measures and is also available on the Investor Relations section of our website.
I'll now turn the call over the <unk>, President and C. E O said why Ted.
Thank you, Kevin and good morning, everyone and thank you for joining us for fourth quarter and year end 2000 twenty-three earnings call.
Ted White: And thank you for joining us for our fourth quarter and year-end 2023 earnings call. I'd like to begin today's call by providing an update on Verrica's commercial launch since our last quarterly earnings call back in November. I'll then ask our Chief Commercial Officer, Joe Bonaccorso, to provide a more detailed review of our commercial activities and Why Can't Launch. Following Joe's remarks, our Chief Financial Officer, Terry Kohler, will review our fourth quarter and year-end financial results.
I liked to begin today's call by providing an update on Burke is commercial launch since our last quarterly earnings call back in November.
Oh that ask our chief commercial officer drove out of course have to provide a more detailed review of our commercial activities and why can't watch.
Following Joe's remarks, our Chief Financial Officer, Terry Kohler will review, our fourth quarter and year end financial results.
Ted White: We'll then open up the call to take your questions. First and foremost, the organization continues to be focused on our top priority, the launch of Y-CAMP, which is the first and only commercially available FDA-approved treatment for molluscum contagiosum. With our first full quarter of commercial operations now complete, we're beginning to see traction in many of our targeted dermatology and institutional accounts as we execute our launch plan. Our fourth quarter execution resulted in $1.9 million in Y-CAMP net revenue, which we believe demonstrates our continued progress in driving adoption and reflects growing confidence in our prescriber base as we work to expand coverage of Y-CAMP to over 200 million commercial and Medicaid lives at the end As a further update on Covered Lives, in December, we agreed to terms and coverage under the medical benefit with two of the largest PBMs.
Well then open up the call to take your questions.
First and foremost.
The organization continues to be focused on our top priority. The launch it why can't which is the first and only commercially available F. D. A approved treatment for molluscum contagiosum.
With our first full quarter, a commercial operations now complete we're beginning to see traction and many of our targeted dermatology and institutional accounts as we execute our launch planet.
Fourth quarter execution resulted in 1.9 million and why can't net revenue, which we believe demonstrates our continued progress in driving adoption and reflects growing confidence in our prescriber base as we work to expand coverage of why can't go over 200 million commercial and Medicaid lives at the end of.
The year.
As a further update uncovered lives in December we agreed to terms and coverage under the medical benefit with two of the largest P. B S.
Ted White: We're working to finalize those agreements; however, coverage under those medical plans became effective on January 1, 2024. In addition to expanding our coverage, on January 29th, we announced that the CMS issued a permanent J code, J7354, for WICAMP, which is under the Healthcare Common Procedure Coding System process. We expect that the J Code for Wycanth will become fully published on April 1st.
We're working to finalize those agreements however coverage under those medical plans became effective on January one 2024.
In addition to expanding our lives covered on January 29th we announced that CMS issued a permanent Jacob J 7354 for White cat.
Which is under the health care common procedure coding system process.
We expect that's J code for why can't will become fully publish on April 1st.
Ted White: Securing that J-code for Wycanth represents a critical milestone in our commercial strategy, as the J code enables providers to use the same code across all payers for reimbursement. We believe the J-Code will help grow Y-CAMP utilization among the U.S. Medicaid patient population and increase overall buy-and-bill account utilization by simplifying the billing and reimbursement process for Y-CAMP. In the fourth quarter, Verrica also expanded its Y-CAMP product distribution capabilities when it entered into an agreement with Walgreens to distribute Y-CAMP through its specialty pharmacy. Walgreens joins Verrica's existing specialty pharmacy, New Factor, which continues to be instrumental in helping the company distribute WICAMP among institutions, dermatology, and pediatric medical practice.
Securing the J code for white can represent a critical milestone in our commercial strategy.
J code enables providers to use the same code across all payors for reimbursement.
We believe the J code will help grow I can't utilization among the U S. Medicaid patient populations and increase overall by a bill account utilization by simplifying the billing and reimbursement process will like him.
And the fourth quarter Verica also expanded our why can't product distribution capabilities. When we entered into an agreement with Walgreens to distribute why can't through its specialty pharmacy.
Walgreens joins Burke is existing specialty pharmacy, new factor, who continues to be instrumental in helping the company distribute why can't among institutions dermatology in pediatric medical practices.
Ted White: The Walgreens partnership is exciting as we look forward to the opportunity to grow that relationship and leverage Walgreens' physical footprint and existing relationships with Durham On Call to build community awareness and grow treatment rates. On February 1st, we executed a distribution agreement with DMS Pharmaceutical, a prime vendor to the U.S. Department of Defense, to provide Wycanth to U.S. military installations around the world. The DMS relationship was in direct response to outreach from U.S. military treatment facilities requesting information on how to procure WICANF for military personnel. As the fourth quarter came to a close, we transitioned into the first quarter.
The Walgreen's partnership as exciting as we look forward to the opportunity to grow that relationship and leverage Walgreens physical footprint.
An existing relationships with pheromones call to build community awareness and grow treatment rates.
On February 1st we executed a distribution agreement with D. M S pharmaceutical prime vendor to the U S Department of defense.
To provide why can't two U S military installations around the world.
D. M. S relationship was in direct response to outreach from the U S military treatment facilities requesting information on how to Pirker why can't for military personnel.
As the fourth quarter came to a close we transitioned into the first quarter, we saw wins on the institutional side of our business with major Ivy and and hospitals, adding why can't to formulary and placing orders we.
Ted White: We saw wins on the institutional side of our business with major IDNs and hospitals adding WICANT to formulary and placing orders. We expect these wins to continue as we see more success in our efforts to combat unapproved compounded contradin, along with the anticipated publication of the J-code on April 1st. Now I'd like to give you an update on our efforts to eliminate the amount of conferitum being improperly compounded for the treatment of molestation. As you know, we have consistently taken the position that we intend to fully exercise our legal rights and execute on our multi-pronged strategy to clear the market of significant suppliers who are unlawfully compounding catharsis. At the same time, we've cautioned you that we may not see the results of our efforts immediately.
We expect these wins to continue.
As we see more success in our efforts to combat unapproved Campana Conservative along with the anticipated publishing of the J code on April 1st.
Now I'd like to give you an update on our efforts to eliminate the amount of concern I'm being improperly compound it for the treatment of Alaska.
As you know we have consistently taking the position that we intend to fully exercise our legal rights and execute on our multi prong strategy to clear the market of significant suppliers, who are unlawfully compound it get there.
At the same time, we have cautioned you that we may not see the results of our efforts immediately rather we have said that as a cumulative effects of our plan started to take effect, we'd expect to see noticeable reduction and the availability of campana comparatively within a 12 month period of time.
Ted White: Rather, we have said that as the cumulative effects of our plan started to take effect, we'd expect to see a noticeable reduction in the availability of Companacantharidin within a 12-month period of time. Well, we believe we're on track and well on our way to hitting our timeline.
Well, we believe we're on track and well on our way to hit our timeline.
For example, the.
Ted White: The last 503B pharmacy in the United States on the FDA's Outsourcing Facility Product Report to report compounding contheridin has discontinued compounding contheridin and informed its over 400 institutional customers of the availability of YQA. In addition... A number of large national licensed 503A pharmacies have also agreed to discontinue compounding cathartics. Consistent with this reduction in the supply of compounded cantharidin, we are regularly hearing in the market about the lack of availability of compounded cantharidin and receiving inbound requests for Y-canth from providers who are also informing us that they can no longer obtain compounded cantharidin. As we've witnessed the available supply of compounded cantharidin in the United States significantly decrease, we are further escalating our efforts to ban the illegal importation of compounded cantharidin from Canada and specifically the illegal importation of non-FDA approved cantharidin products from Dormer Labs in Canada.
The last 503, B, a pharmacy in the United States on the Fda's outsourcing facility product report to report compound comparison has discontinued compounding compare it in and informed it's over 400 institutional customers of the availability of like him.
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Number of large national license to fly with three pharmacies have also agreed to discontinue compound they get there to <unk>.
Consistent with this reduction in the supply of compound to get there and we are regularly hearing in the market about the lack of availability of calm panic in third and receiving inbound requests for why can't from from providers, who are also informing us that they can no longer obtain compound in comparison.
As we've witnessed the available supply of come panic attacks in the United States significantly decrease we are further escalating our efforts to ban the illegal importation of combat and third in from Canada, and specifically the illegal importation of non F. D. A approved and sarin products from dormer labs and.
Canada.
Ted White: Similar to the actionable results we saw from our efforts with the 503A and 503B pharmacies, we believe that as we continue to execute and escalate our intended strategies, the illegal importation of Faraday from Canada will be discontinued. Now, I'd like to provide an update on our pipeline. On January 5th, we announced that the last patient has been dosed in Part 2 of the company's Phase 2 trial for VP315, a potential first-in-class oncolytic peptide for the treatment of basal cell carcinoma, or BCC. VP315 is a peptide that has been engineered to provide more targeted delivery to stimulate the patient's immune system and destroy cancer cells.
Similar to the actual results we saw from our efforts with the 503, a and 503 B pharmacies, we believe that as we continue to execute and escalate are intended strategies.
Illegal importation I've got a ferret in from Canada will be discontinued.
I'd now like to provide an update on our pipeline.
January 5th we announced that the last patient has been dosed in part two of the companies phase two trial for P. P 315, a potential first in class Oncolytics peptide for the treatment of basal cell carcinoma or B C C.
P. P 315 is a peptide there's been engineered to provide more targeted delivery to stimulate the patient's immune system and destroy cancer cells.
Ted White: We remain excited about the opportunity for this asset, which we view as either a potential non-surgical alternative to Mohs surgery or as a neoadjuvant chemotherapeutic for large basal cell carcinomas, including advanced tumors or non-resectable basal cells. The ongoing Phase 2 trial is a two-part, open-label, multi-center, dose-escalation, proof-of-concept study The study enrolled 92 adult subjects with a histological diagnosis of basal cell carcinoma and at least one eligible target lesion.
We remain excited about the opportunity for this asset, which we view as either a potential nonsurgical alternative to most surgery or as a neo adjuvant chemotherapy for a larger basal cell carcinomas, including advanced tumors or non resectable basal cell.
The ongoing phase two trial is a two part open label multi center dose escalation proof of concept study with a safety you run and designed to assess the safety.
Pharmacokinetics efficacy of B P 315, when administered entered criminally with adults with biopsy proven P. C C.
The study enrolled 92 adult subjects with the histological diagnosis of basal cell carcinoma, and at least one eligible target at least.
Ted White: Our interpretation of the data from the study will focus on complete clearance as well as overall tumor shrinkage in patients who may have residual tumors. We expect initial results from the study in the first half of 2024. From an outside the U.S. perspective, in December, we announced that Verrica's development and commercialization partner, Torrey Pharmaceuticals, reported positive top-line results from its Phase III trial of TO-208, which is marketed as Y-canth in the United States, for the treatment of molluscum in Japan. The top line results show that the proportion of subjects achieving complete clearance of all treatable molluscum lesions at the completion of the confirmatory study, the primary endpoint of efficacy, was statistically significant versus placebo.
Our interpretation of the data from this study will focus on complete Clarence as well as overall tumor shrinkage on patients who may have residual tumors.
We expect initial results from this study in the first half of 2024.
From an X U S perspective in December we announced that Burke is development and commercialization partner Tori Pharmaceuticals reported pauses topline results from its face free trial of T 0208, which.
Which is marketed as why can't they the United States for the treatment of I'll ask them in Japan.
Line results showed that the proportion of subjects, achieving complete clearance of old treatable molluscum lesions at the completion of the confirmatory studies. The primary endpoint of efficacy was statistically significant versus placebo.
Ted White: T0208 demonstrated similar results to Wycant's Phase III program and was well tolerated during the study. Torrey intends to submit a manufacturing and marketing application for the product in Japan based on the results of the Phase III trial and other studies currently being conducted. In addition to molesting them,
T 0208 demonstrated similar results to white can't space three program and was well tolerated during this study.
Tori intends to submit in manufacturing and marketing application for the product in Japan based on the results of the phase III trial and other studies currently being conducted.
In addition to molest them.
Ted White: As we disclosed on January 4th, we announced alignment with the FDA with respect to the Phase 3 Clinical Development Plan for Wycanth for the treatment of common warts following our Type C meeting. More specifically, we reached agreement with the FDA on the overall design components of a pivotal phase three study for WICAMP that would support an efficacy supplement for the proposed indication of common warts. We will be seeking additional FDA feedback on our updated clinical design in the second quarter of this year. I'll now turn the call over to Joe Bonaccorso to review our commercial progress. Joe?
As we disclosed on January 4th we announced alignment with the F. D. A with respect to the phase three clinical development plan for why can't for the treatment of common awards following art type C meeting.
More specifically, we reached agreement with the F. D. A on the overall design components of a pivotal phase three study for why can't that would support and advocacy supplement for the proposed indication of common awards.
We will be seeking additional FDA feedback on our updated clinical design in the second quarter of this year.
I will now turn the call over the job on a course ode to review our commercial progress Joe.
Joe Bonaccorso: Thanks very much, Ted. As Ted mentioned, we had our first full quarter of commercial operation. And we are gaining increasing traction among dermatology practices, pediatricians, and institutions. There is significant and growing interest in prescribing and adopting WICAMP among physicians, and broad acceptance on the payer side. We also feel our agreement with DMS and the opportunity with the DoD will further accelerate adoption. Since our last call, insurance coverage of Y-CAMP has grown significantly.
Thanks, very much Ted.
Ted mentioned, we had our first full quarter of commercial operations, and we are gaining increasing traction among dermatology practices pediatricians and institutions.
Never get and growing interest in prescribing and adopting weitkamp amongst physicians and brought acceptance on the payer side we.
We also feel our agreement with D M S and the opportunity with the D. O D will further accelerate adoption.
Since our last call insurance coverage of Weitkamp has grown significantly.
Joe Bonaccorso: We have increased our number of covered lives from approximately 112 million to now over 200 million in both commercial and Medicaid. Our coverage includes major PBMs, such as CVS, ESI, and OPS. I'm pleased to say that our coverage metric has exceeded our internal expectations, and we believe this will ultimately translate into an acceleration in prescription growth of YCAMP over the next several months. In addition to our market access work, our sales force reach has expanded over the last five months. With over 4,000 healthcare professionals trained, we are seeing major integrated delivery networks adopt YCAMP, with both the Mayo Clinic and Kaiser Permanente beginning to order products through our distribution partner, Triple F. We're also continuing to work to gain adoption with private equity-backed dermatology and pediatrician group practices. In support of our field efforts, we have expanded our sales footprint to 53 territories, from 50 at launch.
Increase our number of covered lives from approximately $112 million and now over $200 million and both commercial and Medicaid or.
Our coverage includes major P. B M such a C. B S E S I and opt them.
I'm pleased to say that our coverage metric has exceeded our internal expectations and we believe this will ultimately translate into an acceleration in prescription growth a white cat over the next several months.
In addition to our market access work our sales force reached has expanded over the last five months.
With over 4000 health care professionals trained we're seeing major integrated delivery networks Ah.
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And Kaiser Permanente, beginning to order products to our distribution partner Triple laugh.
We're also continuing to work to gain adoption with private equity back dermatology and pediatrician group practices.
The support of our field efforts, we've expanded our sales footprint to 53 territories from 50 at launch.
Joe Bonaccorso: We're also adding two additional hospital reps as we continue to focus on driving adoption on the institutional side. With HCPs at major IDNs beginning to adopt, and with several other significant formulary wins, the additional hospital reps will be critical in driving demand, pulling through orders, and maximizing the market opportunity. We're also working towards adding two major hospital GPOs and utilizing their support to drive further adoption. In addition, we're adding 14 pediatric reps in the first quarter, so we plan to have a total of 20 pediatric reps in the field by the end of the quarter. Our focus on the pediatric footprint is fueled by encouraging inbound traffic, which is consistent with our internal market assessment of molluscum diagnosis from pediatric practices across the country. Due to the size of the pediatric market, our plan is designed to be efficient around major MSAs, and we will continue to work in coordination with our physician buying group partner, Main Street Vaccines, and pediatric-focused GPOs. I also wanted to touch again on the J-code.
We're also adding two additional hospital reps as we continue to focus on driving adoption on the institutional side.
With H C p's at major ideas beginning to adopt.
With several other significant formulary wins.
Mental hospital reps will be critical and driving demand.
Pulling through orders and maximizing the market opportunity.
We're also working towards adding two major hospital G P OS and utilize their support to drive further adoption.
In addition, we're adding 14 paediatric, perhaps in the first quarter and so we plan to have a total of 20 pediatric reps in the field by the end of the quarter.
Our focus on the pediatric footprint.
By encouraging inbound traffic, which is consistent with our internal market assessment of molluscum diagnosis from pediatric practices across the country.
Due to the size of the pediatric market. Our plan is designed to be efficient around major msas and we will continue to work in coordination with our physician buying group partner main street vaccines in pediatric focused G. P. S.
I also wanted to touch again on the J code that go Ted's earlier comments seat of the J code is expected to be a significant driver of adoption monk dermatologist or white cat.
Joe Bonaccorso: To echo Ted's earlier comments, the receipt of the J-code is expected to be a significant driver of adoption among dermatologists for YCAM. We believe that the J-code, which is expected to be published on April 1st, will streamline reimbursement, accelerate benefit verifications, and provide consistent reimbursement, which is more challenging with the miscellaneous J-codes. We have received supportive feedback from practitioners since we announced our J-Code receipt, and we are working hard to educate the market and prepare for our code becoming effective on April 1st of this year. I'll now pass it to Terry to review our fourth quarter and year-end financial results. Terry?
We believe that the J code, which is expected to be published on April 1st will streamline reimbursement accelerating benefit verifications and provide consistent reimbursement, which is more challenging with the miscellaneous Jacob.
We have received the support of feedback from practitioners since we announced our J code receipt.
And we're working hard to educate the market and prepare for our code becoming effective on April 1st of this year.
I'll now pass it to Terry to review, our fourth quarter and year end financial results Berry.
Terry Kohler: Thanks, Joe. Wycanth revenues were $1.9 million in the fourth quarter of 2023, with total 2023 revenue for Wycanth of $4.7 million. This revenue represents the continued fulfillment of ex-factory orders to our distribution partner, FFF Enterprises, as we continue to build awareness, drive adoption, and expand insurance coverage and formulary access. In addition, the Q4 units were partially in support of our expanded distribution footprint with the addition of Walgreens as a second specialty pharmacy partner. We also recognize collaboration revenues of $122,000 in the fourth quarter of 2023 and $466,000 for the full year 2023 related to the clinical supply agreement with Torrey Pharmaceuticals. Gross product margins for the full year 2023 were 94%, which continued to benefit from certain components of standard costs of goods sold, including bulk production and assembly of applicators from our registration batches, having been expensed as R&D prior to approval.
Thanks, Joe.
Well I can't revenues were 1.9 million in the fourth quarter of 2023.
Total 20 twenty-three revenue for why can't the 4.7 million.
This revenue represents the continued fulfillment of ex factory orders toward distribution partner.
Enterprises as we continue to build awareness drive adoption and expand insurance coverage formulary access.
In addition, the Q4 units were partially in support of our expanded distribution footprint with the addition of Walgreen's is the second specialty pharmacy partner.
We also recognize collaboration revenues of 122000 in the fourth quarter of 2023 and 466000 for the full year 2000 twenty-three related to the clinical supply agreement with Tori Pharmaceuticals.
Gross product margins for the full year, 2000, twenty-three, where 94% which continued to benefit from certain components of standard cost of goods sold including both production and assembly of applicators from our registration batches, having been expense does R&D prior to approval.
Terry Kohler: Research and development expenses of $5.3 million in the fourth quarter of 2023 declined versus the third quarter of 2023 by $1.2 million, primarily driven by reduced stock compensation expenses. For full year 2023, R&D expenses increased to $20.3 million from $12.2 million in 2022, driven by increased CMC costs related to the pre-approval activity, increased clinical trial costs for VP315, as well as an increase in stock-based compensation. Filling general and administrative expenses of $17 million in the fourth quarter of 2023 declined versus the third quarter of 2023 by $3 million, driven primarily by a reduction in stock-based compensation expense. For full year 2023, selling general and administrative expenses increased to $47.3 million from $17.4 million for the full year 2022. The incremental spend was primarily driven by the approval and launch of YCAF in 2023 and an increase in stock-based compensation expense. Gap net loss was $67 million or $1.48 per share for fiscal 2023 compared to a gap net loss of $24.5 million or $0.72 per share for the prior year.
Research and development expenses of $5.3 million in the fourth quarter of 2000 twenty-three declined versus the third quarter of 2023 by 1.2 million, primarily driven by reduce stock compensation expense.
For full year 2000, twenty-three R&D expenses increased to 20.3.
$3 million from $12.2 million in 2022, driven by increased TMC costs related to the preapproval activity increased clinical trial costs for the B 315.
Well as an increase in stock based compensation expense.
Telling general and administrative expenses of $17 million in the fourth quarter of 2023 declined versus the third quarter of 2023 by $3 million driven primarily by a reduction in stock based compensation expense.
Full year, 2000, twenty-three selling general and administrative expenses increased to $47.3 million from $17.4 million for the full year of 2022 the.
The incremental span was primarily driven by the approval and launch them why camp during 2023, and an increase in stock based compensation expense.
GAAP net loss was $67 million or one dollar and 48 cents per share for fiscal 2000 twenty-three compared to make GAAP net lost of $24.5 million or 72 cents per share for the prior year.
On a non-GAAP basis, which excludes stock based compensation and non-cash interest expense. The full year 2000, twenty-three net loss was $51.8 million or one dollar and 14 cents per share compared to me in that loss of $17.4 million or 51 cents per share and full year 2022.
Terry Kohler: On a non-GAAP basis, which excludes stock-based compensation and non-cash interest expense, the full year 2023 net loss was $51.8 million, or $1.14 per share, compared to a net loss of $17.4 million, or $0.51 per share, for the full year 2022. And finally, as of December 31st, 2023, Verrica had aggregate cash and cash equivalents of $69.5 million. The company expects that its cash and cash equivalents as of December 31st, 2023, will be sufficient to fund operations into the second quarter of 2025. I will now turn the call back to Ted for closing remarks. Thanks, Terry. I'm very pleased with the productivity that Verrica continues to achieve across its commercial efforts and our pipeline.
And finally as of December 31st 2000, twenty-three farahkan aggregate cash and cash equivalents of $69.5 million.
The company expects and it's cash and cash equivalents as of December 31st 2023 will be sufficient to fund operations into the second quarter of 2025.
I will now turn the call back to Ted for closing remarks.
Thanks Terry.
I'm very pleased with the productivity that Bert continues to make across its commercial efforts and our pipeline.
Executing across our entire business and we believe our success is translating into growing awareness and utilization of why can't as the first F. D. A approved therapy indicated from Alaska and the only commercially available F D. A approved treatment.
We continue to forge excellent relationships with dermatology and pediatrician practices and we believe that our efforts to increase lives under coverage is laying the foundation for the expansive coverage needed to maximize the commercial opportunity for why can't.
Ted White: We are executing across our entire business, and we believe our success is translating into growing awareness and utilization of WICAMP as the first FDA-approved therapy indicated for molluscum and the only commercially available FDA-approved treatment. We continue to forge excellent relationships with dermatology and pediatrician practices, and we believe that our efforts to increase lives under coverage are laying the foundation for the expansive coverage needed to maximize the commercial opportunity for Wycanthus. At the same time, we're taking steps to ensure that patients have access to a safe, FDA-approved product. That concludes our formal remarks, and I'll now turn the call over to the operator for Q&A. Thank you.
At the same time, we're taking steps to ensure that patients have access to a safe F D. A approved product.
That concludes our formal remarks, and I'll now turn the call over to the operator for Q&A.
Thank you.
We will not be conducting a question and answer session.
If you would like to ask a question. They say start and then one on your telephone keypad console.
Confirmation time will indicate your lines from the question queue.
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Thanks for taking our questions and congratulations on all the nice progress. So we had a few questions. So first can you provide a little bit more detail around the item contribution and any insights into just notifications that are pending or or you've added recently to send that checks around that and whether you have a goal close to nine.
Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press star and then 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then two if you would like to remove your question from the queue.
The distance by ear and it seems like some easy kind of low hanging for your cats I really can right.
Stacy Ku: For participants using speech equipment, it may be necessary to pick up the handset before pressing the start key. This is from Stacy Ku of TB Cohen. Please go ahead. Thanks for taking our questions and congratulations on all the nice progress. We had a few questions. So first, can you provide a little bit more detail around the IDN contribution and any insights into additional institutions that are pending or you've added recently, just some metrics around that, and whether you have a goalpost in mind of additions by year end? It seems like some easy kind of low-hanging fruit to really convert.
I understand it takes a little bit of time.
The infrastructure, but any details it'd be really appreciate it. That's the first question and then the second question is can you provide any type of commentary around how clinicians are using why can't at this point. So just provide that that most updated <unk> split between specialty pharmacy might bags nervous person fine now so that's the second question and then.
There. It is just alright early I know.
Joe Bonaccorso: I understand it takes a little bit of time to kind of establish the infrastructure, but any details would be really appreciated. So that's the first question. And then the second question is, can you provide any type of commentary around how clinicians are using Y-CAMP at this point to just provide the most updated current split between specialty pharmacy white bag service versus buy-and-bill? So that's the second question. And then the third is just very early.
Early but are you getting a sense of how the doctors are using the product I, they treating to clear and thank you so much.
Thanks for the question Stacey I'll turn that over the joke about of course, Sir good morning, Stacy to answer your first question around the idea is we have a you know obviously a full diplomatic strategy. It's a great opportunity for why can't we have Kaiser Permanente Mayo currently ordering and we got several other ign's close to I would say close to the finish line.
With formulary approval and expected first order some time in quarter two.
We'll continue to look at the and prioritized by the largest opportunity and then there's other strategies around some of the smaller ITN and health systems throughout the country, hence the expansion in the institutional feel horse helped drive that even more.
Joe Bonaccorso: I know it's very early, but are you getting a sense of how the adopters are using the product? Are they treating it well? Thanks so much. Thanks for the question, Stacy. I'll turn that over to Joe Bonaccorso. Good morning, Stacy.
Second question around I believe was around how the ER dermatology are split between specialty pharmacy in buying Bill. That's as you would expect with the miscellaneous J codes start it's been leaning more towards white bag specialty pharmacy, what about 80 per cent of the volume gone through there and 20% buying bill and that's a compilation of.
Joe Bonaccorso: To answer your first question about IDNs, we have a, you know, obviously a fully implemented strategy. It's a great opportunity for WICANF. We have Kaiser Permanente and Mayo currently ordering, and we've got several other IDNs close to, I would say, the finish line with formulary approval and expected first orders sometime in quarter two. We'll continue to look at them and prioritize by the largest opportunity. And then there are other strategies around some of the smaller IDNs and health systems throughout the country, hence the expansion in the institutional field force to help drive that even more.
Of a physician offices in our health systems as well, we expect the buying bill component of this Ah launched to grow the permanent J code expect it to be published on April one and then the last question I believe was around treat to clear you know, we're seeing dermatologist following that algorithm to want to treat the patient to clearance.
Everything we've seen so far in the anecdotal feedback we've gotten from our customers is pointing in that direction that didn't want to get through a full course of therapy with the patient and obviously their assessment on when they think the patient is cleared and doesn't need anything else.
Joe Bonaccorso: The second question around, I believe it was around how the dermatology or the split between specialty pharmacy and buy-and-build. That, as you would expect with a miscellaneous J-code to start, has been leaning more towards white bag specialty pharmacy with about 80% of the volume going through there and 20% buy-and-build. And that's a compilation of physician offices in our health systems as well. We expect the buy-and-build component of this launch to grow, with the permanent J-code expected to be published on April 1. And then the last question, I believe, was around treat-to-clear. You know, we're seeing dermatologists following that algorithm to want to treat the patient to clearance. Everything we've seen so far and the anecdotal feedback we've gotten from our customers is pointing in that direction, that they want to get through a full course of therapy with the patient, and obviously, their assessment of when they think the patient is cleared and doesn't need anything else. That's helpful.
Okay. That's helpful and <unk>, if I can ask that just a quick follow up on the idea in consultation what kind of these seems to be kind of talk order. So how should we think about that percentage of.
This type of contribution in 24 of our system is as we think about guidance.
Consensus of 2024 around 20 million for the year. Thanks, so much.
Yeah. So I think when you you know when you look at our hospital opportunity and you look at these facilities as best you can on a on a per patient for a month opportunity. So we would think about you know 30% of our volume should be coming from the institutional side of the business I would say approximately that's what we're kind of taken through right now that may accelerate more.
As we continued to adopt on the.
On the J code and you know you also gotta look at this Stacy is a binary event right. Once we get a facility up and running and committed to using adopting white cats for their patients we should be able to count on that repeat business month over month.
Very helpful. Thank you.
Stacy Ku: And if I could ask just a quick follow-up on the IDN contribution. What kind of – this seems to be a kind of bulk order, so how should we think about the percentage of this type of contribution in 2024 versus some of the – as we think about guidance of consensus for 2024, around $20 million for the year? Thanks so much.
You're welcome.
The next question we have for some quick I mean, <unk>, obviously kept her market these kind of hate.
Hi, guys, it's a Nissan for Greg Congrats on the corner and thanks for taking my questions. Just a couple for me how should we be thinking about the current molluscum town. The remains occupied by treatments such as curettage in cryotherapy and at what pace on a relative or even absolute basis do you anticipate conversion to white cats and then.
Joe Bonaccorso: Yes, I think when you look at our hospital opportunity, and you look at these facilities as best you can on a per patient per month basis. So we would think about, you know, 30% of our volume should be coming from the institutional side of the business. I would say approximately that's what we're kind of thinking through right now, and that may accelerate more as we continue to adopt the J code. And you also have to look at this, Stacy, as a binary event, right? Once we get a facility up and running and committed to using and adopting Wycats for our patients, we should be able to count on that repeat business month over month. Very helpful. Thank you. You're welcome. The next question we have is from Gregory Renza of RBC Capital Markets. Please go ahead. Hi guys, it's Anishanth for Greg. Congratulations on the quarter and thanks for taking my questions. Just a couple for me.
Really quickly how should we be thinking about sampling of white cats through four Q at any residual into 2024. Thanks again.
Okay.
So I'm, sorry, I missed a little bit of your question in the middle there, but I I believe you were asking how should we think about curettage in cryosurgery still being used versus why can't you know when when we got into this market. It was understood that curettage. It was probably used about 10% to 15% of the time at at most in crowds.
Surgery was somewhere in that 30 per cent mark of the source of business. So we're continuing to think about it as.
Physicians don't like using cryosurgery, especially on small children.
It's very painful it's technique dependent and we think we could continue to take from that piece of the pie as well as continuing to convert.
Compounded darin piece of the market and also get new doctors off the sidelines that have not treat it without an F. D. A approved product that they're ready.
Great. Thank you so much and then just just real quick on that on the white counts sampling. If there was any through four Q and any into 2024 just for some clarity there.
Gregory James Renza: How should we be thinking about the current molescum TAM that remains occupied by treatments such as curatage and cryotherapy, and at what pace on a relative or even absolute basis do you anticipate conversion to Y-cans? And then, just really quickly, how should we be thinking about sampling Y-cans through 4Q and any residual into 2024? Thanks again. So I'm sorry, I missed a little bit of your question in the middle there, but I believe you were asking how we should think about Curetage and cryosurgery still being used. versus Wycanth.
Sampling you were asking about.
Yeah. So we we do continue to sample as need it sometimes it's just a function of getting our coverage finalized with what you know wherever the insurance company may be for that Doctor.
We didn't have the permanent J code is that comes on board now, we expect more and more same day treatment. So that'll continue to drive the use of samples down and convert to real time prescription. So you know it's a very efficiently managed program by us and we're very judicious and how we go about doing it.
Great. Thank you so much you're welcome. Thank you for your question.
The next question we have is from.
Of a chain rang like he's got hit.
Thanks, I just want to better understand the state of play with coverage.
Joe Bonaccorso: You know, when we got into this market, it was understood that CureTouch was probably used about 10 to 15% of the time at most, and cryosurgery was somewhere in that 30% mark of the source of business. So we're continuing to think about it as physicians don't like using cryosurgery, especially on small children because it's very painful.
Maybe it as it relates to the new J code you know you talked about dramatically expanding covered lives numbers I think to over 200 from nearly doubling quarter over quarter, what does that really mean on the ground you know when it's coverage versus you know headline coverage versus <unk>.
Joe Bonaccorso: It's technique dependent. And, you know, we think we could continue to take from that piece of the pie, as well as continue to convert on the compound that can dart into a piece of the market and also get new doctors off the sidelines that have not been treated without an FDA-approved product at their ready. Great, thank you so much. And then just real quick on that for the YCAN sampling, if there was any through 4Q and any into 2024, just for some clarification there. The sampling you were asking about? Yes. Yeah, so we do continue to sample as needed, you know, sometimes it's just a function of getting our coverage finalized with, you know, whoever the insurance company may be for that doctor. We didn't have the permanent J code.
Pull through at the office level does the J code in April me in that it'll be really easy for patients and physicians are there still prior off potentially necessarily out of their friendship I follow ups.
Whereas the orange. Thanks for the question you know as you know as we're ramping coverage up right. We have over 200 million lives now which is exceptional for for a product. This young and its lifecycle. It's a medical benefit of driven products. So you typically see less prior authorizations and you went on the on the pharmacy benefit side.
You'll still have occasionally a prior authorization, which will be the label just the doctor having to put in their notes. The patient was two years of age and older but to your question now when you have a J code assigned right. That's streamlining the reimbursement portion of it and if your coverage is you know clean I know no. Prior authorization, that's going to facilitate same day <unk>.
Joe Bonaccorso: As that comes on board now, we expect more and more same-day treatment, so that'll continue to drive the use of samples down and convert to real-time prescription. So, you know, it's a very efficiently managed program by us. And we're very judicious in how we go about doing it. Great. Thank you so much.
Treatment for that patient under that insurance company, if there's a prior authorization. They gotta just get that cleared and tree. So there's got to submit the paperwork around it but having both having this 200 million lives in the J code now working and <unk>. If you will should really help accelerate the adoption of why can't even more.
And just timing there. So you mentioned being published April 1st I guess, there are a couple of steps after that with regards to still getting that propagate at three am Mars or is that how that happens automatically on April 1st and then when that they're how much education effort, they're still to.
Joe Bonaccorso: You're welcome. Thank you for the question. The next question we have is from Oren Livnat of HC Rainwright. Please go ahead. Thanks. I just want to better understand the state of play with coverage. Maybe as it relates to the new J code, you talked about dramatically expanding covered lives numbers, I think over 200 from nearly doubling quarter over quarter. What does that really mean on the ground?
Makes offices are aware that there has been a material change in their life is presumably guy need there and so yeah. So maybe when should we see an acceleration through the air It failed as a result, yeah. So just the point you back we were awarded the J code in January. So we have started already working through a a a a a full of fully baked.
Oren Gabriel Livnat: You know, what is coverage versus, you know, headline coverage versus, and I'm going to turn it over to Dr. Warren. Warren, thanks for the question. You know, as you know, as we're ramping coverage up, right, we have over 200 million lives now, which is exceptional for a product this young in its lifecycle. It's a medical benefit-driven product, so you typically see a lot of people who are in the hospital, who are in the ICU, who are in the ICU, who are in the ICU, who are in the ICU, who are in the ICU You'll still occasionally have prior authorization, which will be the label, just the doctor having to put in their notes that the patient was two years of age and older.
Communication plan with the insurance community and letting them know that the J code was awarded and we're tracking now to see who's starting to publish it.
So that is that's been going on since January. We're also working now to work with customers who are either currently buying the one with the miscellaneous J code or who have expressed interest in coming on board to buying bill when the J code was final and we're working to get those offices set up ahead of of April one and then.
As we continue to track towards April one we got several more communication blasts go onto the Payor community Post April one will continue to do that just to make sure. We have our you know our top 150 payers squared away and it's always boots on the ground right. So we have our we have our sales team out there and they're going to continue to make short at the office.
Joe Bonaccorso: But to your question now, when you have a J-code assigned, right, that's streamlining the reimbursement portion of it. And if your coverage is, you know, clean, i.e. No prior authorization, that's going to facilitate same-day treatment for that patient under that insurance company. If there's a prior authorization, they've got to just get that cleared and treat it, so they've just got to submit the paperwork around it. But having both, having this 200 million lives and the J-code now working in Simpatico, if you will, should really help accelerate the adoption of Y-CAMP even more. And just timing there.
As you know.
<unk> of the J code itself, the J code number making sure that they have checked her insurance contracts to what their reimbursement would look like on the ASP plus side of it and it.
That's always a this is an account management dropped right, there's always that reinforcement of education and knowledge that we share with customers every time, we're in the office in addition to our political so.
Okay, and just to have it real quickly to follow up on earlier question about you know how docs are you using it what do wait I know, it's quite early but what do we know so far about re treatment rates cause I know some patients that experience clearance on one read treatment. So what are you, saying trend wise at least try to think about how to.
Oren Gabriel Livnat: So you mentioned being published April 1. I guess, are there a couple steps after that with regard to still getting that propagated through EMRs? Or is that how that happens automatically on April 1?
Joe Bonaccorso: And then when that's there, how much education effort is there still to make offices aware that there's been a material change and their life is presumably getting easier? And so, you know, maybe when should we see an acceleration through the year of sale? Yeah, so just to point you back, we were awarded the J-Code in January, so we have already started working through a fully baked communication plan with the insurance community and letting them know that the J-Code has been awarded, and we're tracking now to see who's starting to publish it, okay? So that's been going on since January.
Model. This in terms of number average number of treatments per patient and on the insurance side do you have any reason to believe that retreatments will be treated any differently from Ah no friction in pear perspective.
Yeah. So.
Let me take your last question first we don't see any impact on insurance reimbursement is what is what you're asking Henri treatment right. They when they approved our product. They knew was it can be up to two applicators for treatment and they knew it was four three treatments over 12 weeks and we haven't seen any real hard cap on the end of.
Joe Bonaccorso: We're also working now to work with customers who are either currently buying and billing with the miscellaneous J-Code or who have expressed interest in coming on board to buy and bill when the J-Code is final, and we're working to get those offices set up ahead of April 1. And then, as we continue to track towards April 1, we have several more communication blasts going to the payer community. Post-April 1, we'll continue to do that, just to make sure we have our top 150 payers squared away. And it's always boots on the ground, right?
The four treatment if somebody to the cemetery and let's say right. So no. We don't we don't anticipate friction there from the payer community.
Right now it's early but what we're seeing is typically two applicators per patient and plus we're also early on using samples there right starter doses to get them going as we were building coverage. So.
Two plus the samples are pretty good spot to be in and we're tracking towards you know how we modeled our our thoughts around you know driving demand and what it would look like on a per patient level.
As far as the applicator goes.
Joe Bonaccorso: So we have our sales team out there, and they're going to continue to make sure that the office is aware of the J-Code itself, the J-Code number, making sure that they have checked their insurance contracts to see what their reimbursement will look like on the ASP Plus side of it. And that's always a – this is an account management drug, right? There's always that reinforcement of education and knowledge that we share with customers every time we're in the office, in addition to our clinical. Okay, and just to pivot real quickly to follow up on an earlier question about, you know, how doctors are using it. What do we know so far about retreatment rates? I know it's quite early, but what do we know so far about retreatment rates?
Okay I'll get back in the queue. If there is your questions by me. Thanks.
Thank you.
The next question, we have <unk>, John <unk> off need them company, He said I hate.
Hi, everyone. This is John on percentage congrats on your progress and thank you for taking our questions. So regarding the upcoming type C meeting for why can't label expansion encounter more it's would you be able to provide any color on the potential of design at this trial and whether or not additional trials would be conducted in.
An external genital warts it's.
Joe Bonaccorso: Because I know some patients have experienced clearance on one retreatment, so what are you seeing trend-wise, as we try to think about how to model this in terms of number, average number of treatments per patient? And on the insurance side, do you have any reason to believe that retreatments will be treated any differently from a friction and payer perspective?
This includes you know in the investment required and any potential market opportunity for each of these indications and a second can you provide any insight on how your partnerships with walgreen's is structured and whether it will see any additional specialty pharmacy partnerships in the future.
<unk>.
So basically the questions, but first but I'll turn it over Gary Goldenberg, Chief Medical Officer.
Thanks, Ted for the type C meeting follow up regarding common March with the agency I think the way that you could think about it is it would be a typical phase III program that you would expect the agency to ask a sponsor of Iran. We are stove and communication.
Joe Bonaccorso: Yeah, so let me take your last question first. We don't see any impact on insurance reimbursement. Is that what you're asking about retreatment, right? When they approved our product, they knew it could be up to two applicators per treatment.
Joe Bonaccorso: And they knew it was four treatments over 12 weeks. And we haven't seen any real hard cap at the end of the four treatments if somebody needed a fifth treatment, let's say, right? So no, we don't anticipate friction there from the payer community. Right now, it's early.
<unk> and look forward to to saying more as we as we continue to finalize the details of the trial design.
Yeah, and then the second I think the other two questions you had was regarding Walgreens.
Joe Bonaccorso: But what we're seeing is typically two applicators per patient. Plus, we're also early on using samples there, right? Starter doses to get them going as we build coverage.
So walgreens the partnership with Walgreens is accelerating nicely as just to recall why we went to that.
Give us an opportunity to further expand our our insurance network within the specialty pharmacy World right heading a second pharmacy. Walgreens also has 300 community health system stores, and we're working towards getting those store stocked with Y camp and that'll give us a presence across 50 states when that initiative is complete and we're going to start.
Joe Bonaccorso: So the two plus the samples, a pretty good spot to be in. And we're tracking towards how we modeled our thoughts around drive and demand and what it would look like on a per patient level as far as the applicator goes. Okay, I'll get back in the queue if there's a question for me.
Joe Bonaccorso: Thanks. Okay, thank you. The next question we have is from John Serger of Needham Company; please go ahead. Hi, everyone. This is John on PERSERGE.
Doing that you know some time later this quarter into the second quarter and we're always looking at our model right. So what we really want to do here is to be operationally efficient and.
And we want to think about ways to continue to ramp acceleration. So your your other question regarding potentially adding another specialty pharmacy will continue to assess that and see if there was a need to further strengthen our footprint and help accelerate business. So that's constantly under review by us.
John Fraunces: Congratulations on your progress. Thank you for taking our question. So, regarding the upcoming Type C meeting for Why Can't Label Expansion and Common Warts, would you be able to provide any color on the potential design of this trial and whether or not additional trials would be conducted in external general warts?
The next question, we have some of that off the client kept her market he's kind of hidden.
Gary Goldenberg: This includes, you know, the investment required and any potential market opportunity for each of these indications. And second, can you provide any insight on how your partnerships with Walgreens are structured and whether we'll see any additional specialty pharmacy partnerships? So, John, thanks for the question. But first, I'll turn it over to Gary Goldenberg, our chief medical officer. Thanks, Ted.
Mhm.
Great.
Thank you and good morning, So two questions first what's the model for the pediatric sales force I think I've seen at various times you.
We're going to have a I think a part time.
D accurate sales force and then I think I've also seen that this may be has evolved to where it's a visa fulltime hires with probably a compensation model that looks like the dermatology team.
Gary Goldenberg: For the Type C meeting follow-up regarding common words for the agency, I think the way that you could think about it is that it would be a typical phase three program that you would expect the agency to ask a sponsor to run. We are still in communication and look forward to saying more as we continue to finalize the details of the trial. Yeah, and then the second, I think the other two questions you had were regarding Walgreens.
Yeah. So great question you know, we're looking at a variety of models and pediatrics known that we had to get there, but based on the inbound traffic we continue to get to the office and what we're hearing on the ground.
We made the decision to staff that with a full time, you know compensated feel force. So it will be building the that team now 220 representatives and they will be hitting the ground and full April 1st we think there's a strong market opportunity with pediatricians and we we've decided to make that a full effort to go after.
Joe Bonaccorso: So, Walgreens, the partnership with Walgreens is accelerating nicely as, you know, just to recall why we went to that. It gave us an opportunity to further expand our insurance network within the specialty pharmacy world, right, adding an effective pharmacy. Walgreens also has 300 community health system stores, and we're working towards getting those stores stocked with YCAMP, and that'll give us a presence across 50 states when that initiative is complete. And we're going to start doing that, you know, sometime later this quarter or early second quarter.
Right.
Okay. That's very helpful and the second question relates to sampling and just.
When we when you look at yourself the sell through data from Triple Laugh and you know how much of that volume is sampling and how much of that so far is is reimbursed business.
Joe Bonaccorso: And we're always, you know, looking at our model, right, so what we really want to do here is be operationally efficient, and we want to think about ways to continue to accelerate acceleration, so your other question regarding potentially adding another specialty pharmacy, we'll continue to assess that and see if there's a need to further strengthen our footprint and help accelerate business. So that's constantly under review by us. The next question we have is from Kim Dolliver of Brookline Capital Markets. Please go ahead. Thank you, and good morning.
So when we look at sampling that's on a.
That's in a different lane for US right. We're not we're not looking at that as our pull through from three outs. So sampling has just been on a as needed basis.
You know based on the opportunity with the physician if they were looking to treat the same day, while while we were getting our insurance coverage built out or they're using the white back stuff should be more a pharmacy that that has no no bearing on what we're doing at three F as far as our revenue drive.
Okay, but this is just a per cent just looking at the overall activity.
Are we looking at 80, 90% sampling at this age or a lower number.
Okay.
I'm, sorry, I didn't catch the last end of your question.
Oh.
Brian Kemp Dolliver: So, two questions. First, what's the model for the pediatric sales force? I think I've seen at various times you, Well, we're going to have, I think, a part-time pediatric sales force, and then I think I've also seen that this may be, has evolved to where it's a, you know, these are full-time hires with probably a compensation model that looks like dermatology. Yeah, so great question. You know, we were looking at a variety of models in pediatrics, knowing that we had to get there. But based on the inbound traffic, we continued to get to the office and what we're hearing on the ground. We made the decision to staff that with a full-time, you know, compensated field force. So we'll be building that team out to 20 representatives, and they will be hitting the ground in full force on April 1st. We think there's a strong market opportunity for pediatricians, and we've decided to make that a full effort to go after. Okay, that's very helpful. And the second question relates to sampling and just... When we look at yourself, the cell through data, how much of that volume is sampling?
Well, let me rephrase it what what percentage of the volume so far is sampling.
So.
What what we typically do is I'll try it I don't have an approximate percent for ya, but what I would save you. The samples were have been tapering down significantly since we first launched the product in September October right. So meaning that September we were probably at our highest trying to get some of trial use and then now we're bringing.
That down so I would say roughly maybe 556% of our activity out there is driven by sampling.
That's perfect. Thank you.
Okay.
The next question. We have is a follow up question from Alright, that's H T right.
It gets kind of hate.
Thanks, just a couple of squeeze and I guess <unk> question, maybe a different way to look at it negative is getting at is can you come out in droves to nets.
Ultimately you know you talk about Medicaid is an important part of this business and.
And a new specialty pharmacy networks wished that shake out now I'm going for.
Morning, Thanks, Lauren gross aggressiveness today, and it's been very consistent with our expectations pretty long. So going forward. We continue to expect that net sales as a percentage of gross sales who's going to be in that 45% to 50% range there might be some lumpiness in that number throughout the year, just depending on where patients are in their deductibles.
Joe Bonaccorso: And how much of that so far is reimbursed? So, when we look at sampling, that's on a different lane for us, right? We're not looking at that as our pull-through from 3F.
Joe Bonaccorso: So, sampling has just been on an as-needed basis. You know, based on the opportunity with the physician, if they were looking to treat the same day while, you know, while we were getting our insurance coverage built out, or they're using the white bag specialty pharmacy, that has no bearing on what we're doing at 3F as far as our revenue drives. Okay, but just as a percent, just looking at the overall activity. Are we looking at 80-90% sampling at this stage or lower than that? I'm sorry, I didn't catch the last part of your question. Oh, yeah, well, let me rephrase it.
But very consistent with what we we we felt pretty launched.
And do you expect that to improve as coverage and contracting come down through the air and you know what sort of terminal sustainable dress to that in your mind.
Yeah, we would expect that and improve both is coverage comes on and we have less impact of our co pay program for insured not covered as well as as we transition more business to buy a bill which is capability from a distribution standpoint. So you know you're probably in them closer to that 50% of the higher end of that range. They gave you once we get to a normal state.
Joe Bonaccorso: What's the percentage of the volume so far? So, you know, what we typically do is, and I'll try, I don't have an approximate percent for you, but what I would say to you, the samples were, have been tapering down significantly since we first launched the product in September and October, right? So, meaning that in September, we were probably at our highest trying to get some trial use, and then now we're bringing that down. So, I would say it's roughly, you know, maybe five, six percent of our activity out there is driven by sampling. That's perfect; thank you.
Okay, and lastly are you expecting significant response from the F. D. A in March to the savings petition you know how how big a deal as this imported business now and do you think they're gonna just kick the can on this 180. They respond to are you expecting something material and what might be.
The next steps.
Yeah Orange.
We don't expect that in the case that can you know their responses due in April.
We continue to have outreach with the F D. A regarding our concerns and we fully expect a response from them.
Joe Bonaccorso: The next question we have is a follow-up question from Oren Livnat of H.C. Wainwright. Please go ahead. Thanks, just a couple.
Right, but do they you think I'll actually do anything or are they gonna acknowledge here concerned [laughter].
Oren Gabriel Livnat: I'll squeeze in. I guess to Bill and Kem's question, maybe a different way to look at it, maybe what he's getting at is, can you comment on growth for Nets? Ultimately, you know, you've talked about Medicaid as an important part of this business, and a new specialty pharmacy in New York City. Where's that shakeout now and going forward? Morning.
I don't even at that debate.
If I knew that I'd win the lottery [laughter] [laughter].
[laughter], we think we made a very strong argument and our citizens petition there is precedent for what we're asking for in and we hope that the FDA roles in our favor, but obviously I can't predict what they're going to do it but but we're confident that we will be successful one.
Terry Kohler: Thanks, Oren. Gross net today has been very consistent with our expectations pre-launch. So going forward, we continue to expect that net sales as a percentage of gross sales are going to be in that 45 to 50% range. There might be some lumpiness in that number throughout the year, just depending on where patients are in their deductibles, but very consistent with what we thought pre-launch. And do you expect that to improve as coverage and contracting come on through the year? And, you know, what's the sort of terminal, sustainable growth in that in your mind? Yeah, we would expect that to improve both as coverage comes on and we have, you know, less impact on our co-pay program for insured people not covered, as well as as we transition more business to buy and bill, which is favorable from a distribution standpoint. So, you know, you're probably closer to that 50%, the higher end of that range that I gave you once we get to a normal state. Okay, and lastly, are you expecting a significant response from the FDA in March to this petition? You know, how big a deal is this imported business now?
Way or the other.
Okay. Thanks, so much goodbye.
[noise] then answered the questions at this time I would talk to tend to slip back up it should take one who couldn't comment.
Thank you operator, so I'd like to thank all of you for joining US. This morning, we're obviously very pleased with the significant accomplishments in 2023 and the progress we expect to make in 2024th.
And we look forward to providing another update on our first quarter earnings call in May.
Thank you very much.
That concludes today's conference. Thank you for joining US Yeah may now disconnect your lines.
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Mhm.
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Oren Gabriel Livnat: And do you think they're going to just kick the can on this 180 day response? Or are you expecting something material, and what might be the next? Yeah, Oren, we don't expect them to kick the can, you know; their response is due in April. We continue to have outreach with the FDA regarding our concerns, and we fully expect a response. Right, but do they, do you think they'll actually do anything? Or are they going to acknowledge your concerns? If I knew that, I'd win the lottery.
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Joe Bonaccorso: We think we made a very strong argument in our citizen's petition. There is precedent for what we're asking for, and we hope that the FDA rules in our favor. But obviously, I can't predict what they're going to do.
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Joe Bonaccorso: But we're confident that we will be successful one way or the other. Okay, thanks so much. Good luck. There are no further questions at this time. I would like to turn the floor back over to Ted White for closing comments.
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Ted White: Thank you, operator. So I'd like to thank all of you for joining us this morning. We're obviously very pleased with the significant accomplishments in 2023 and the progress we expect to make in 2024. And we look forward to providing another update on our first quarter earnings call in May. Thank you very much. That concludes today's conference. Thank you for joining us. You may now disconnect your lines.
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