Q2 2019 Earnings Call
At this time I would like to welcome everyone to the Amax Pharmaceuticals second quarter 2019 earnings call.
All lines have been placed on mute to prevent any background noise.
After the speakers remarks, there will be a question and answer session.
If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad.
To withdraw your question press the pound key.
It is now my pleasure to turn today's program over to Mr., Linda Lennox Vice President Investor Relations you May begin your conference.
Thank you Carmen.
Good morning, and welcome to the Amax Pharmaceuticals conference call to discuss our second quarter financial results.
Earlier. This morning, we issued a press release for those of you who don't have a copy you can access in the investors section of our website at the Maxpharma Dot com.
Please be reminded that remarks made during this call may include forward looking statements pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
You want to emphasize that these forward looking statements involve risks and uncertainties that could cause actual results to differ materially from those disclosed in such forward looking statements.
Please refer to our 2018 Form 10-K , and our Q1 2019 Form 10-Q for a full review of these risks and uncertainties associated with our business.
On today's call, we will discuss certain non-GAAP financial measures.
With respect to our performance we use these non-GAAP measures for financial and operational decision, making and as a means to evaluate our performance because we believe they better represent the ongoing economics of our business.
The definitions of our non-GAAP measures are set forth in our earnings release, which was filed with the FTC today copies may be obtained at SBC dotcom and in the Investor section of our website.
We have forward looking estimates of our long term.
Outlook, including that we will be adjusted EBITDA neutral like 2020.
Amax growth trajectory and expectations for adjusted EBITDA on a multi year timeframe are based on a strategy of maximizing commercial product opportunities to fund investments in new products with various assumptions, including certain assumptions about the progression and approval of MX product candidate.
So please refer to these additional risk factors.
On todays call.
Our Bill Heiden, our president and Chief Executive Officer.
Ted Myles, our Chief Financial Officer, and Tony Cathy I know, our Chief commercial officer.
Dr. Julie Krop, our Chief Medical Officer will also be with US for the question and answer portion of today's call.
Let me quickly run through the agenda for this morning's call Bill will briefly review the second quarter highlights and some recent double [laughter] Ted will provide an overview of our second quarter financial results and revision to our 2019 financial guidance.
Tony will provide an overview of the upcoming launch of ITC and then bill will close out the call and we'll open it up for <unk>.
With that it's now my pleasure to turn the call over to Bill Bill.
Thanks Linda.
Good morning, and thanks for joining us on our quarterly update call. We've got a lot to cover this morning, So let's get started.
As we look at the quarter, we saw strong and consistent execution from our commercial team.
This led to sequential and year over year revenue and market share growth for the subcutaneous auto injector feraheme and intra Rosa.
The tables in our press release showed impressive quarter versus same quarter year ago growth.
On this slide you can also see that each of our promoted products also grew sequentially versus the first quarter of 2019.
Net revenues for Makena auto injector were 8.5% higher than the first quarter and we saw market share grow nine percentage points over the first quarter to 63% market share.
Feraheme revenues were up 12% versus the second quarter of last year and up 5% versus Q1.
In addition, we achieved record market share more than 17%.
In the second quarter.
And finally into Rosen net revenues were up significantly versus this quarter year growth go grew 11% over Q1.
Total prescription market share grew through the quarter exiting Q2, and 4.8% market share our highest share achievement since launch.
Returning to Mckenna for a moment there are a couple of other items to report in the quarter that I wanted to touch on right upfront.
As we mentioned previously we've had sustained supply disruption within Mckenna intramuscular product stemming from issues at our original contract manufacturer.
And we intend to pursue all available remedies against that supplier.
These ongoing supply issues cost, perhaps go to lose market share in the face of increased generic competition, we made a mutual decision with PRASK out to exit the generic I end market.
And Ted will cover the impact in more detail in a few minutes, including the impact on our financial expectations for the year.
As I've already mentioned Makena auto injector market share grew to 63% and we're really proud of that achievement.
In fact based on this share growth that means that the generic intramuscular market has actually been shrinking and is now less than 40% of the total market.
Over the last few months. Many of you have asked US about this prolong study results and where we go from here with those study results today, We also announced in at a recent meeting with the FDA regarding the prolong study the agency informed us that they plan to hold an advisory committee meeting in the fourth quarter of this year to facilitate transparent discussions of the prolonged trial and allow FDIC to obtain the necessary input from advisory Committee members important stakeholders to inform regulatory decision making for Makena.
Well I can't speak to what the FTD will or won't do I want to reinforce the Amen continues to firmly believe in the clinical utility of Mckenna.
The original lease trial run by the National Institutes of health demonstrated a 30% reduction in the rate of pre term birth in a U.S. patient population compared to placebo.
Women at risk of a pre term birth, having no other FDIC approved treatment options to lower their risk of pre term birth other than Mckenna.
And preterm births can lead to devastating health care outcomes for the newborn.
In addition, pre term birth rates are rising in the United States and our highest in some of the most vulnerable patient populations.
We think that the advisory committee is a logical next step as the agency will have an opportunity to hear directly from the company clinical experts Medical Society Representatives and patients on their personal experiences and the scientific data supporting the clinical important and medical need for Makena.
As the meeting draws closer we'll provide any information that we can and we look forward to a productive conversation with the FDA and experts about this important medication later this year.
And now as you know by leasing was approved by the FDA in June and since that announcement, we've had an incredible amount of media coverage, which has helped raise awareness with potential patients and with medical professionals.
More than 300 news outlets across the country, including CNN Reuters the lead time lead times and NBC I've covered the by the CE approval news.
This media pickup has helped drive tens of thousands of visitors to our buy lisi Dot com website with approximately half of those visitors taking action such as answering questions on our symptom checker to see if they might have HSDD or downloading a guide for having a discussion with their physician.
We're currently gearing up for product availability, just a few weeks, we'll have our national sales force out in the field and we'll also be launching our direct to consumer branded digital campaign, Tony will cover some of the details about our upcoming launch and metrics that we'll be watching to gauge early success of the launch a little later on this call.
And with those opening remarks, let me turn the call over to Ted to go through the quarterly financials, and our update to full year financial guidance. Ted. Thanks, Bill Slide nine shows our revenue by product for the second quarter of 2019 compared to the same period in 2018.
The Makena Subcu auto injector continued its strong performance with $41 million of revenue in the second quarter compared to 13 million in the same period last year.
Which was the auto injectors first full quarter on the market.
We've been very pleased with the success of the auto injector as we've gained significant share every quarter since launch even in the face of multiple generic intramuscular competitors.
Next line item illustrates the Makena I am product due to the supply disruptions caused by our primary supplier we were unable to ship any I am product during the quarter.
The $10 million in negative revenue reported in the second quarter includes invoice has recently received and our estimated remaining liability for Medicaid and commercial rebate obligations for Makena I am from past periods.
It is very common to change the estimated liability based on revised assumptions of channel mix invoice lag in overall exposure, particularly in a heavily medicaid oriented market.
In some cases invoices arrive many quarters. After the initial sale product. This new information is incorporated in our current reporting and future expectations.
Once again Feraheme demonstrated strong performance in the quarter with revenue of over $42 million.
This growth was all driven by volume not only did the IB iron market growth during the quarter, but so did feraheme share of that market.
Our Hmong team continues to deliver strong results and we believe Feraheme will continue to be a source of steady cash flow.
Second quarter sales of Inshell rose over $4.9 million up from $3.2 million in the same period last year.
As you'll recall, we made a couple of changes to the patient co pay savings program in the first quarter of this year.
And believe we've optimized that program as Bill showed we're back on a steady and Rx and trx growth trajectory.
Moving down the CNL. The next slide presents operating expenses and operating results on a GAAP and non-GAAP basis for the second quarter of 2019 compared to the same period in 2018.
We broke out a couple of line items to better illustrate the trends driving our results for that period.
Cost of product sales includes amortization of intangible assets.
During the second quarter of 2018, we recognized approximately $61 million of amortization expense substantially all of this was related to the Mckenna high end product.
During the second quarter of 2019, we didnt recognize any mckenna I am amortization, because we did not sell any mckenna high end product.
The Q2 2019 direct cost of product sales includes a $4.8 million writedown Mckenna intramuscular inventory.
R&D NSG and they were aligned with our expectations. The comparison of the S.J. line item is a bit complicated by the 2018 reversal of approximately $50 million of contingent liability.
During that period, we determined that it was unlikely that we would achieve sales milestone that would have triggered a payment to the former shareholders and therefore, we reversed the liability and recorded a negative expense.
Late in the second quarter of 2019, we determined that it was probable that we would no longer supply presto and therefore, our revenue forecast for intramuscular products was revised to zero.
This resulted in a full impairment of the Makena I am intangible asset a noncash charge in the second quarter of 2019 of $77 million.
During the second quarter, we recorded a loss and adjusted EBITDA of approximately $24 million.
This is higher than expected largely driven by lost sales and negative revenue of the intramuscular products.
So as we as we review our expectations for the full year, we have decided to lower our financial guidance for 2019 due to the loss of revenue from the Mckenna intramuscular product and our server franchise development partner informing us they intend to terminate our agreement.
While we believe they have no grounds for termination we've removed the milestone revenue from our 2018 expectations.
You can see on the left side of the slide that for the six months ended June 32019, we reported revenue of approximately $154 million in adjusted EBITDA loss of approximately 59.
Our revised guidance on the far right of the slide.
Revenue of 340 million and adjusted EBITDA loss of $80 million at the respective Midpoints assumes no I am revenue and the removal of approximately $20 million previously expected milestone revenue.
Our operating plan for the back half of the year is based on continued strong commercial performance of the Makena Subcu auto injector and continued growth of Feraheme and Intrarosa.
And also includes continued investments in the development of serve brands.
And Amec for 23, and a fully funded launch plan provide leasing.
Moving to the balance sheet, we believe our products our portfolio are important opportunities to address unmet medical needs for patients and are worthy of these near term investments.
The work Weve done to transform our balance sheet over the past several years early retirement of more than $1 billion in debt has positioned us to make these investments and even go into a temporary loss position in 2019.
As we look to the back half of 2019 as a period of narrowing our adjusted EBITDA loss versus the first half of the year, thereby setting up adjusted EBITDA neutral 20 Twond.
We ended the second quarter with $261 million of cash.
In July we made the $60 million milestone payment to Pelican.
Tony is now going to provide an overview of our upcoming launch by leasing.
Tony.
Thanks, Ed and good morning, everyone I'd like to take just a couple of minutes to provide a few updates on by risi, including early market signal that elements of our national launch scheduled for September .
Hey, My team is very excited to bring this product to market. We know from market research. The approximately 110 pre menopausal women experience symptoms of HSDD.
Most of these women do not realize they are experiencing accretable medical condition. We also believe from our own market research that by leasing has the potential to raise awareness by providing a safe and effective new treatment option to an underserved patient population with acquired generalize HSDD.
Our very early assessment of the market post approval would suggest we're not the only ones excited about changing the way HSDD as discussed in treated.
To date, we've seen over 500000 visitors to our unbranded patient website, unwashed dot com, where visitors are staying longer and viewing more content than we typically see an unbranded sites.
This time is translating into actions with over 80000 visitors, having completed HSDD symptom checker today.
In mid July we rolled out our early experience program. This is a targeted program designed to help us learn more about the market.
We have 20 sales reps in the field today, calling on a small subset of healthcare providers across the country.
Their feedback is helping us validate and challenge ourselves since from research on the treatment of HST, which is further informing our targeting method will use these insights and feedback to refine and improve our plans ahead of launch.
As mentioned our national launch will take place in September with the activation of our high performing and fully trained sales force of approximately 125 sales representatives.
These are the same sales professionals, who are currently promoting into Rosa and the mosquito auto injector.
This team will be calling on approximately 15000 healthcare professionals at launch consisting mostly of OVC lands, but will also include sexual medicine specialists and select primary care offices.
As we shared before we are committed to helping us for a pre menopausal women with acquired generalized HSDD have access to buy we see.
Over the past couple of months our market access team has been working hard to educate payers on the clinical profiles by receipt.
We recently submitted our listening to the Compendia, which we'll now put by VC and the national electronic pharmacy ordering system and payer processing systems.
We believe that by leasing will eventually reach the same broad commercial coverage as seen with other approved sexual health products, which our research would indicate is currently in the 60% to 70% range of all commercial insurance plans.
As you probably anticipate we expect the price for by leasing will vary by patients insurance. Unlike most newly approved products, we expect payer access will take time.
In the meantime, we're making the first four pack of lease available to patients for a zero dollar co pay on her first prescription and a maximum of $99 on or subsequent refills of the four pack.
To help ensure a positive experience for patients we will be launching by we see through to specialty pharmacies.
We believe that these discrete nature of home delivery, coupled with services provided by this type of model will be well received by our target patient demographics.
So I'll close or how I started by emphasizing the excitement SDMA Mag provide we see this as an important moment as we bring the first FDA approved as needed treatment option to the millions of pre menopausal women with acquired generalized HSDD and to the physicians who are treating them.
My Macy is an innovative product.
We want to provide women in healthcare providers with an experienced to match.
Let's start by driving awareness of HSDD.
Helping foster conversations between patients and physicians and ultimately differentiating by we see in the marketplace.
Our commercial organization is already hard at work to deliver a successful launch in September .
And with that I'll turn it back over to Bill for closing remarks Bill.
Thanks, Tony well as you've just heard this is an important moment for patients and our company only two years ago. When we had just two commercial products. We set the ambitious goal to bring even more innovative treatments to patients to expand our product portfolio and to build additional durable revenue streams.
We set out to in license or acquire late stage development medicines and take them through the regulatory approval.
And we have done just that.
We've been building additional internal capabilities to support this goal and recent regulatory approvals Feraheme broad label, the Makena subcutaneous auto injector and just this past quarter. The approval by Lisi show that we are successfully executing on the strategy.
And today, we have two other exciting development programs Amec for 23 NCR for anti.
For 23 is a polyclonal antibody in development for the treatment of severe preeclampsia in pregnant women.
There are currently no FDA approved treatment options for severe preeclampsia and it is the leading cause of maternal and neonatal mortality.
Enrollment in clinical trials for this condition is challenging and as such difficult to predict when the timing of enrollment completion.
We are continuing to add new sites and enroll additional patients in this phase two a three b trial for M&A or 23.
San Fran tag as our other other development program Soup brand tag is in development as a single dose ready to use solution for patients treated with novel oral anticoagulants or low molecular weight heparin when reversal of the anticoagulant effect is needed for emergency surgery or serious uncontrolled bleeding.
We and our partners from Paris for your technology recently met with the FDA to discuss the upcoming submission of an idea or an investigational device exemption or the automated coagulation butter.
Based on approval of that I'd submission, we expect to initiate a phase three program for Super intake in the fourth quarter of this year.
We've considered pursuing breakthrough designation for SAP rentech, but based on feedback from the agency on additional data that might be required to achieve breakthrough we've decided not to pursue that application Super Antech already has fast track designation, which will allow us to apply for an expedited review at our Anda filing.
Investments in the launch of by Lisi, and our development stage products will allow amec to bring additional innovative therapies to patients in need and build a new chapter of durable growth for shareholders.
And with that we'll conclude our prepared remarks, and we will open the call for questions Carmen.
Certainly at this time, if you would like to ask a question.
Press Star then the number one on your telephone keypad again that is star one on your first question comes from the line of Daniel Tayo with H.C. Wainwright.
Gen Douglas your line is open.
Hi, good morning, Thanks for taking the question just.
As a starting point in terms of the ft AD com that's upcoming.
Have you been engaged in conversations with any of the key medical societies in terms of a car to get their perspective on the results from prolong and in anticipation of what they might sort of discuss at this meeting.
Thanks, Doug I'm going to ask Julie Julie Krop, our Chief Medical Officer is here and I'm going to ask her to answer that question for you.
Yes, hi.
Of course, this is critical and I think the FDA in asking for the AD com.
Is very interested in understanding sort of the totality of the data from a variety of different stakeholder, obviously, including the medical societies and yes of course, we are in constant we are in contact with them and we'll continue to provide them with.
All the information they need in order to be able to be active participants and this whole discussion at the Advisory Committee.
Yes. They are obviously, an important stakeholder Doug they treat these patients. They are aware that this is the only treatment option for patients who are at risk of pre term birth. So they have a lot at stake here and Julie and her team have been working closely so they will definitely play a role at the Advisory Committee.
Okay, and maybe could you share some of just the early feedback that you've gotten from them in terms of the results from a prolonged.
Yes, I mean, I really can't speak for the medical societies, I mean, I think we at AMAG as Phil reiterated I mean this is a unique situation. This is a product that's been on the market for over 50 years.
Obviously widely used by physicians within the guidelines for a cod and SMS for treatment of patients with a prior preterm birth strong safety profile, obviously, the Lisa Cohn data reinforce that and I think we're in just minutes unique situation with prior us positive data and now a negative trial in patients outside the us with a different healthcare system and a different set of first factors phone patients treated in the U.S. and so it's it's that totality of the data is all that.
We can put together to try to understand how.
How this will be handled and I think that you know.
As I said I, just can't speak for how the medical societies will respond.
Because that's.
We can.
Okay, and then just one quick one.
Jumping between calls this morning, so I might have missed it but just in terms of the termination of the collaboration agreement on zero point on tag on Yeah.
You know just what that means in terms of the timelines on development and even just the future of the program for Amat. Thanks, Yes. So the.
I mean this the background I think to the determination. This is a partner that actually.
Did not end up having a significant stake in the U.S anticoagulant market. This was a US co development agreement and so there's certainly background. That's understandable from a contractual standpoint, we don't believe that the partner actually has the ability.
To to terminate so we think ultimately we will prevail without the most conservative course was to remove it from.
Our financial guidance the.
The development plan is really unchanged.
We are developing this product in in combination or for use with.
The various anticoagulants and low molecular weight heparin, but it does not change the the development plan Giuliani further Tom Yes, I know it doesn't it also doesnt change our timelines our timelines, we're not dependent on the agreement okay.
Thank you very much.
Okay. Thanks, Doug.
And your next question is from the line of Jessica Fye with JP Morgan.
Hey, guys. Good morning, Thanks for taking my questions.
First on guidance I appreciate you reiterating the guidance for 2020 to be neutral on an adjusted EBITDA basis. When we think about the roughly 80 million dollar year over year improvement you're projecting can you help us think about how much of that will come from higher revenue versus lower Opex I ask because consensus has your 2020 revenue up about $10 million year over year, suggesting.
The rest would need to come from expense cuts.
Assuming consensuses this colo.
Hey, Jess it's Ted here.
So it's a little early to talk specifically about our next year expectations, but we see a lot of stability in the portfolio obviously.
2020, EBITDA neutral assumes continued great execution on Makena Subcu feraheme.
Intros that will clearly by the end of the year will be in the cash.
Full positive.
Bucket with Makena and with Feraheme and then there is a bit of it as you know 2019 was a big R&D year and to launch two product launch here.
As we get into 2020 were sold driving the VC launch, but less so on intrarosa because we're out of launch mode. There and we believe a lot of the R&D costs that are being incurred in 2018 will mitigate in 2020.
Okay got it and just sticking with guidance with the 19 revenue guidance coming in.
Not fully explained by I think the $20 million your print tag.
Milestone that was supposed to come in this year is the rest from Mckenna I am and.
Are you standing by the 40 to 50 million quarterly run rate for Mckenna with solely the Subcu product.
Yes, so the big drivers of the guidance lowering were clearly as you said Mccain I am as you know we had so $10 million of negative revenue in Q2, there were some headwinds in Q1, so not only were we counting on positive revenue for the Makena, we particularly good generic I am product through our authorized generic partnership, but we actually incurred negative revenue. So thats a bit of a whole. So that's a key driver and then.
The what I'll call the conservative removal of the $20 million of.
Server Antech development milestone revenue those two drove the guidance revision.
And your other question about $40 million to $50 million of Makena, Weve talked about that sort of big picture and.
Largely driven by the Subcu really proud of the results in Q2, the Subcu delivered $41 million of revenue. So we're in that range and.
We're continually encouraged by the progress the commercial teams, making with the Subcu and the adoption by physicians.
If you if you if you think about the go forward now ingest. The this is bill.
Obviously the share that we have achieved.
For the full quarter, 63% for the auto injector is performing very very nicely the intramuscular market.
Has been shrinking over the last several quarters and so as we look to the future. We eventually we're likely going to get out of the intramuscular market anyway as multiple players come into that market and became less interesting if you will.
But the success of the Makena auto injector is really what's going to drive revenues going forward.
Okay got it and just last one following up on me.
A question on your friend Tag can you help us understand like what Daiichi was asserting to be able to terminate the agreement.
And remind me when you believe you can report the phase three results for that product.
Sure. So I don't want to get into the specifics of what's Daiichi is asserting because when we get into legal contractual language and so I don't want to I don't want to get into that again, you can you can certainly understand from a commercial perspective, they don't have a presence in the us market and so I certainly understand there may be some background.
Where you can understand why they might want to try and get out of this agreement, we think contractually they actually don't have the.
The ability to do so in terms of timing, let me turn it over to Julie yes.
So I don't have the exact timing to today, but probably definitely sometime in the first half of next year.
We will be able to report out that data for the three year study. Unfortunately these trials are pretty yeah, they're pretty fast I mean, as you remember healthy volunteer studies.
So yes.
It's pretty quick so.
Okay, great. Thank you.
Thank you Dennis.
Your next question comes from the line of Amy Satya with SPP Leerink.
Please go ahead.
Hi, good morning.
This is Jason on from me. Thank you for taking our questions.
Maybe first I think you sort of touched on this bill, but just wanted to come from so the fact that you didn't change sort of your preliminary view of 2020 Despites.
The lowering of 2019 guidance.
Yes, it sounds like you didn't assume basically that the that the I am has pretty negligible contribution in 2020 and just wanted to.
Yes, Thats right reason and again, the Subcu auto injector is performing.
As well or better than than we had expected and so.
Interesting versus.
Our forecast from a year or two ago.
The intramuscular market is shrinking and so.
As as an interesting is that market was forecasted to be its becoming even less interesting as it continues to get smaller.
There are other generics that have entered the market and so rather than be a contributor with our authorized generic to two of being another player in that market and is complicated by the supply challenges that we've had with the intramuscular we decided the best course going forward was to focus on the continued execution and great success, we've had with the subcutaneous auto injector.
Okay.
And then.
Maybe I guess focusing on the rest of the year.
Just on sort of generic items there seem to be one that's that's been picking up share pretty recently.
Maybe could you just sort of give us maybe more like more broadly sort of your expectations in terms of number in generics for the rest of the year and then.
Also in terms of.
Youre sort of AG.
Contribution.
I think we still see some scripts.
Obviously flowing from press go into the third quarter.
Would there be any sort of financial impact in a failure to supply penalty that's sort of kicks in in third quarter.
Maybe just maybe help us just work through the numbers there. Thank you.
Okay. So.
Let me start with just a big.
Comment which is.
I think some of the analysts communities actually buying a different dataset then we buy.
So we have very accurate and we have very accurate data on the market and so as I mentioned that the intramuscular market is shrinking now there are some folks trading share within that market, but important to keep in mind that the market is actually getting.
Smaller.
In terms of the financial impact had maybe you want to mention.
Yes. So if you are seeing some press go shipments currently that makes sense. So we didn't ship any product depressed go in Q2.
During Q3 for that matter.
They still hold they may still hold some inventory and we'll be putting that out in the market based on their own demand. We've already booked those revenues again in Q theres minimal theres minimal financial exposure to office.
It was a small amount of inventory and minimal exposure, yes. The expectation is they will continue to lead out that inventory and ultimately deplete the inventory that they have on hand, Tony anything further.
No just a comment maybe a question was asked on number of generic so we see a number of them today I think bill said it on the head there is some horse trading going on we focus on the big number which is total generic uptake versus branded subcutaneous auto injector, that's moving in the right way, we would expect more generic simply because we know there is at least a couple more out there.
With vial sitting with the FDA.
But from a generic perspective today, we think the market is fully supplied.
There is enough of them out there. So we're starting to see what we believe are kind of two discrete markets out there.
Okay. Thank you very much.
Thanks season.
Your next question comes from the line of Serge for longer with them.
Hi, good morning, Thanks for taking my questions.
I guess first on a on Mckenna can you just talk whether the supply issues that are affecting the.
And your mess intramuscular product.
Can have any carry over to the auto injector going forward.
Yes, no they don't the.
Two separate suppliers and this this whole intramuscular supply issue really was caused by one supplier.
Our primary supplier on the intramuscular form and again they have nothing to do.
With the sub Q auto injector.
Okay.
And then on center parents had just remind us what kind of.
Collaboration structure was in place.
And now that it's.
Being terminated whether you will seek in additional partner to for development.
So the development partnership was really.
Funding based on the development of our reversal agent in combination with a particular.
Oral anticoagulant.
And so I said, whether that's in or out frankly does not change our development plan of program at all.
In terms of a additional development partner certainly not the way. This program was structured there is interest in partnering seer print tag ex us and so there may be eventually some type of partnership that's consummated around seer print tag.
Ex us.
But I don't see a replacement development program.
That structured the same way this this current.
Development program is structured with Daiichi sankyo.
Does that answer your question Serge Yes.
And then one last one on the fight Lisi.
I guess, what kind of commercial coverage you expect that launch in September and how should we think about a whack in net pricing progression.
This year next year.
Yes sure. So thanks for the question so super Super early to be putting targets out there for coverage.
As stated in the forward comments I think we do anticipate eventually we'll get the level seen with other therapies.
Out in the marketplace today of roughly 60% to 70%.
But by leases on one of the guys products. We're just now going to go back and start having discussions with payers with now the whack price listed.
And what kind of let you know as you go forward we've got.
Yes, hi expectations for coverage overtime, but its early to say just when and how that kind of takes where you'd want to restate Tony the.
Patient access program, yes, absolutely absolutely apologize I know some folks are jumping on the call Midway and light. So maybe I'll just restate for the benefit of the folks at maybe joining later in the call.
So even though we do anticipate that type of coverage, we do anticipate like I said, it's going to take some time in the interim we believe access to the product is critical at launch so we will be launching with a zero dollar.
Okay for first fill of a four pack and that a $99 Max.
Out of pocket for patients for subsequent refills of the four pack.
So I think what you will see surgeons is not uncommon right and product launch, we'll see relatively high gross to nets to start and then that will come down over time. The net price will go up over time based on coverage.
Great. Thank you.
Thank you Sir.
Your next question comes from the line of Tyler Kim with Suntrust.
Hi, This is Tyler on for Greg. Thanks for taking the questions I just have one quick one on Makena.
Do you think that the recent court ruling on the compounding vasopressin could have any implications for them to come to market.
No I don't think so because when you think of that obviously, we've got generics, which are lower priced versions.
A lesser version, if you will and intramuscular form versus the subcutaneous auto injector I think today, there is a low priced option and so I don't think that we're going to reopen that pandora's box of exposing patients to.
To compounded hydroxyprogesterone caproate, because because of the availability of generic so no I don't think that has an impact.
Okay. Thank you.
Okay. Thanks Tyler.
There are no other questions at this time I will now turn the call back over to Bill Heiden for any closing remarks.
Great. Thank you comment I want to thank everybody for joining us on the call today, we have got a busy Q3 in front of us and we look forward to updating you on our continued progress that busy Q3 includes the launch of by leasing which is really just a few weeks away. So we're all very enthusiastic to get that out into the marketplace and help even more patients. So thank you again for your time and we look forward to continuing to update you on progress.
Thank you. Thank you again for joining today's conference you may now disconnect.