Q2 2019 Earnings Call
At this time I would like to welcome everyone to the <unk> second quarter 2019 conference calls.
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. If you would like to withdraw your question press the pound key.
Thank you I would now like to turn the call over to Andrew Guggenheim Chief Financial Officer After Meera.
Great. Thank you operator, and good afternoon, everyone.
I'd like to welcome you to <unk> earnings conference call to discuss the financial results for the quarter ended June 32019.
I'm joined today by our chairman and CEO , Tom Wiggins, our Chief Commercial Officer, Lori Lions, Williams, and our Chief Development Officer Louis opinion.
Earlier. This afternoon your mirror issued a news release announcing the company's results for the quarter.
Copies of news releases and SEC filings can be found in the investors section of our website.
Before we begin I would like to remind you that during the course of this conference call.
We'll be making certain forward looking statements about your mirror based on management's current expectations, including statements regarding to remember its business plan development programs strategies prospects market opportunities and financial forecast and guidance.
These statements are subject to numerous risks and uncertainties and actual results could vary materially from the results anticipated by these statements investors should read the risk factors set forth in <unk> Form 10-Q for the quarter ended June 32019, and any subsequent reports filed with the FCC.
With that said I'd now like to turn the call over to Tom ligands, Tom Thanks, Andrew.
Good afternoon, everyone and thanks for joining us.
We've continued to set ambitious goals for ourselves over the past several quarters and I'm happy to report that we successfully delivered on them in the second quarter.
Significant wins on the commercial development and strategic fronts.
Okay Brexit as we said from the beginning our initial launch efforts were focused on creating a positive patient and physician experience with Q Brexit.
By ensuring broad seamless and affordable access by facility facilitating strong commercial coverage.
Operating a patient centric co pay savings card program.
It was our belief that each of these would serve to establish a solid foundation for expanded physician adoption and our direct to consumer or DTC efforts would in turn drybulk awareness of and demand for Q Brooks.
During our first quarter call, we indicated that the following changes to the co pay savings program, we would see an immediate and significant improvement in the gross to net would you pay a discount.
And then we also expected overall growth in prescriptions in Q2, despite a temporary decline immediately following the program changes.
Right that many companies are unable to deliver would make this type of change.
I'm pleased to say that we delivered on these expectations in Q2, we saw a dramatic improvement in the GPM discount to 39% down from 76% in Q1.
And an increase in the number of Brexit prescriptions by approximately 20%.
Our ability to deliver.
Resulting in net product sales grew to Brexit 8.1 million in the second quarter more than triple the 2.5 million, we reported in the first quarter.
Well, we will share more key highlights from the second quarter, but I do want to take a moment to congratulate her and the team facilitating a successful transition for the Kobe savings card.
It's important to note that we successfully accomplished this while ensuring that patients and their physicians continue to have a positive experience with Q Brexit.
Having established a strong foundation, we believe we are now well positioned to leverage our patient activation effort to continue driving substantial revenue growth in the future.
Now turning to lever kids in that.
The market continues to evolve as we expected with the anti IL 13 signaling establishing the standard of care and adoption of biologics occurring much more rapidly and broadly that occurred in psoriasis.
However, there still remains a significant need for new and improved therapies for a topic dermatitis.
Against this backdrop, we are enthusiastic about the opportunity for leverage to deliver highly competitive best into these profile.
Relative to both billion Mab.
Other AG products currently in development.
We believe our phase to be data support this profile and with now design a phase three program to deliver it.
In the context of the competitive landscape, we believe our position with the level of the strong and look forward to the opportunity to compete in this large and growing market.
Laurie and Louis will outline our thinking in greater detail.
I'm also excited that Albemarle sees the same potential for Lebron, we're pleased with their decision to exercise the option to license rights to develop and commercialize library in Europe .
And we look forward to our partnership as we advance the program.
In conjunction with our preparation for our phase three program, we had a successful and positive either end of phase two meeting with the FDA.
We remain on track to enroll the first patient in the phase three program by the end of this year.
And we expect to report topline results in the first half of 2021.
I'm incredibly proud of our team's execution. This past quarter, we expect to continue this momentum as we head into the second half of the year and beyond.
With that I'll turn it over to Laurie.
Thanks, Tom.
There are two noteworthy to break the headlines from a commercial perspective this quarter first we delivered 229% quarter over quarter net sales growth.
And secondly, we continue to meet or exceed expectations on our key performance indicators.
As you'll recall, we evaluate our success across the following three categories for delivering quality assets, secondly, driving physician adoption and third activating patients to seek treatment.
In Q2, we continued to make progress on the asset side, while also delivering on our commitment to lower our gross to net discount.
As Tom mentioned, we set an ambitious goal to reduce gross to net and provided guidance of 45% to 55% during our Q1 call.
Not only did we meet our goal, but we far surpassed that reducing our gross to net discounts of 39% in Q2 down substantially from 76% in Q1.
This is no small feat when you consider other dermatology products, where GTN discount can be as high as 70%.
Needless to say, we're pleased to see to Brexit Overperforming on this key driver and an area that can often compromise net sale.
Additionally, we are pleased to report quarter over quarter demand growth. Despite our changes to the co pay card we recognize that in some instances when companies make the sort of adjustment product demand never recover.
He Brexit, however, did not sacrifice prescription growth as evidenced by the 20% growth for the quarter.
Moving to prescriber behavior physician adoption of keep Brexit has substantially exceeded the internal estimate we set at launch to date there have been nearly 13000 prescribers of keep Alexa and we continue to see substantial growth every month.
We believe this is an encouraging trend in the context of data from other successful launches for example, when you consider that to tell you not launch approximately 6500 prescribers had written at least one prescription 10 months into that launch.
Given our success in driving uptake with a broad base of prescribers in the back half of the year I focus will be on productivity per per prescriber, which provides a great opportunity for continued demand and that sales growth.
Additionally, because we continue to increase new prescribers every month and see an opportunity to capitalize on refills for existing she brings to patients. We believe there are many ways to enhance our growth for the remainder of the year.
Lastly, I'm, particularly excited about our patient activation activity. The key performance metrics, we set for ourselves prior to launching our DTC campaign continues to outpace our assumption.
One trend in particular that we see as an indication that the campaign are driving patients to take action. It's a 38% growth we've seen in the topical dermatology hyperhidrosis market year over here.
This market had historically remained flat yet now we see significantly more patients seeking treatment and filling prescriptions.
In addition, and importantly in Q2, the data show a strong inflection in a number of key Brexit claim sent to the payer which were up more than 50% over the first quarter.
Think about that for just a moment that means we successfully reached patients with our advertising they booked an appointment with the dermatologists they've received a key Brexit prescription and it was submitted to the payer on the patient's behalf.
In short that means we delivered exactly as planned on arguably the most difficult parts of the funnel influence.
In the same period, we that we saw this 50% claims growth. We also saw a 20% increase in prescription.
Improving our pull through efforts to enhance its conversion ratio presents a great opportunity for growth.
It's important to ensure that patients are aware of the savings card physician process prior authorizations and pharmacies seek more information from the physician when necessary.
It has the focus of our entire team and I expect they'll deliver on this effort just as they have on each component of the launch plan today.
In summary, we believe the hyperhidrosis market is shaping up as expected the Brexit demand continues to rise new physicians and patients are trying the therapy everyday and our gross to net is healthy contributing to net sales growth of 229% quarter over quarter.
With this in mind, we reiterate our guidance for Q Brexit peak sales of 500 to 600 million.
Before I turn the call over to Louis I want to offer my perspective on the landscape, which also continues to evolve as we'd expected.
By inhibiting I, all 13 signaling diplomat is rapidly establishing the class as the new standard of care.
Given the benefits and ease of prescribing adoption of biologic Haiti therapy has been much faster and broader than we've seen at the beginning of the psoriasis market.
Psoriasis biologics weren't as easy to right because they require intensive safety counseling and lab monitoring.
He told me not reach the 1 billion annualized 80 sales in the U.S. within 18 months.
It took humira and Enbrel eight and nine years, respectively to reach that same threshold into life.
Given this rapid uptake analysts estimate a multibillion dollar 80 market in the years to come.
While he told me not had substantially advance the standard of care as an any chronic immune mitigate mediated disease. There remains a significant need for new and improved therapies.
So it's definitely a d., we believe me therapy first you need to clear the high bar set by deploying him up.
This will require a song strong safety profile and no lab monitoring requirement, which translates into ease of use.
All while still maintaining a broad efficacy profile spanning the range of 80 symptom.
Beyond that the key opportunity for improvement are for improved efficacy across your writer skin lesions and quality of life.
Secondly, improved tolerability, particularly in terms of conjunctivitis, which is a clinical liability for dupilumab and third improve convenient specifically less frequent administration.
We believe this dynamic allows for the adoption of new systemic 80 therapies and one that favors leverage based on the profile we demonstrated clinically.
Furthermore, it represents a significant challenge for other new mechanism with less established profile.
Importantly, leverage will have the opportunity to compete in a first line anti IL 13 class that will be a multibillion dollar market in enough itself by the time, we launch.
While there are a number of new candidates under evaluation, even if the efficacy is attractive we believe there's a long way to go before any we'll be able to establish that they can truly deliver the combination of efficacy safety and ease of use to generate significant personal line utilization.
As an example, with respect to JAK inhibitor.
While the yield or oral administration will likely be attractive for some patients. We continue to witness the challenges of establishing a profile suitable for widespread adoption in dermatology.
We expect dermatologist to be more judicious with their use of Jack likely relegating them to second or third line use.
Given black box warnings of serious safety risks burdensome lab monitoring requirement.
And the difficulty of optimizing efficacy in the context of the dose limiting toxicity, which has played the class to date.
While we fully expect to see more positive efficacy readouts from this and other classes. The Jack experienced cautions that clean easy to use safety profiles are difficult to establish.
And while we certainly believe Jackson other new products could ultimately find utility in certain segments of the 80 market. We believe the expected Lebron product profile will result in share first line positioning.
In light of this we are excited about the opportunity for leverage to deliver a highly competitive.
In fact, best in disease profile relative to the existing and future therapies, we see lots of ways to win and it's expanding market and with that I'll turn it over to Louis to provide an update on our stuff.
For next steps for the lever because in our phase three program Lewis.
Thank you Laurie.
We are a few months post announcement of delivery fees to be steady results and our confidence in the robustness and quality of the data has only increased.
The findings of the study along with the substantial body of additional clinical and Nonclinical data support our belief that every has the potential to be a death and disease therapy in Haiti.
As a reminder, our goal would lever is to leverage its unique molecular profile.
Differentiated pharmacokinetic profile and targeted mechanism of action to deliver a therapy with the safety and ease of use of the Io anti IL 13 class.
And that the added benefit of improvements in Africa.
Safety and Tolerability.
Our phase to be did I have validated the speeches by demonstrated.
One a clean safety profile consistent with our expectation based on all studies of levering and more than 4400 patients.
To a robust and brought up because the pro profile spanning the range of 80 signs and symptoms, including edge and skin lesions that looks particularly strong on key measures of most important to patients and prescribers.
So Josh for writers and RF easy 90, and I again.
Three excellent tolerability profile, including a low rate of conjunctivitis that was similar to that observed in patients receiving placebo and many 80 studies.
And for strong efficacy with both once every two week and once every four week administration, presenting an opportunity for improved convenience.
As you know following the positive results from the Phase Twob study, we committed to aggressively advance to phase three.
I'm pleased to report that our end of phase two meeting with the FDA. It was very successful.
Notably we reached an agreement with the agency on the final trial design that we believe will maximize the benefit that I've read may one day offer patients.
We can confirm that or two pivotal monotherapy trials, we will evaluate levering in both adults and adolescents with moderate to severe AB.
A 16 week induction phase with a 250 milligram dose of leverage every two weeks.
Following the voting though.
And following the 16 week induction phase.
Two different maintenance therapy regimens, one in which lever use does every two weeks and another in which leverage the every four weeks out to 52 weeks.
The favorable feedback we received from the FDA.
In our trial design confirms that he remains an area of unmet need and that additional treatment options are needed for patients.
We plan to share additional details on the design of the phase three trials will need begin enrollment later this year.
Which would put us on track to report top line results in the first half of 2021.
With that I will turn it over to Andrew to discuss our financials for the second quarter Andrew.
Thanks Louis.
For the second quarter of 2019 revenue totaled 66.6 million comprised of 8.1 million in Q, Brexit product sales and $58.6 million in collaboration and license revenue.
The 8.1 million in Q Brexit product sales represented a 229% increase over or more than triple the 2.5 million in first quarter 2019 revenue.
This increase was driven by 30% growth in gross sales and a 37 percentage point improvement in the GTN discount as terminal already noted we were incredibly pleased with the progress in these areas.
The $58.6 million in collaboration and license revenue for the second quarter of 2019 is entirely related to the armor all transaction, we allocated the deemed $110 million transaction price consisting of the 30 million upfront option fee.
50 million option exercise fee and the $30 million in phase three initiation milestone to the two key performance obligations under the agreement for which we received the 110 million specifically the even commercial property, we granted to overall and the R&D services, we are obligated to provide to them.
We recognized 53% of the transaction price that was allocated to the IP license in the second quarter. When the license was granted and will recognize the remaining 47% over the period in which the R&D services are performed essentially the duration of the phase three program in a manner analogous to the percentage of completion method.
For the second quarter of 2018, the $39.1 million in collaboration and license revenue was primarily related to a milestone payment we received under a prior collaboration.
Total cost and operating expenses for Q2, 2019 were 82.9 million compared to $60.3 million in the same period of the prior year with the increase driven by a rise in S unique expenses in connection with the launch of Q Brexit and for this quarter specifically the investments in our life unfolds DTC campaign, which we launched in late March of this year.
He asked you any expenses for the quarter were consistent with our expectations recall that we had guided to this being the peak SGN a quarter for the year given the launch of the DTC campaign and the period in which we have the highest on their presence.
Turning now to the balance sheet and cash runway. We ended the second quarter were 327.2 million in cash and investments. This excludes the 80 million in payments from Almirall, we have received or will receive and the approximately 40 million in proceeds. We recently drew under a structured financing facility, which provides us additional financial strength and flexibility at an attractive cost of capital.
We are now in an even stronger position to fund our operations into the first half of 2021 and through the expected topline data readout from a leverage <unk> phase three program.
As we look to the second half of the year, a few key points to make regarding our financial expectations.
For Q Brexit, we are confident in the underlying fundamentals of the launch and our ability to generate significant demand and sales growth in the second half of the year with this said, we expect prescription rates to move around on a week to week basis. Given this is our first full year cycle and there are several commercial factors at play simultaneously.
For the full year 2019, we expect total net product sales in the low $30 million range, representing substantial growth in the second half over the first half sales of 10.5 million.
As we move forward in 2019, we will update you Brexit revenue guidance, only if warranted by changing circumstances.
For the GTN discount, we reaffirm our prior guidance of approximately 40% in the second half of the year and moving forward. The actual number each quarter likely will fluctuate within a narrow range depending on a few factors because we achieved our longer term guidance in Q2, we expect that future growth and net product sales will be more closely correlated with growth in prescriptions for gross sales.
We also reaffirm our gross margin guidance of 80% to 90% and we were already within this range in Q2.
For the armor all related collaboration and license revenue, we expect to recognize approximately 2 million in each the third and fourth quarters of this year.
And finally, we are confirming our previously issued operating expense guidance for the year. This guidance includes a significant decrease in SG expenses in the second half of the year compared to the Q2 level based primarily on lower spend as planned related to our DTC efforts.
With that I'll turn the call back over to Tom for some brief closing remarks Tom.
Thank you Andrew.
Building on our success in Q2, our priorities for the second half of the year a very straightforward.
First we will continue to drive demand for progressive.
Were working from a strong foundation.
With nearly 13000 unique prescribers good payer coverage a greatly improved gross to net discount and data pointing to our ability to expand a one stagnant market by activating an increasing number of patients to seek frequent.
Second we are excited to move leverage rapidly into phase three and we look forward to the opportunity to present, the phase twob data at an upcoming medical meeting this fall.
These priorities are consistent with our strategy to build a company with best in class development and commercial capabilities that can execute on the Lebron phase three program.
Continue to deliver on the two bucks, along and allow us to leverage our experience to execute a successful launch of leverage.
As well as other potential products in the future.
We believe this strategy will deliver the greatest return and value.
We're committed to the dermatology space and we'll continue to be guided by our mission of developing better treatment solutions for the millions of people living with chronic skin conditions and the dermatology practices compared for them.
With that I'd now like to open up the call.
A question operator.
If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad, we'll pause for just a moment to compile the queuing thereafter.
[noise].
And our first question comes from the line of Leo of Abraham from Citi. Your line is open.
Hi, good afternoon.
Maybe first question on Brexit can you just give a little bit of color on the weight of compliance that you're seeing with patients taking the drug and on a reasonable rate of scripts that you're seeing is if you have the data to hand.
Hi, This is lorie I can speak to that so based on the data we've seen so far refills are really consistent with the expectations. We had previously and as a reminder, our model assumes three you refilled per year. After a patient has started to Brexit and so far the data we have support holding that assumption. So what we hear qualitatively is that both patients and physicians really do seem to love the product. So we think that probably helping the refill number but so far we're comfortable with where that assumption that.
[noise] and then on the DTC program that you that you initiated earlier this year.
Can you comment on the impact of that program. It's it's kicked in yet and just quantitatively what what you seeing in terms of interest from patients physicians and how quickly you think this will translate into volume increases.
Sure. So on so far we have of course seen a lot of activity being driven to the web site, which is not uncommon when you launch these campaigns.
So we track all of those metrics as you might expect that I think the things. We're most excited about we add our that we see real market growth. So again looking at the total topical market for hyperhidrosis in dermatology, that's up 38% year over year. Since we started the campaign and then we also have seen in this quarter, specifically, 50% increase over Q1 of the claims that are being sent to the payers. So I think as we get further into launch we're seeing more and more evidence at at kind of an even more granular level to say our campaign of doing exactly what we needed to do which is to get these people to go in and make sure it to a dermatologist ask for a prescription and so far.
We see those things happening.
And then lastly on that because my.
I I I assume we presented data.
A little later this year, what what incremental data can be expect when when the data presented at a medical conference.
Yeah I live it's Louis we plan to present.
More full data set on on what we have now so you will get a better insights into not only the primary endpoints, but some of the secondary endpoints and key safety data.
Great. Thank you very much.
Our next question comes from the line of Umer Raffat from Evercore. Your line is open.
Hi, Thanks, so much for taking my questions I had one for you.
Louis today, and perhaps one for Andrew if I may.
Lewis My question is a multi part question, it's really around how I feel like among all the investor and analyst community. We've we've talked and debated extensively for <unk> 13 pathway.
With each of the players involved.
Well, we haven't had much of a discussion on especially with with.
If you guys has been on 33 pathway and specifically what are your expectations on the upcoming readout for the 30. The reason the atopic dermatitis do you think any one of them is differentiated versus others and there's an app. This is lily there's more.
And also do you think we should or shouldn't be reading across from some of the asthma data at least two different companies have put out recently would love to hear your thoughts on that and I had a follow up for Andrew If we have time.
The.
Can you repeat the very last part of that question.
The and that's why was the recent asthma result, we can or cannot read across from them for that 33, but.
Okay.
Yeah, Hi, good to hear from you know you know, it's it's it's certainly a competitive landscape because there's such an unmet need for your topic dermatitis. Yeah. We we continue to be excited about our results and how they stack up against all the competition today are tough to call on what's going to happen with I O 30, threes and others are one of the things that we know unlike psoriasis 80 isn't more heterogeneous disease and so to pre clinically a good outcome is important and we think that we have done that and the importance of well not only for further clinical development, but also for for the market.
So I think you know what with new data, it's it's going to have to be a important to see the clinical data before we comment further on it.
And then in terms of I O 33, whether it carries over difficult to say you know as much as another tough area and patient selection and the asthma studies is so critical and so.
It doesn't necessarily project, the it's it's going to work or not and atopic dermatitis.
Got it and one for Andrew perhaps a quick one Andrew I realize there's meaningful assets in dermatology potentially for sale you guys are obviously limited by the cash on hand, as well as the size of the company as well, but my question was is there anything out of the box it's theoretically possible.
We've seen companies or even more equity at times and their own market, but there isn't anything possible that could open you guys up for dermatology assets, which aren't necessarily things were thinking about given the size of the company right now.
You know more it's Tom.
Let me answer it Andrew welcome to.
To add.
Let me start off by saying, we think the two assets we have are.
Among the best the.
As we look around the landscape. So we think that is a relatively high bar to get over for other things.
We continue to look at the landscape.
We certainly would not we'd be interested in adding either to our commercial teams.
Offerings at the right time as well as the portfolio.
But I think the bottom line is we've got two assets.
With an opportunity to create a lot of value with both of them.
And we will continue to study landscape.
And we are now.
That.
That.
That makes sense.
Yep. Thank you very much.
Our next question comes from the line of Louis Chen from Cantor. Your line is open.
Hi, Thanks for taking my questions. So my first question I have for you is that is there any synergies between hyper hydrous is any topic dermatitis as it pertains to your sales force.
And then secondly, just back on numerous question here on the H. Herpich dermatitis, obviously, you noisy market lots of trials happening here you know, what's your confidence level that you'll have the best in class profile relative to the other products on the market any thoughts there would be helpful. And then lastly, just on the proof of concept for a polymer hyperhidrosis hows that progressing does that add on top of your peak sales number that you've given is there any overlap between patients currently already using it for Palmer hyperhidrosis. Thank you.
Yeah Louise.
Hey, Tom how are you.
Well, let me start off by saying absolutely there was synergy between our commercial organization between the two products I mean in addition through successfully launching new brands. We're we want to successfully launch the company and develop a best in class commercial organization or any other ancillary groups that we need to be very competitive with the market for the short answer is yes, and I'll turn it over to Lloyd to give us a little a little more color on that.
Hi, Lisa this is Lori I think we do see a number of potential synergies and the hyperhidrosis market maybe market, mostly because the capabilities that we're building right now on the commercial front. We believe are going to set us up well to come in and succeed and 80 as well I think if I take a massive step back and consider the data points. We have over the last nine to 10 months, we created a team who we think are super talented and so far they continued to deliver on every single thing we asked them to do so I think the best asset you're going after on the commercial front. The really good solid executing team and we think we've built that and can certainly leverage that and a d. as well just maybe speak briefly to the polymer study I'll, let Louis answer the study question, but just on my view on the peak year sales opportunity as a reminder, for our $500 million to $600 million peak opportunity that we've guided to we do not have a polymer indication built into that we do of course, making us.
I'm sure that there is some off label use that is driven by the physicians and not by us.
But our current assumption does not assume an indication.
For Palmer and Louis maybe you could update on the trial yeah. So we do have a proof of concept polymer trial, that's ongoing and we will give more information about that trial later this year.
Yes, Hi, Louise it's Tom again, I, just wrap up by because I think the last two questions what kind of along the same thing same same theme, we see our commercial organization has a strategic asset.
It's a it's very talented I think that what they delivered on the second quarter was fantastic.
So.
As we look for other opportunities and certainly begin to think more about commercializing lubricants AMAP. We think we have a terrific strategic assets in our commercial organization.
Okay. Thank you.
Thanks Louise.
Our next question comes from the line of Stacy Koo from Cowen and company. Your line is open.
Good afternoon. Thank you for taking my questions first on Brexit Congratulations on the progress from managed care would you be willing to restate. Your question that guidance for the second half the year given that you've already hit your 40% target.
And can you help us understand that your breakfast good cadence for the year.
And I have another one.
Okay. Sir this is Lori safeties I'll take those first couple and then if you want to add your last question on after that that's fine as well on the growth in that side, we actually are confirming our approximately 40% gross to net discount that we talked about on prior and really the way. We see it is that we've reached that goal earlier than we previously thought that we would and committed to I think there's great performance by the team to get it down all the way to 39% in Q2. So we you know it could have some movement and the positive or negative direction, but it's going to stay we believe pretty tight in the range at approximately 40% and that's what we would but that we take for the second half of the year in terms of the prescription growth on you know obviously the estimates that we provided today do indicate that we see substantial growth coming in the second half of the year as Andrew spoke to earlier, we do believe that we'll continue to see you know some bouncing around of the scripts on a week over.
Or week basis, but in general a nice trajectory up and for US the opportunities that we see to capitalize on for the back half of the year or we've got this broad based the prescribers 13000, we got 85% of lives covered we're experiencing substantial market and claims growth and so the final pieces I think we'll be focusing on we'll be increasing our productivity per prescriber and then also driving a higher conversion of those claims that have been submitted to the payer making sure that we're pulling as many of those through as we can so good strong opportunities I think for growth the back half of the year and would be happy to take your third question as well.
Thanks, So just moving on to the library or could you give us additional insight into the phase two program and can you comment on whether you believe yesterday will guide your use of rescue therapy.
Thank you.
Yeah. So the the phase three program with our lead by two monotherapy trial will be similar to the phase two trials in most regards.
There will be some key differences. However, one is we're going to include.
Adolescence with we're very happy about the utilization of a single dose for for the induction period, and finally I'm treating patients over a maintenance period of about 52 weeks.
We have been in discussions with agency about more specifics of the trial design and so we're going to go ahead and talk about that more once we initiate the study.
Thank you.
Our next question comes from the line of female Fernandes from Guggenheim through line is open.
Hi, guys. Thanks for taking my question just.
Sort of filling in the portion that's a couple of questions for me the first on Brexit.
You might have touched on this with the compliance question previously, but just wanted to know sort of the dynamics for two bricks as it relates to new versus repeat prescriptions and how that's been progressing since since.
Since launching and maybe with respect to Liberal Kisan that think about sort of the inclusion for the phase three having both adolescent and adult patients just wondered you know given the heterogeneous Miss nature of a topic dermatitis.
Does anything has to be done from a trial design standpoint to optimize results among both adults and nautilus. Thanks.
So maybe I'll take the first question and then south it over to Louis.
First on the compliance piece again actually a question earlier really what we're seeing so far is in line with our expectations and we're saying depending on the week and we do see some fluctuation in these numbers, but depending on the week, we tend to be about two thirds, new prescriptions and about a third resell so that number tends to grow over time of course, if you have more and more patients who are actually onto Brexit you have more and more opportunities to actually get a refill and so we would expect that to be a source of growth as we get through not only the back half of this year, but frankly into the out years as well so no new updates that we would provide so far I think we see it exactly as we thought prior to launch and maybe Lewis and then a question.
Yeah, Hi, Seamus I'm here in terms of inclusion of adolescence, we are not concerned about the potential for the for the outcome.
Form a couple of perspectives. One is you know given the great safety profile. The leverage we don't have to adjust the dose and adolescent patients and so with adolescents greater than 40 kilograms, we're going to have a really good exposure of drug and from our perspective that is what's going to be important to along with of course, the targeting I'll 13 in terms of driving efficacy. So our expectation is that the efficacy in adolescence will be similar to those in adult.
Great. Thank you.
Great. Thanks, that's there.
Our next question comes from the line of Sergei Avalon Shale from Needham and company. Your line is open.
[noise] Hi, good afternoon, just a couple of questions for me first on a Q branch for for Laurie.
I think in your prepared remarks, you mentioned that a formulary coverage and hit or anywhere you, 5% can you just talk about weather.
What percentage is in tier two coverage and two or three and whether you expect any movements between these cheers.
Going forward.
Hey, Serge Yeah. It is 85% now of all commercial lives with coverage for Q, Brexit and the split between tier two and tier three is still about the same if youre costs about 30% of our lives are in tier two which we see as an advantage frankly, one that we didn't necessarily predict but really couldn't strong coverage in tier two for some of the lives and then the tier three coverage as a reminder, pretty pretty good coverage really all they generally need to do is process. A P.A., that's very consistent with our label Ensenada hoops to jump through in that regard.
Okay and.
Are you seeing any off label usage of kubrick's into other parts of the body. This beyond the aksler at this point.
Yeah, we don't promote anything off label, but we do hear anecdotally that some physicians are starting to experiment, which is of course, what citizens do in every specialty and derm is is did you see the same tendency and derm, obviously as Lewis spoke to earlier, we have an ongoing trial to try to collect some data and polymer that ultimately our medical affair colleagues would be able to use to guide physician.
We we don't anticipate that the commercial team would be in a position to be talking about that anytime soon.
Okay.
One last one for Andrew.
I think in the past you at a ballpark the.
Cost for the phase three trials of for Liberty around 200 million.
Coming out of the into phase two meeting with the FDA is that still the ballpark figure in us.
Did anything change from your prior.
Assumptions of the phase three trial design.
Hi, Sergey I know this is Andrew I think that maybe to the punch line.
We still believe that ballpark as the appropriate ballpark, obviously on the heels of the meeting we are now working as we are working as we finalize the design and finalize the associated costs, but generally we came out of that meeting.
With confirming the assumptions into which we went into the meeting so no change the ballpark you know as we are.
Move forward and in connection with the announcement of the start of the trial Oh sure uptick.
Broadly, but that's still the right range.
Okay.
Thank you.
And again that star one on your telephone keypad, if you would like to ask a question over the phone and our next question comes from the line of Elliot Wilbur from Raymond James Your line is open.
Hi, Good afternoon. This is actually vikram around on for Elliot.
Thanks for taking the questions just have two here.
First one would be on revenue guidance I'm I see that's in the low 30 millions.
Which means that we'd be looking at somewhere in the low twentys for the second half.
Thank you back to sales this quarter.
What would that imply a pretty modest growth in Rx is for the remainder of the year for looking at that right compared to the beginning of the launch.
Hi. This is Lori you know, we do see substantial growth in the second half over the first half when you look at it in terms of revenue. So you're right. It would be approximately low 20 millions in the second half over the 10 and a half that we've seen in the first half and I think based on the trends that we're seeing so far and closely monitoring we believe the DTC efforts are really driving patients to seek treatment and I think the takeaway message from today is that we've got all the fundamentals right. We've got coverage, we got a lot of physicians, who have adopted the product and we are really driving that activity into the derm office and so the opportunity really at the capitalize on the second half of the year make sure that we're really driving productivity per prescriber and also that we are converting all those patients once they come in and making sure. They get all the way through the PA process and are converted into actual prescription for key Brexit. So I'd say, we feel really good about where we're at on given the first quarter three quarters of launch and I think the team has.
Very consistently delivered on what we expect and we look forward to seeing that in the second half as well.
Okay. Thanks, and then just one more I'm supposed to that you drew down 40 million in the second tranche of the credit facility.
Could you provide any color on these capital there was just us not opportunistic move any information you can provide thanks.
Sure Yeah, No I think I think it was exactly that a as you know we stated or the.
Either the armor, all exercise or the remaining funds under our debt facility would be sufficient to fund through the expected data readout for for luxury obviously armor all exercised its option. So that alone enabled us to hit our cash runway guidance of having data to fund through library, we really looked at draw. It's just an opportunity to further bolster the balance sheet provides us additional flexibility at what we think is an attractive cost of capital.
And our next sorry. Our next question comes from the line of Douglas Tsao from H.C. Wainwright. Your line is open.
Hi, good afternoon, thanks for taking the questions just.
No Laurie I know you've spoken about the new to brand statistics for the key drugs a launch.
I'm just curious if you're still seeing that that most of your patients are sort of new to therapy and you know do you expect at some point given you know the popularity of the therapy amongst physicians at least you know just to see some of that conversion from from the dry saw market.
Hi, Doug.
Yes on the first part of the question. We are we continue to see very high rate of new to brand and it's been in the high Seventys really since launch and we continue to see that trend I think what we believe that speaks to the fact that the DTC campaign is working right. We have all these metrics that are playing into that direction and so what we see is that as there's an expansion of the market.
Most of the patients who are coming on to Q. Brexit are in fact, new to therapy and have not tried something in the previous 12 months, having said that you know, there's 25 or so percent who are coming from other therapies for the most part that is from dry so and so we already are seeing you know really the Brexit kind of taking over and becoming the leader in the hyperhidrosis market. That's great News I think we feel very good about that you know nine months into launch, but the big opportunity for us longer term is continuing to grow that market, which again, we have data to suggest we're doing.
It it and is there anything that you can do and I and I understand your your point about sort of trying to grow the market, but you know if we look at you know the number of scripts for for written for dry hole every year there are not a negligible number.
And so is there any way to sort of pry loose some of that volume.
Yeah, I mean, I think we actually are primarily some of that volume dog. If you. If you were to look at it we actually have already seen Q Brexit their pastor I saw in terms of market share just to be very clear and so.
In the derm market and so on we do believe that where our effort of concentrated which isn't derm people now see that that's the first line therapy right and if people want to come in and get US a treatment for hyperhidrosis, you can call a bunch of Derms and I feel pretty confident they're going to tell you. They want to put them on t. Brexit. So we think thats a great win and certainly we see those scripts as ones that should be hours on and then additional benefit as we continue to drive more people in.
And then in terms of the final question for me just quickly in terms of the 13000 prescribers that you referenced is there much more room for that number to go up or do you think that you're pretty much maximum maximize maxed out in terms of sort of high quality targets.
Well I'll answer it in two ways died I mean first I would say I'm really pleasantly surprised by that number given my experience in dermatology and you know we reference some of it on the call today, but you don't tend to see that many prescribers of the base does not tend to become that broad certainly not as quickly. So kudos to the sales teams are really driving that trial and usage, having said that in the last month alone in July we added almost 1300, new prescribers. So do I think it will continue to go up I actually think it will potentially it could slow down over time, but the point is we've got a good strong base now let's focus on how do we make them more productive and generate more sales as we get to the back half of the year.
And I guess, one final what percentage of your sales are coming from dermatologists versus any other kind of provider say primary care.
The vast majority is coming from Derms, and derm and peas, and P.A.'s, though we do kind of track those together because we are targeting all of them and the 13000 prescribers number includes the nurse practitioners and <unk>, who are in Durham offices as well, it's around 80% to 85% depending on the time point you'd look at are coming from people, who we're targeting so again one of the key questions. We had at launch where can we get the patients that show up in the write off is not just to take action, but to get to the right office and that's another data point that makes us confident that we've actually the stuff we've done that because we need them to be there, where we have the highest likelihood to pull them through where they have sampled and co pay cards and all of those good tools that we put in place.
Okay, great. Thank you so much for all the the perceptive.
Yeah. Thanks, Doug.
Our last question comes from the line of Passion Cerus from SVB Leerink. Your line is open.
Hi, everyone. This is Mike John's departure, thanks for taking my questions.
So the first one.
With the second quarter.
Breakfast sales numbers in hand have you been able to make any determinations about any potential seasonality for the product.
And then secondly, great to hear about the addition of adolescence it'll ever Kitimat study, obviously each opportunity. This is particularly common among pediatric patients. So what plans if any are there for testing it there.
And what would next steps forward look like in terms of potentially starting to see the wheels in motion there.
Okay. Mike I'll start this is Laurie for that Q2 sales and I would say really what we've seen so far the first three quarters and we have not necessarily think seasonality, although in truth it'd be kind of hard to get that read some friends launch mode, and obviously were growing so significantly quarter over quarter.
If you look at the hyperhidrosis landscape in total there tended not to be seasonality historically, but you know we need to get probably further into this launch to the point, where the market is a little more stable again before we can really before we could really answer that question completely in the clinical trials and also what we hear from physicians qualitatively. If you have hyperhidrosis you have it year round you don't just suffer with it in the summer and so it wouldn't necessarily be our expectation to see seasonality, but probably a little too soon to know for sure.
Yeah, and then yes, we are excited about that.
Having adolescence into pivotal trials and again I think this was a you know how important nod from agency the about the safety profile of the molecule. So that's great and certainly we do plan to have a full blown feed program. We we have.
Have plans in place in both the U.S. and Europe , and we'll have additional trial along with the pivotal trial to study how well Ravi were no subjects.
[noise].
Got it thanks very much.
[noise] and there are no further questions at this time. This does conclude today's conference call. Thank you for participating you may now disconnect.
Thanks, everybody.
Thank you.