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spk15: Good day, and thank you for standing by. Welcome to the Arcudis Biotherapeutics Q1 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message confirming that your hand is raised. To withdraw your questions, please press star 11 again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your speaker today, Eric McIntyre, Head of Investor Relations. Please go ahead, Eric.
spk06: Thank you, Mark. Good afternoon, everyone, and thank you for joining our QDSIS first quarter 2023 earnings call. Slides for today are available on the investor section of our website. On the call, we have Frank Watanabe, President and CEO, Ken Locke, Chief Commercial Officer, Patrick Burnett, Chief Medical Officer, and Scott Burrows, Chief Financial Officer. During this call, I'd remind everyone that we will be making forward-looking statements. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. We encourage you to review the information disposed in our latest SEC filing. And with that, I'll hand the call over to Frank to kick us off.
spk05: All right. Thanks, Eric. So, I am on slide five of the deck, for those of you who are following along in the deck. and provide a high-level overview. During the first quarter of the year, we made strong progress in laying the foundation for sustained long-term growth at Arcutis. I'll start with Zoriv, our innovative product for plaque psoriasis. We believe this product is very well positioned for long-term success with the real potential to eventually replace topical steroids. And physician and patient feedback has been exceedingly positive, and the launch continues to build momentum. We're seeing encouraging script growth as physicians gain positive real-world experience with Zareve. We've roughly doubled our TRXs quarter over quarter in Q1, and we see continued growth in April. I think it's worth noting that we're at the last five branded topical launches, have seen growth stall somewhere between three and six months into the launch. We've now continued steady growth through nine months of our launch. We also continue to make progress on gaining broad, high-quality access for patients to Zoriv. We now have coverage at two of the three large PBMs, as well as a number of other large downstream health plans within just six months of our launch, and we're making good progress with the remaining large PBMs. We have now over 110 million commercial lives, which is about two-thirds of the commercial market, and I think it's important to note that over 90% of those patients have access to Zoriv without a prior authorization. which meets our goals for high-quality access for Zareef. We believe we should be able to get to over 80% commercial coverage before the end of 2023 and likely even sooner than that. I will note that while obtaining coverage is a necessary precondition for patients to gain access, it is not alone sufficient. And we are augmenting our field deployed forces to increase our pull-through of that coverage into covered prescriptions. And Kemp will talk a little bit more about that a little bit later. At the same time, we've made continued progress on regulatory milestones to expand to additional indications and geographies with topical raflimelast. We received a confirmation of our PDUFA date for the foam in seborrheic dermatitis in mid-December, which is setting us up for our first launch of the foam. We believe this product is massively differentiated, and there's a very high level of physician excitement around this product and a very high sense of customer urgency for this product, given the unmet needs in this area. We also recently received the approval of Zareeb Cream in Canada for plaque psoriasis, and the launch in Canada is going to be in the next couple of weeks. Obviously, it's a smaller market than the U.S., but we still think it's a very attractive opportunity. And this represents the first regulatory approval for Zareeb outside of the United States, which is another key milestone for our QDIS. We also had a presentation of late-breaker data from the Integument 1 and Integument 2 trials in atopic dermatitis at the American Academy of Dermatology meeting in March. We continue to get very positive physician feedback on the clinical profile in AD, especially the early onset, including the impact on itch in as little as 24 hours, which was presented at AAD, as well as the differentiated safety and tolerability profile, which is particularly important in atopic dermatitis. And we expect to file for approval in ages 6 and above in atopic dermatitis late in the third quarter, early fourth quarter of this year. We also just recently completed enrollment in the integument PED study in ages 2 to 5, and we expect to see top line data from that study in Q3. I would note that that will be a supplemental NDA. So that data is not a critical path for the aforementioned filing, late Q3, early Q4, and six and above. You know, really, so that we can capitalize on this incredible opportunity, we are adjusting our capital allocation priorities, and we're making some specific adjustments to drive success in our commercialization efforts. And Scott will provide some more details on that shortly. Turning to slide six, you know, I think Topical reflumilast really represents, you know, you hear this word a lot, but a pipeline in a product with potentially four unique products in one and multiple inflection points coming up ahead with, you know, potentially new launches every two or three quarters to the next several years. So with Zareve today, we're competing in a market of around 2 million topically treated psoriasis patients in dermatology offices in the U.S. The total TAM effectively doubles in size with the expected approval of Cevderm to more than 4 million patients in the dermatology office in the US. And then the TAM will nearly double again to almost 7 million patients in dermatologist offices with subsequent launch in AD. And then there's nearly as large an opportunity outside of the dermatology office with about 6 million additional patients being topically treated outside of dermatology offices, mostly in primary care and pediatrics. We do plan on a capital efficient partnership to allow us to access this broader opportunity outside the dermatology offices rather than building our own sales team. When you factor in all of these different opportunities, that's a six-fold increase over our current psoriasis market that we're targeting at the moment with Zareed. And I think that really speaks to the long-term potential of topical reformulast and Arcutis in the space. We think that the topical reformalized product profile is ideally aligned with what physicians and patients need and are looking for. And as I mentioned before, you know, the catalyst path really sets us up very nicely for a potential new launch every two to three quarters with Cevderm at the beginning of 2024, atopic dermatitis later in 2024, and then scalp and body psoriasis early in 2025. And with those introductory remarks, I'm going to turn things over to Ken.
spk16: All right. Thanks, Frank. As you're following along, I'm now on slide eight. So moving to commercial performance, our launch momentum continues to grow with steady prescription growth built on the back of the exceptional feedback that we've been receiving on the product profile. As Frank mentioned, we've nearly doubled the TRX volume quarter over quarter and new prescription growth by nearly 80% with continued positive momentum into Q2 on both fronts. We continue to hear exceptional feedback on the product profile of Zareve from physicians and patients alike, and in particular, the rapid efficacy, the effectiveness in treating the most difficult plaques, even on the palms and soles, in addition to the sensitive areas, and physicians are seeing very little, if any, tolerability issues associated with the product. On slide nine, we take a deeper dive into what's driving our continued growth through the lens of market research. Dermatologists' preference for Zareve has grown substantially as positive patient feedback and clinical experience builds. On the left is a look at longitudinally physician preference on Zareve growing over time. We believe the consistency of the profile for Zareve is truly shining through. As expected in the early days of launch, prescribers were trialing both new products with the majority expressing no clear preference. As clinical experience has built, more and more of these same physicians are shifting preference to Zareve. And in the most recent wave, demonstrating a doubling of preference since we began measuring this in November of 22. Unsurprisingly and consistent with what we hear in conversations with customers every day, Zareef's tolerability and safety profile lead the way in terms of the reasons for product preference. This is followed very closely and importantly by our absolute efficacy and speed of onset. It's critically important to continue to have physicians gain confidence in topical reflumelast as we look to launch additional indications, as their current experience and perceptions will significantly shape the reception of our future launches. On the right-hand side of the slide, we take a closer look at the new prescription trend, which is reflective of critical brand choice in the moment. And for Zareef, we continue to show positive trajectory. This can be thought of as a leading indicator and a platform for repeat business. We believe the momentum is just getting started as preference takes hold and prescribers select Zareef increasingly often for their next eligible patient versus other alternatives. As Frank mentioned, other recent branded topical launches have not seen the ability to sustain that launch growth trajectory through nine months. So we're very encouraged by what we're seeing here. On slide 10, the next slide depicts here the source of business for Zareve from launch to date. And we're very encouraged as our volume grows that two-thirds of our business continues to be sourced from topical steroids and steroid-containing combinations, with the balance coming from a mix of older non-steroidal products, such as vitamin D analogs and topical calcineuron inhibitors, as well as a very healthy portion of competitive branded products for black psoriasis. We continue to position Xareev to convert a significant percentage of the topical steroid market. That is really where the long-term opportunity remains in psoriasis, as with all of our subsequent indications. Moving to the next slide, on slide 11, we have continued to unlock the requisite broad high-quality access for Xareev that will drive further unit demand, revenue realization, and growth and improvement. And as Frank mentioned, now approximately nine months into launch, we have two-thirds of the commercial lives covered in the U.S. and well over 110 million lives. Importantly, over 90% of these 110 million or so are actually covered without a formal prior authorization requirement, which is critical to facilitating the long-term conversion from steroids by making it as easy to write that next, sorry, as easy to write Zareve as that next steroid instead of that next steroid. So on the right side, just a recap of our historically stated access and coverage goals anchored by our responsible pricing strategy. Firstly, preservation of long-term gross net, which I'll speak to more in detail in a moment. The second is to optimize for both our volume and our franchise value. Specifically, gaining access to government payers and avoiding specialty peer and coinsurance thresholds with our future indications is important because there's a larger government pay demographic with those indications. Thirdly, obtaining high-quality coverage with a minimization of step edits and prior authorizations. And we've also now begun to see differential coverage emerge across national PBMs and health plans compared to topical DERM competitors. Depending on the payer and plan, these branded competitors are seeing higher out-of-pocket costs to patients as a result of tiering, incomplete adoption across formularies, imposed quantity limits, and requirements for formal prior authorizations. And lastly, faster formulary adoption, which we have seen play out thus far with the major payers. Now, circling back to the gross and net aspect, while we've made extraordinary progress on securing formulary coverage, we need to now push down execution to the office and pharmacy level to ensure appropriate reimbursement. It has taken us longer than expected to convert that coverage to paid prescriptions, and this must change. We have also seen some delays in terms of coverage implementation at the downstream plans, and some pharmacies still running our covered patients as uncovered in our co-pay program. We believe we've diagnosed these underlying causes, and we're taking a number of specific steps to improve this as we continue to launch and gain more payer coverage. For example, we've increased our field-based footprint focused on reimbursement support and pharmacy education to enhance coverage pull-through and further partner with dermatology offices on the specific criteria needed in order to drive covered prescriptions. We are encouraged by the improvement in translating coverage to paid prescriptions in certain regions of the country where we've already implemented these measures and the trending of copay cost reduction over the year as we more broadly address some of these key dynamics. Now, we've also felt the effects that most manufacturers typically see in the first quarter, which are insurance plan changes, deductible resets, and higher coinsurance populations year over year, which drive our copay offset costs up. Now, we expect this to improve as we move throughout the year. But importantly and above all, We're securing the payer coverage necessary to build the foundation to meaningfully convert the topical steroid market with Zareve. So, slide 12, in conclusion, I want to revisit the three core pillars to commercial success that we've spoken about in the past that set the foundation for sustained Zareve growth. Driving physician awareness and expanding our prescriber base, we've now seen over 6,000 unique riders since launch, and this has grown approximately 50% since the last read where we showed in Q1, commensurate with our volume growth. And while our breath is growing nicely, there's still plenty of headroom for our targeted HCPs to experience the benefits of Xerive. Now, with respect to the patients, we are receiving testimonials daily on a positive experience with Xerive, and refills are growing very nicely, contributing now in excess of 20% to TRX each week in April and reflective of the confidence that our writers have to continue prescribing. We also, as our coverage improves, are continuing to evaluate the right time to supplement our current DTC efforts by way of highly targeted means such as connected television. And lastly, we continue to build on our broad high-quality access as discussed with coverage secured at two of the three major PBMs and the quality of that coverage meeting our hurdle of minimizing step edits and prior authorizations. So at this point, all of our indicators and measured launch metrics, prescriber sentiment and awareness, and patient reception continue to point upwards. We continue to learn and adjust our tactical approach in order to maximize the number of patients that receive the benefit of Zareve. And with the foundational elements largely in place, we look forward to delivering on the long-term promise of Zareve. I'd like to now pass it to Patrick for an R&D update. Patrick? Thanks, Ken.
spk07: I want to touch on our atopic dermatitis and seborrheic dermatitis programs briefly before updating on upcoming milestones. As investors are aware, AD is a key opportunity for topical reflumilast, and physician feedback on our AD data has been very positive. What continues to jump out is the speed of onset in our trials, which gives a clear early indication that the drug is working, and of course, the ever-important safety tolerability data that are a key aspect of the product profile. Consistent with this is our itch response across all indications. Itch is particularly a critical element for patients' with AD, atopic dermatitis is often referred to as the itch that rashes, and is the most important signal for AD patients to know that a drug is working early and an important indicator of clinical response. So looking at slide 14, as Frank mentioned, we presented these exciting daily itch data at a podium presentation at the recent American Academy of Dermatology meeting. This is a great commentary on the early onset of action for reflumilast. We show a statistically significant improvement in itch just 24 hours after the first application of drug, and then again at all time points thereafter across both of our pivotal phase three trials. This profile aligns well with the unmet need in the market, and this kind of early response of symptoms is exactly what patients and HCPs want to experience when initiating treatment in atopic dermatitis. Switching to our foam program, now on slide 15, and our first indication of seborrheic dermatitis. The recent FDA acceptance of our application is yet another major milestone for the company, and we're looking forward to the December PDUFA for an anticipated approval. Excitement is intensifying in the physician community based on the strength of our topical reflumilast data and because they have so little to offer these patients currently, keeping in mind that there are just as many patients in derm offices with seborrheic dermatitis as there are with psoriasis. Reflumilast foam would be the first topical drug for seborrheic dermatitis in decades. So a reminder on our phase three data. Here we are again on slide 15. We're showing a very strong early response with over 40% of patients with IgA success already at week two, which increases to 80% IgA success at week eight. And that was our primary endpoint. And this tracks, looking at the graph on the right, this tracks to 50% of patients going all the way to completely clear at eight weeks. We as well showed a significant impact on itch, which is a major symptom of seborrheic dermatitis as well as AD, but we haven't included those data here, although they have been presented. These absolute efficacy levels are unheard of for a topical. Just to note that these data are from our registrational phase three study, but they replicate the impressive data from our phase two study that was just published in the Journal of the American Medical Association. Again, this is with the foam formulation, and we're hearing that this formulation really aligns well with patient needs in this space and provides a strong competitive differentiation. I'll finish up my update on the R&D progress with a summary of our milestones on slide 16. Taken together, these represent an opportunity for significant, sustained, long-term growth with additional approvals and expanded geographies, as well as label expansion, highlighting just a few of these now. showing continued regulatory execution with our recent Canada psoriasis approval. Now just to contextualize the importance of this for patients in Canada, this is the first non-steroidal approved there in over 25 years. Canada played a central role in our development of Xareve. Over a third of all clinical trial participants came from Canada. So lots of familiarity with the Xareve already there and excitement within the derm community for Arcutis. Moving on to atopic dermatitis, We updated our SNDA submission timeline to late Q3, early Q4 this year. That'll include ages six and above, as Frank mentioned. We also announced last week the completion of enrollment of our integument PEDE trial. That's ages two to five years. And our top line there, as mentioned, is expected in Q3 of 2023, Q3 of this year. That's going to be an important data set for our differentiated profile in atopic dermatitis. So thanks for the chance to update you on our R&D progress, and I'll turn you over to Scott for the finance update.
spk04: Thanks, Patrick. Turning to page 18 of the slide deck, net product revenues were $3 million in the first quarter, in line with our prior guidance. Strong unit demand growth, which doubled sequentially, was offset by the anticipated higher gross to net in Q1. As Ken discussed earlier, Q1 gross to net was higher quarter over quarter due to the typical first quarter insurance deductible resets and the dynamics in getting our prescriptions covered by insurance. We expect gross to net will improve through the balance of 2023 based on our ability to continue to expand our high quality commercial coverage and our continuing efforts to translate that coverage into covered prescriptions. For Q2 specifically, we expect that sequential net sales growth will be driven primarily by the continued demand growth we are seeing, with improving gross-to-nets only modestly contributing quarter-over-quarter. For the balance of 2023, we expect revenue growth to be driven by both demand growth and further gross-to-net improvement. Turning to the rest of the P&L, research and development expenses were $35 million in the quarter and included a one-time $3 million NDA filing fee for seborrheic dermatitis, The decrease year-over-year is primarily due to lower clinical development costs for our topical reflumilast programs. SG&A expenses were $43 million for the quarter as we continue to invest in the Zareve launch and the upcoming launches in seborrheic dermatitis and atopic dermatitis. Net loss per share was $1.31 for the quarter. Turning to our final slide on page 19, we provide some key balance sheet and cash flow items. We remain well capitalized with cash of $333 million as of March 31st. We are excited about the progress we're making in these early innings of the Zareve launch and in our ability to drive increased shareholder value. We also recognize the criticality of continuing to invest in the growth of the launch in psoriasis, as well as prepare for the follow-on launches in seborrheic dermatitis and atopic dermatitis. In response, we are taking proactive steps to reduce R&D spend, specifically investment in our early stage pipeline, as well as spend in other areas of the company to ensure we have the resources to invest in the launch. For the remainder of 2023, we would expect R&D quarterly OPEX to be modestly down sequentially, with more significant declines in 2024 as the remainder of our reflumelast clinical program approaches completion. We are reducing planned expense growth in G&A areas as well, but still expect overall SG&A expense to grow modestly as we continue to fuel the Zareve launch and prepare for our next two product launches in 2024. In addition to these prioritization efforts, we have made meaningful progress in our XUS outlicensing efforts with the potential to further strengthen our balance sheet with non-dilutive capital. This concludes the financial update. I'll now turn the call back to Frank to wrap up our remarks.
spk05: OK, well thanks everyone for joining us for the call today. I know for our East Coast colleagues it's late in the day, so we appreciate you making the time and with that we will open things up to Q&A. Thank you.
spk15: At this time we will conduct the question and answer session. As a reminder, to ask a question you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, Press star 11 again. Please stand by while we create our question and answer roster. Our first question will come from Vikram Purohit of Morgan and Stanley. Please go ahead.
spk12: Hi, good afternoon. Thanks for taking our questions. We have two, both on the Zareve launch, one on reimbursement and one on, I guess, patient use dynamics. So on reimbursement, you mentioned that it's taking a little bit longer than you'd expect it to get gross to net down to levels where you were hoping to get them. Could you just unpack for us, I guess, what's taken longer than you would have expected? And specifically, what do you think you could, what are the levers you can pull on in the next six to nine months to help to compress that gross to net down? And then secondly, You mentioned roughly 60% of patients are switching from topical corticosteroids to Xarev. Are you seeing that as a direct one-to-one switch or a direct replacement, or are patients who were previously using topical corticosteroids also using Xarev in conjunction with TCS and just mixing and matching therapies across their body? And we asked that question to help get a sense of durations. If you could comment on kind of duration, what you're seeing in terms of annualized tubes of use, that'd be great.
spk05: Thanks. Sure. So, Ken, maybe you can take that, and then Patrick, if you have any additional color from a clinical standpoint.
spk16: Yeah, I'll start. Hey, Vikram, how are you? So, some of the dynamics I talked about, some of the underlying causes, I'll just expound on. So, first of all, there's a little bit of inertia where prior to us having coverage, the best way to get the patient the drug was just simply the process that is non-covered. So, even as coverage comes on board, we have to Educate and be out there to to help with the pharmacy networks to help process the prescriptions correctly. Secondly, I'd say we've seen some lag in terms of the implementation of coverage. So, as Frank mentioned earlier, we've been getting the wins at the payer level. They're being announced, but it takes some time to push those down into the plans themselves and ultimately sort of get the system up and running to acknowledge the fact that we're getting covered. And, you know, thirdly, I'd say, you know, coverage in and of itself does not necessarily mean reimbursed scripts. So, the fact that, you know, there is coverage, let's just take an example at, you know, PBM1, there might be other criteria we then are on the hook for, meaning the prescription has to be processed correctly, the right information has to be included in that prescription, i.e., you know, the diagnosis code, tried and failed medications, that's first and foremost. So, there's some work to do. That's why I mentioned earlier execution now at the office level. And then, secondly, on the pharmacy side, to make sure that those are being run correctly and sort of end to end the things that have to happen get sort of ultimately happen. And that's why we've taken some of those steps, as I mentioned, to increase both our education level as well as our field based footprint to focus on these aspects of reimbursement such that we really can enhance that rate of covered prescription. So that's what we're we're staring at in terms of the. Kind of challenges that we're working through. You know, we haven't really given guidance on sort of how long, but what I'll say is that, you know, we are very encouraged to see that, you know, our internal copay costs or offsets are, you know, continue to come down, which means that there's an increasing number of prescriptions being processed correctly and covered. And so, you know, but I think what's obfuscating this picture is the quarter one dynamics that we talked about earlier, which were, you know, in addition to the challenges of sort of implementing one's own coverage, you also see dynamics in which You know, we mentioned the insurance changeover, the high deductibles. And one of the interesting dynamics, you know, is that if, you know, we're seeing a larger population of healthy patients that are opting for high deductible plans, which means that if, you know, you're otherwise a healthy patient, the deductibles, you know, would largely fall to the manufacturer that, you know, the drug that you happen to be taking. So we're seeing an increase year over year in the population of patients who are picking those kind of high deductible plans. but we largely expect that to resolve over time as the year goes on when we get out of that deductible loop. So that's part of the dynamics in the first, I think your first question. Your second question had to do with the ratio, I think, of TCS to us. And so I think the, you know, what we're seeing is we're seeing a whole variety of sort of use cases, including, you know, people who are on multiple steroids, coming over to Zareve and thus rationalizing their overall regimen. And we also see people who are on a single steroid that are coming over. And the third aspect you mentioned, sort of in combination, we are also seeing that use case too. So it's sort of, I'd say, a mixed bag with respect to the use case. And so I don't know that it tracks sort of perfectly on a one-to-one basis, but I will reconfirm the fact that we are very confident in our tube utilization guidance that we've given in the past. And Again, the refills are really starting to kick in now as the volume increases. We're seeing, you know, week over week increasing percentages of refills. We also have seen patients receiving now up to their fifth refill. So it's good confidence building, but in general, we need a little bit more time to sort out sort of the exact ratios. But I feel reasonably confident that, you know, that the guidance that we provided before on tube use is still appropriate.
spk07: Okay. Thanks for taking my question. Just to add a little bit on the clinical context of that, I think the real value of this product to patients with skin disease, patients with psoriasis, and the doctors and osteoporosis to take care of them is the eventual ability to manage these conditions without the use of a steroid. You know, the patients have grown up their whole life using topical corticosteroids, and the doctors that we're working with have, you know, throughout their training and throughout their whole practice have used these. So I think as experience grows within the patient, within the healthcare providers, that comfort in being able to move patients over to being treated as monotherapy with Zareve so that they don't have that exposure cumulatively to topical corticosteroids that we know from publications is associated with bone demineralization and some of these other side effects that we associate with systemic exposure to steroids, I think is a real benefit. And as Ken mentioned, we're already starting to see all these different ways that doctors are using this as a tool to treat their patients. But I think over time, what we're going to start seeing is more and more of a shift towards treating patients with monotherapy because of the fact that this profile supports being able to treat the disease no matter where it occurs on the patient. And that will only be more true when the foam is approved for patients with scalp psoriasis, because then you really will be able to treat it from head to toe every single place the disease manifests.
spk11: Okay. Understood. Thank you. Thank you. Please stand by for our next question.
spk15: And our next question comes from Seamus Fernandez with Guggenheim Securities. Please go ahead.
spk03: Oh, great. Thanks for the question. So it sounds like the coverage implementation has been a bit challenging. I'm just trying to better understand what we're looking at in terms of scripts written versus scripts filled, you know, and if we're seeing abandonment of scripts at a higher level or if, There's, you know, substantial couponing such that we'll see a stronger directional change as we move into the second and third quarters of this year. Just trying to get a little bit of a sense of how the coverage implementation is going to be coming on in the subsequent quarters. And then, just my second question, can you talk a little bit about how the coverage implementation is likely to be applied to the potential approval of the foam formulation, certainly in the feedback that we're getting from physicians with active experience with Zareve is only quite a bit greater in terms of the enthusiasm, not just for the seb derm indication, but for the broader utility of the foam formulation. So, just hoping to get a better understanding of how the current coverage that you've really battled for and fought for and prized for is likely to play through into the launch of the foam formulation next year. Thanks.
spk05: All right. So, Seamus, good to hear from you. You guys are going to keep Ken busy today. So, Ken, I'll let you handle Seamus's question.
spk16: Sure. Absolutely. Seamus, thanks for the question. You know, we have not spoken previously to specifically to sort of fill versus abandonment rates. What I will tell you, though, is, you know, the copay programs that we have in place largely mitigate the concern, you know, over abandonment, meaning, you know, our fulfillment rates are reasonably high because we have programs to support either, you know, covered patients or non-covered patients. So, if your insurance type, for example, let's just say you were, you know, part of the original first PBM approval, You know, in that case, you'd be eligible to be reimbursed, you know, given the right criteria, that would become a covered script. I think in the case of the implementation delays, what we're seeing is, you know, that should come on now. We really, you know, that's largely resolved. And then going forward, we have one more PBM that's going to be coming on board. So, those two things I see as sort of tailwind to improving the rates of covered scripts. And so, abandonment has not historically been a problem so long as you have, sort of a mechanism, in our case, a non-covered copay offer to cover that. So I don't think that's the challenge. It's more about making sure that we capitalize on the coverage we are getting in a timely manner. And that means, again, as the coverage comes on board, we have an obligation to provide the right information about the patient at the office level. and to get the prescription process at the pharmacy level correctly in terms of getting, you know, that process as a covered patient. So those two things have to happen in concert, ultimately for us to tap into the coverage that's actually negotiated for at the PBM level. As for the subsequent quarters, I think that's what I'm looking forward to as well, which is as we, you know, come to full steam on implementation of our two PBMs and then pick up our third, which we expect sometime, you know, in the middle of the year, This should ramp up significantly in terms of both, you know, capitalizing on the coverage itself, but also reaping the benefit of the education we're putting in now in terms of, you know, educating the offices, educating the pharmacies on sort of what it takes to get Cereve covered. So, I feel like that trajectory will only get better in terms of sort of implementing coverage. Now, as for the second question regarding subsequent indications, The good news is, you know, unlike when we're launching a product from sort of ground zero, you know, in some of the PBM contracts that we're negotiating or have negotiated, in several cases, there are instances where the next indication, for example, seborrheic dermatitis would be viewed as a line extension, and therefore, the coverage that's assumed for the current PSO indication would be transposed to that, so we would not be starting from zero. That's not true about every payer, but it's true about, you know, some of the negotiated contracts that we have already. So sort of that immediate, you know, kind of offset, you know, or drop, if you will. We won't take a huge punishment, if you will, by launching another indication. In fact, we think that that will facilitate the uptake in the launch trajectory because of that pre-existing coverage on that next indication. So that's going to translate over and sort of, you know, be again a tailwind to that next launch.
spk03: Perfect. Super helpful. And then just as a final question, you know, Frank, I think you said at some recent meetings that, you know, sort of the target growth to net exiting the year that you were anticipating to achieve is somewhere between 40 and 60%. Just wanted to get a sense that we're sort of consistently on that trajectory, and we should sort of think about the balance of the remainder of the year kind of coming on in a linear fashion. Admittedly, this quarter, obviously, being the sort of low watermark in that regard, or the high, I don't know, the low, but thank you.
spk05: Yeah, sure thing. So just to clarify, I don't believe I've ever put a time frame on when I thought we would get to our steady state gross to net. We do continue to believe that, you know, we'll get to something around, you know, the 50-ish sort of range, that 40 to 60 percent range, which, you know, is about as good as anyone performs these days. How quickly we get there, I think, is still to be determined. You know, there's obviously the coverage decision at the PBMs. And as Ken mentioned there, we've seen some implementation lags, but then also there's the follow on in the downstream health plans, making formulary decisions. We announced, for example, some decisions in April that were a reflection of the coverage that we got at Express Script in November. So there can be a fairly significant lag there. So, at this point, I won't say that we'll get there by the end of the year. But certainly we expect to see continued progress, as Scott mentioned, quarter and quarter throughout the year. And we do continue to believe that we will get to that sort of 50-ish sort of range on a gross to net.
spk15: Perfect. Okay. Thank you. Thank you for your question. Please stand by for our next question. And our next question will come from Oye Ear of Mizuho. Please go ahead.
spk10: Hey guys, thanks for taking my questions. I guess my first question is, could you kind of just help us to understand a little bit more in terms of what you guys are doing to improve this processing issues? I guess I just quite don't understand what's going on in the doctor's office. Is there some difficult code that they need to generate, or is it a software issue? Just a little more clarification. And the second question, I guess, is like what proportion, were you able to quantify what proportion of scripts that had these issues and what proportion, you know, could have just been due to seasonal fluctuations? Thanks.
spk05: Yeah, so, Ken, I think it's back over to you again.
spk16: Okay, I'll just keep the mic. So, Bowie, how are you? So, let me start with kind of trying to explain a little bit about what's happening at a high level. So, you know, when you get a coverage decision and so, formulary implementation, you know, there are criteria that have to be met in order to access that particular sort of, I guess, access. to access the coverage that we've been. So there are conditions that the patient has to meet. So as this very specific example, if the insurance company needs to know that number one, the patient is confirmed a plaque psoriasis patient. So you mentioned the code, for example, so the ICD or diagnosis code would have to be included in that prescription. The second piece is any information associated with the utilization management of that payer, and just to bring that down further, what therapies has that patient tried? So those two bits of information have to be included in the prescription itself, ultimately for the payer to kind of accept those conditions. Yes, you've met the conditions that we've agreed upon, and we're going to go ahead and pay you for that prescription. So those are aspects that happen in the office. And there are many dynamics that can happen in the office where one or more of those particular conditions may or may not be met. So that's what we're focused on in terms of making sure that every office understands that criteria. That's very common. You would see that for most, if not all, branded products. And something that we are looking at in terms of how do we help continue to educate those that actually input those prescriptions to know what do you have to do to get CERI. That's a large part of our focus in our field footprint, including our sales reps, sort of spending time with the folks there to make sure they understand that on the front end. So it's not a software problem or anything like that as much as the consistent application and recording of those criteria in order for us to get that prescription processed. The other piece of the puzzle is, you know, making sure that the pharmacies understand that we do have coverage and that patients with that particular type of coverage should be processed as such. So trying to, you know, make sure that they implement and use that route in terms of the covered offer. And, you know, those two things sort of work in concert to make sure that you get a covered script. So those are the things we're working on. Like I said, it's mostly education. um and and not a not a problem and not a technical problem that's going on in the offices um now we haven't spoken to the proportion of scripts that are having these issues because that you know sort of is a roundabout way of talking about you know sort of the cover not covered now we know that it is the minority of prescriptions currently coming through as covered in q1 and we're working obviously very hard to implement and improve this and like i said it happens in several places at once on the front end and on the back end in terms of both prescription initiation as well as prescription processing at the pharmacy level. So, those are the areas of focus, and we continue to, you know, work with those two areas in terms of partnership, education, and sort of, you know, that's the focus of our field-based team today.
spk10: Okay. Thank you.
spk16: Yep.
spk15: Thank you for your question. please stand by for our next question. Our next question comes from Tyler Van Buren of TD Cohen. Please go ahead.
spk09: Hi, guys. Good afternoon. So as a follow-up to a previous question on the third and final major PBM that you said will come online by mid-year, can you offer any additional color around these ongoing interactions? And if you think it's likely to include no prior authorization like the first two PBMs, and if perhaps one or two step edits would be required. Thanks.
spk16: Yeah, so we can't comment on sort of the final ruling, if you will, in terms of what that looks like. You know, up front, you're obviously negotiating and sharing with the payers the value proposition of your product and, you know, arguing for, you know, various levels of utilization management. You know, I would say, you know, we're hopeful about the timing, but certainly can't guarantee anything. But what I will say is congruent with the other PBMs and sort of the approach that we've taken from the beginning is that our position is with the responsible pricing should come enhanced terms or more favorable utilization management. So the minimization of step edits and ultimately the lack of prior authorizations would be kind of what we'd be shooting for. That's our goal. And we've seen that play out thus far. So it would be very consistent with that approach. in terms of thinking about, you know, the next PBM.
spk05: Yeah, you know, and I think maybe I would just add a little bit of color. You know, I think if you look at our track record in terms of coverage, what we've seen, what we've demonstrated so far is we're able to obtain coverage faster, better coverage in many cases than other recent branded topical launches. And, you know, so we're very pleased with how things are going, and we're sanguine, I would say, about the third PBM. And just quickly, I think it's probably Tara, not Tyler, but wanted to welcome the two of you to the coverage universe. I think this is your first quarterly call, so welcome aboard.
spk09: Yes, thank you so much. Yes, I did not mention that it's Tara, not Tyler, but very great to speak with you guys today.
spk11: Thank you for your question. Please stand by while we bring up the next question.
spk15: Next question will be from Chris Shibutani of Goldman Sachs.
spk13: Please go ahead. Hi. This is Steven for Chris. Thanks for taking our questions. Two for me. I had a question on increasing this field force. Can you just speak to the magnitude of the increase in the number of reps? and then when we should expect to see an impact from this expansion. And then in terms of capital allocation priorities, it was announced today that there's a shift to focus more on the Zori launch and commercialization away from the pipeline. Just curious if we could see additional steps like this taken in the near term and kind of what that next level of reprioritization would look like. Thank you.
spk05: Sure. So maybe I'll take the second part of that question, then I'll turn the first question over to Ken for the first part. So, you know, we, I think the short answer is no. At the moment, you know, I think we have implemented the changes that we anticipate making. You know, I think we have a lot going on in our QDIS. Clearly, we've got a very broad pipeline, but it's critical that we have the resources to launch the REIS successfully and to launch Subderm in ADE. And so, you know, we just felt that it was a prudent shepherding of shareholder money, frankly, to do some reprioritization. You know, this is not a wholesale culling of the pipeline or anything like that. And, you know, we will be continuing to advance some of the programs. You know, ARQ-255 is in the clinic right now. We are continuing to progress ARQ-234, which is, you know, the biologic we recently acquired. But we have chosen to pause some of the other earlier stage programs, for example, 256, which is the cream version, 252, excuse me, which is the cream version of our JAK inhibitor. We've put that program on hold. We may bring it back later and put on hold some of the earlier stage programs, the preclinical programs in the pipeline so that we can really focus our resources in the highest impact areas. We also have just been looking at areas like, as Scott mentioned, GNA and headcount growth and making sure that Any additions there are the most impactful, the highest priority additions. But I don't anticipate us making further changes or adjustments, you know, in the coming months, at least on current plans. Ken, you want to maybe talk a little bit about the changes in Salesforce and when we might see an impact there?
spk16: Sure. So, Stephen, how are you? So I just want to clarify, you know, it's field-based, not field-forced. So what we've done is we've expanded upon our resources that are focused on field reimbursement. This is a pretty common type of role within many companies. And, you know, what we're looking at is not a huge lift. You know, we actually have some of these folks on board already. We're looking to get somewhere in the neighborhood of, you know, 10, 12 folks. to help supplement, and they're not actually sales team members. They're very focused on partnering with our pharmacy and our channel. They do call on some key physicians, but mostly to, you know, again, offer further education regarding the information necessary to get a prescription processed correctly. So it's not a sales rep increase by any means. We're still at the number we said before, but largely, you know, focused on field reimbursement. This team should be in place almost – we've actually been doing it on a rolling basis, but should be in place reasonably soon. And we've actually already seen benefits of the implementation in the various regions and locations in the country that we have folks where they've been able to make an impact already. So the impact is actually quite rapid once you put somebody in place. and are able to, you know, better, you know, better partner and spend resources. What we don't want to do is, you know, spend our, our, our field rep time, you know, talking about this aspect versus building conviction in Zareve. And so this team is really supplementing the, you know, the efforts of the field team, you know, as we go forward and it's not, they're not sales reps. So just, it doesn't really expand. I'd call our, our sales footprint proper.
spk13: Okay. Makes sense. Thank you very much for the color. I appreciate it.
spk02: You bet.
spk15: Thank you for the question. Please stand by for our next question. Our next question comes from Louise Chen of Kantar. Please go ahead.
spk08: Hi, thanks for taking my question. So I wanted to ask you what your go-to market strategy is for seb derm if you get approval. How do you expect uptake to be relative to what you saw for psoriasis? And then my second question is, when do you think we could hear about a partnership for PEDE and primary care? Could it be this year and could it be a global partnership? Thank you.
spk05: Hey, Louise. I was just thinking today, I haven't talked to you in ages, so nice to hear your voice. So, you know, again, I think maybe I'll take your second question, then I'll throw it back over to Ken for the first question and Patrick for some thoughts as well. You know, in terms of the timing of a primary care partnership, You know, I think it's always difficult to predict when a negotiation could be concluded. We haven't initiated anything yet. You know, I think what we've said in the past, and we continue to believe this, is that we need to have the primary care partnership in place at least around the atopic dermatitis, at latest around the atopic dermatitis launch, just given the size of the atopic dermatitis opportunity outside of dermatology. You know, it's about 60% of the market. It certainly could be a meaningful contributor to step derm as well. So we may, you know, end up concluding an agreement prior to atopic dermatitis. But, you know, a lot of that's going to depend on discussions with a potential partner as well. And then, Ken, do you want to talk about the go-to-market and then an uptake? And Patrick, you may have some thoughts, too, from a clinical perspective.
spk16: Sure. So you want Patrick to start maybe, and then I'll jump on that. Sure. Patrick, you want to start there?
spk05: Sure.
spk07: Yeah, absolutely. So, you know, seborrheic dermatitis is a disease where there hasn't been, as we mentioned, a new product launched in decades. And so I think we are really focused on the medical side on disease state education and kind of clarifying especially what the burden of disease is on patients. You know, in some of the research that we've done, we've been able to show that patients are on five or more and often taking up 30 minutes of their day each day managing their seborrheic dermatitis. And those number of treatments are both over the counter as well as prescribed. So I think a lot of this information is something that because this hasn't been a part of the conversation, healthcare providers may not be aware of. So we have a lot of work that we're doing with regard to education. That being said, we know from the patient perspective that there is a very strong desire for new treatments. We hear that clearly when we go out and talk to patients And we also sense a lot of frustration on the healthcare provider side on the lack of kind of new modalities to be able to offer patients. So, we are doing our diligence with regard to disease state education, but it's to a very receptive audience.
spk11: Thank you.
spk16: Yeah, so I'll just add to that, Louise. So, I mean, I would expect, you know, you know, seb derm is a different animal in terms of compared to psoriasis, you know, the degree of unmet need, the degree of anticipation. and largely the familiarity that we'll be capitalizing on in terms of both our company as well as the experience with psoriasis. So we expect the conditions to be quite different as it relates to heading into that market. We largely see ourselves having not as much direct competition in the market, not being as crowded, coupled with this very high level of anticipation to look a little bit different. I also mentioned earlier with respect to the access dynamics, the fact that we will be launching into a situation in which we already have some early coverage owing to the transposition of the current coverage onto the new indication or line extension. I would expect that to really be a boost in terms of not starting at ground zero in either access, familiarity, or comfort level with the mechanism or the product. we will be doing some of the similar tactics however in terms of thinking about you know sampling the product obviously you know that is a core expectation in dermatology offices and getting people familiar whereas you know people are generally familiar with foam products um our foam product is quite different with respect to the quality of the vehicle and so we'll be getting people you know kind of oriented with that ultimately launching then with you know samples um just like we would in any other you know product launch but you know, this one is going to be a little bit different. And so I wouldn't count on the dynamics being sort of exactly the same given early days, you know, relative to psoriasis.
spk08: Great. Thank you.
spk15: Thank you for your question. Please stand by for our next question. And our next question comes from Greg Frazier, Truist Securities. Please go ahead.
spk02: Good afternoon, folks. Thanks for taking the questions. Just following up on the field-based expansion, understand it's not REPS, but should we expect to step up in SG&A spend in the coming quarters, or could SG&A spend decline? You mentioned pulling back on some SG&A growth. And then just to follow up on the challenges with the coverage implementation that you're seeing, sorry to ask about this, but again, because you're probably tired of talking about it, but What extent are the issues manifesting in the office versus the pharmacy? With the coverage that you have, prior auths are largely not required, but some of what you described, like the dog confirming the indication, sound a bit like prior auth steps. I just want to understand better why NRX is not still due to these issues. Is it usually the pharmacy when the copay is not accurate for the coverage? Just any additional code would be helpful. Thanks so much.
spk05: Yeah, sure. Scott, do you want to maybe take the question around SG&A and then we can take the question around GTN?
spk04: Thanks for the question, Greg. Yeah, on SG&A, we would still expect it to go up modestly, sequentially as we continue to invest in the launch. I think this, you know, supplemental field team, you know, is one driver. You know, we're continuing to add tactics. And then, you know, in addition to psoriasis, we have to prepare for the subderm and atopic dermatitis launches. So, we've been consistently saying that even with the reprioritization and reducing expense growth in certain areas of SG&A, the overall commercial investment, we want to keep robust to make sure that we have the resources we need for the launch. So SG&A, I think, will still modestly grow sequentially in support of those launches.
spk11: All right. Ken, do you want to go ahead?
spk16: Yeah, so in terms of the, you know, kind of office versus pharmacy dynamic, you know, I'll do my best to, I think it'll be anecdotal at best, because we have not been, I'd say, you know, quantitatively measuring this. But I'd probably say it's probably a split of about 60-40, Greg, in terms of where I believe the challenges exist, both of which are remediable and addressable in terms of being able to tackle that they take different approaches, right? So the The office-based is about, you know, education and consistency of entering the right information. And while, you know, to your point, it sounds like a VA, you know, prior authorization is sort of a more formal process that sort of you have to stop and fill out a little bit more information typically. And this is, you know, you can probably look to other, you know, other systemics and such for when you have a true prior authorization process. This is a confirmation of and sort of your tried and failed. So, a little bit softer of that process, but it is required in order to, I'd say, activate any coverage that you have. So, whereas you will see products that have a quote unquote hard prioritization that sort of, you know, you absolutely have to fill out additional information and justification for that drug. We're not seeing that with respect to the type of coverage we're getting. I think it's about that ratio, about 60-40. And then the pharmacy side, like I mentioned, largely the realm of our reimbursement specialists who are working with those pharmacies and continuing to educate them and let them know that first and foremost, we are covered in some particular plans and that those patients should be run via the covered route and to obtain the necessary information from the office. I don't have those quantifications at my fingertips, but that's what I would say kind of anecdotally and based on what I'm seeing.
spk02: That's helpful. Thank you.
spk01: Yep.
spk15: Thank you for your question. Please stand by for our next question.
spk11: And our next question.
spk15: We'll come from Sean Kim with Jones Trading. Please go ahead.
spk01: Hi, guys. Thank you for taking my questions. I guess just one question related to the recent approval in Canada. I'm curious to hear what marketing efforts you need to do in Canada, recognizing that it is a smaller market, whether you'll lead the efforts by redeploying some of the commercial force into Canada or partner out for efforts, and whether the expected product sales in Canada will be net positive on the bottom line. And I guess more broadly for the ex-U.S. opportunities, I'm just curious if you have specific geographic areas that you're focusing on for the time being.
spk05: Yeah, Sean, thanks for the question. So I'll take part of this, and then I'll ask Ken to comment about the Canada launch plan. So from an ex-U.S. standpoint, Canada is the only geography that we plan to do ourselves outside the United States. And, you know, frankly, the U.S. and Canadian dermatology communities are so tightly interwoven that we felt that that was the right thing to do. Canada also has been a major contributor to the clinical development program for reflumelast I think about one in three patients across all of our clinical studies came from Canada. And so, you know, there's a very high level of familiarity there with the topical reformalists. Beyond Canada and the United States, we would be looking for a partnership for any other geographies. And we have said repeatedly in the past that, you know, our primary focus is on Japan and China and Asia more broadly. I think Scott mentioned in his comments, prepared comments that we've made significant headway on potential partnerships in Japan and China and think that that's something that could be something that could happen in the relatively near future. Beyond Japan and China, the only other really big market out there is Europe. And the challenge, I think, in Europe is reimbursement for topicals. You may be aware Pfizer actually withdrew Eucrisa from the market last year for commercial reasons. You know, most European countries want to reimburse you at the rate of a topical generic steroid, which just is not a reasonable reimbursement rate. And so that creates some significant headwinds in Europe. And then I think, you know, beyond that, it would really depend on the appetite of a partner to take on other geographies. But that certainly is not one of our priorities right now, trying to find partners in, you know, Middle East, Latin America, places like that. So, Ken, do you want to maybe talk a little bit about the Canada launch preparations?
spk16: Sure. So, thanks for the question. So, you know, just to dimensionalize Canada, you know, Canada is about one-tenth the population of the U.S. So, just thinking about an FD instead of opportunity standpoint, you know, obviously smaller than the U.S. What's interesting about Canada, though, is that, you know, the concentration of prescribers in the case of dermatology specifically is quite compact. And so it doesn't take much in terms of, you know, a lot of footprint. We're actually, our investment is pretty modest with respect to Canadian commercialization. And we've leveraged significant amounts of resources from the U.S. team in terms of, you know, commercial help, meaning our operations, our marketing, you know, many of the functions, regulatory, everything sort of borrowing from the U.S. and leveraging what we've already done. And so this is what I would view as a very efficient sort of approach where we we'll have a sales team on the ground, but we're talking about, you know, seven folks, which is pretty modest in the entire country to do this. And so, you know, again, leveraging very highly from the things that have already been done, whether we're talking about tactics or, you know, learnings or strategy. And, you know, we also enjoy the fact that, you know, the unmet need in Canada is significant and that the anticipation there, is even greater than you would imagine. So we're, you know, there's a lot of tailwinds going into this particular launch. You know, as for the sales, you know, obviously we all know that Canada pricing is substantially different than the U.S. We'll talk more about that when we actually announce the launch terms. But we do feel that, you know, this is going to be a net positive proposition in launching into Canada. And, of course, we'd be having the follow-on indications as well in terms of the entire portfolio.
spk11: Great, thank you.
spk06: Mark, maybe just one more question because I know we're past the hour, Mark.
spk15: Sounds great. Please stand by for our last question. And our last question will come from Rohit Bathan with Needham & Company. Please go ahead.
spk14: Hi, this is Rohit on for SIRS. Thanks for taking our questions. Where do you expect to be in terms of pricing of the reflumelast foam for sub germ? And then can you talk about how you plan to drive disease awareness? Thanks.
spk05: Yeah, yeah, I guess Ken, you want to maybe take the 1st 1 and then Patrick, you can address the disease awareness.
spk16: Yeah, so, you know, I think that the pricing of the phone will be largely in the neighborhood of the cream. we've done that for a particular reason. Again, earlier on when we were talking about our access strategy, it's important with these follow-on indications, particularly seb derm, that has a larger government pay component to make sure that we're not triggering inadvertently additional burden to the patient. And what that means, plain speak, is if you're priced too high, you trigger the specialty tier, which ultimately results in co-pay or co-insurance amounts to the patient of anywhere from 30% to 40% of list price, which is probably too much for a medicare patient so we're being very conscious of trying to stay below that threshold that threshold does change every few years from the government standpoint but you know staying in the neighborhood of our current pricing is probably the most proven approach to enter the market and then we would look to see you know if there were movement within the the definition of the tier yeah and just to talk about disease awareness for a subderm
spk07: As I mentioned, this is something that we're working on within our medical affairs team that's already out in the field. One thing that's important to keep in mind is that seborrheic dermatitis is a highly prevalent disease. And even though many of the patients may not be under treatment right now due to the lack of kind of new treatment options in the last decade, there are still as many seborrheic dermatitis patients in dermatologists' offices. as there are psoriasis patients. So this is a disease that's very familiar to the doctors that we're engaging with right now already for Zareve cream. And so it's really just a matter of kind of incrementally increasing their awareness about some of these facts that I talked about earlier, you know, notably the like disease burden on patients. You know, some of the things that we've learned from a more formalized analysis of seb germ that hasn't really been done previously because there hasn't been a kind of you know kind of corporate engagement in really looking at and systematically understanding uh what it is to have the disease of severe dermatitis and how does it that specifically impacts patients so i think you know it's a good opportunity for us to kind of share this information with health care providers as we look forward to the approval at the end of this year thank you
spk05: Okay, so we're a little over time, but I just want to take just a minute and wrap things up. I think, as I said at the beginning of my comments, if you look at the fundamental indicators of the business, we're very, very encouraged. Demand is growing very strongly. Very, very positive patient and physician feedback on the product profile. and, you know, made great headway with coverage on the product as well, outpacing, you know, all of the other recent topical launches. You know, I know a lot of the questions have come up around this gross to net question, and I think it's the first time we've probably gone into great detail around gross to nets and some of the dynamics that we're seeing. I would point out a couple of things. The first one is, you know, topical dermatology from a reimbursement standpoint, is different than any other sector of the pharmaceutical market. This is as different from orals and injectables as buy and bill is in many respects. But the topics that we've discussed around our growth to net dynamics are not unique to our QDIS. In fact, you see this really with every topical company having very similar sorts of issues that they have to address. And I think the most important thing is you know, that we have, I think, a good understanding of where we have run into challenges with gross-to-nets, and we have a solid plan on how we can implement and improve our gross-to-nets, and we remain confident that we're going to see quarter-and-quarter improvements throughout the year, and as I mentioned before, we continue to believe that we're going to be able to achieve a very solid gross-to-net in the foreseeable future. So, I wanted just to clarify that a little bit and look forward to continuing to update you all on the progress we're making on gross-to-nets as well as on patient demand and subsequent calls. And with that, I think we're going to wrap up.
spk15: Thank you, everybody, for your participation today's conference. This concludes the program, and you may now disconnect.
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