BioDelivery Sciences International, Inc.

Greetings. Welcome to Biodelivery Sciences' first quarter 2021 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I would now like to turn the conference over to Terry Cuio, Executive Vice President and Chief Financial Officer. Thank you. You may begin.

Thank you and good morning, everyone. Welcome to our first quarter 2021 earnings conference call. Leading the call today is Jeff Bailey, Chief Executive Officer. We are joined by Scott Plescia, President and Chief Commercial Officer. Following our prepared remarks, we will conduct a question and answer session. Earlier today, Biodelivery Sciences issued a press release announcing its financial results for the first quarter of 2021. A copy of the release can be found on the investor relations page of the company's website. Before we begin, I would like to remind everyone that certain statements may be made during this call, which may contain forward-looking statements. Such forward-looking statements are based upon current expectations, and there can be no assurances that the results contemplated in these statements will be realized. Actual results may differ materially from such statements due to a number of factors and risks, some of which are identified in our press release and our annual, quarterly, and other reports filed with the SEC. These forward-looking statements are based on information available to BDSI today, May 6, 2021, and the company assumes no obligation to update statements as circumstances change. An audio recording and broadcast replay for today's conference call will also be available online in the Investors section of the company's website. With that, I'd like to turn the call over to Jeff Bailey, our CEO. Jeff?

Thank you very much, Terry, and welcome, everyone, to our company's first quarter 2021 earnings call. I'm happy to report that our business remains healthy and well-positioned as we manage through the pandemic. I would like to focus your attention on three main takeaways from today's call. The first key takeaway, our overall business remains solid in the first quarter with sales growing 7%, including Bell Buca, TRX volume growth of 8.9% year over year, despite two challenges. A notable challenge, like other pharma companies are reporting, COVID is having a market impact in Q1 with patient visits being down across a number of therapeutic areas. This includes a long-acting opioid market that saw prescription volume decline 5.8% compared to Q4. Furthermore, we saw one-time disruptions to our business from the February winter storm URI. The storm had both regional and national impact. Recently, in the south-central area, where we have a strong presence, pharmacies and physician offices were closed for multiple days. More specific to BDSI, we encounter a national impact. as our Tennessee distribution facility was not able to ship product due to the storm for approximately two weeks. We mentioned these headwinds previously in our Q4 2020 earnings call. Despite these challenges, our businesses performed well. With weather-related issues behind us, it's been encouraging to see an increase in sales representatives' face-to-face calls with healthcare providers or HCPs, as well as stronger prescription trends. We're also seeing the highest weekly NBRX market shares on a year-to-date basis in April, along with an all-time record high TRX market share in our most recent data week. Scott will cover this in more detail. These trends give us confidence in our growth going forward. Additionally, we know that much of our lost revenue in Q1 was due to a weather-related disruption to prescription fulfillment rather than decreased customer demand. The second key takeaway, our product portfolio remained strong and profitable as we continued to build our balance sheet ending the quarter with approximately $116 million in cash. In the first quarter, we generated $9.2 million in EBITDA with an attractive 22% EBITDA margin. This is accompanied by approximately $11 million in operating cash flow generation. which enables us to invest in our brands while positioning us well to maximize shareholder value through thoughtful business development at the appropriate time. The third key takeaway, we remain confident about our growth in 2021 as we see three important developments going forward. First, patients are returning to physician offices at a higher rate and weekly shares in April are at all-time highs. Second, we are seeing increasing face-to-face interactions by our sales representatives with HCPs as offices are reopening access, which is critical to promoting clearly differentiated products like Belbuca and Simproic. Third, and most importantly, we are reiterating the financial guidance we issued last quarter. We are still on track to achieve four-year total revenues of $170 to $180 million, including Belbuca net sales of $155 to $165 million, and $40 to $50 million of . I also want to share one additional update about our business. Our three-day bench trial with Allergen related to their paragraph four patent challenge concluded on March the 3rd. Post-trial briefs from the parties are due to the courts by mid-May. We have a strong patent position, and while we remain very confident in the strength of our IP, we can neither predict the decision the court will reach nor the timing of the court's decision. As you would expect, we are not able to comment further regarding the ongoing litigation. With that, I will turn the call over to Scott to provide more details of our performance during the first quarter. Scott?

Thank you, Jeff. As Jeff mentioned, during Q1, Valbuca prescriptions grew by 9,200 year-over-year to over 112,700 retail, mail order, and long-term care TRXs combined. This represents a solid 8.9% increase in Belvuca TRXs compared to the first quarter of 2020 and a slight sequential decline of 5.1% compared to the fourth quarter of 2020. The year-over-year growth from Q1 2020 was meaningful due to the challenging comparison to a pre-COVID market in January and February of 2020 and then an elevated level of prescriptions in March 2020 when patients could stock up on their medications as stay-at-home orders were implemented. Belbuco's scripts grew year-over-year despite the impact of the pandemic, a continued decline in the overall long-acting opiate market, and the negative headwinds from winter storm URI, as Jeff described. Given the confluence of events this quarter, we were pleased with Belbuco's continued revenue and script growth and its stable Q1 TRX market share of 4.5%. During the first quarter, Belbuco's new-to-brand market share of 6.7% declined by 1.1%, from 7.8% in the fourth quarter, but remained significantly above its TRX share of 4.5%, which means there is still a meaningful opportunity to grow total prescription share as these metrics have historically converged. Embry-X accounts and share in the first quarter were adversely impacted by HCP office and pharmacy closures in high market share areas for us, as well as pharmacy level fulfillment failures related to Winter Storm URI, and the disruption at our Tennessee distribution facility. We know that there were over 4,000 pharmacy orders that weren't fulfilled for these reasons in February and early March, and also believe there was a downstream effect of others that did not get refilled a month later. During this time of disruption, Delbuca's MBRX market share fell to as low as 5.7%, but has subsequently improved to 7.5% during the past four weeks, ending April 23rd. We also saw our TRX share reach a record 4.7% with our most recent data. Our commercial team quickly pivoted to increase geographic targeting efforts using both in-person and digital tactics into the affected areas. Moreover, our sales representatives continue to implement the national rollout of our First Start NBRX program, which continues to meet or exceed our expectations. For those HCPs participating in the program, we have seen a 32% lift in MBRXs, while TRXs have improved by 16%. First Start allows healthcare providers to easily prescribe Belbuco to appropriate commercial patients for the first time by providing convenient access to Belbuco, while the HCP staff is securing prior authorization approval. We believe that this program can continue to generate incremental growth in 2021. We are pleased to report that Belbuca's prescriber base increased in the first quarter by 6% year-over-year. As mentioned, the winter storm impacted some of our most productive regional territories. Sequentially, our prescriber base remained stable, largely due to the impact of these territories, which represent approximately 21% of Belbuca volume. Our market access with Valbuca has improved greatly over time and has been important to our success. Valbuca currently enjoys strong commercial coverage with over 90% of lives covered. I believe our current level of coverage provides a significant opportunity for growth, which is supported by our consistent year-over-year TRX growth across all payer types. We continue to be committed to improving access to Bell Buca while balancing payer coverage and rebate levels, especially in Medicare. Simproic Q1 prescriptions dipped to approximately 16,800, remaining flat year over year compared to Q1 2020, with a 10% sequential decline from Q4 2020. The Pomora market is historically weaker in the first quarter of each year, which is more apparent in Semproic's trends due to its growth since we acquired the brand in mid-2019. The decline was magnified by the negative impact of winter storm URI and the disruptions to our distribution center in February. We are encouraged to see Semproic March TRX count increase by over 1,000 prescriptions, or close to 21% from February. We expect renewed growth in revenues and total prescriptions for Semproic as this new Rx share has consistently exceeded total Rx share since May 2019 when BDSI began active promotion. Like Bell Buca, Semproic is well positioned with covered status for 89% of commercial lives with 60% of preferred status. We believe our early 2020 market access wins with Prime Therapeutics and CVS will drive additional growth for the remainder of 2021. The BDSI sales force has done an outstanding job pulling through these wins. We expect to reach new TRX count and share highs throughout the year. The commercial team took a proactive approach to overcoming the challenges we faced in Q1. This included precision targeting of specific geographies with increased and enhanced digital marketing with areas that were most impacted by winter storm URI, as well as the launch of new programs to interact with potential patients via social media. It was encouraging to see increased face-to-face interactions our sales team had with healthcare providers in Q1, which reached their highest levels in over a year and approximately 15% below pre-COVID levels. We believe that our sales representatives' ability to interact with our customers is essential to having robust growth, and a recent increase in face-to-face interactions will have a positive impact for the remainder of 2021. Our resourceful and effective commercial organization has now been tested through both the pandemic and seasonal disruptions that impacted our business. The team continues to demonstrate significant resilience while driving growth and results for our brands. I could not be prouder of our team. With more individuals being vaccinated, we are optimistic that most physician offices will return to previous access levels in the near future. We believe this is essential to driving the growth of our portfolio. We are extremely committed to building upon our history of successful sales performance and growth and look forward to demonstrating this during the remainder of 2021. With that, I'll turn the call over to Terri to provide an update on the financials. Terri.

Thank you, Scott. Total net revenue for the first quarter was $41 million, an increase of 7% compared to $38.3 million in the first quarter of 2020, and a decrease of 3% compared to $42.2 million in Q4 2020. Revenue from continuing operations, including sales of Belbuque and Simproic, as well as royalty revenue, grew sequentially 3% quarter-over-quarter. As a reminder, BunaVale, which was discontinued in 2020, recorded net revenue of $2.4 million in the fourth quarter of 2020, resulting from the release of certain sales returns reserves. Bilbuca net sales in the first quarter of 2021 were $36.4 million, an increase of 9% compared to $33.5 million in the first quarter of 2020, and an increase of $800,000, or 2%, compared to $35.6 million in the fourth quarter of 2020. Bilbuca gross-to-net deductions improved in the first quarter as compared to the fourth quarter of 2020, as anticipated, primarily due to typical decreases seen for Medicare coverage gaps as well as lower Medicaid deductions. Net sales for Semproic in the first quarter of 2021 were $4.4 million, which reflects 5% growth year-over-year and 20% sequential growth compared to the fourth quarter of 2020. Semproic gross-to-net deductions improved in the first quarter due to the typical decreases seen for Medicare coverage gap, as well as updates to our gross-to-net channel estimates. Total gross margin for the first quarter was 86%, in line with the first quarter of 2020, and above the 80% margin during the fourth quarter of 2020. Total operating expenses in the first quarter of 2021 were $27.8 million compared to $26.7 million in Q1 2020 and $21.4 million in Q4 2020. As expected, the sequential increase in the first quarter is mainly attributed to planned marketing investments in our core brands, which are typically higher in the first half of the year, as well as elevated legal fees of approximately $3 million in the quarter, primarily associated with the ongoing Paragraph 4 litigation. Gap net income for the first quarter was $5.2 million, or 5 cents per share, in line with the gap net income in the first quarter of 2020, and below gap net income of $10.2 million, or 10 cents per share, in the fourth quarter of 2020. EBITDA in Q1 2021 was $9.2 million, or 22% of net sales, compared with $7.8 million, or 20% of net sales in Q1 2020, and $14.3 million in the fourth quarter of 2020. Non-GAAP net income for the first quarter was $8.5 million, or 8 cents per share, and reflects GAAP net income excluding stock-based compensation and non-cash amortization of intangible assets. as compared to non-GAAP net income of $8.3 million, or 8 cents per share, in the first quarter of 2020, excluding the same items. In the fourth quarter of 2020, the company reported non-GAAP net income of $13.7 million, or 13 cents per share. The company has a strong balance sheet, with cash and cash equivalents as of March 31, 2021, of $116.4 million, as compared to $111.6 million at year-end 2020. Operating cash flow generation of $11.1 million in the first quarter was partially offset by $6.1 million used to repurchase shares and $300,000 of fixed asset additions, resulting in a net increase in cash on hand of $4.8 million. Our share buyback program initiated in the fourth quarter of 2020, and we have repurchased approximately 1.6 million shares through Q1 2021 at an average price of $3.87. The $6.3 million in share repurchases to date represents 25% of the total authorized amount of $25 million. This reflects the continued confidence of the board and the management team in the strength and value of our business. The company will opportunistically utilize the share repurchase program, weighing the benefits of doing so with business development initiatives. We are reiterating our full year 2021 guidance and continue to expect net sales in 2021 for Belbuca in the range of $155 to $165 million, and 2021 total company net revenue in the range of $170 to $180 million. As previously discussed, These estimates incorporate the impact in Q1 from the winter storms. We estimate our total operating expenses to be in the range of $115 to $120 million in 2021, as we continue to invest behind the growth of our brands. And we expect EBITDA to be in the range of $40 to $50 million in 2021. We anticipate remaining operating cash flow positive throughout the year. I will now turn the call back to Jeff for some concluding remarks before we open up the call for Q&A. Jeff?

I want to take a moment and thank our employees who continue to perform strongly when faced with the ongoing challenges of the pandemic and the unprecedented weather-related conditions in some of our key regions in February. Despite these challenges, the team delivered solid results in the first quarter, and we expect to build upon the momentum we have experienced the first few weeks of the second quarter. Moreover, we are looking forward to increasing interaction between our Salesforce and healthcare providers for the balance of 2021, especially in person. With products which make a difference in patients' lives and a strong balance sheet to consider select business development opportunities, I believe BDSI is well-positioned to drive shareholder value. We will now take your questions. Operator?

If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Our first question is from Brandon Fulks with Cantor Fitzgerald. Please proceed.

Hi, thanks for taking my questions and congratulations on the solid execution. Maybe just three from me, I guess. Maybe just firstly, I know I heard about the Elvigen update, but can you just remind us if there are any other challenges? Should you be successful in Elvigen? Anything else we should be watching? Secondly, how do you think about the urgency for business development in the current stage? you're buying back shares, the business is doing well, and then maybe wrapped in that, do you have any change in your thinking about investing in R&D? So would it still just be commercial stage assets you're looking at, or would you look at earlier stage things? Thank you.

Hey, Brandon, it's Jeff. Hope you're doing well, and thanks for the questions. First of all, just kind of a general perspective on Alvagen. Again, not too much has changed. I think just to reiterate the fact that we had the three-day bench trial that took place and concluded on March the 3rd related to the paragraph four patent challenge. While we remain very confident in the strength of our IP, we can't predict the position of the court nor the timing of the court's decision. Our hope is that the decision will be rendered earlier than later in the second half of the year. uh is our perspective uh post trial briefs from the parties are due uh to the courts by mid-may and the decision you know from the court will be expected subsequent to the filing of those post trial briefs so um hope that gives you the perspective that's that's what we know at this time not too much has changed brandon so uh let me just pause there like cover what you needed on now yeah and maybe just quickly um at this stage would you say settlement's completely off the table we just

too far in. And then secondly, can you just remind me if there are other companies that also have challenged the patents at this stage?

Thank you. So we take a look at the – on the settlement front, you know, can't really comment on that, but it's one where, you know, settlement can always happen, as you know, through a process any time. So it's one where that's the case there. So nothing, you know, to comment on relative to settlements. Um, and you know, the only other challenges out there was camo coming from a different perspective. Uh, but that's, you know, that that's it on the, uh, on the legal front. Great. Okay. And then onto the urgency of a business development, I guess, you know, maybe taking it, uh, even just a little bit more broad as far as, uh, to date, what we're doing business development has been, we've been completing thorough diligence, uh, very important cross-functional, really good process and collaboration as far as making sure we're looking at all the things that could make sense to us from a business development standpoint. So I'm really pleased to report that this is something that an awful lot of work is going into, regular venues every week, and making sure we're keeping our finger on the pulse when it comes to business development and playing through this. As you'd expect at this point, we want to make sure we have really discerning, taste here with the way that we're focusing on some things that we've rejected quite a few assets at this point, and we continue to assess a number of what we find to be interesting assets at this point. And we take a look at just from a strategy standpoint on that front. It's one where, you know, it's really we have a tremendous commercial infrastructure, and, of course, we aim to leverage that and play that through all the way. When you talk about, so just to say, look at the really good process and really good intense effort as far as looking at all the BD opportunities. On the urgency front, it's one where it's really about, from a timing standpoint, it's about the right deal at the right time that really brings shareholder value. We want to maximize shareholder value. There's some things that really do potentially make sense as far as based on the backbone of our company with the commercial footprint. and making sure that all the right things are being focused in on there. But we're going to make sure we continue to show that this is a really thoughtful, judicious process of valuing the opportunities and, again, just bring it back to shareholder value. So from a timing standpoint, you're right, we've been doing the buyback, which could be configured in different deal constructs and things like that. It would be helpful on that end, of course, if we decided to go that way. From a timing standpoint, it's one where it's the right deal at the right time. And so I just want to make sure that – assure you also that this is something that's front and center for the company, top priority as far as the work that's going on, and a lot of good work's been going on on that end. So let me just pause there before I get to your R&D question, Brandon.

You answered that question. Thank you very much.

Excellent. All right. And then on the R&D front, You know, it's something where it continues to be very much the mindset that, you know, we're a company that really, you know, later stage our product, you know, something more like a phase three type of product or currently commercialized, that's kind of our sweet spot based on, of the company. So as far as anything early stage, Brandon, that's not something that's at the top of the list. It wouldn't rule it out completely. But, you know, we're not a deep R&D organization. So I think that's just important to point out. And so nothing has really changed from that perspective, what we shared in the past on that end. But just one where, you know, really one's looking for the right asset that really fits the perspective that I described before.

Great. Thanks so much. I appreciate the comprehensive answers.

All right, Brenda, thank you.

Our next question is from Greg Gilbert with Truist. Please proceed.

Good morning. I have a couple, a few. Scott, first with you, it looks like we're seeing a slowdown in the decline rate for long-acting opioids overall. Do you think that's a real trend, or is it premature to call it, given the sort of weird comps in the markets over the past year?

Greg, I appreciate the question. We actually felt last year it would have slowed down and started to flatten. We had modeled that actually. We had started to see, for example, even the NBRXs were really stabilized, which tend to drive some of the TRXs. And it does appear that the market's come back. If you look at how it performed early in Q1, I think it was in our initial comments, but there was quite a fall off. And now we've seen a bounce back in March and April. You know, one of the things we think that drove that was patient visits. When you look at IQVIA data around patient visits, there was a sharp decline in early 2021, actually probably below any other time period since COVID hit as far as face-to-face visits. So we're starting to see that kind of dampen and come back a little bit. So, yeah, we do believe it's the rest of the year we should start seeing as face-to-face visits increase and also as weeks. As far as us individually, as we're able to get in front of more doctors with the right reach and frequency, we should see script trends start turning around as well.

Have there been any access wins or changes of note for your portfolio since the last quarter?

No, nothing substantial or meaningful to report this time. Still ongoing conversations, as always.

Got it. And then maybe for... Jeff and Terry, on capital allocation, the stock's well below where you had been buying it. Is it a no-brainer to keep buying it at these levels, or is it more important to keep powder dry to sort of diversify the portfolio? And is that realistic in light of legal uncertainty, right? Is that uncertainty, does that uncertainty prevent you from even transacting if you wanted to right now? It's a multi-part capital allocation question, so what are your thoughts?

Yeah. Hey, Greg. So thanks for that. Yeah, it's an important question and one that I and Jeff spend a lot of time, and it's really important for us to be considering and weighing those – exactly the variables that you're talking about. In terms of the share buyback, as you might imagine, when we're in quiet periods, we – You know, the only way that buying can happen is through kind of a 10B5 plan. So, you know, I think you'll be able to see whether it's continued or not. But we are weighing it with the business development, and we want to make sure that we can balance it. I do feel pretty confident that given, I guess, the credibility that I feel we've established and our performance over the last couple of years, that we'll have access to the financial markets under a variety of scenarios if and when the time is right. So we are looking at that. I think while the trial is certainly something that's out there, that wouldn't preclude us from being able to proceed on certain types of transactions before then.

And maybe I could just wrap up with a legal question for Jeff, since I know you like talking about litigation and predicting outcomes so much. But perhaps I'll ask it in a more helpful, factual way. So if you go to the mat and get a decision and win against the first challenger, for example, can you help us understand to what degree that affects the odds or does not as it relates to the CHEMO challenge, just so people understand the relevance of decision one and how it could affect eventual decision number two, should you play it all out? Thanks.

Yeah. Thanks, Greg, for the question. CHEMO elected not to contest the validity of the patents at the March trial with Alvagen. Instead, what CHEMO did was they agreed to be bound by the court's decision. from the Alvagen trial concerning the validity of the three orange patents. You know, on the chemo front, there's stuff we just don't know. You may have picked up on that the FDA has not reported chemo as having a tentative approval for its generic buccal film product. So, you know, that's what we have reported at this point as far as the perspective on both trials.

Thanks a lot. Appreciate it, folks.

Okay.

Great. Thank you.

Our next question is from David Amselen with Piper Sandler. Please proceed.

Hey, everyone. This is Zach on for David. Thanks for taking my questions. Apologies if I missed some of this color, but I was just hoping to get a little bit more insight into the pace of recovery for belbuca as 21 progresses in normalization. So I guess... In other words, just to what extent will it return to physicians' offices and pack prescriptions in your view, given that Lubuca generally has been fairly resilient? Thanks.

Scott, do you want to go first, and maybe I'll tap in as well? But please go ahead, Scott.

Yeah, yeah. Thanks, Zach. I appreciate it. So I kind of mentioned earlier that the face-to-face visits, which we view as critical, so patients actually going into offices because a lot of times in the opioid space, they will not make a change unless they see the patient. So that could be either adding our product to it or switching. So, again, early in the quarter, we saw a decline in face-to-face visits. Actually, the pain space and rheumatology, when you look at the data, are pretty aligned, but they're probably the ones that were hit the hardest early in 2021. That's kind of stabilized now. It's coming back. And, again, it was probably 10 points less recently less visits than there were as we exited 2020. I think we're encouraged that we'll see that go back. Obviously, a lot of things are opening up here in the United States now, and we do feel that that's going to be a key trend for us. The thing I think we're encouraged by, though, is our actual ability to get in front of HCPs and have a meaningful conversation. So when we look at our data, we opened up our Salesforce last July, and we saw a steady increase in the ability to have face-to-face interactions with our HCPs. And that kind of peaked in October. Then we hit the holiday period, January, November, December, January, and then February is a short month. We also had some weather in there and a national sales meeting, so it kind of dropped down again. But then March – we reached kind of an all-time high for the amount of time we've been in front of HCPs really since pre-COVID. And that was a 25% jump over October even. So we're already starting to see in our numbers now where in recent weeks our share is up to 4.7%. We did 4.5 in Q4. The MBRX share has also rebounded to 7.5% the last four weeks. So we're already starting to see that recovery, and even more granular as we look at some of our pharmacy demand that, you know, isn't publicly available, we can start to see some trends coming back there as well. And so we're very encouraged and feel like the rest of the year we can get back to some more of our historical growth rates.

Zach, if I could just go ahead and build on Scott's comment there that I think is really important. Your questions are really important from the standpoint of the overall market dynamic we have here is that we're really the – Only Schedule 2 is actively promoting in the market, and it's one where that's just a great situation for us. During the pandemic, as you can imagine, with face-to-face being down, that's something that in this market, with this market dynamic, it's one where we really have our big bet placed on our sales force, that those face-to-face interactions mean everything to us. And the one thing that doesn't change about this business is one where the fundamentals of this business, which is the rights, doctor, the right prescriber, the right message, the right frequency, right doctor, right message, right frequency. That doesn't change. And so that frequency has been missing during the pandemic. And also the storm didn't help Bob in the first quarter as well. So we're similar to what's being messaged by some other pharma companies, but it's also one where look at as we're hoping that things were coming out of the pandemic here. that we're seeing a trend now that patients may be getting back in the offices, or we looked at the IQVIA data that Scott was referencing before, and that was one where that's very helpful to see that there's a trend back with patients getting back in the office. But also we're seeing our face-to-face call activity going up in March and into April here. That's huge to us, especially the attributes. We have two clearly differentiated products with Galbuca and Symproic. And it's so important that our reps get that face-to-face time with prescribers. It makes a big difference. So, you know, we want to really make sure that we're seeing this through all the way. But it's an important part of, you know, the way that we view the world. So it's one where we want to make sure. So I would also, I think I misspoke, you know, we're Schedule 3. I think I said by accident Schedule 2 earlier. So I just want to reiterate that, that market dynamic, that we are the only Schedule 3 promoting the marketplace. I want to make sure that it's known that we're the only Schedule III paying product out there. It's a great dynamic for us, but getting back to face-to-face is huge to us.

Great. No, that's very helpful. Thank you. And then if I could squeeze one more in-onset product, too. Just looking at prescription data, it seems like share has sort of stayed relatively stable over the past year or so. So anything you're doing there to sort of change the trajectory of the asset over time?

Yeah, Zach, I appreciate that. So when you look year over year, it was flat, but we actually had quite a bit of growth throughout 2020. Early this first quarter, we actually had a negative impact within a couple of plans that we grew the most in. What I mean by that is we grew our share significantly last year, grew our business there. Actually, we're approaching 50%, for example, in Prime Therapeutics. But what happens every year in that plan is the business just Q1 is really soft. So, for example, last year there's a 23% drop in business. This year it was 21 in that plan. And then it comes back throughout the year. So because we've grown our business there so much in the last year, it had a negative impact on our overall share. But the good news is, within that plan and CVS, for example, or two wins last year, you see similar dynamics. They usually are kind of their low point in Q1 and then build throughout the year with Q4 being their highest TRX count. So actually, we feel pretty confident we can grow share and keep growing it. We have pulsed in different digital marketing that we hadn't done before with Semproic in recent months. So we believe that we'll get back on track here shortly. Part of it was some market dynamics and payer dynamics that we typically see in this space. Okay, great. Thanks so much.

Thanks, Zach.

Our next question is from Scott Henry with Roth Capital. Please proceed.

Thank you, and good morning. Just a couple questions. The first one, When I look at reported revenues and total prescriptions for the quarter, obviously you can back out revenue per script. And the past couple of years, we've seen revenue per script very strong in Q1 and then perhaps coming off that a little bit the rest of the year, which is somewhat counterintuitive. I would expect revenue per script to be lower in Q1 because of the reset. I guess the question is, do you expect that trend to continue this year where revenue per script is highest in the first quarter? And as well, why do you think we're seeing that trend?

Yeah, maybe I'll jump in first, Scott. Good morning. So actually, it is what we would expect. We typically see that the coverage gap does have, Medicare coverage gap does have an impact for us. And It is quite low in the first quarter, and it does increase as the year goes on, as people start to hit their deductibles and so on. So, in fact, it is a trend that I would expect. The gross-to-nets should increase as the year proceeds.

Okay, so you would expect revenue per script, not gross-to-net, to decline sequentially, quarterly, through the year? I just want to make sure I understand that correctly. Yes.

Okay. All other things being equal. There's no other movement, but yes. Okay.

Scott, the only other movement that kind of counters that a little bit, that doesn't usually outweigh it, is just the blend of strengths and stuff over time sometimes can, you know, as patients, we see our higher strength as being a bigger percentage of our scripts. Okay, great. But it's very spot on on the gross to net side of things.

Okay, excellent. And were there any price increases in the quarter?

Yeah, we took a price increase January 1st.

Okay, and what about?

5%.

Thank you. And then just the final question for Terry, legal fees of about $3 million in first quarter should we expect a similar number in second quarter or higher or lower? And then should we, assuming we get a conclusion, should we expect that to decline in the second half of the year?

Yeah, so the 3 million was the increase over the prior quarter, just to clarify that comment. And I wouldn't expect it to continue to increase by any means. We have, as we shared before, submitted the, or the briefs are being submitted as we speak, and you know, hopefully the costs would taper down as the year goes on.

Okay. Great. Thank you for taking the questions.

Yep.

Thank you.

Our next question is from Tim Ludo with William Blair. Please proceed.

Hey, guys. This is Ludo. Thanks for taking the questions. So I was wondering if In terms of the New START program, the impact of the weather this year obviously showed that you've got a pretty good business concentration in some regions of the country. Is the New START program focused on the regions where you already have a strong presence or are you trying to use that to diversify geographically?

It's a little bit hard to hear you. It was cutting out, but I think that was a question for Scott that was about the First Start program and whether we are selectively using it in regions and so on. Is that right? Yeah, yeah.

I think I picked up most of it. So Laughlin, I would say the MBRX First Start program, we actually went on a national level. We had piloted it in the middle of last year and then went completely national kind of mid Q4, October, early November. So we're encouraged. Again, we've seen a 32% lift in the HCPs that are participating in MBRXs and then a 16% in TRXs. I think one of the things, though, might answer your question is we've One of the important things our marketing team has done over, let's say, the last year and a half and really dialed it in the last six months to a year is on the digital side, we've built infrastructure now that if we see a weather event or there's issues, you know, issues in certain areas or we see a share drop or a business drop, we can actually pulse in. The system actually almost does it automatically, pulses in additional digital marketing and kind of an increased communication with HCPs and potential patients in those areas. So hopefully that's helpful to you.

Definitely.

I'm sorry, we can't hear you. Okay, I'll leave it at that. Thanks.

I'm sorry, Dr. Laughlin. Thank you for the question.

As a reminder, just star one on your telephone keypad if you would like to ask a question. Our next question is from Tim Chang with Northland Securities. Please proceed.

Hi, thanks. Scott, I had a question for you on sort of, you know, how marketing for Belbuco and Seproc will change once we get to the other side of this pandemic. You know, I had heard anecdotally from some physicians, like in the state of Florida, for instance, that during the pandemic, it was a lot easier to actually prescribe opioids because patients couldn't come into the doctor's office. You know, the state of Florida basically, they basically changed the rules so that they could get opioids without, the patients could actually get the opioids. And I'm sort of wondering when those state rules revert back, you know, will Buca benefit largely because it's a Schedule III product? I just wanted to get your thoughts on that.

I appreciate the question. Yes, they did change some of the regulations around how they could be prescribed and lighten them up somewhat for patients, again, to increase access because it could be more difficult during this time. And honestly, I mean, it's always been – fairly easy to prescribe or convenient to prescribe Belbuque. As a reminder, you can write refills for it. They've always been able to call it in, things like that. So for us, that won't change. I'm not sure how long those regulations will persist, though, Tim. We really haven't heard about any changes upcoming or reverting back to anything anytime soon. So we really haven't modeled anything around that. You know, I think anything that differentiates us is helpful, I think, going forward.

Okay. Thanks for the commentary. And Jeff, you know, obviously you're waiting for this decision on a legal front. You know, is there any way to sort of handicap or sort of put bookends on what the impact of, let's just say, I mean, in the worst case scenario, you get a negative decision. I mean, have you already started to prepare for or do you have a contingency plan set up in that scenario? And even if it is a negative decision, I would imagine you would appeal it. I just wanted to get your thoughts on that.

Yeah, Tim, so just to reiterate that, you know, we feel strongly about our case that we've laid out there. And just like any good leadership team and our responsibility to really be great stewards of the business, you think about things from all different angles. So we think about it from all different angles, but just to reiterate that we feel strongly about our case and where that stands. So the whole management project is one where we just like to always look at whatever the topic is within our world as far as making sure we're ready for all different types of scenarios that would play through. So I just want to assure you that we're on top of our game looking at all different sorts of BD options that fit under different scenarios and everything like that. So hopefully that answers your question, Tim. Yeah.

No, that helps. And, you know, obviously you guys are in a pretty good financial position, right? So you're going to wait for the court decision, obviously, before you make any sort of BD decisions, right? Is that sort of how you guys are thinking about it?

Well, naturally, Tim, there's a link between outcome trial and certain BD approaches, but not all. So it's one where probably you'll read between the lines there. That's how granular we are as far as when it comes to our BD work and the way that we're thinking about the world on that end. So there's a number of different approaches that feed through, but There is a link with certain BD approaches, but not all BD approaches tied to the trial.

Okay, great. Thanks much.

Thank you, Tim.

We have reached the end of our question and answer session. I would like to turn the conference back over to management for closing remarks.

Thank you, Sherry. As far as, just to reiterate, as far as We're really proud of the effort of our team, our employees here in the first quarter, some of the dynamics of the first quarter, but really business on solid footing. Really, we're very fortunate. We have differentiated products that play out in the marketplace, and you can tell from our look forward, we're feeling really good about just our guidance and the world that's in front of us. But it comes back to just really good operational excellence and executing day in and day out. Really, that's the mantra of our team and our focus, really to execute really well, to really deliver here in 2021. And so at that point, very much want to thank everybody for participating today and look forward to speaking to you soon.

Thank you. This does conclude today's conference. You may disconnect your lines at this time. And thank you again for your participation.