BioDelivery Sciences International, Inc.

Greetings. Welcome to the Biodelivery Sciences Third 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 will now turn the conference over to your host, Terry Coelho, Executive Vice President and Chief Financial Officer. You may begin.

Thank you, and good morning, everyone. Welcome to our third 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 third 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, November 3, 2021, and the company assumes no obligation to update statements as circumstances change. An audio recording and a presentation that accompanies our prepared remarks and broadcast replay for today's conference call will also be available online in the investor 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 third quarter 2021 earnings call. It gives me great pleasure to speak to you again today, following closely after our recent Elixir Investor Day. I hope that we were able to convey our excitement about our new neurology vertical, as well as our overall outlook for the future of BDSI. Before we delve into the details of our earnings call, I want to thank Terry Quaglio for her dedication and service to our company as CFO over the past three years, and wish her well in her next role. She leaves behind a strong balance sheet and a well-managed financial organization. At the same time, we are pleased to welcome John Golubeski as our new CFO, a former colleague who served as CFO at three of my prior companies and who brings over 30 years of financial and operational expertise to BDSI. John and I are well calibrated to each other, and we are fortunate to have him on the team. The three main takeaways I want to cover with you today Number one, strong business growth. Our business continued to reach new highs in the third quarter, with product net sales growing 7.5% year-over-year, including Belbuca TRX volume growing close to 8% year-over-year. I am particularly proud of this growth, despite the unexpected and unfortunate situation with Alvagen, which was described in an 8K which we submitted to the SEC on September 21, 2021. More on that to follow. We're incredibly proud of our nimble team who sprang into action immediately to stem losses to our business. We are just now beginning to see a rebound in Dalbuca prescriptions as a result. We provided guidance on September 21st of an estimated total company net sales range of $38 to $42 million for the quarter in connection with the Alvagen situation. I am confident that the quarter's performance would have been even stronger, but for the issue with Alvagen. Despite these unexpected headwinds, Belbuca reached an all-time high TRX market share in the third quarter of 4.9%, complemented by an all-time high in unique Belbuca prescribers of 8,639, which is an increase of 11% year-over-year. We are really seeing this broadening of the base of prescribers of Belbuca as such an important driver for continued future growth. We're also seeing signals of stabilization in the long-acting opioid market, And Scott will walk you through what we're seeing that gives us this optimism. Number two, as far as takeaways go, operational strategic efficiency. We've been prudently managing our expenses in the quarter and continue to generate healthy operating cash flow. In the third quarter, we generated $11.1 million in EBITDA with an attractive 27% EBITDA margin and GAAP EPS of $0.07, ahead of market consensus of $0.05. This resulted in generating approximately $7 million in operating cash flow, which enables us to continue to invest in the future growth of our business and to maximize shareholder value. This quarter, we repaid $20 million in debt, thereby saving $4.4 million in future interest expense payments. We also made a $6 million upfront payment to Dr. Reddy's for Elixib, and we ended the quarter with approximately $101 million in cash. Additionally, we strengthened our supply chain by moving to a new logistics distribution partner, and we expanded from one to two distribution centers for our products in order to de-risk our business by reducing the reliance on a single location. This is an important move to support our continued growth. Moreover, we have started to invest behind the Elixir launch while also keeping our finger on the pulse with respect to other business development opportunities and remain opportunistic about identifying additional neurology products if they are a good fit with our existing portfolio. The final key takeaway, Elixit provides product diversity and is a third growth driver with an estimated peak year revenue in the range of $350 to $400 million. We are incredibly excited for the future of BDSI. We are poised for the growth of an established paying franchise and are anticipating strong momentum with the addition of Elixit to our neurology franchise. a logical adjacency to our current product portfolio in pain. The Elixip acquisition diversifies our portfolio beyond pain by establishing a dedicated neurology sales force and allowing us to leverage our current infrastructure to manage the addition of Elixip in a very efficient way. It's also important to note that we have a strong team that has significant launch experience, including experience in neurology and migraine. We've been energized by the positive feedback from clinicians, and the opportunity to get further integrated into the neurology community. We held a successful key opinion leader advisory board meeting in Chicago last month and heard their thoughts about the clinical profile, Elixib's place in the market, and the potential to prescribe Elixib as the only ready-to-use oral solution for migraine approved by the FDA. This has only increased our enthusiasm about Elixib that we'll be launching in the first quarter of 2022. I also wanted to mention to you that we were pleased that Elixib was nominated for the prestigious Pre-Galien Award, which recognizes innovation to improve human condition in the best pharmaceutical product category. On the legal front, we remain confident in the validity and strength of Delbuca's intellectual property. We can neither predict the decision the court will reach regarding the P4 or patent litigation, nor the timing of the court's decision, and are not able to comment further regarding the ongoing litigation. Separately, I wanted to call your attention to an eighth case submitted to the SEC on September 21st, 2021. BDSI disclosed that it had filed a motion for order to show cause in the United States District Court, the District of Delaware, why Albigen should not be held in contempt for violating the court's order of June 28th, 2021. The court ordered Albigen not to launch its generic product until it could reach a final decision on the merits in the pending P4 case. We contend that Alvagen violated the order in or about August 2021 by, among other things, offering its generic product for sale through five compendia price reporting services. As alleged in the motion, after Alvagen's product launch, certain payers began declining insurance coverage for Belbuca and directing use of Alvagen's a generic substitute, and or making it more difficult for patients to obtain insurance coverage for Delbuca. Albigen withdrew its compendia product listings on or about September 9, 2021. The company's motion to hold Albigen in contempt for launching its generic product remains pending before the court. With that, I'll turn the call over to Scott to provide more details of our performance during the third quarter. Scott?

Thank you, Jeff. As Jeff mentioned, during Q3, Belbuco prescriptions grew by almost 8,700 TRXs year-over-year, the new high of over 121,100 retail, mail order, and long-term care TRXs combined. This represents a solid 7.7% increase in Belbuco TRXs compared to the third quarter of 2020 and sequential growth of 2% compared to the second quarter of 2021. Belbuco prescriptions grew year over year and quarter over quarter. We remain pleased with Belbuco's continued revenue and script growth and its improvement in Q3 to a new TRX market share record high of 4.9%, up from 4.1% in Q3 of 2020 and 4.7% in Q2 2021. During the third quarter, Delbuco's new-to-brand market share of 7.6% was generally flat, well up to 7.7% in the second quarter, and remained significantly above its TRX share of 4.9%, which means there's still a meaningful opportunity to grow total prescription share as these metrics historically converge. NBRX count was similarly flat in Q3 year-over-year, while the NBRX count for the entire market was down by 6.3%. We believe that the MBRX numbers this quarter were negatively impacted by formulary changes resulting from Alvagen's Compendia listings, which have now been withdrawn. Continuing to build the prescriber base is important to the brand's growth trajectory, and we're pleased to report that the prescribers increased in the third quarter by 11% year over year to 8,639 unique prescribers, a new high for the brand. Sequentially, our prescribers grew by 3.5% from the second quarter. We view this as extremely encouraging and expect our prescriber growth to have an increased impact as face-to-face patient visits improve over time within pain practices. Now moving on to saproic. Q3 2021 saproic prescriptions also grew to a record high of approximately 19,200 TRXs. or an increase of 7.6% year-over-year compared to Q3 2020 with a 7% sequential improvement from Q2 2021. We expect continued growth for Force and Proic as our NRX count increased 9.8% from Q3 2020 to 11,163, a new NRX count high for the brand. This significant increase in NREX count led to a new record Semproic NREX share of 14.3% in the third quarter as compared to TRX share of just over 13.3%. This difference between NREX share and TRX share should lead to continued momentum Q4 and beyond. Like Bell Buca, Semproic is well positioned with covered status for 89% of commercial lives with 61% at preferred status. The ability of the commercial team to consistently pull through the 2020 formulary wins with CVS and Prime Therapeutics, where we've seen a 26% increase in TRXs from the Q1 to Q3 this year, has been an important part of our growth. The growth in these plans, as well as a new formulary win effective Q4 2021, where symbolic coverage improved from non-preferred, non-covered, with a step-through Movantic to preferred status with no step-through required, providing access to approximately 800,000 lives, gives us confidence in attaining new TRX count and share highs as we finish 2021. As we discussed on our October 14th Elixir Investor Call, we've been actively preparing for Q1 2022 launch. We're planning to leverage an efficient structure in our commercial organization that will allow for elixir promotion within our current Bell Buca sales force, as well as with the highest potential prescribers in a dedicated elixir sales force. During the fourth quarter, the BDSI team is busy preparing for the planned first quarter launch, including supply chain preparedness, hiring for the expanded sales force, conducting training, and preparing marketing materials. In addition, we are focused on establishing relationships with migraine key opinion leaders, and we will be attending the American Headache Society Conference this month. We are incredibly excited to be adding a differentiated and high-potential product like Elixib to our portfolio in a large market with over $2 billion of annual sales, which represents a logical adjacency to our pain franchise. As Jeff mentioned, it leverages our commercial expertise, much of our existing infrastructure, and our team's extensive experience with over 40 product launches. I am confident, based on our team's proven track record, that we'll be able to execute a successful launch in the first quarter of 22 and look forward to sharing additional information in the future. 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 third quarter was $41.1 million. an increase of 4% compared to $39.4 million in the third quarter of 2020, and generally in line with the net revenue generated in the second quarter of 2021. This was at the upper end of the $38 to $42 million guidance range recently provided for this quarter. Total net revenue growth year over year for the third quarter was 29% when excluding the beneficial impact of the Q3 2020 channel refresh and Univail net revenue. Total product net revenue growth for Belbuque and Simproic combined was 7.5% year-over-year, or growth of 32%, excluding the Q3 2020, gross to net accruals related to the channel estimates refresh in that period. It is important to note that there was a favorable impact to our product net revenue associated with the transition to our new logistics distribution partner, as certain wholesalers increased their short-term inventory position to ensure supply continuity. Belbuco net sales in the third quarter of 2021 set an all-time record of $36.9 million, an increase of 6% compared to $34.8 million in the third quarter of 2020, or 33% growth when excluding the beneficial impact in Q3 2020 of the channel refresh. As expected, Belbuco gross-to-net deductions increased in the third quarter of 2021 as compared to the second quarter of 2021, primarily due to typical increases seen for the Medicare coverage gap. Net sales for Semproic in the third quarter of 2021 were $4.1 million, which reflects 20% growth year over year. As expected, Semproic gross to net deductions also increased in the third quarter due to the typical increases seen for the Medicare coverage donut hole. In the third quarter of 2021, we had $20,000 of royalty revenue, whereas in the third quarter of 2020, royalty revenue was $658,000. and in the second quarter of 2021, royalty revenue was $916,000. Additionally, third quarter 2020 net revenue included $574,000 for BunaVale sales. Total gross margin for the third quarter was 85% compared to the 86% margin during the third quarter of 2020, and 89.7% in the second quarter of 2021. As a reminder, the second quarter of 2021 Gross profit included approximately $1.4 million in recovery of inventory-related costs, which helped to increase gross margins in the second quarter. We expect gross margins to be in the mid-80s range going forward. Total operating expenses in the third quarter of 2021 were $25.5 million compared to $22.5 million in the third quarter of 2020 and $25.8 million in Q2 of 2021. Year-to-date 2021 operating expenses of $79 million compared to $77.4 million for the third quarter year-to-date 2020 period include higher sales and marketing costs and higher litigation costs associated with the P4 case, partially offset by reduced G&A spend in 2021 compared to the prior year, which included costs associated with the CEO transition in the second quarter of 2020. As always, we continue to closely manage and prioritize operating expenses. EBITDA in Q3 2021 was $11.1 million or 27% of net sales compared with $13.4 million or 34% of net sales in Q3 2020. Year-to-date through Q3 2021, EBITDA is $33.4 million or 27% of net sales compared to $26.2 million or 23% of net sales year-to-date through Q3 of 2020. Gap net income for the third quarter was $6.7 million, or 7 cents per share, compared to the gap net income of $9.4 million, or 9 cents per share in the third quarter of 2020. The 7 cents per share EPS for the third quarter was 2 cents per share ahead of market consensus of 5 cents per share. Non-gap net income for the third quarter of 2021 was $10.3 million, or 10 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 $12.7 million, or 12 cents per share, in the third quarter of 2020, excluding the same items. Year-to-date non-GAAP net income through September 30, 2021, is $31.3 million, or 30 cents per share, excluding stock-based compensation and non-cash amortization of intangible assets, as compared to non-GAAP net income through September 30, 2020, of $30.6 million, or 29 cents per share, excluding the same items, as well as excluding the financial impact of certain one-time items that are non-recurring, including the discontinuation of BunaVale and costs associated with the CEO transition in the second quarter of 2020. The company has a strong balance sheet with cash and cash equivalents as of September 30, 2021 of $100.7 million as compared to $111.6 million at year-end 2020. Year-to-date operating cash flow through Q3 2021 was $27.3 million compared to $14 million for the same period in 2020, an increase of $13.3 million. For the third quarter, total cash on hand decreased by $19.1 million from $119.9 million on June 30, 2021, with operating cash flow generation of $7 million being partially offset by $20 million used towards an early penalty-free debt prepayment of our term loan and a $6 million upfront payment to Dr. Reddy's for Elixib. As Jeff mentioned earlier, the $20 million prepayment will result in approximately $4.4 million of interest savings over the course of the remaining loan period. Turning to full-year 2021 guidance, the company is lowering its full-year 2021 total net revenue guidance range to $162 to $167 million from $170 to $180 million previously. The situation with Albigen, which Jeff discussed, is a meaningful factor contributing to our amended guidance. We expect net sales in 2021 for Belbuca to be in the range of $144 to $148 million as compared to the range of $155 to $165 million previously. We continue to estimate our total operating expenses to be in the range of $115 to $120 million including pre-launch investments to support the Q1 2022 launch of Elixib. We expect EBITDA to be at the lower end of the range of $40 to $50 million for our ongoing base business. However, EBITDA is expected to come in below $40 million when including the Elixib investments. Finally, the company continues to expect that it will deliver positive operating cash flow in 2021. Now let's turn to some of our expectations for Elixib. Our projected long-term outlook for Elixib net sales is in the range of $350 to $400 million, including preliminary estimates for the potential pediatric label expansion. As most of you know, today marks my last day with BDSI. It has been exciting to be a part of the leadership team that has driven tremendous growth and the transformation of BDSI over the past three years. It has truly been a pleasure working with this team and accomplishing as much as we have. I'm also very proud to be leaving BDSI with a strong balance sheet based on profitability and solid cash flow generation and thoughtful financings at the right times. It has been a pleasure interacting with the equity research analysts and so many of our investors. I will now turn the call back to Jeff for some concluding remarks before we open up the call for Q&A. Jeff?

Thank you, Terri. This has been a transformative quarter for BDSI from a few different perspectives. First, our growth continues, and we hit new record highs in market share and script volume for Belbuca and Simproic, and record net sales for Belbuca. Second, with the acquisition of Elixir, we expanded and diversified our product portfolio into the exciting neurology sector, focused on the multibillion-dollar market for acute migraine products, The strategic fit between pain and neurology allows us to leverage our current structure and manage elixir in a very efficient way. It gives us greater breadth of business development opportunities going forward. And third, our employees answered the call to maintain operational excellence and build further growth. I want to take a moment to thank our employees for their continued commitment and strong execution. We are very optimistic about the company's next chapter for patients, providers, employees, and our shareholders. We'll now take your questions. Operator.

Thank you. At this time, we'll be conducting a question and answer session. 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. For participants using speaker equipment, it may be necessary to pick up your answer before pressing the star keys.

One moment, please, while we poll for questions. And our first question is from Brandon Foulkes with Cantor Fitzgerald.

Please proceed with your question.

Hi, thanks for taking my questions and congratulations on good results, obviously, with the tech backdrop. So I guess maybe just firstly, I just want to delve a little bit into the, I guess, Elvigen's actions in the market and the 8K that you did file earlier in the year. Do you believe you are seeing a continued disruption in the Belbuta market from that disruption? Or do you think we've moved past that disruption now and we're sort of back to a bit of a closer to normal environment? And then secondly, maybe just sort of, it goes hand in hand, so I'll ask it. Can you just pass out the impact that you're seeing in the chronic pain space in general? Descriptions across the board do seem to be a little bit depressed. Are patients just staying on their current therapy? Is there hesitancy to change therapies in the current environment? And if so, is this coming from the patient side, the physician side, or is it really just a lower patient flow into the office? Any color there would be helpful. Thank you.

Well, first of all, good morning, Brandon, and thanks for the question, as always. Hope you're doing well. Yeah, let me take the first part. This is Jeff, and then I'll turn it over to Scott for talking about just the long-acting opioid market. On the Alvagen front, yeah, we still see some effect. We see it dissipating at this point. But with our team, I could not be more proud of that. When the issue came up and we became aware of the Alvagen action in the marketplace, we jumped on that immediately back in the middle of August and just to remedy that as quickly as possible. And then eventually, of course, Alvagen removed their pricing from the compendia. So our team has been all over that. So That was really helpful, and it created the divot a bit in the quarter, but we've really made great progress since then. We do see some residual effect, but we believe it's on the lower end at this particular point, and we're on the good side of all that, so that's really important. Now we're seeing a return to growth and all-time high product market share and stuff like that come into play. So that's been managed really well. I'm really so proud of our team as far as the execution and what's played through there with a real curveball, just something that's very unusual in the marketplace. And they also reflect on just part of that, all the different players when it comes to, like, the electronic medical records folks, the payers, et cetera. They've never seen anything like that before. So our team really had to break some new ground as far as being able to remedy that. So some really good stuff based on the execution by Scott's team as far as being able to manage that. So I hope that answers your first part of your question as far as that. Right now, There's some effect that's ongoing, but we've been on the minor end based on the work so far. Let me turn it over to Scott to answer the second part of your question about the overall market question. Scott, all yours.

Thanks, Jeff. Good morning, Brandon. First, I think what we see as a positive in the LAO market right now is that it seems to have really stabilized on the TRX side of the market. For example, I think If you recall, Q1, there was a very large decline in the marketplace itself, almost down 6% quarter to quarter. And then what was encouraging to see was actually a bounce back in Q2, almost up 1%. And only down about 1.3% quarter to quarter in Q3. So when you look at those three quarters sequentially, it's pretty flat. So that's stabilized. And that's encouraging because even in past years, we've seen larger declines in that quarter over quarter. So that's a positive. I think the one thing, though, that's still a headwind is patient visits, face-to-face patient visits. Based on IQVIA data, recent data, the pain market still really trails dramatically a lot of the other therapeutic areas. So if you look at, for example, September was down over 40% face-to-face visits versus pre-COVID levels, baseline levels. And then... There are televisits also, telemedicine visits as well, but those haven't compensated for that fully. So that is a little bit of a headwind. I think mid-year we started to see things trend back up where we felt like it was improving, and then I think COVID spiked again, and it's probably had another impact on it. And so because there's a decline in face-to-face visits, pain physicians tend to want to make changes in therapy face-to-face a lot of times. So we do think that face-to-face visits are critical. And as that goes up, we should start seeing the market reflect that as well. The positive we brought up in our script was the all-time high in prescribers. And we saw a pretty nice jump in prescribers for the quarter, one of the largest ones we've seen in the last six to eight quarters. And I think that's important. So as the patients go back into these offices for face-to-face visits, that should play well for our script growth.

Brandon, did we cover what you're looking for there?

You did very well. Thank you. I appreciate the color.

Great. Thanks, Brandon. Thanks, Brandon. And our next question is from Scott Henry with Roth Capital. Please proceed with your question.

Thank you, and good morning. And, Terry, good luck. It's been a pleasure working with you these past couple years. A couple questions. First, do you have any color on how we should think about the elixir ramp? I mean, should the initial quarter be very minor? Just trying to get a sense, and I did miss the first couple minutes of the call if you commented on that.

Scott, good morning. This is Jeff. Yeah, we did not comment on that specific. So back to the analyst call, of course, we gave our view of the long-term picture as far as peak-year sales into the 2030s, as far as peak-year sales of $350 to $400 billion. We've not given guidance for next year yet. I think we take a look at a unique situation where we're able to watch a couple of recent launches into the market, and you can imagine our algorithm as far as being able to look at that, and the payer piece that's critical here, we know that. And, of course, we have all the marketing tactics and the experience on the team as far as not only just many launches by the team in neurology, but also specific to migraine previously. So we have some really good experience here about the execution plan in place and really a spec pharma targeting plan, very similar to the playbook that's worked well for us with Bell Butte. So just very targeted and efficient is our approach. So when it comes to the ramp next year, I think it's what you would expect. So in the first quarter when we do launch, It's going to be a lot about just getting the payers on board. We see it as a steady climb next year to be able to get through that. The fourth quarter by then, I think that's where we really see that we'd be getting some traction in the marketplace. So we're not getting specific numbers yet, Scott. You'll get that from us early next year. But it's also something that really gets us really excited here. The ongoing market research when it comes to our confidence in this only continues to grow. We have just done, as Scott highlighted, a major venue with a few sessions with key opinion leaders in Chicago. And it was really, really just got us even more excited about where this thing is going overall. So we're not in a position to give you the specifics yet, but it's one where we're really feeling good about where we get as time goes on with Alexa. So I hope that was helpful, Scott.

That was helpful. Thank you. And then just shifting on to the model, I guess the one thing that jumps out at me the most is the operating expense guidance of 115 to 120, which seemed to imply a significant boost in fourth quarter. Is that the case, or maybe I'm misinterpreting the guidance in some way?

Hi, Scott. It's in line. That's the range we've been guiding towards all year. I think we've been able to very effectively manage our spend, even as the revenue has been a little bit softer than we had expected. But we are preparing for launch. You'll see a slide in there where we're talking about a number of things. We're hiring for the expanded sales force. We're getting all the marketing materials ready, training materials for all the sales force to take on. I think supply chain preparedness. So there's a number of different areas that we're spending to get ready for the launch.

Okay. Thank you for that color. And Terry, I guess it would only be appropriate that my last question for you be when you would expect to report as a fully taxed company. We've got two years of positive quarterly numbers here. typically one would take a gain for the tax and start taxing fully. I just want to get a sense, would you expect that to happen in 2022? And, you know, I promise I won't ask you this question again.

You won't be able to. You'll be asking John that question. By the way, it's in the room as well.

But, Scott, look, we're looking at it for sure. It's a consideration. You know, it could be this year, it could be next year, but it is something that we are keeping a close eye on.

Okay. Thank you for taking the questions.

Absolutely. Thank you, Scott.

And our next question is from the line of Tim Lugo with William Blair. Please proceed with your questions.

Hey, guys. This is Locke going on for Tim. Thanks for taking the questions. I guess first of all, Terry, I think you mentioned that there was some inventory bills that wholesalers in the quarter ahead of the sort of transition of distributors. Can you maybe quantify that or just help us think how much may sort of pull forward there was from the fourth quarter potentially? And then on the topic of the elixir launch and I think, Jeff, you mentioned getting payers on board in the first quarter and so on. How much on the topic of payers, how much can you get done ahead of the first quarter? I mean, will you be on formularies by the time you launch, or is that really not going to start happening until you actually launch in the first quarter?

Sorry, you want to go first? Yeah, so... I'll take the second. Scott, I'll take the second, please.

Yep. So just on the... It was a little bit... Your voice had cracked out a little bit, so I think I captured your full question, but we... We did have some of the, a couple of the wholesalers buy in a little bit, just wanted to make sure they've been through transitions like this in the past where companies have had glitches and they wanted to make sure. It was not very large, the impact. We're not giving exactly how much it is, but a few of them bought into the first week of October just to be, actually not even a few, a couple of them to just be sure they'd have enough to bridge any glitches that could happen.

You said something about the fourth quarter, but okay.

All right. Yeah, that's all. Thanks.

And then the second part of your question, I believe, is tied to what do we expect as far as formulary when it comes to Elixir and the uptake there? And so a lot of great work has been going into that by Scott's team, as you imagine, with the major players. I think we've also had this really interesting seat. to be able to see data and see how some other players have approached it in the migraine space. So it's kind of neat to see kind of a framework, a playbook in front of us about how to sequence it. So I want to make sure everybody's really well aware of that, that we're really in tune on that end. And also our leadership on the managed markets end is really top-notch and very experienced. So I'm going to let Scott go ahead and weigh in about timing and things like that. But it's also, we do see, you know, some impact potentially in the first quarter. But as the year goes on, that's where, you know, just as you would expect more layering in. Scott, you want to go ahead and just expand on that?

Yeah. Hi, Lachlan. So we've been working hard since the deal closed. You know, unfortunately, there's a short time frame to a window that we have to launch. So what's, what's, been a very positive is we've already had clinical reviews at two large PBMs. Actually, one of them just did a second review also on that side. And we're actually getting an expedited review at one of the payers that literally a lot of times won't even review you for the first six to 12 months. So that's been pulled forward. Our goal is to bring them on as fast as their system can while making sure we have a contract that makes sense for us. We are very encouraged. We feel like we're going to be able to contract with the three largest commercial payers, and it'll probably be staged over time. So one could possibly be near, at or near to launch, very near launch, probably a little bit more later in the year, and then possibly 2023, the last one come on board. But we're going to do everything we can to pull this forward. I think the way to look at this, though, is we're going to have a very robust patient services program in place. We wanted to assure that a commercial patient that gets prescribed Elixib receives it. Early in our launch, even if we don't have all the commercial coverage lined up, it's going to be about patient trials, building prescriber bases, and making it as seamless as possible so that they don't even feel that there may not be coverage yet. So that will require us having some robust programs in place that, over time, as we add the formulary coverage, those will get pulled back, but in a way that, again, the patient or the health care providers don't feel or see that.

So that's the way it will work for us. Awesome. Thanks. You're welcome. Thank you. Thank you.

Our next question is from Tim Chang with Northland Capital. Please proceed with your question.

Hi, thanks. Jeff, I think you mentioned, or maybe it was Scott, you mentioned that face-to-face physician visits are down 40%. Where do you see that figure next year? I mean, do you see it still being down considerably in 2022?

Yeah, I'll let Scott reflect more in detail on that, but I think it's something that's It's quite unique about the pain market compared to other specialties as far as that goes. And it comes back to some things we've seen like during COVID where some of the capacity has been reduced with some satellite offices that are closed, but also some of the mid-levels like the nurse practitioners or physician assistants have transitioned from pain to some other space. So there's less capacity there. So we think that that's in play. We do see that there's some things in the market that will bring back more capacity to that world, but it's also one where I think we need to make sure that we're doing everything possible to maximize what we have there. So I think going forward, it seems that it's trailing other specialties. But I want to bring it back to this point about what we are seeing, which is really encouraging on our end, is the base of prescribers that are using Belbuca is growing so nicely. You probably saw from the one slide during the presentation that what we're doing, in spite of the patient face-to-face visits being down, we're getting a broader base there. So that's really helping drive us to new volume highs and market share highs, the fact that we're getting a much better, stronger breadth of prescribers that are coming into play. So growing the breadth of prescribers by 11% over one year, based on my past experience, is quite remarkable. And the trend is consistent that we're seeing that's coming to play. So getting more prescribers and that. So what we're doing also within the framework to say, look, it's a market dynamic that we don't control. But what do we control is getting more prescribers using our product. So this is also the combination of not just what our reps are doing in the field, which are doing an outstanding job, but on the marketing end, our CRM database, bases are growing so nicely. What we're doing with prescribers and also with patients, that's really helping us kind of behind the scenes. It doesn't get back to hopefully you see we're a team. We just don't report what's going on. It's like, what are you doing about it? And so we're growing both share and volume despite the fact those visits are down. Scott, anything else you want to add to that?

Yeah, I just think Jeff touched on a little bit, but we do feel like some of the capacity, for example, satellite offices and Some of the practice have scaled back a little bit, especially on their mid-levels, the nurse practitioners and physician's assistants. So I do believe that, you know, the patients are still out there and that over time, especially as COVID cases continue to decline, that they'll get busier in the offices. Yeah. I think if patients are stable right now, they're less likely to go into the office based on the current COVID dynamic. But I think we're confident, again, as Jeff said, we're building prescriber-based. The market starts coming back, that that'll have a nice impact, positive impact on our business going forward.

And maybe I just want to follow up. I mean, obviously, there's been this boom in telemedicine. I mean, what sort of leverage might you have next year for the Elixiv launch? I mean, is it possible to partially launch Elixiv through a telemedicine channel?

That's a great question, and we're not giving all the specifics on our tactics and strategies, but what I will share with you is that we are looking to actively partner with different telemedicine platforms, specifically those that are working in the migraine space. So, So you'll see us actively pursuing those channels. We really think the product profile fits nicely to your question.

So we're excited about that. That's an important part of our world.

The only thing lacking on telemedicine in this space is if you don't have samples. We think samples will be crucial, which we'll be sampling very generously. But there is a lot of telemedicine use in the space, and we're aware of that. And, again, we'll be partnering there.

Okay, great. Thanks.

Thanks, Tim. Thank you. And just as a friendly reminder, if you have any questions, you may press star 1 on your telephone keypad. Doing so will ensure your spot in the Q&A queue. Our next question is from David M. Sellin with Piper Sandler. Please proceed with your question.

Hey, everyone. This is Zach for David. Thanks for taking my question. So just another one from me following up on the chronic pain market discussion. Do you guys see telemedicine having a meaningful role in this market even once we get past the pandemic? And if you do, how does that impact your commercial and promotional efforts for Belbuco going forward?

So, Zach, thanks for the question. It's interesting in this space. I mean, market research keeps on playing back that for patients' switches to new medication, that for most prescribers, it requires a face-to-face. They want to see the patient face-to-face. And telemedicine here is, I think, what we're learning is a nice touch point, but the real change is to a new medication actually really to play off the patient visit. So going forward, we need telemedicine plays a role in this market, but it's not one that's the primary driver because people are coming back to those face-to-face venues being so much, and especially with Belbuco where It's not only just the switch, but it's also like the demo that takes place. These offices have really gotten good. Our reps have really done a great job as far as training the staff about how to go ahead and use the product and all this stuff. It's very simple to use, but it needs to be demonstrated for like a new patient. So the face-to-face means a lot to us specifically. So in telemedicine in general, in this marketplace, it's just different than some other therapeutic areas where it's a touchpoint telemedicine is, but not really where the switches take place. Scott, anything else you want to add to that?

I do think it's valuable for a patient that's stable, doing well on therapy already, that it's a good touchpoint to follow up. All the data suggests that the MBRX productivity of the telemedicine call is nowhere near a face-to-face, not just our product, but others, and all markets, for the most part, are that way. So, you know, as far as, like, driving growth, it's still going to be that face-to-face visit the majority of the time.

And just reiterating, I know I mentioned it before, Zach, but our tactic within that, the fact that They don't switch necessarily on telemedicine and the face-to-faces are down, but we are so excited about the fact that our strategy has been to broaden the breadth of our prescribers, and that's growing so nicely, and that really helps us as far as to counter that part about the business, what's been going on. So it's working for us as far as we take a look at our share of volume growth that continues despite that market dynamic.

Zach, the one thing I'll add on the telemedicine side, while we haven't partnered with any platforms there, One of the things we've done over time here, our marketing, our digital marketing has become quite sophisticated and we actually know where the pain management prescribers, where they go digitally. And we're actually advertising in those locations to impact those that might be doing more telemedicine. So it's not like we're not in the area, but we actually do focus some non-personal and basically digital promotion in those spaces where doctors that are on telemedicine platforms actually go for their information.

Great. Thanks, Zach.

Okay. Great. That makes sense. And then just one quick follow-up on that then. What is the current mix of the Salesforce and Salesforce detailing that is being done in person versus virtual as of now? Is that still down versus pre-pandemic levels?

Yeah, so we're still seeing face-to-face visits down anywhere from like 12% to 15% over where we were before, but probably 95% to 97% of our interaction is face-to-face. There's very little virtual detailing going on on our part right now.

Yeah, I think during the early part of COVID, the offices were super receptive to virtual. They got it to say, look, it's a different interaction that has to take place. I think what we've learned from the field is that, you know, the offices have become fatigued by that sort of approach. And now that they have the patient flow and certain practices coming through, it's back to face-to-face. So it's kind of game on, you know, from that perspective. And, you know, face-to-face are down a bit for rep to prescriber, but it's a very high percentage. It's almost 100%, as Scott said, being face-to-face now.

Not a lot of offices close down to us access-wise, but maybe frequency is, impact a little bit, maybe you can't go in there quite as often, and that's an office-by-office basis that the territory managers have to decipher and work through. Any other questions, Zach?

Thank you so much.

Zach, appreciate it. Our next question comes from the line of Oregon LiveNet with A.C. Wainwright. Please proceed with your question.

Thanks. Can you hear me?

Yeah, yes.

Great, great, great. Well, first, I just want to say so long to Terry. It's been grand. Good luck in your next endeavor.

Thanks, Darren.

So just to talk about the dynamics, you've touched a couple of times on how telemedicine isn't really sufficient to drive therapeutic switches and new starts, which totally makes sense. But that reminds me, a couple of years ago, we were talking when you had Investor Day and you were earlier in the launch, you were talking a lot about what the process is to switch a patient from, let's say, another long-acting opioid or from IR to ER. And I'm just curious, what is the current state of the art with regards to necessary down titration and up titration of existing opioid treatment? I'm just curious, how easy is it to switch now? How hands-on does the process need to be? And I have a follow-up.

Scott, do you want to take that one? Yeah, thanks for the question, Oren. So we obviously... we have our label of prescribing information. So that has not changed one bit. So depending on the level of opioids they're on prior to switching to us, they'll get tapered down to an appropriate dose. And then basically they'll get transitioned over to Valbuca. And they can either come off their other opioid or they may be on a low dose of it. And then they will titrate up over time. And a lot of times what they'll do is you know, get down to 30 MSC, be placed on Belbuca, and then with the goal of even further lowering their short-acting opiates as they titrate up. So, you know, it's definitely different than you see with other products. If you're, you know, switching from a like molecule to like molecule, from short-acting to long-acting, you know, it isn't always as complex as that. So, That's why that face-to-face visit, I think, is important. And also, if you remember, obviously the delivery system here using a film versus taking a tablet is quite different. So it's making sure the patient knows how to apply it and whatnot. Offices have gotten very skilled. I think the nuance you're sharing here, maybe the question behind the question is there are a lot of physicians that are very comfortable now in transitioning patients. It's easy. But when they have a new patient who's not had Belvuca before and had a film product, they want to be able to demonstrate that for them or have someone in their office do that. So that's where it becomes important, basically.

Okay. And just to follow up on the Elixib launch, so it sounds like, you guys will be quite focused on, you know, minimizing friction, so to speak, and making sure whoever writes this, you know, sampling even aside, whoever writes this, you know, drug will hopefully get to the appropriate patients. So should, should we just assume, I don't know if we even know pricing yet, I could have missed it. But should we assume that, you know, growth to net in the early days, you know, sort of regardless of where we see the scripts going, that we should assume sort of, you know, realize net value per script will be, you know, quite, depressed early on?

Terry, you want to take that one?

Yeah, I'll go ahead and take that one. Yeah, so just as you would expect, again, we're pulling the playbook. It's amazing the data out there to watch some of the other players that are out there that just launched a over the last couple of years. And as you would expect, I think that if you take a look at some of their numbers, you'd be able to be mimicking that. So yeah, the growth stats will be high in the early innings of this. As we get deeper into the year, next year, we see that that dissipating, eventually normalizing to, you know, about what we're used to as a company over time. But it's one where in the early innings, it'll be, uh, I guess if you take a look at some of the other products recently launched, we see something very similar on the gross-to-nets as far as that goes. So I think you have it right, Oren, as far as the way to think about that. So anything else, Scott, Terry?

No, just Jeff's spot on, and it's exactly what I stated earlier. We'll see. Probably as we're able to pull back our services as we bring formularies online, then the gross-to-nets will improve based on that, and We're really going to be focused on, again, patient trials, getting exposure to the product to patients, appropriate patients, and adding prescribers in the short run here. That's really what it's all about.

And I haven't missed any pricing announcement. That hasn't happened yet, correct?

No, we have not. We haven't provided that externally to anybody yet. Great, great.

All right, thanks. Appreciate it. Thanks, Lauren.

Thanks, Lauren.

And we have reached the end of our question and answer session. I'll now turn the call back over to Jeff Bailey for any closing remarks.

Well, thanks, everybody, for participating today. And hopefully you saw there was a lot of good stuff that we were able to accomplish in the third quarter with some interesting things happening in the marketplace. But I'm just really proud of our team and what's played through and just The fact that our products are hitting new volume and market share highs, you know, just something really special. I think you take that away. The other one is about Elixir that you can see we're really setting up for a really outstanding launch with really using the experience of the team to play through. So really the next chapter of our company, we're so excited about this, about where we are, where we're going in so many ways. And as we wrap up, just once again, thank Terry for all the impact that she's had. And also welcome to John. who's also in the room here. It's a smooth transition between the two team members there. And just thank you so much for your participation today. Everybody have a great rest of the day. Thank you.

And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.