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spk03: Hello, and welcome to the Novant, Inc. quarterly update conference call and webcast. As a reminder, all participants are currently in a listen-only mode. If anyone requires operator assistance during the event, please press star zero on your telephone keypad. Following the presentation, there will be a question and answer session. Note that this webcast is being recorded at the company's request. and a replay will be made available on the company's website following the end of the event. At this time, I'd like to remind our listeners that remarks made during this webcast may state management's intentions, beliefs, expectations, or future projections. These are forward-looking statements and involve risks and uncertainties. Forward-looking statements on this call are made pursuant to the Safe Harbor provisions of the federal securities laws and are based on Novant's current expectations and actual results could differ materially. As a result, you should not place undue reliance on any forward-looking statements. Some of the factors that could cause actual results to differ materially from these contemplated by such forward-looking statements are discussed in the periodic reports Novant files with the Securities and Exchange Commission. These documents are available in the Investors section of the company's website and on the Securities and Exchange Commission's website. We encourage you to review these documents carefully. Additionally, certain information contained in this webcast relates to or is based on studies, publications, surveys, and other data obtained from third-party sources and the company's own estimates and research. While the company believes these third-party sources to be reliable as of the date of this presentation, it has not independently verified and makes no representation as to the adequacy, fairness, accuracy, or completeness of or that any independent source has verified any information obtained from third-party sources. Joining us on today's call from the Novant leadership team are Paula Brown-Stafford, Chairman, President, and Chief Executive Officer, John A. D'Onofrio, Executive Vice President and Chief Operating Officer, and John M. Gay, Chief Financial Officer. I would now like to turn the call over to Paula Brown-Stafford. Please proceed.
spk02: Thank you, Andrew. And thanks to everyone for joining us this morning. Novan is building a premier medical dermatology company that is focused on developing and commercializing innovative therapies for diseases of the skin. Our priority is our NDA for Berdasmagel 10.3% for the treatment of molluscum, molluscum contagiosum. It is under review at the FDA with a PDUFA goal date of the 5th of January, 2024. We are in the review cycle, and we have less than eight months remaining. Since January, we have had a number of noteworthy accomplishments. Our entire team remains excited about our progress, our momentum, and what lies ahead. Our NDA was submitted in early January. This represents the most significant milestone NoVAN has achieved to date and something of which we are extremely proud. In March, our filing was accepted for review with no known potential issues. And we were provided our PDUFA goal date, as I mentioned, as well as other expected milestone dates for a standard review cycle. We continue our dialogue with the agency while we move forward with preparing toward our commercial supply of drug substance in anticipation of a potential approval. Ferdazomer gel, 10.3%, is a novel topical nitric oxide releasing medication for viral skin infections. Ferdazomer sodium, our active pharmaceutical ingredient, is a new chemical entity. Our NDA is based on a Phase III program that demonstrated clinical evidence of efficacy with robust clinical data from our B-simple-IV trial and a favorable safety profile for patients with molluscum. Our clinical trial data from B-simple-IV were published in JAMA Dermatology in July of last year. So if approved, this product would satisfy an important patient care need largely displacing in-office procedures that are often cumbersome, painful, and time-consuming. Molluscum is highly contagious. It is one of the five most prevalent skin diseases worldwide and the third most common viral skin infection in children, most of them less than 10 years old. And if left untreated, it could last up to 48 months. Through recent market research, we received caregiver feedback that speaks to the impact of the disease, really on the psyche of the patient. And to give you a sense of the real-world experiences, as you can see in these quotes here, it leaves children feeling depressed, hopeless. bullied, a need to build their self-confidence. And last week, we actually received an email from a parent. We get these quite frequently. And this one, it was just a striking email. And at the end, it said, I am looking for a sign of hope. We think we're that sign. The market is prime. for a topical self-administered or caregiver-administered therapy. The market potential is large with 6 million patients in the U.S. today and approximately 1 million new patients annually. We believe the lack of at-home options results in many undiagnosed cases. The current standard of care is in-office procedures, freezing, cutting, blistering, And off-label and OTC offerings that have no proven efficacy. Per U.S. claims data, over 70% of patients with molluscum go untreated. 19% of molluscum patients seek treatment from a dermatologist. 72% visit their pediatrician. But approximately 90% of these pediatricians have a wait and see approach. Whereas 65% of dermatologists will treat molluscum, but it's typically with a treatment that's an in-office procedure.
spk00: So this is how we view the future.
spk02: We believe that Berdasmagel 10.3% has the potential to become a first-line therapy. Dermatologists in communities would likely lead the way, and what we expect is that pediatricians would follow. There's no FDA-approved treatment today for molluscum, but a wait-and-see approach is not a standard of care that patients or caregivers seem to benefit from today. So in the next seven and a half months, the FDA could approve two potential treatment solutions that we believe would complement one another. We believe if approved, Berdasmagel could be prescribed by a pediatrician as a prescription product that would most likely be covered by insurance at the pharmacy, whereby if approved, A new drug device combo could be used as an in-office procedure by dermatologists across multiple visits, if covered by medical insurance. So there's room for both in the market, if approved. One, a prescription.
spk00: One, a drug device used in the office.
spk02: Our research shows that healthcare providers are ready for a safe and effective treatment and specifically Berdasmagel if approved. As you see here, there's a very high potential, very high adoption rates are expected within 12 months of approval across the three primary HCP types who are seeing molluscum patients today. So we're planning for success. Our NDA is in the review cycle at the FDA, and we're currently expecting the review to be complete by the goal date of January 5th, which is, again, less than eight months away. So as we respond to FDA information requests, we're also planning toward a potential launch. So specifically, we look to build awareness and excitement for our potential product among our customers, as well as employees and potential future employees. We work to educate healthcare providers about the disease and the treatment options. We look to deliver the best possible access program. We want to prepare our existing commercial organization We continue to protect our proprietary platform technology with patents nationally and globally. Now, the extent of these efforts remains dependent on funding available to the business. So our go-to market strategy starts with the opportunity in the dermatologist's offices. They recognize the value. Their patients recognize the value. They are eager. So we expect pediatricians will look to them and follow. We will mostly market to non-derm HCPs digitally. Once we prove out our marketing playbook with the dermatologists, we would look and expect to have the foundation to expand beyond dermatologists. The opportunity for Berdasmagel is compelling. So I'll now hand the call over to our Chief Operating Officer, John D'Onofrio, to provide an update on our commercial business for the first quarter of 2023.
spk07: Thank you, Paula. Good morning, everyone. I'm pleased to report our promoted products delivered strong prescription growth compared to Q1 2022. This is the fifth consecutive quarter of strong commercial team execution delivering growth across our promoted product portfolios as compared to prior periods. Our team successfully launched new promotional campaigns for Rofate and Winsora, moved to digital platforms and selling tools across our portfolio. Complementing our strong total prescription growth compared to Q1 2022, we have also experienced a significant increase in underlying demand and new prescriptions for both Rofate and Minolera, and increased ACP rider activity for Winsora. When Zora, which was launched in mid-2021, competes in a market that has many treatment options for psoriasis, as such, this is a positive trend in a very competitive market. For the quarter, we continued to grow our prescribing base and market share for our core promoted products. Q1 Rofate total prescription volume of 40,149 was less than 100 prescriptions short of an all-time high set in Q4 2022. This represents an 11% growth over Q1 2022, 18% growth in new prescriptions, and all-time highs in both new prescribers and total prescribers of 8,000 and 9,000 respectively. As noted in previous calls, when Zora was impacted in the second half of 2022, by new competitive launches that have challenged the use of topical steroids in the U.S. for plaque psoriasis. However, our new promotional efforts and execution have returned Winsor to growth of 9% in Q1 2023 versus Q1 2022. Minolera continues to outperform the declining minocycline market for acne, strong growth of 19% in total prescriptions and 18% growth in new prescriptions, versus Q1 of 2022. Our strong prescription growth during the quarter was partially offset by two factors impacting our net profitability. We experienced a supply disruption in March for Rofate. This issue was quickly resolved and distribution channels restocked in solid demand and pull-through in mid-April. In addition, as it relates to our gross-to-net deductions, we experienced an increase in payer rebates As we move from non-preferred to preferred coverage, higher patient-assistant copay costs due primarily to a coverage mix shift of higher deductible plans and the result of patients' annual coverage deductible resets. We continue to work towards the implementation of tactical and strategic actions to reduce the impact of gross to net adjustments on profitability. Overall, we're excited with the total prescription growth performance, including new and total prescribers for our promoted brands. Thank you, and I will now hand it over to John Gay, our Chief Financial Officer.
spk10: Thanks, John, and thank you to everyone for joining our call today. Before we review the activity for the quarter ended March 31, 2023, I will remind you that when I refer to prior year figures for the quarter ended March 31, 2022, it includes 20 days of activity based upon our March 11th acquisition last year and the related timing of the consolidation of our commercial business within our financial statements. As such, the comparability of the current year versus prior year first quarter should be noted as it relates to this 20-day stub period in the prior year. I'd also like to let our listeners know that we are not yet providing guidance as it relates to Q2 and full year 2023 revenues or EBITDA. With the three months ended March 31st, our net product sales of 2.4 million included in our commercial businesses total revenue was comprised of 1.1 million for Rofade, 0.5 million for Manzora, and 0.3 million for Manolera with other products in our portfolio contributing 0.4 million. The increase in our net product revenue for the three months ended March 31st, 2023 as compared to the three months ended March 31st, 2022, was due to the timing of the EPI Health acquisition, offset by the impacts of a manufacturing delay with the supplier for our ROTH-AID commercial product. ROTH-AID was on backwater beginning in March 2023 until mid-April of this year. This temporary stock out of ROTH-AID impacted the overall net product revenue during the first quarter of 2023, as there was a 28% decrease in the number of units sold in Q1 2023 from Q1 2022. I will note that this decrease of units sold is calculated based upon the total units sold in the prior year first quarter, including units sold by EPI Health prior to the acquisition by Novant. However, I am pleased to report that the volume of units sold to our customers in mid-April of 2023 rebounded when Rote was restocked. License and collaboration revenue on a consolidated basis was 0.6 million for the three months ended March 31st, 2023. This amount relates primarily to the SOTO agreement for the outlicense of SB 206 recorded in the research and development operations business. Total cost of goods sold recorded in the commercial business was 1.3 million for the three months ended March 31st, 2023 Cost of goods sold includes the cost of procuring finished goods from our third-party manufacturers, sales-based royalty and milestone expenses, and other third-party IP licensing costs. For the three months ended March 31, 2023, we recognized net product revenue-related royalty expense of $0.7 million within cost of goods sold. This amount included our current obligation to third parties in addition to amounts related to the accounting presentation for the MC2 licensing agreement. Our R&D business incurred research and development expenses of $4.8 million for the three months ended March 31st, 2023 and 2022. Included in the fluctuation from the prior year quarter was a $1 million net decrease in the SB206 program related to the SB206 NDA submission in January of 23, offset by a $1 million increase in expense related to a regulatory milestone payment, which became due to Ligand Pharmaceuticals during the first quarter of 2023. On a consolidated basis, SG&A expenses were $10 million for the three months ended March 31, 2023 and 2022. Included in the fluctuation from the prior year was a $4 million net decrease and transaction-related expenditures in connection with the EPI health acquisition, offset by an increase of $3.7 million of selling, general, and administrative expenses incurred to support the conduct of our commercial business operations. Consolidated net loss was $14.1 million for the three months ended March 31, 2023, compared to $13.4 million for the prior year comparable period. As it relates to our balance sheet, as at the end of the quarter, we had a total cash balance of $12.5 million and accounts receivable totaling $13.8 million. In the first quarter of 2023, we closed a registered direct offering for gross proceeds of $6 million. We received the SOTO upfront payment of $5 million related to the Rofate Out License Agreement in Japan, and we have continued to use our $15 million accounts receivable-backed factoring facility which provides working capital in an amount that is up to 70% of our commercial businesses' gross eligible receivables. We will need additional funding to support our planned and future operating activities related to our Berdasmagel 10.3% product candidate and our business in general. We believe that our existing cash and cash equivalents as of March 31st, 2023, plus expected receipts associated with product sales from our commercial product portfolio will provide us with liquidity to fund our planned operating needs into the late second quarter of 2023. Variability in our operating forecast, driven primarily by commercial product sales, timing of operating expenditures, and unanticipated changes in net working capital may impact our cash runway. We continue to be laser-focused on obtaining the additional funds necessary to get to a potential approval and launch of Medasra JL 10.3% if approved, including evaluating strategic opportunities while at the same time conserving cash by delaying or deferring certain expenditures. We have been pursuing and will continue to pursue additional capital to a broad range of financing strategies and other strategic alternatives. With that, I will hand it back to Paula.
spk02: Thank you, John and John. I truly believe that NoVan is in the position to succeed with a potential approval and an infrastructure to support a potential product launch. We are highly focused on driving towards the potential approval of Berdasmagel 10.3%, on aligning our commercial infrastructure to support a potential launch. on the continued growth of our marketed products and improving the gross-to-net profitability. And as John mentioned, we continue to aggressively pursue additional potential capital or strategic relationships to provide the funding necessary to progress the development of Berdasmagel. And these activities include the evaluation of options such as debt, equity, in-license, out-license, acquisition or sell of an asset, a business unit, or the company. In closing, we at Novant are committed to building a premier medical dermatology company. We remain focused on executing and delivering results, and we're excited for our future. So thank you, and operator, you may now open the line for questions.
spk03: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Oren Livnet with H.C. Wainwright. Please go ahead.
spk09: Thanks. I appreciate the questions. I have a few. Just on the EPI business, I understand it's been a little volatile for different reasons the last few quarters. Aside from the destocking in particular this quarter, can you Give us an update on the progress with the prior issue you called out with regards to pharmacies maybe inappropriately pushing patients to copay cards rather than through existing insurance coverage. And are you able to quantify the dollar hit this quarter from that destocking? Should we expect that to fully reverse in Q2 such that sales will exceed maybe underlying demand by the same amount? Thanks.
spk07: Thank you, Oren. Appreciate the question. Yes, we have been able, as we noted, working with the pharmacies and seeing the issues that we saw in the second half of 2022. We have seen some improvement, but we do believe that the first quarter seasonality with the higher deductible plans reset and also seen a shift to higher deductible plans. has muddied that picture a little bit for Q1. We feel like it's a seasonality. We've seen that across the industry with not only competitors but other companies, and we feel like that will even out, if you will, over the next couple quarters. We've also began implementing working closely with our network pharmacy partners in order to have better data and metrics, as we mentioned, in the second half of the year, and that's continued into Q1. So, yes, and I'll hand it over to John, and he can provide a little bit more on the impact of the stock out.
spk10: So, thanks, Oren. Good morning. So, related to your question, you know, we did talk a little bit about on the prepared remarks about the decline in units sold. I think to the point of your question, we did see that rebound in mid-April. So, a lot of it was a timing issue. And so, I think both from a TRX perspective, that growth trajectory continues. as it relates to our demand on a sales side that was recouped effectively in April. As it relates to continued profitability, I think that will be really twofold. One, it will be addressing some of the gross net items that John just mentioned, but as it relates to total units sold, we do see that recovering.
spk09: Okay, and I know you're not giving guidance for 2Q or beyond, are you able to sort of characterize what you view that, I guess you'd call it a normalized size of this franchise, whether it's Rope Aid alone or the whole thing, you know, adjusting for seasonal or one-time pushes and pulls? You know, do you look at this as a $20 million business, a $25 million in terms of, like, current run rate, or is that not something you're able to sort of characterize right now? And I have one follow-up after that.
spk10: Yeah, I think, Oren, to that question, if you look at kind of where we ended up, last year on a consolidated basis. We'll just talk about total net product revenue, right, because the roadbed is by far the biggest component of that. We do expect to see growth year over year. Now, part of that will be because of the full year of activity, but we do expect to see continued growth in the sales, if you will, of our commercial business. As it relates to a run rate, I think as it relates to net product revenues, You know, I think we'll continue to see TRXs grow and units sold grow. I think the challenge will be addressing some of these gross-to-net components. But, you know, I think, you know, we ended up last year roughly $16 million in net product revenue. You know, I think we will exceed that this year. You know, what percentage I think will largely be dependent upon the gross-to-net matter that we discuss.
spk09: Okay, and just lastly... to move to SB 206, which is obviously the, you know, most important thing here, I guess, well, firstly related to EPI, do you just look at it as a bridging, uh, strategy essentially to SB 206 now, or should, you know, are you looking at as a growing, uh, business, you know, for the next couple of years beyond this year in your view? Um, and then just on SB 206 specifically, uh, did you receive a day 74 letter or I assume you did. And did that, um, Any changes to your expectations for what you need to do to prepare for approval or activities you need to do after approval to ramp up before launch?
spk02: I'll start with that one, Oren, and then John can talk about the bridge. So SB206. We, in our, basically our day 60 letter, they gave us all the information that you would typically get in a day 74. So we were thrilled to get all that information in one and get it ahead of time. So we are, you know, and in that they, you know, provided interim dates that are typical in a standard review that get you to the, you know, January 5th PDUFA date. So we have all the information we need from them. We will this summer, they will have an internal mid-cycle review and we'll get that input, you know, late second, early third quarter, we'll get that input from the agency. So in terms of what we have to do now, you know, we, as I mentioned, are really focusing our effort on the approval and spending less on the pre-launch activities due to our financial situation. But we are preparing our drug substance supply so that we would be in a position to launch in the first half of next year. So there are things that we need to do this year from a manufacturing standpoint to be ready for that.
spk10: Yeah, and more into the first part of your question as it relates to kind of the activity of EPI Health and bridging. At the end of the day, when we did the acquisition of EPI Health, it was really twofold rationale. One was to give us the infrastructure to launch SB206 as it relates to Salesforce and the relationships. That was a key value proposition as it relates to that acquisition because, as folks know, To do that, either build internally or to outsource, if you will, is very expensive. The other benefit, obviously, is that we acquired a great sales team, infrastructure, leadership, management, and the products. Roadfade is a great product, and we fully expect to be able to use our lifecycle management for that product and others in our current portfolio to provide value to shareholders. Now, as Paula noted, The long view of Novant is SB206. And at the same time, we do have a current portfolio that we're going to execute against. And, you know, we think it does provide value. But, again, at the end of the day, the long-term value of Novant is SB206.
spk02: Thank you, Oren.
spk10: I appreciate it. Thank you.
spk03: The next question comes from Jeff Jones with Oppenheimer. Please go ahead.
spk06: Good morning, guys, and thanks for taking the question. You just gave a lot of detail, but a couple of follow-ups here. On Middle Era, it looked like sales took a hit as well, looking at 4Q to 1Q. Any comment there? And then on the BD front, in terms of discussions with Sato around rights beyond Japan, I know there was a clock on those discussions. Can you give us an update on that?
spk10: Thank you.
spk07: Good morning, Jeff. Thanks for the question. In regards to Minalera, if you know, we look at the overall market dropped about 14%, and we declined about 1.5%, if you will. So we look at is this the market overall decline from Q4 to Q1, and we still feel strongly Also, you know, again, on the net side, as John mentioned, we saw the same implications of the high deductibles and resets. But from a TRX perspective, that's what we're seeing. We still saw a strong prescriber base as compared to Q4. And so it was more driven just by the market itself for the quarter.
spk06: Got it.
spk00: So market and gross to net. From a net, yes. Net revenue perspective.
spk07: I'll hand it to John for the second part. Oh, I'm sorry.
spk02: No, the second first, Sato. Yeah, I'll take it. That's okay. So regarding the out license or their in license of Rofaid into other countries, that clock is not up yet. So that goes into the end of the second quarter. So we'll provide an update at a later point on that.
spk00: Great. Thanks, guys. Okay.
spk03: The next question comes from Jonathan Eshoff with Roth. Please go ahead.
spk08: Thank you very much. Guys, might the R&D expense drop over the rest of this year such that year over year R&D spend is flat? I believe you mentioned that it would be at least on the fourth quarter call. Good morning, Jonathan.
spk10: Yes, you're correct. We expect R&D to be flat compared to last year and And, again, the rationale there being it's a lot of the activity that we're currently in the process of doing as it relates to the NDA submission and administering any responses back from the FDA and preparing the facility that will run through R&D. So to answer your question, yeah, we expect R&D to be flat year over year. And, you know, we saw it flat in Q1, although for slightly different reasons.
spk08: And are all Consolis stability batches submitted?
spk02: Yes. Yes. I will take the opportunity to say you may not have, there's sort of one line in the queue. We did have an issue with the Consolis name. It was conditionally approved by the agency. However, we will not be moving forward with that name. So we have sent in And we have other name options with the agency in terms of getting – it would be conditionally accepted, again, until we had an approval, if we have an approval. But just we won't be using the Consolus name anymore.
spk08: Okay. Back to 206. Thanks for that. So, you know, will you have the exact same – headcount for sales, let's say, in eight-ish months, or now you're saying it'll be over the first half of 24 before you can effectively really launch, given you'll do less prior to approval, just given the cash position. So will you have the same headcount, and would a greater focus on Consolis compromise the legacy EPI product sales at all, you think, next year?
spk02: Yeah, I'll start, and if John wants to add. But where we are in headcount is that based on our cash position, we actually have a freeze on hiring for our sales associates. But we're still covering that 40 to 42 territories with the heads that we have. So we won't be increasing that. It was always our plan. with SB206, we believed that going upwards, you know, 50 to 60 in that range would be the best thing for a launch, but we aren't launching in 2023, so, and in terms of, you know, the positioning is that, you know, what you would end up with is Berdasmagel in the first position and Rofate in the second position, so, and then going on from there.
spk08: Go on.
spk07: Yeah, I just think to follow up just on Paula's point, when you look at the legacy EPI brands, we're going to target the same positions. So that footprint of representatives will complement as we launch Bedazimer. Also, we have a strong rider base, both Rofade, Windsora, and Minolera. And we feel confident that that rider base will remain strong and continue to move forward and grow those products even with the launch. It's a very complementary selling point with all three current products and then with Bedazimor. Obviously, I think the top three, Bedazimor, Rofate, and Wenzora, will all do very well. And Menolera in the oral antibiotic market will be moved to fourth position at that particular point.
spk08: Okay, you guys mentioned something about $700K booked into COGS. Does that mean there's another $550,000 that needs to be booked this quarter as it relates to the $1.25 million to a third party you have to pay from Sato's $5 million?
spk10: So, Jonathan, we've recorded that accrual, if you will, in COGS at the end of Q4. So as it relates to my prepared remarks in COGS of roughly 1.3 million, 700 of that is royalty. The rest is, you know, what I would say is product cogs as it relates to, you know, the acquisition of materials for selling. But to your point, that prior milestone was recorded in Q4.
spk08: Thank you. And I guess it's safe to say that, you know, any sort of view towards in-licensing any new products is de-emphasized for the time being. Yes?
spk00: I think that's probably a fair assumption.
spk08: All right, thank you very much, guys.
spk03: The next questioner comes from Jeff, excuse me, Kemp Dolliver from Brookline Capital Markets. Please go ahead.
spk04: Great, thank you. A couple of questions. First, you know, there was the comment in the slide deck about streamlining the commercial team, but it looks like the size of the commercial team has remained steady. What changes did you implement in the quarter?
spk02: No, I'm not sure what you're referring to in terms of the size of the commercial team because the commercial team has decreased in size by compared to the fourth quarter.
spk00: So we do not have the number of territories.
spk02: Okay. Okay. Yeah, so we've said that we cover 42 territories, and that's generally been with 40 to 42 people.
spk00: We're currently around 37. Thank you.
spk05: And then with regard to the marketing initiatives that you've commenced for the promoted products, what are you doing differently versus last year?
spk07: Yes. So in Q1, we launched brand-new campaigns for both Rofate and Winsora, which you've seen the uptick in performance. We also moved to digital platforms and selling tools. For our representatives, it's been a real nice addition into the marketplace. We definitely executed on our strategy to build Windsor awareness and usage, hitting all-time highs in total writer for Q1. And we've definitely focused on our messaging for fast week one results as a differentiator in the very busy and competitive psoriasis market. And we've also continued the momentum and strong growth on Rofate with all-time highs in new prescriptions. And our goal is still establish the medical need of persistent facial erythema and making sure you're treating that with a prescription product. So those initiatives from a marketing perspective, why we tried to ensure we're being fiduciary responsible to the shareholders has been received very well in Q1. And you can see that in the prescription group.
spk04: That's great. Thank you. And the last question relates to the change in formulary position. And granted that it's, you know, only a couple months of data, but when you focus on, say, prescriptions versus rebate, you know, and putting aside the seasonal effects, are you seeing a net benefit in revenue from agreeing to higher rebates in exchange for the better formulary positions?
spk07: Yeah, thank you for the question. So we are excited that we did on one of the major plans move from non-preferred to preferred coverage effective January 1st. So obviously we're paying higher rebates, but we'll see better coverage and lower copay card costs. We did not see that in Q1 as much as we expected. And we think a lot of that is due just to the shift in high deductibles and also the with the reset plans, so it wasn't as clear to see. But on the individual basis, we have seen the benefit, and we believe we'll continue to see that through Q2, Q3, and Q4. So it will continue to improve as we work through pull-through of downstream accounts as well. The dynamic of it being effective January 1st and being pulled through through all the thousands of downstream accounts is also a part that will... increase over the upcoming month. So, yeah, again, so we're pleased with it. We feel like moving to a preferred position definitely puts RopeA to this particular life cycle in a great position, and the pull-through will continue as we go through the year.
spk04: That's great. Thank you.
spk03: The next question comes from John Vandermosten with Zax. Please go ahead.
spk01: All right. Thank you, and good morning, Paul and John and John. I want to ask a question on your marketing efforts that you'll make, assuming approval for SB206. Are there any social media or similar approaches that you can use to improve awareness? And I'm wondering what the most effective medium is that you can use to increase awareness of molluscum and even the products that you currently are marketing.
spk07: Yes. So, John, thank you. Great question. Before launch, we'll be using our medical affairs organization to make sure there's awareness of molluscum and some of the points Paula mentioned in the previous slides. And then when we look to go forward as far as our marketing efforts, we have developed a great initial launch strategy and promotional plan that will continue to evolve. We'll use the same tools that we're currently using in our existing platform, but absolutely we'll use digital and social media types of avenues to not only promote the product, but to promote the awareness of the disease state as we've noted to ensure that this absolutely gets treated as a disease and there's a prescription medication available. We also believe this will help not only in the dermatology market where we have a strong foothold and good relationships, but it will help us our initial launch into pediatrics and as we grow to evolve further down that road. So absolutely. Thank you for the question.
spk01: Okay. And when you think about splitting the effort between awareness for providers and awareness for patients, how do you look at the effort there, I guess, 50-50 or maybe 75-25? How do you think about that?
spk07: I think that will primarily be driven off of resources and funding as well. I think primarily the beginning part will be around awareness at the physician level. And as we evolve and grow, the opportunity to expand that to patients and also caregivers of patients is a fantastic opportunity. And again, I think cash resources will be a primary driver from that perspective. But our market research does show that that ability to reach the patient and the patient caregiver can absolutely impact this opportunity.
spk01: Great. Thank you, John. And regarding ROCADE in Japan with Sato, what is the development timeline and process for that going forward?
spk02: Yeah, thanks, John. So the process is that, and that is really for them to share for a timetable but there is some development effort that is necessary in-country before they launch. So they are beginning that process now, getting ready to do the small development effort that they need there to then commercialize. So it won't be immediate.
spk01: Got it. And I was looking at animal specimens for the psoriasis category. It looks like they're going to be about up 3% to a little over $30 billion. And I'm wondering, you know, there's a few new entries into the category, and I'm wondering if it's becoming more competitive or is there more potentially complementarity among the medicines there and there's combination approaches, I guess, being used to more effectively treat. What are your thoughts on that? Yes.
spk07: Great question. And when you think about the competition, it's not only there's more entrants, which we have noted is great for the market itself, because as we know, there's usually numerous prescriptions written to address the disease state. Part of it is just the size and the amount of investment coming in from these new companies. It's both larger pharma companies with... biologics, and then the non-steroidal companies that have invested a significant amount of investment, both from a field size perspective. You've seen DTC kind of campaigns coming out and additional types of promotional. So it's more around the size of the resources and investment in here. And again, I think it's been great. We believe it's been great for the market itself as the awareness and the opportunities But as we've stated, you know, steroidal use, and especially a combination product with a steroid and a vitamin D analog, have an extreme place and benefit to these patients, and that awareness only highlights the fast-acting need to address psoriasis. And we feel like with Winsora, that meets all patient needs from that spectrum, and the increased competition and awareness is good for the marketplace.
spk00: Okay, great. Thanks for the extra detail. Appreciate it.
spk03: You're welcome. This concludes our question and answer session. I would like to turn the conference back over to Paula Brown-Stafford for any closing remarks.
spk02: Thank you all. Thank you, analysts, for your very good questions. Appreciate those. In conclusion, we believe the opportunity for Bridasmer gel is compelling, and Novan remains focused on executing and delivering results and we're excited for our future. Thank you for being with us.
spk03: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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