OptiNose, Inc.

Q4 2022 Earnings Conference Call

3/7/2023

spk_0: the day and thank you for standing by welcome to the up the nose fourth quarter twenty twenty two earnings call at this time all participants are analysts and only mailed after that speakers presentation there will be a question and answer session to ask the question during the session you will need to press start one one when your telephone you will didn't hear an automated message advice in your hands it's three to withdraw your question please press our one once again please be advised to today's conference is being recorded i would now like to in the conference over to your speak read today jonathan really vice president of investor relations please go ahead
spk_1: the morning and thank you for joining us today we review up to for fourth quarter twenty two a few performance and our plans for the remainder of the year i'm joined today by chairman just get are a or c l doctorow me my mood and are cheap commercial off their path that joke contributing to the prepared remarks proportion a portion of today's gop ronnie pollen i will have the question and answer session the blood will be presented on the garden with you know our website up know dot com and investor section before we start or would like to remind you that discussions during the conference go include forward looking statements of statement that are not a stark of acts are hereby identified as forward looking statements are looking statements are subject to risks and uncertainties the cause actual results to differ materially from those indicated by the statements additional information regarding these factors and forward looking statements as discussed under the cautionary note on forward looking statements section of the earnings release of the issue today as well than a risk factor section and elsewhere enough to notice most recent form ten and use that about with the ftc and available on the website ftc dot gov and on our website
spk_2: notes dot com
spk_1: your costs and not place undue reliance on forward looking statements the looking statements during the conference golf big only other the original date on of the golf or any earlier date indicated in such statements and we undertake no obligation to update or revise any these statements will now make prepared remarks and then we'll move to the a question the answer session with that i will now turn the golf
spk_3: just get our job
spk_4: jonathan and good morning everyone
spk_5: you've all have the opportunity to interact with volume years prior positions president chief operating officer of the company but given the recent decision to name him ceo i'm taking this opportunity to introduce him and to share some perspectives about them on behalf of the board of directors as you know peter recently made the decision to step down as ceo in that context of work in front of the question of ceo succession obviously a very important decision for any company private or public as the board discussed this decision we recognize that we were under somewhat unique position for a company of our size to have a ready now candidate to promote into the position as you know romney's in a part of building up the news from the very beginning and it's been a very close working partner with you the fact that he can step into the ceo position given that history is an incredible benefit to the company it's shareholders the management t all of our people and customers and patients we sir i've known rami for more than twenty years dating from the time that we overlap while you're both employed by johnson johnson in this case while army serve as a member of the management team a advances foreign citizen and i served as hockey were german and later worldwide chairman of the pharmaceutical sector during that period in the very robust succession plan planning processes within jj ronnie was consistently viewed as a rising star with significant upward potential for see your leadership roles both within and beyond medical fairs and are indeed over the past five years as chairman of the board for the knows i've had the chance to work more closely with him and further recognize his leadership skills we all recognize running on my liking the development of expanse for chronic run of sinusitis but he brings much more to the senior leadership roles he is occupied and the board is confident we will do so as the company's ceo it's rare to see a senior executive in our industry that trained as an md served in the military and combines the history of highly productive drug development with exceptional executive and leadership skills robinson an integral part of building up the house into what it is today and notwithstanding the challenges the industry and the company a say in the last few years rami is ready now to leave the company into it's next chapter of road with the filing of the supplemental and the a for the chronic sinusitis indication now behind us ronnie will leave the effort to ensure the company is ready to launch axioms that is very important application is you know there's currently no f d a approved therapy for this disease and a high level of patient satisfaction and with the therapeutic options harvey available the planning is already underway to come get the company into the position to successfully launched expands into a marketplace with significant unmet medical knee in the not too distant future i can speak on behalf of the entire board of directors when i say that we are thrilled that this executive if he has already heard from the prior to the new ceo we anticipate ethnicity and that rami will leave this seem to the next level of success while maintaining the culture and values that have contributed to the company winning awards for being a great place to work thank you all for listening and now turn it over to iraq ronnie
spk_6: thank you very much enjoy for your kind remarks and thank you to everyone listening for joining us with morning
spk_5: we appreciate you joining us for our fourth quarter update before we get started with our business update i would like to introduce our new chief commercial officer paul spent polish recently most recently the senior vice president of the us pharmaceutical commercial organization had a immune therapeutic a division of nestle health sciences in as nearly thirty years of it
spk_6: experience in the life science and pharmaceuticals industry as a commercial leader
spk_5: quitting responsibility for marketing sales market access and commercial operations kiss history of relentless focus on commercial execution and like the experience building successful commercial organizations in brains out of product we profiled similar to advance it a big part of why we believe he will be successful in his role as a new leader of our commercial team
spk_6: so starting on five three we'll go into more detail in a moment but i'd like to highlight three key take away from today's presentation first we were mean enthusiastic about the potential edition of an indication to treat patients with chronic sinusitis queen data suggest that see as is currently being diagnosed by healthcare providers approximately ten times more frequently than nasal polyps and in the current health care environment or off label use is increasingly constrained by pairs we believe in new indication could enable us to access a multi fold larger patient audience and therefore drive significant growth second we announced the submission of our supplemental new drug application in february for its hands as a treatment for patients with chronic sinusitis it with consistent with our previous guidance and is an important milestone on the road to a potential a pool of the new indication in december two thousand and twenty three third we have we focus our strategy to prioritize the potential launch of its fans as the first ever f d a approved drug treatment for cs because of important differences patient prevalence frequency of diagnosis and payer dynamics we believe the potential for return on investment that can be produced by promoting it's hands following the potential label expansion for cs is significantly greater than the return available from promotion of its hands as a treatment for nasal polyps
spk_5: because of this we have as we enter twenty twenty three structured our business to reduce the use of cash during twenty twenty three and to increase our focus on profitability
spk_6: while preserving the infrastructure in capabilities it will be important to a rabbit and successful launch in vs following the potential approval these principles of shaped our expectations for twenty twenty three and we will discuss those expectations later in the present asian trying to fight for we believe the future approval of its hands at the first and only of the april treatment for cs have potential to increase the number of patients for whom the product can be promoted by tenfold because claims data suggests that an order of magnitude more patients are currently diagnosed and treated for chronic sinusitis then are diagnosed and treated for nail polish we expect the greatly expanded universe and potential patients to include those that are currently cared to work by physicians in our existing commercial footprint which would significantly grow our potential within the scope of our current activity we also expect the expanding universe of patience to include patients who are cared for by physicians outside of our current commercial reach and we are already exploring a number of ways the future outreach to those physicians and patients as possible including through commercial partnerships alternate spelling models modest future expansion of our direct selling efforts
spk_7: by other means
spk_6: the fact that claims data show a very large number of patients are being diagnosed with cs today after ten million office visits per year are coded for chronic sinusitis really did diagnoses it's of optimism that it will not be necessary to engage in in the educational efforts around the prevalence or recognition of chronic sinusitis the diagnosis is already being made and documented frequently much more frequently than nasal polyps in the course of ordinary clinical practice in addition you are aware that we believe pale friction is one of the chief hindrances to product update and the fact that a diagnosis of chronic sinusitis is commonly documented in routine practice may help address one of the most important challenges to uptake created by payers today
spk_5: specifically one of the challenges payers create for physicians prescribing it's hands today particularly allergists or primary care providers who do not routinely perform needle and to be is asking for attestation to an on label diagnosis which today of course as a diagnosis of nasal polyps
spk_6: the new cs indication may be better aligned with current vision practice behaviors and with or requirements in addition to addressing a larger patient population as a reminder today approximately eighty percent of commercial lives are in a plan that covers x hands and of those approximately half or in a plan that requires a primary of a concern to me or any plan requires a prior authorization that includes physician at a station to and on label diagnosis what we believe more patients could be diagnosed with nasal polyps and are currently being diagnosed and that some positions could independently choose to write exams more broadly for patients with insurance plans that don't require attestation to a nasal polyps diagnosis having a meaningful number of patients in plans that require attestation we believe in deterring many physicians for lighting it's hands broadly or at all and of course a promotional offers today are constrained to nasal polyps with a cs indication we believe there's significant potential for more physicians to be willing to write for a broader group of their patients because it will be comparatively much more straightforward to a test to a diagnosis that they are routinely documenting today
spk_8: coming to flights six
spk_6: on february sixteenth we submitted are supplemental new drug application in pursuit of the additional it's hands indication for treatment of patients with chronic rhino sinusitis this is a novel indication for which no drug has ever been approved by of the a accordingly the specific language of the potential future indication is a bit uncertain and maybe chronic sinusitis chronic rhino sinusitis chronic rhino sinusitis without nasal polyps or other similar language
spk_5: for me promotional perspective we view these terms as interchangeable
spk_6: focusing on what's next we are now in a seventy four day window during which ft a will decide whether to accept yes and a submission for filing based on the submission date we expect that to occur by the start of may if accepted the standard ft a review period where this type of application is ten months and months from the submission date which would result in unexpected fk action date in mid december twenty twenty three i will not review data from the reopen program in detail during prepared remarks however we have included summaries of the co primary and point in an appendix today's presentation we open with a landmark program and a major accomplishment for our organization and for the field sir any questions will be happy to address those during the q and a session
spk_8: turning to fight eight
spk_5: while our fourth quarter and or twenty twenty two results were aligned with the expectations that were set in our last call we are not satisfied with these results
spk_6: accordingly we've made significant changes to our organization as well as to how we plan to operate moving forward
spk_5: our initial changes already implemented for focus on reducing total expenses are concentrating or commercial investments for growth on our most productive territories and programs
spk_6: in addition or new chief commercial officer paul spence and his team are evaluating and acting on a number of key factors that we believe underlie the revenue trends observed in the second half of twenty twenty two he's taken on this challenge energetically and with an eye on both improving the tactical quality of our commercial execution and on a variety of potential strategic changes during the coming months specific examples of areas receiving attention include improving the efficiency with which active position interest in prescribing exams is converted to fill the prescriptions the drive net revenue the rate at which prior authorization paperwork is submitted the structure and implementation of our copay program and the size and management of our pharmacy distribution network and are pay or strategy a commercial team is aware that v and other areas where we are evaluating and considering action this year have potential ramifications not only for promotional efforts in nasal polyps in twenty twenty three but also for how we are setting your organization up for successful launch of the much larger new see indication i'd like to note that will be looking for evidence of performance improvement before we allow or commercial changes to influence our outlook for the full year twenty twenty three as for results in fourth quarter twenty twenty two there were approximately twenty seven thousand seven hundred new prescription for exams a decrease of seven percent compared to fourth quarter twenty twenty one quietly market defined by ins prescriptions written by any position for any condition a large component of which are prescriptions for allergic rhinitis increased by five percent over the same period for the full year twenty twenty two there were approximately one hundred and thirteen thousand one hundred new prescriptions for example a slight increase compared to four year twenty twenty one while the ins market i just described increased by seven percent over the same period
spk_9: coming to fly nine
spk_6: in fourth quarter twenty twenty two there were approximately eighty six thousand two hundred total prescriptions for hands a decrease of eight percent compared to fourth quarter twenty twenty one of the market which includes ins prescriptions written by any physician for any condition a large component of which are prescriptions for allergic rhinitis increased by three percent over the same period for the four year twenty twenty two there were approximately three hundred and forty one thousand total prescriptions for exams a two percent increase compared to fully or twenty twenty one while the ins market previously described increased by four percent over the same period
spk_9: coming to fight ten
spk_5: exams market share of five point seven percent of in fourth quarter twenty twenty two decreased when compared to the five point nine percent share in fourth quarter twenty twenty one
spk_6: in the future we may eliminate or replaced this measure measure because the denominator who used to calculate distraction has limitations as a reminder that denominator for this share include all infinite have to write prescriptions written by an audience of approximately twenty one thousand physicians which includes a substantial number of scripture news for indications such as allergic rhinitis and which does not include prescriptions for the several biologics that are indicated to treat nasal polyps breadth and depth of physician prescribing as measured by the total number of physicians who have patience filling exams prescriptions had mixed results from fourth quarter twenty one to fourth quarter twenty two regarding breath in fourth quarter twenty two there were eight thousand one hundred and four physicians who had a so a patient fill at least one prescription for example an increase of eight percent compared to fourth quarter twenty twenty one we got in depth the number of physicians who had more than fifteen exams prescriptions filled by their patients than a quarter decreased by eight percent from fourth quarter twenty one to fourth quarter twenty two with approximately one thousand four hundred and fifty physicians in this segment i will now turn the call over to jonathan to discuss fourth quarter and form your financial performance and guidance
spk_1: thank you army turn the sidewalk as we reported up knows recognize twenty point nine million dollars a chance that revenue and fourth quarter twenty twenty two degrees seven percent or fourth quarter twenty twenty one net revenues of twenty two point five million dollars the primary driver of the your your decreasing in fourth quarter is a prescription demand that running just discussed for your twenty way to canada revenue with seventy six point three million dollars an increase of four percent compared to the prior year during the side thirteen based on available prescription data first or third parties and data we see directly from for wireless network said that except that average net revenue for prescription from fourth quarter twenty point two was two hundred forty two dollars and it crease of one percent compared to two hundred and forty dollars of revenue per prescription and fourth quarter twenty twenty one four year twenty my to average net revenue per prescription with two hundred and twenty four dollars and flex an increase in pressure two percent compared to two hundred nineteen dollars for the earlier twenty twenty one as we discussed got prior cause we may change dark okay assistance program start starting twenty to that was intended to increase average net revenue or prescription or reducing the number of proportion of prescription filled by commercially short patience and plant that ally deductible we believe this change had the intended effect reduced or capacitance expense and increased average net revenue or prescription and the early part of the year we really the increase in average revenue per prescription due to the change and kobe assistance help offset effect of increasing proportion of or prescription by to government plans and increases the contracted rebates and commercial plants both of which has the effect of decreasing average revenue per perception turning five fifteen today we announced our initial financial guidance or twenty twenty three or guides reflects our commitment to refocus our strategy to prioritize the potential large expanse of the earth ever ft a pre drug treatment the chronic sinusitis and i held the message or investors take on today is that we are focused as company or preserving cast that we believe will generate i i return appears to support cf launch while maintaining the infrastructure necessary to rapidly and successfully launched a new education upon arrival hurt for the full year of twenty twenty three weeks back total operating expenses to be in the range from ninety to ninety five million dollars or which brought currently eight million dollars is stock based compensation to the reduction of approximately thirty million dollars or twenty five percent compared to the iron twenty three million dollars reporter for the boy you're twenty twenty two and reflect actions taken nervous through this up and play related and their party expenses approximately half and thirty million dollar reduction it's trivial to sales and marketing and remainder is available to general administrative expenses and reduce research and development abolish and the conclusion that reopen program as part of actually intended to reduce still operating expenses for full your twenty twenty three company reduce number of territory managers by approximately fifteen percent of the and twenty twenty two second bearing in mind the at the level failed to martin expense reductions and our second half twenty twenty two prescription trends or expectation for example that revenue for the full year twenty twenty three is between sixty two million to sixty eight million dollars is important note that we are not assuming revenues from a cf launch and are fully or twenty twenty three guy adams third is part of our expectation for for your twenty twenty three weeks that first quarter twenty twenty three exams that revenue to be approximately ten million dollars with your year degrees to a fans that revenue for the first quarter twenty twenty three it's consequences and expected increase aggressive net deductions and affected decrease in the unit ship effected increased and growth net deductions and the first quarter twenty twenty three and that includes increase rebates and changes the business next that also influence or for your twenty twenty three net revenue expectations and average revenue per prescription respect average net revenue per perception to be approximately two hundred dollars for the full your twenty twenty three finally as we noted our earnings press release morning oliver financial obligations under the a mandatory state of panic on no purchase agreement have been classified as current liability on a gap each quarter we perform forward looking analyses to evaluate the alignment of the project and performance of our current business or current liquidity the terms of our that agreement under the out the projections we are permitted years and the analyses are generally based only on the business that we have today that is a fans approved the treatment for chronic run as i decided what naval part of that accounting basis we believe it is probable that it will not be that we will not be able to maintain compliance with certain financial liquidity covenants in the agreement it's important to note that assessment does not account for revenues from a cfl approval the potential out of partner primary care and other events could lead to a city their lives in the future
spk_6: i went out and call back over rom if closing remarks ronnie you jonathan before moving to q and a and as we turn our attention fully forward to twenty twenty three or like to take a moment to reiterate or strategic focus this year
spk_5: first we believe achieving the first ever chronic sinusitis indication will be a crucial driver or future value for patients and for our company is therefore our top priority
spk_6: second we are dissatisfied with our commercial results in twenty twenty two
spk_5: mindful of the importance of the cash we have today and of the potentially greater value of commercial investment following the future potential cf indication we have taken and will continue to take action to efficiently generated fans revenue with the current indication suffered we must prepare organization to see the potential opportunity created by a new chronic sinusitis indication by planning for successful launch aimed at rapidly making the product available to millions of patients in need but will require a range of africa going twenty twenty three the position ourselves for inflection and twenty twenty four
spk_0: we that i'd like to thank you for your attention this morning and open the call for q and i as a reminder to ask a question please press star one one on your calif down and wait for your name to be a now to withdraw your question please press star one one again please stand by while we compiled the key when a roster
spk_10: our first question comes from brandon fall with can your line is now and then
spk_11: i think my question then and this lessons on me on the appointment
spk_12: how many just from me
spk_10: how quickly can you ramp
spk_13: the see has labeled uptake and just given sort of would go back to the revenue covenant in the first quarter twenty twenty four and then family yeah can you elaborate a bit more a first for the head when he's being and twenty twenty three and walk could those different twenty twenty four with the yeah dickensian
spk_14: live in the label think if
spk_5: hebron and and thank you
spk_6: so i'm obviously we're not we're not sharing rcs cs forecast for twenty twenty four at this time but i'll just share a couple of general thought about the nature of the launch of for cs the the first thing i'll say is that it this is the launch of the new indications naughty de novo launch of a new product into the market
spk_5: so we have you have the advantage of physicians who are already in established relationships with with our on commercial organization we have the advantage of the distribution channels that are already in place we the advantage of many of the prescribers that we talking to already having a general familiarity with the product which you all of which may not be the say same we are launching a product om de novo into the marketplace so you're those things i think will facilitate good option of the product more rapidly than that it might be if we were launching new yeah we did he come the other hand it's never a good idea to underestimate the potential impact of of pale barriers and we are aware of that and will be working to address that in dumb you identify noted earlier there's a variety of reasons to think that is yes indication actually will be awesome
spk_1: much easier to are prescribed didn't need a polyp indication fever for the written by discussed earlier so i'm so those are just in general thought that i think could down could suggest you that the rabbit and successful launches yes and twenty twenty four and and an alarm paul johnson if you wish to add anything i'm not i think that's getting a i think i'm with in terms of your typical first quarter caden neil for for twenty twenty four thing in each year we talk a little bit about your palm the the start a year of the a reset son
spk_15: our pocket expenses for patients in i think i'm typically that results in a in a lower else
spk_1: revenue per year prescription in first quarter as as our patients you need that out of pocket minimum
spk_16: and and there's kind of greater reliance on okay assistance program during that period i think our expectations that beginning of next year will be similar to do what they are the of each year in terms of that dynamic
spk_0: right thank you very much please stand by for our next question
spk_1: our next question comes from gary nach men with the capital markets your line it's now and ten
spk_17: hi guys the morning and so you know with a lot of the evaluation of that commercial components and strategy that you highlighted the he doing a fear it sounds like you're taking a close look at everything so you know what are the areas where you think you need to have the greatest change and how long it'll take to effect
spk_10: as changes
spk_5: and i what the reduction in territory managers by fifty percent or where does that put the size of the self force currently
spk_6: i'm so gary i'll start and that all i've policy at me additional comments to adnan and thank you gary for your question from the first thing i'm all addresses the last question that the current com number of territories that we have deployed as seventy seven am and yelling and we think that allows us to cover
spk_5: the idea that is a sort of most potential the the physicians for the greatest potential from our current universe not understanding or surprise on the market for several years and we have a better sense of er physicians for prescribing today than we had to me initially launched
spk_6: some so i'm with regard to the via areas of of action you observed that it it sounded you i think might come we were acting in in every area of commercial and
spk_5: and i'm kind of glad that you reach that conclusion because we threw open the food book to do we evaluate all aspects of our commercialization for not nothing is off the table for consideration having said that the areas that i specifically mentioned as examples are areas where we think a i'm in a greater focus your attention is likely to produce the
spk_6: greatest i'm the greatest potential for a change the greatest difference during twenty twenty three the timeline for the expectations for change
spk_5: vary depending on which of those areas were talking about arms for some of those things poland has seen have already acted i'm to to look for changes some of those things on have been subjected to fairly intensive analysis and we expect action to be following hear ya later during march or or rom or during the spring and the timeframe for are you're seeing the difference in the market again varies by which of those tactics were talking about paul would like to add anything and everything think the question so to start the year there's actually several areas that are receiving particular catches rami mention of particular note or we just came from our national sales meeting where we were focused on several things one most importantly was are improving the efficiency with which active written exams prescriptions are converted to fill the spent prescriptions that ultimately are going to drive greater evidence the quickly around that stronger pc positioning and improving the quality of and speed up your submission
spk_18: was a lot of attention last week as we're together in addition the structure and implementation of our cookie program
spk_1: out of five the management of our pharmacy distribution network
spk_19: and our pair exit strategy of of off receiving a particular attention as well okay they had a ball and
spk_1: the i know it it and i mean it sounds like gad things are going to be evolving over the question the or and i'm i'm sure we'll get update that updates another different areas and face facing you know when it comes to thinking about that vf launch of you know how how the have any sense of how much of an effort you're gonna need of
spk_5: nine that are at this point and you know just rally talk about them as discussions you might be having with potential kokomo partners and what some other tales alternative might be you mention that and they're prepared remarks
spk_6: oh yeah sure you're in and place for that for that question
spk_5: so we are doing a lot during twenty twenty three to prepared to be able to have a rapid and successful launch now as we as we head into into next year with the new indication should be risky that in december
spk_6: and some of those things require this kind of lead time so polluted to
spk_5: a pair access pure access has ramifications not just now obviously has ramifications for twenty twenty four and it meant american a the negotiations happening now are specific to contracts which will come into force with the beginning of twenty twenty four so there's a lot of things we have to do now to be ready for next year
spk_6: the i'm the overall commercial investment the only young the size and distribution is ruth a footprint of our i'm directing structure and and thirty other major selling effort i don't expect that to change substantially in size it it's not so much about having to ramp up the size of it's going to twenty four it's more about change during the content and the strategy india in the matter of execution in order to to shift the focus to this new are more commonly diagnosed armed
spk_1: nope easier to an easier to see sort of widespread uptake indication so it it's not a an issue so much of size as out of style or quality of of the work that will be doing it that sort of what you are getting out with regard to the i'm in the plans for our commercial infrastructure
spk_6: he is it getting of the issue you're asking about gary ah yeah ninety that that's that's helpful but you know as far as a potential of hundreds and then he said other vices spelling alternative a chronic sinusitis and that the are going to change the size of a prank than there's other ways that you'd be able to tap into that larger market and i present right well so gary years here's some the way the way we're thinking about this is that there's a substantially increase potential within our current specialty audience and that's what i was talking about before but yet as you said there's a lot of potential outside of our current special the audience also
spk_5: and we have to think creatively about the ways in which our company can realize the benefits
spk_6: of of getting product and him to patients who needed in that much larger audience the most obvious way and it into and one that we would like to see if possible of course if we're able to engage in some kind of commercial partnership with an organization that has an existing infrastructure that allows promotion into that primary care audience and what we are we are planning to continue to actively pursue conversations with organizations that have the necessary infrastructure and an interest in a product victim you could increase leverage with that infrastructure come so that would be one way of of our our organization seen potential benefit from that i also alluded to that possibility that are other ways we might see those benefits way that might not involve having to share value in the same ways as we might have two and a primary care partnership and those waves are a little less certain but worthy of exploration right now during our lead time up to the new indication for example their academy emerging models in the marketplace for mechanisms of reaching out directly to patients
spk_8: and and and sort of using non traditional promotional mechanisms to engage those patients
spk_6: get get them access to providers able to make an appropriate diagnosis and and if appropriate prescribed the product for them and to fill that prescription in ways that no include our current pharmacy network or potentially other matters is for fulfillment and that may increase efficiency and outreach for for a broader population that not sort of within our current special the universe
spk_1: hum i don't want to define what that looks quite yet because as i said you a minute ago and it's something that we we are beginning to actively explore it looks like there are some potential mechanisms by which this may be possible
spk_6: and i want to be clear that we're not we're not close minded we are open minded to a variety of of a potential mechanisms for getting the hand that good product in the hands of patients who who may need it that are outside of our specialty get outside of our specialty care universe
spk_1: okay a great an nsf last one at yale little bit more that the net revenue per prescription coming down to two hundred from to forty at if you guys are going to be focusing more on profitability a fear that mostly volume caravan are at a good idea of different programs are you factoring into that and said we expect you if if it's gonna be a transition year i with the cs indication to get it back up to the levels we saw last year hamlet that's a really good question and it is a significant decrease in are projected our dragon net revenue prescription johnson would like to comment on a sir i mean i'm gary thanks for the question of it of the the guy that we put out the of of approximately two hundred the of dollars the offer for average net revenue for prescription it incorporates yes and changes in business next the okay as well as your iron growth and that deductions with in line of business and an ugly that guy eddie get around a rising interest rate environment that may lead to customers caring less inventory at the end of twenty twenty three than they did and twenty twenty one point twenty two yeah i think i'm the had some of the a where we ended up i think in and twenty twenty two the out
spk_20: damn
spk_1: yeah it was the result i think of of the have some some benefits that you wouldn't necessarily your plan for the start of a year as a reminder of the a last year we started out with guidance for the year of of approximately two hundred and ten dollars for trx and so we ended up the a year at at approximately two hundred and twenty four dollars so yeah a gum in terms of you're looking at business friends around the of mix of business or the making some choices the contract a little bit further into certain government eliza business which is the driving next year into those lines of business which are relatively less profitable that still good life a business and the can have an hey can have halo effect with position to officer commercial patients the other things are all kind of the in the mix for our initial guidance here for an expectation of two hundred dollars for trx okay that it has like this might be more the new normal the wrong even but cf the it'll be more in this level or could it get back up a little bit the that not going to to twenty four oh yeah i think i'm you're probably the other thing that there would notice is that of the the started the last two years and we've we made some changes to our copay assistance program of the and twenty twenty one year with we may change the kobe assistance program that was focused on yelp reducing the number of proportion of perception that were coming from patients were a commercial plans to do not cover advance and twenty twenty two and we may have changed the kobe assistance program again you're kind of intended to reduce the number of proportion prescriptions that the time i'm from patients who were in commercial plans with a high high deductible
spk_0: which video that which cover advance yeah both of those kind of line the businesses a relatively less profitable for us or and ya in in certain cases can actually be unprofitable lines of it as worse
spk_21: we we haven't made a a similar kind of the of profitability optimizing your change the kobe assistance if started twenty twenty three but that doesn't mean that we can't yell look at things like that as we move forward
spk_5: okay that's helpful thank you
spk_1: please stand by for next question our next question comes franklin san angelo with jeff friends your line and now and then i yeah they should take my question now was talk about the balance sheet a little better mean you know you're ending here with ninety four million dollars in cash on you know sort of based on a new revenue guys is he a million versus the outlook for operating expense you know that that you provided a gave us enough to the pieces here but as one of you to sort of summarize that and and give us your expected sort of cash burn and and twenty twenty three the i they think you for the question ultra alternate win over jonathan have to answer our backline yeah as a gun it you can it he can a the nail on the had i think with were getting enough pieces the the maybe put the them out together yourself the use out yet but the obviously you're he added the air with ninety four million in cash
spk_21: yet as you point out yeah we structure of it that the reduces gas and twenty twenty three
spk_22: the again while preserving the the infrastructure capabilities important or rapid and successful launch in cs fallen federal approval of the of the the midpoint of our revenue and operating expense rages yet they imply approximately twenty million dollar improvement to operating income yeah relative the full year twenty twenty feel
spk_1: and and that they get that the other way we were structured as business we expect that similar improvement to the youth of cash and so then it is it as as a note for for for folks of yeah if you don't have the press release open or the tank a open later on
spk_21: are you sick ass and twenty twenty was approximately sixty seven million dollars right right the that go on correct sort of assuming that burn kind of come down thirty two four three yeah the i think i think that the other cut the midpoint of the ah brave benson and dumb revenue would apply a of
spk_6: approximately twenty million dollars at work out of range it out with a high low end to the that is probably somewhere between fifteen and twenty five million dollar improvement a big as an organization yeah we would i'm the at try to try to aim for the the higher end of that range the are not pair up i'm located revenues with high case operating expenses so yeah a year we we would strive to be approximately twenty but maybe lot burn twenty a little better or twenty within those range upon in that that that find that vendor sort of as followed by i didn't want to talk about sort of were that will leave you ride him and i think help always been pretty much leaning towards you know the opportunity to the to enter into some type of commercial partnership right and in anticipation of the see as indication i mean any thoughts with respect to timing around that i mean you sort of laying out you know a timeframe for or hopefully purdue fan and mid december i mean you know i have those conversations started the think we could expect to see some in the second half of the year you think that kind of more you know we'd come and twenty twenty four post approval
spk_5: so when i'll i'll comment on that i'm so be it very difficult in it in advance of reaching an agreement to say exactly when an agreement might be reached some i can say that we have in the past and i certainly intend right now during during twenty twenty three am to engage in of writing conversations with or
spk_6: innovations that may have interest in on promoting the product into that the large audience that we're not reaching with our own commercial footprint
spk_17: whether those organizations will prove to be interested in
spk_0: closing an arrangement prior to the producer date whether they may be interested in seeing the purdue for approval before closing an arrangement
spk_23: some bans and and what exactly the terms of such an arrangement might be that those are uncertain i don't i don't know the answer those questions yet
spk_24: but with regard to weather will be engaged in act two conversations i'm your during the course of this year the answer is definitely yes okay thanks
spk_23: please stand by for next question
spk_5: our next question comes from david and solomon with high for sandler your line it's now i have been
spk_25: thanks so i guess how to sort of
spk_23: you know sort of has to baby
spk_6: an obvious question but i think an important one your entertaining of a call promote here and another that something we've talked about going back to the the ip ah but just given where things are at the business and given the potential challenges regarding interest in owning a piece of the assets here why don't you just entertain a a sale of the company in the think that that maybe the the the better alternative here just given all the moving parts how do you think about that help so sir david i love or comment on that and then john's not invite you to come in if you have anything to add but some for all the reason that you've described david and in and others you know we are evaluating a wide range of strategic options
spk_24: and i think failed the company is within the range of options that were considering it it always it always has been and will continue to be
spk_23: it certainly not the only the only possibility were considering that as i said earlier we are actively planning to engage in and get out your part conversations about eight a primary care promotional partnership
spk_25: and i'm you're inclined to do everything necessary to continue to operate the company independently but in no way to that preclude possibility of
spk_26: conversations about our no emanate i pad thai transaction either so we will continue to entertain all strategic options as we go forward through twenty twenty three
spk_6: and then as a follow up as you look at the the launch in us he youth you talk about the the potential for greater penetration within your existing ah prescriber bay so is it fair to say that that's where at least early on in the role at that's where most of the growth is going to come from and it if that is certainly the case then what is the urgency to detain a primary care partnership ahead of approval around me
spk_5: oh so
spk_6: today to be the young the potential for the product we think is very substantial within our current you are commercially contacted a are on direct selling audience and in an indirect phones or specialty audience has a lot of new potential with a new indication and and we do intend to to go after that assertively the with our own infrastructure but yet that doesn't mean that there's not a lot of additional potential outside of the the audience that we're currently calling on and we really don't have the resources to to go after that certainly not with a traditional direct selling model
spk_23: so so it means that if we are able to reach a primary care partnership
spk_27: you're starting on day one after the approval there is potential in a very large audience it we're just not going to be able to efficiently access ourselves and primary care partnership would give us a vehicle for be able to come
spk_5: increase the potential value available to us an increasing number of patients who are able to be treated so it would be incremental value very much worth having put your for variety of reasons that we'd like to see but that doesn't mean that we're not going to see substantial incremental value within our current topic within our current audience so i'm not sure though if i've answered your question david that address what you asked
spk_6: i'm dead i guess i'm just struggling with you know the urgency of to you'll find a primary care partner and don't you call on a certain basket of high volume general practice has already and if so how many the on
spk_1: yeah no to david i think it's appropriate for us to have a sense of urgency come around find it funny primary her partner and and that's not because there's not a lot of potential in our current audience they're it but the sooner we can get a primary care partner the sooner we can access an otherwise untapped large potential audience and while it's true that we do have a small number of i'll call it a specialist like primary care physician i'm in are called on universe is a very small number in comparison to the number of primary care physician one might ideally choose to i'm to engage if you had a primary care promotional infrastructure what what what's our current number right now
spk_28: the i mean they've just heard a sense of scale the of the adding we think about the number of i'm specially like primary care physicians and or a call on universe yet it if you were talking about a number that up
spk_0: a few thousand
spk_5: as opposed to a when you look at at the broader opportunity and primary care think historically yeah we've looked at the others that potentially an audience of yeah somewhere around fifty thousand addition to our canada
spk_0: higher value of prescribers in that in chronic sinusitis space and of the other as it's just a completely different order of magnitude terms of that the number of positions that somebody with appropriate dumb infrastructure
spk_29: yeah
spk_30: that would be leverage of all his opportunity could reach if we were to partner with them
spk_0: got gotta thank it i show no further questions at this time i would now like to turn the conference back to rami for closing remarks like to thank you very much for joining us this morning from for a review of armed the the for your performance and twenty twenty two and are are forward looking to what we expect me becoming and twenty twenty three and we look forward to talking to you again i'm in a few months with our first quarter results of everyone has a wonderful day
spk_1: this concludes today's conference call thank you for participating you may now disconnect the conference will begin shortly to raise and lower your hand during una you can dial star one one yeah it's since
spk_4: good day and thank you for standing by welcome to the up the nose fourth quarter twenty twenty two earnings call at this time all participants are analysts and only mailed after that speakers presentation there will be a question and answer session the ask the question during the session you
spk_5: when need to press start one one when your telephone you will didn't hear an automated message advice in your hand it's raise to withdraw your question please press star one once again please be advised to today's conference is being recorded i would now like to in the conference over to your speaker today jonathan really vice president of investor relations please go ahead the morning and thank you for joining us today we review up enough for a quarter twenty twenty two performance and our plans for the remainder of the year i'm joined today by chairman just get ari or see a doctor rummy my mood and are too commercial up their path bad joke contributing to the prepared remarks proportion a portion of today's gop rami pollen i will have the question and answer session the blood will be presented on this got me the our website up news dot com and the investor section before we start i would like to remind you their discussions during this conference call include forward looking statements of statements that are not historical facts are hereby identified as forward looking statements are looking statements are subject to risks and uncertainties the cause actual results to differ materially way from those indicated by such statements additional information regarding these factors and forward looking statements of this got the new the a cautionary note on forward looking statements section of the earnings release of the issue today as well than a risk factor section and elsewhere and up knows most recent form ten ain't and cues that about with the fcc and available on the website se si dot gov and on our webs i love nasdaq up your gosh and not place undue reliance of or looking statements about looking statements during this goblins golf big only other the original data on of this golf or any earlier date indicated in such statements and we undertake no obligation to update or revise any of these statements will now make prepared remarks and then we will move to the a question and answer session without a will now turned out to just get our job jonathan and good morning everyone you've all have the opportunity to interact with volume years prior position president chief operating officer of the company but given the recent decision to name him ceo i'm taking this opportunity to introduce him and to share some perspectives about now on behalf of the board of directors as you know peter recently made the decision to step down as ceo in that context of work in front of the question of ceo succession obviously a very important decision for any company private or public as the board discussed this decision we recognize that we were in is somewhat unique position for a company of our size to have a ready now candidate to promote into the position as you know romney's than a part of building off the news from the very beginning and has been a very close working partner with you the fact that he can step into the ceo position given that history is an incredible benefit to the company it shareholders the management t all of our people and customers and patients we sir i've known rami for more than twenty years saidi from the time that we overlap while you're both employed by johnson johnson in this case while on he served as a member of the management team advances pharmaceutical and i served as company your terminal later worldwide chairman of the pharmaceutical sector during that period in the very robust succession plan planning processes within jj ronnie was consistently viewed as a rising star with significant upward potential for see a leadership roles both within and beyond medical fairs and are indeed over the past five years as chairman of the board for off the knows i've had the chance to work more closely with him and further recognize his leadership skills we all recognize run on by letting the development of expanse for chronic renal sinusitis but he brings much more to the senior leadership roles he is occupied and the board is confident he will do so as the company's ceo it's rare to see a senior executive in our industry they're trained as an md served in the military and combines the history of highly productive drug development with exceptional executive leadership skills robinson an integral part of building up the house into what it is today and notwithstanding the challenges the
spk_6: industry and the company a say in the last few years rami is ready now to leave the company into it's next chapter of road with the filing of the supplemental and the a for the chronic sinusitis a to now behind us ronnie will leave the effort to ensure the company is ready to launch axioms that is very important application as you know there's currently no f d a approved therapy for this disease and a high level of patient satisfaction with the therapeutic options hardly available the planning is already underway to come get the company into the position to successfully launched access into a marketplace with significant unmet medical knee in the not too distant future i can see on behalf of the entire board of directors when i say that we are thrilled that this executive transitions is already heard from the prior to the new ceo we anticipate hot mississippi and that romney will leave this seem to the next level of success while maintaining the culture and values that have contributed to the company winning awards for being a great place to work thank you all for listening and now turn it over to iraq ronnie thank you very much enjoy for your kind remarks and thank you to everyone listening for joining us this morning we appreciate you joining us for our fourth quarter update before we get started with our business update i would like to introduce our new chief commercial officer paul spent paul was recently most recently the senior vice president of the u s pharmaceutical commercial organization had a immune therapeutic a division of nestle health sciences and as nearly thirty years of experience in the life science and pharmaceuticals industry as a commercial leader including responsibility for marketing sales market access and commercial operations
spk_5: just history of relentless focus on commercial execution and like the experience building successful commercial organizations and brands that a product with profiles similar to exams it a big part of why we believe you will be successful in his role as the new leader of our commercial team
spk_6: so starting on five three we'll go into more detail in a moment but i'd like to highlight three key take away from today's presentation first we remain enthusiastic about the potential edition of an indication to treat patients with chronic sinusitis queen data suggested see as is currently being diagnosed by healthcare providers approximately ten times more frequently than nasal polyps and in the current health care environment or off label use is increasingly constrained by pairs we believe the new indication could enable us to access a multi fold larger patient audience and therefore drive significant growth second we announced the submission of our supplemental new drug application in february for its hands as a treatment for patients with chronic sinusitis it was consistent with previous guidance and is an important milestone on the road to a potential approval of the new indication in december two thousand twenty three
spk_5: third we have we focused our strategy to prioritize the potential launch of its hands as the first ever f d a approved drug treatment for yes
spk_6: because of important differences in patient prevalence frequency of diagnosis and pair dynamics we believe the potential for return on investment that can be produced by promoting it's hands following the potential label expansion for cs is significantly greater than the return available from promotion of hands as a treatment for nasal polyps because of this we have as we enter twenty twenty three structured our business to reduce the use of cash during twenty twenty three and to increase our focus on profitability while preserving the infrastructure and capabilities it will be important to wrap rapid and successful launch in cs following the potential a poodle these principles of shaped our expectations for twenty twenty three and we will discuss those expectations later in the presentation
spk_5: coming to fight for
spk_6: we believe the future approval of acts hands at the first and only f d a approved treatment for cs have potential to increase the number of patients for them the product can be promoted by tenfold because claims data suggests that an order of magnitude more patients are currently diagnosed and treated for chronic sinusitis than are diagnosed and treated for nail polish we expect the greatly expanded universe and potential patients to include those that are currently cared glock by physicians in our existing commercial footprint which would significantly grow our potential within the scope of our current activity we also expect the expanding universe of patience to include patients who are cared for by physicians outside of our current commercial reach and we are already exploring a number of ways the future outreach to those physicians and patients as possible leading to commercial partnerships alternate spelling models modest future expansion of our direct selling efforts by other means the fact that claims data show a very large number of patients are being diagnosed with cs today after ten million office visits per year are coded for chronic sinusitis really to diagnoses it's a optimism that it will not be necessary to engage in in the educational efforts around the prevalence or recognition of chronic sinusitis the diagnosis is already being made and documented frequently much more frequently than nasal polyps in the course of ordinary clinical practice
spk_8: in addition you are aware that we believe or friction is one of the chief hindrances to product update and the fact that a diagnosis of chronic sinusitis is commonly documented in routine practice may help address one of the most important challenges to uptake created by payers today
spk_6: specifically one of the challenges payers create for physicians prescribing it's hands today particularly allergists or primary care providers who do not routinely perform needle and off be is asking for attestation to an on label diagnosis which today of course as a diagnosis of nasal polyps the new yes indication may be better aligned with current vision practice behaviors and with a requirements in addition to addressing a larger patient population
spk_5: as a reminder today approximately eighty percent of commercial lives are in a plan that covers x hands and of those approximately half or in a plan that requires a primary of a concern actually or any plan requires a prior authorization that includes physician at a station to and on label diagnosis
spk_6: what we believe more patients could be diagnosed with nasal polyps and are currently being diagnosed and that some positions could independently choose to write exams more broadly for patients with insurance plans that don't require attestation to a nasal polyps diagnosis having a meaningful number of patients in plans that require attestation we believe in deterring many physicians for lighting it's hands broadly or at all and of course a promotional offers today are constrained to nasal polyps with a cs indication we believe their significant potential for more physicians to be willing to write for a broader group of their patients because it will be comparatively much more straightforward to a test to a diagnosis that they are routinely documenting today coming to fight six on february sixteenth we submitted are supplemental new drug application in pursuit of the additional it's hands indication for treatment of patients with chronic rhino sinusitis this is a novel indication for which no drug has ever been approved by of gear accordingly the specific language of the potential future indication is a bit uncertain and maybe chronic sinusitis chronic rhino sinusitis chronic rhino sinusitis without nasal polyps or other similar language
spk_5: from a promotional perspective we do these terms as interchangeable
spk_6: focusing on what next we are now in a seventy four day window during which ft a will decide whether to accept vs and the a submission for filing
spk_5: based on the submission date we expect that to occur by the start of may if accepted the standard ft a review period for this type of application is ten months and months from the submission date which would result in unexpected fk action date in mid december twenty twenty three
spk_6: i will not review data from the reopen program in detail during prepared remarks however we have included summaries of the co primary and point in an appendix today's presentation we open with a landmark program and a major accomplishment for our organization and for the field sir any questions will be happy to address those during the q and a session turning to fight eight while our fourth quarter and forty or twenty twenty two results were aligned with the expectations that were set in our last call we are not satisfied with these results accordingly we've made significant changes to our organization as well as to how we plan to operate moving forward
spk_5: our initial changes already implemented for focus on reducing total expenses are concentrating or commercial investments for growth on our most productive territories and programs
spk_6: in addition or new chief commercial officer paul spence and his team are evaluating and acting on a number of key factors that we believe underlie the revenue trends observed in the second half of twenty twenty two
spk_9: he's taken on this challenge energetically and with an eye on both improving the tactical quality of our commercial execution and on a variety of potential strategic changes during the coming months
spk_6: specific examples of areas receiving attention include improving the efficiency with which active position interest in prescribing exams is converted to fill the prescriptions the drive net revenue the rate at which prior authorization paperwork is submitted the structure and implementation of our copay program
spk_31: and the size and management of our pharmacy distribution network and are pay or strategy
spk_6: a commercial team is aware that v and other areas where we are evaluating and considering action this year have potential ramifications not only for promotional efforts in nasal polyps in twenty twenty three but also for how we are setting your organization up for successful launch of the much larger new see us indication
spk_9: i'd like to note that will be looking for evidence of performance improvement before we allow or commercial changes to influence our outlook for the full year twenty twenty three
spk_5: as for results in fourth quarter twenty twenty two there were approximately twenty seven thousand seven hundred new prescription for exams a decrease of seven percent compared to fourth quarter twenty twenty one widely market defined by ins prescriptions written by any position for any condition a large component of which are pretty
spk_6: options for allergic rhinitis increased by five percent over the same period for the full year twenty twenty two there were approximately one hundred and thirteen thousand one hundred new prescriptions for example a slight increase compared to four year twenty twenty one while the ins market i just described increased by seven percent over the same period i'm going to fly nine in fourth quarter twenty twenty two there were approximately eighty six thousand two hundred total prescriptions for its hands a decrease of eight percent compared to fourth quarter twenty twenty one of the market which includes ins prescriptions written by any physician for any condition a large component of which are prescriptions for allergic rhinitis increased by three percent the same period
spk_5: for the four year twenty twenty two there were approximately three hundred and forty one thousand total prescriptions for exams a two percent increase compared to full your twenty twenty one while the ins market previously described increased by four percent over the same period
spk_32: coming defied can
spk_33: exams market share of five point seven percent of in fourth quarter twenty twenty two decreased when compared to the five point nine percent share in fourth quarter twenty twenty one
spk_1: in the future we may eliminate or replaced this measure measure because the denominator to be used to calculate distraction has limitations as a reminder the denominator for this share include all infinite have to write prescriptions written by an audience of approximately twenty one thousand physicians which includes a substantial number of scripture and for indications such as allergic rhinitis and which does not include prescriptions for the several biologics that are indicated to treat nasal polyps breadth and depth of physician prescribing as measured by the total number of physicians who have patience filling exams prescriptions had mixed results from fourth quarter twenty one to fourth quarter twenty two regarding breath in fourth quarter twenty two there were eight thousand one hundred and four physicians who had a fill a patient fill at least one prescription for example an increase of eight percent compared to fourth quarter twenty twenty one we got any depth the number of physicians who had more than fifteen exams prescriptions filled by their patients than a quarter decreased by eight percent from fourth quarter twenty one to fourth quarter twenty two with approximately one thousand four hundred and fifty physicians in this segment i will now turn the call over to jonathan to discuss fourth quarter and fournier financial performance and guidance thank you around me turning the sidewalk as we reported up knows recognize twenty point nine million dollars a the that revenue and fourth quarter twenty twenty two degrees seven percent or fourth quarter twenty twenty one net revenues of twenty two point five million dollars the primary driver of the your your decreasing in fourth quarter is a prescription demand that running just discussed oh your twenty two i to have that revenue seventy six point three million dollars an increase of four percent compared to the prior year during the side thirteen based on available prescription data first or third parties and data we receive directly from for wireless network said that except that average net revenue for prescription for fourth quarter twenty twenty two was two hundred and forty two dollars an increase of one percent compared to two hundred and forty dollars of revenue for prescription in fourth quarter twenty twenty one four year twenty twenty average net revenue per prescription with two hundred and twenty four dollars and reflects an increase of pressure two percent compared to two hundred nineteen dollars for the or your twenty twenty one as we discussed on prior cause we may have changed or copay assistance program start twenty twenty two that was intended to increase average net revenue or prescription or reducing the number of proportion of prescription for bills by commercially short patience and plants et al high deductible we believe this change had the intended effect producer or copay assistance expense and increased average net revenue per prescription in the early part of the year leave early the increase in average revenue per prescription due to that change and kobe assistance help offset effects of an increasing proportion of a prescription by and through government plans and increases the contracted rebates and commercial plants both which has the effect of decreasing average revenue per prescription turning five fifteen today we announce our initial financial guidance for twenty twenty three or guidance reflects our commitment to refocus our strategy to prioritize the potential large expanses the first ever f d a approved drug treatment the product right as i decided and i held the message or investors take on today is that we are focus as company of preserving cash that we believe will generate higher return of used to support cf launch while maintaining the infrastructure necessary rapidly it successfully launched the new education upon approval first for the full year of twenty twenty three we expect total operating expenses to be in the range from ninety to ninety five million dollars or which privately eight million dollars is stock based compensation to the reduction of approximately thirty million dollars or twenty five percent compared to the iron twenty three million dollars reporter for the boy you're twenty twenty two a reflex action stay under this thread it up and play related and their party expenses approximately half of thirty million dollar reduction is trivial to sales and marketing and the remainder is available to general administrative expenses and reduce research and development the and the conclusion that reopened program as part of accept that intended to still operating expenses for for your twenty twenty three company reduce the number of territory managers by approximately fifteen percent the and twenty twenty two second bearing in mind the at the level of fail to martin expense reductions and our second half twenty twenty two prescription trans or expectation for example that revenue for the full year twenty twenty three is between sixty two million to sixty eight million dollars is important note that we are not assuming revenues from a cf launch and apple your twenty twenty three guidance
spk_6: third as part of our expectation for for your twenty twenty three weeks back first quarter twenty five three exams that revenue to be approximately ten million dollars the year your year decrease to a chance that revenue for the first quarter twenty twenty three it's consequences and expected increase aggressive net deductions and unexpected decrease in the in itself
spk_5: the fact it increased and gross net deductions and first quarter twenty twenty three and that includes increase rebates and changes the business next that also influence or pull your twenty twenty three net revenue expectations an average revenue per prescription respect average net revenue per perception to be approximately two hundred dollars for the full year twenty twenty three finally as we noted our earnings pastoralists morning all of our financial obligations under the a mandatory state of panic on no purchase agreement have been classified as current liability on a gap each quarter quarterly for forward looking analogy to evaluate the alignment of the project and performance of our current business or current liquidity the terms of our that agreement under the out the projections we are permitted years and the analyses are generally based only on the business that we have today that is
spk_0: fans approve the treatment chronic right of sinusitis with they have a part of that accounting basis we believe it is probable that it will not be that we will not be able to maintain compliance with certain financial liquidity covenants in the agreement is important to note that assessment does not account for revenues from a cfl approval the potential that a partner primary care and other events that could lead to a city that lives in the future
spk_10: i'm now phone call back of ram it's closing remarks brownie
spk_12: thank you jonathan before moving to q and a and as we turn our attention fully forward the twenty twenty three or like to take a moment to reiterate or strategic focus this here
spk_10: first we believe achieving the first ever chronic sinusitis indication will be a crucial driver or future value for patients and for our company is therefore our top priority
spk_13: second we are dissatisfied with our commercial results in twenty twenty two mindful of the importance of the cash we have today and of the potentially greater value of commercial investment following the future potential cf indication we have taken and will continue to take action to efficiently generated fans revenue with the current indication
spk_14: he suffered we must prepare organization to see the potential opportunity created by a new chronic sinusitis indication by planning for successful launch aimed at rapidly making the product available to millions of patients in need
spk_5: this will require a range of africa during twenty twenty three the position ourselves for an inflection and twenty twenty four
spk_6: with that and like to thank you for your attention this morning and open the call for q and i
spk_5: as a reminder to ask a question please press star one one on your calif down and wait for your name to be a now to withdraw your question please press star one one again please stand by while we compiled the key when a roster our first question comes from brandon fall with can turn your line is now and then i think my question then and the lessons from it on the appointment and just from me how quickly can you ramp
spk_1: the he has label uptake and just given sort of would go back to the wedding covenant in the fourth quarter twenty twenty four and then family yeah can you elaborate a bit more a first for the head when he's doing and twenty twenty three and walk could those different twenty twenty four with that yeah dickensian like in legal think if hebron and and thank you i'm so i'm obviously we're not we're not sharing rcs forecast for twenty twenty four at this time but i'll just share a couple of general thought about the nature of the launch of for cs the the first thing i'll say is that it different the launch of the new indications naughty de novo launch of a new product into the market so we have you the advantage of
spk_10: physicians who are already in established relationships with with our on commercial organization we have the advantage of the distribution channels that are already in place
spk_0: we the advantage of many of the prescribers that we talking to already having a general familiarity with the product which new all of which you may not be the same we're launching a product om de novo into the marketplace so you're those things i think will facilitate good option of the product more rapidly than that it might be if we were launching new home and we did he come the other hand it's never a good idea to underestimate the potential impact of of pale barriers and we are aware of that and will be working to address that in dumb you identify noted earlier there's a variety of reasons to think that is yes indication actually will be armed
spk_34: the easier to have prescribed and made a polyp indication feel for for the written by discussed earlier so i'm so those are just the general thought that i think could could suggest that the rabbit and successful launch yes cs and twenty twenty four and an alarm paul giant if you wish to add anything
spk_1: i'm not i think that's gonna a i think i'm a human terms of me out
spk_17: typical first quarter cadence he asked her for twenty twenty four thing in each year we talk a little bit about your arm the the start a year of reset son
spk_5: our pocket expenses for patients yeah i think i'm typically that results in a in a lower else
spk_6: revenue per the prescription in first quarter as as our patients you need that out of pocket minimum and and there's kind greater reliance on or kobe assistance program during that period i think our expectation that the beginning and actually would be similar to do what they are each year in terms of that dynamic
spk_5: right thank you very much
spk_6: please stand by for our next question our next question comes from gary nach me with the male capital market your line it's now and ten
spk_5: i guys good morning so you know if a lot of the evaluation of that commercial components and strategy that he highlighted the he doing a fear it sounds like you're taking a close look at everything so you know whether the areas where you think you need to have the greatest change and how long it'll take to affect those changes and i went to a reduction in territory managers by fifty percent or where does that put the size of the self currently i'm so gary all started that all i've policy at me additional comments and and thank you gary for for your question from the forcing come all addresses the last question that the current come number of territories that we have deployed at seventy seven am and yeah and we think that allows us to cover
spk_18: the out there is a sort of most potential the the physicians for the greatest potential from our current universe not understanding course the price but on the market for several years and we have a better sense of physicians for prescribing today than we had to me initially launched
spk_1: i'm so i'm with regard to the via areas of of action some you observed that it sounded you i think might come we were acting in in every area of commercial and i'm and i'm kind of glad that you reach that conclusion because we threw open to feed book to do re evaluate all aspects of our commercialization for not nothing is off the table for consideration having said that the areas that i specifically mentioned as examples are areas where we think a i'm a a greater focus your attention is likely to produce the greatest i'm the greatest potential for a change the greatest difference during twenty twenty three the timeline for
spk_35: the expectation for change
spk_6: vary depending on which of those areas were talking about found for some of those things i'm poland has seen have already acted i'm to to look for changes some of those things i'm have been subjected to fairly intensive analysis and we expect action to be following hear ya later during march or or rom or during the spring and and the timeframe for are you're seeing the difference in the market again varies by which of those tactics were talking about paul would you like to add anything at gary think the question
spk_5: so to start the year there's actually several areas that are receiving particular catches rami mention a particular note are we just came from our national sales meeting where we were focused on several things one most importantly was improving the efficiency with which active written exams prescriptions are converted to fill the spent prescriptions that ultimately are going to drive greater evidence
spk_6: a particular around that stronger pisa positioning and improving the quality of and speed of peace mission
spk_5: was a lot of attention last week as we're together in addition the structure and implementation of our cookie program or the size and management of our pharmacy distribution network and are pair exit strategy of off receiving a particular attention as well
spk_6: okay then it up available and the a i know it it it i mean it sounds like get things are going to be evolving over the question the or and i'm i'm sure we'll get update that updates another different areas and see you know when it comes to thinking about the fia flights you know how how the have any sense of how much of an effort you're gonna need a find that at this point and you know just ran a talk about the discussions you might be having with potential kokomo partners and what some other tales alternative might be you mention that in their proper i remark
spk_17: oh yeah sure you're in and eight for that for that question some
spk_1: so
spk_6: we are doing a lot during twenty twenty three to prepared to be able to have a rapid and successful launch now as we as we head into into next year with the new indication should be we see that in december and some of those things require this kind of lead time so polluted to armed a pair access appear access has ramifications not just now obviously has ramifications for twenty twenty four and it meant american a the negotiations happening now are specific to contracts which will come into force with the beginning of twenty twenty four so there's a lot of things we have to do now to be ready for next year the i'm the overall commercial investment the that young the size and distribution sort of a footprint of our i'm direct selling structure and and thirty other major selling efforts i don't expect that to change substantially in size it's it's not so much about having to ramp up the size of it going to twenty four it's more about changing the content and the strategy india in the matter of execution
spk_5: i'm in order to to shift the focus to the newer are more commonly diagnosed be easier to an easier to see sort of widespread uptake indication so it it's not a an issue so much of size as out of style our quality of of the work that will be doing it that's sort of what you're getting out with regard to the i'm that the plans for our commercial interests
spk_6: sure he is at getting at the issue you're asking about gary ah yeah not a that that's that's helpful but you know as far as potential of promotes and then he said other vices selling alternative a chronic sinusitis and if you are going to change the size of a prank than the other way that you'd be able to tap into that larger market and episode might as well so gary years here's some way the way we're thinking about this is that there's a substantially increase potential within our current specialty audience and that's what i was talking about before but yet as you said there's a lot of potential outside of our current special the audience also
spk_8: and we have to think creatively about the ways in which our company can realize the benefits
spk_6: of of getting product and him to patients who need it in that much larger audience the most obvious way and it into and one what we would like to see if possible of course if we're able to engage in some kind of commercial partnership with an organization that has an existing infrastructure that allows promotion into that primary care audience
spk_1: and what we are we are planning to continue to actively pursue conversations with organizations that have the necessary infrastructure and an interest in a product that found you increase leverage with that infrastructure so that would be one way of of our our organization seen potential benefit from that i also alluded to the pub stability that are other ways we might see those benefits
spk_6: way that might not involve having to share value in the same ways as we might have two and a primary care partnership
spk_1: and those waves are a little less certain but worthy of exploration right now during our lead time up to the new indication for example there appear to be emerging models in the marketplace the for mechanisms of reaching out directly to patients and and and sort of using non traditional promotional mechanisms to engage those patients get get them access to providers able to make an appropriate diagnosis and and if appropriate prescribed the product for them and and to fill that prescription in ways that no include our current pharmacy network or potentially other mechanisms for fulfillment i'm that may increase efficiency and outreach for for a broader population did not sort of within our current special the universe come i don't want to define what that looks quite yet because as i said you a minute ago and it's something that we we are beginning to actively explore
spk_20: it looks like there are some potential mechanisms by which this may be possible
spk_1: and i want to be clear that we're not we're not close minded we are open minded to a variety of of a potential mechanisms for getting the hand that good product in the hands of patients who who may need it that are outside of our specialty get outside of our specialty care universe okay great an nsf last one at yale little bit more and that the net revenue per prescription coming down to two hundred from two forty as if you guys are going to be focusing more on profitability the fear that mostly volume caravan an are as a good idea if different program for your factoring into that and could we i expect you if this is it's gonna be a transition year i with the cs indication to get it back up to the levels we saw last year hamlet that's a really good question and it is a significant decrease in are projected him our dragnet net revenue prescription johnson would like to comment on a i mean i'm gary thanks for the question of it of the the guy that we put out the of of approximately two hundred the of dollars the offer for average net revenue
spk_19: correction the it incorporates the us and changes in business next the okay as well as your i or to grossman that deductions within arm's length of business and and a belief that the i at a gun write a rising interest rate environment that may lead to customers getting less him and or at the end of twenty twenty three than the
spk_1: good and twenty twenty one point twenty two yeah i think i'm yet some of them via where we ended up i think in and twenty twenty two the out his arm the deal it with a result i think of of the have some some benefits that you wouldn't necessarily your plan for at the start of a year as a reminder of the a last year we started out with guidance for the year of of approximately two hundred and ten dollars i'm pretty are ex and so your we ended up build the year at at approximately two hundred and twenty four dollars so yeah at a gum in terms of you're looking at business friends around the of mix of business of making some choices the contract a little bit further into certain government line of business which is the driving next year
spk_19: into those either the business which are
spk_0: relatively less profitable the still on good life a business on the can have an hey can have halo effect with physicians who officer commercial patients he other things are all kind of the in the mix for our initial guidance here for an expectation of two hundred dollars for trx okay that accounts like this might be more the dude normal the or even with cs
spk_21: it'll be more in this level or could it get back up a little bit didn't knock at the to twenty four oh yeah i think i'm you're probably the other thing that there would notice is that yup that the third of the last two years the are we we made some changes to our copay assistance program
spk_5: of the and twenty twenty one year we we may change the kobe assistance program
spk_1: that was focused on yelp reducing the number of proportion of perception that were coming from patients were a commercial plans to do not cover of hands and twenty twenty two and we may change the kobe assistance program again you're kind of intended to reduce the number of proportion prescriptions that this time from patients who are in commercial plans with a high high deductible on which video that which cover fans yeah both of those kind of lines the businesses are relatively less profitable for us or and ya in in certain cases can actually be unprofitable lines with a source we haven't made a similar kind of the of profitability optimizing your changed the kobe assistance of started twenty twenty three but that doesn't mean that we can't the a look at things like that as we move forward okay that's helpful thank you
spk_21: please stand by for next question
spk_22: our next question comes franklin san angelo with friends your line is now i'm thin
spk_1: i yeah thanks take my question she to talk about the balance sheet a little better mean you know you're ending here with ninety four million dollars in cash on you know sort of based on that new revenue guy is he a million versus the outlook for operating expense
spk_21: i know that that you provided mean you can gave us enough to the pieces here but i wonder if you get to sort of summarize that and and give us your expected to any cash burn in and twenty twenty three glenda thank thank you for the question ultra not went over jonathan of to answer are they claim the i think i'm it you can a the nail on the had a date with we're getting enough pieces the the maybe put the the math together yourself the yourself
spk_6: yet but the obviously your we added the air with ninety four million in cash yet as you point out your we structure a business that reduces cash and twenty twenty three yoga again while preserving the the impression capabilities important or rapid and successful launch and see us fallen federal approval the of the midpoint of our revenue and operating expense rages yet they imply approximately twenty million dollar improvement to operating income yeah relative the full year twenty twenty two and and i think of that the other way were structured as business we expect that similar improvement to the youth of cash and so then it the as a as as a note for for for folks if yeah if you don't have the press release open or the that nk open later on are you sick ass and twenty twenty was approximately sixty seven million dollars
spk_5: right right for that go on correct towards women that burn kind of come down thirty two four three
spk_6: i'm yeah i think i think that the other kind of midpoint of the ah brave benson and dumb revenue view would apply a of
spk_17: approximately twenty million dollars that you are kind of range it out with a high and low and the though say that it's probably somewhere between fifteen and twenty five million dollar improvement i think as an organization yeah we would i'm the a try to try to aim for the the higher end of that range you're not pair up i'm located revenues with high case i'm operating expenses
spk_0: i'm so yeah i a yeah we we would strive to be approximately twenty but maybe law that there and twenty a lot of and twenty within the right upon just in that that that find that vendor sort of as a followup i didn't want to talk about sort of were that will leave you write him and i think help he's always been pretty much leaning towards you know the opportunity to you to enter into some type of commercial partnership right and in anticipation of the see as indication i mean get any thoughts with respected hiding around that i mean you sort of laying out you know timeframe for or hopefully at purdue fan and mid december i mean you know i have those conversations started you think we can expect to see some
spk_23: in in the second half of the year you think that anymore you know we'd come and twenty twenty four post approval
spk_24: so when i'll i'll i'll comment on that i'm so it very difficult in in advance of reaching an agreement to say exactly when an agreement might be reached some i can say that we have in the past and i certainly intend right now during during twenty twenty three am to engage in a variety conversations with organ as asians that may have interest in on promoting the product into that the large audience that were not reaching with our own commercial footprint
spk_23: whether those organizations will prove to be interested in
spk_5: closing an arrangement prior to the purdue for date
spk_25: whether they may be interested in seeing the purdue for approval before closing an arrangement some bans and and what exactly the terms of such an arrangement might be that those are uncertain i don't i don't know the answer those questions yet
spk_6: by your with regard to weather will be engaged in active conversations on your during the course of this year the answer is definitely yes
spk_5: okay thanks
spk_6: please stand by for next question our next question comes from david and solomon with high for sand or your line it's now i been thanks so i guess how to sort of you know sort of has to baby an obvious question but i think an important one your entertaining of a call promote here and another something you talked about going back to the the ip ah but just given where things are at the business and given the potential challenges regarding interest in owning a piece of the assets
spk_36: i'm here why the judges entertain a sale of the company in the think that that maybe the the better alternative here
spk_25: just given all the moving parts how do you think about that
spk_24: help so sir david i want a comment on that and then i'm just not invite you to come in if you have anything to add but some for all the reason that you've described david and in and others
spk_25: you know who we are evaluating a wide range of strategic options
spk_26: and i think failed the company is within the range of options that we're considering
spk_5: it it always it always has been and it will continue to be it certainly not the only the only possibility were considering that as i said earlier we are actively planning to engage in
spk_6: in get out your palm conversations about a primary care promotional partnership and i'm the plan to do everything necessary to continue to operate the company independently but in no way to that preclude possibility of
spk_5: ah conversations about how no emanate i pad thai transaction either so we will continue to entertain all strategic options as we go forward through twenty twenty three
spk_6: and then as a follow up
spk_5: as you look at the the launch and see us he used you talked about the
spk_6: the potential for greater penetration within your existing ah prescribe a so is it fair to say that that's where at least early on in the role of that's where most of your growth is going to
spk_23: come from and if if that is certainly the case then what is the urgency to detain a primary care partnership
spk_6: i had of approval or around me
spk_5: oh so i'm they would be the young the potential for the product we think is very substantial within our current from know sort of commercially contacted a are direct selling audience and in and indirect found our specialty audience has a lot of new potential with the new indication and and we do in ten to to go after that assertively with our own infrastructure
spk_1: but yet that doesn't mean that there's not a lot of additional potential outside of that the audience that we're currently calling on and we really don't have the resources to to go after that certainly not with a traditional direct selling model so so it means that if we are able to reach a primary care partnership you're starting on day one after the approval there is potential in a very large audience that we're just not going to be able to efficiently access ourselves and primary care partnership would give us a vehicle for be able to
spk_28: increased the potential value available to us an increasing number of patients who are able to be treated so it would be
spk_0: incremental value very much worth having for your for variety of reasons that we'd like to see but that doesn't mean that we're not going to see substantial incremental value within our current topic within our current audience so i'm not sure though if i've answered your question david that address what you asked
spk_6: i'm dead i guess i'm just struggling with you know the urgency of
spk_0: you'll find a primary care partner don't you call on a certain basket of high volume general practice has already and if so how many the on
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