OPTN - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen, and welcome to the OptiNose Q1 2019 Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the call over to Jonathan Neely, VP of Investor Relations. begin. may you Sir,

Jonathan Neely

Officer, our on this morning thank first on section. joining Chief the our quarter of joined Commercial the and be our Goldan; Peter we viewed Chief President website, plans today CFO, review remainder this I'm year. OptiNose's XXXX the call and our optinose.com you morning, CEO, Investor presented Operating us Miller; and for as for by Good performance Tom will Gibbs. be Keith our our in Officer, The Ramy Mahmoud; slides that can and

would Before historical we not statements. start, that to I include statements conference All like facts this are discussions call forward-looking will our statements. during hereby are you identified that remind forward-looking as

and from differ uncertainties results to indicated those risks cause to actual could subject materially that such are by statements. statements Forward-looking

under information are cautionary these as earnings that the the and we Additional issued our of that on website, Form of Form annual on note SEC XX-K report optinose.com. with on as Risk website is under sec.gov morning the factors at statements section OptiNose's their most available release the and XX-Q regarding at this and recent filed Factors section discussed forward-looking well

statements. to undue not cautioned are You reliance on place forward-looking

of we call no original only or and or the in obligation Forward-looking call statements during to this conference statements. of undertake any date indicated revise statement, speak these such this as of any date update earlier

will a to turn over We session. will the now make I then Miller. move remarks prepared now Peter? Peter question-and-answer will and With that, we to call

Peter Miller

by to demand to on our that XHANCE key us strong you in and our this begin I'd morning Starting priorities. highlighting good and discuss everybody. for you, Thank appreciate We growth. X, to growth joining morning. continued excited like the Slide plans sustain We're Jonathan,

growth the in focus have quarter of I'm few Further, quarter XX% second consequence the encouraging a to strong primary I focus, with followed in quarter. today of minutes. we that prescription to part growth. early a drive of prescription continuing detail these is of year pleased last the growth. on in XHANCE's in review another over that the results remains continuing strong growth Our report will as fourth

of the a facilitate sites quarter, of planning we the data primary two as of expansion currently to trials key which first for first-in-class and progress program program. pursuit to are a as view we of of potentially to indication. important our We treatment long-term priority drug preparations the not States could of part focused Currently, is but for start second States. additional has we the broader only first-in-class no receding we driver indication, because chronic in trials this clinical Our indication continuing trial audience. program In sinusitis succeeded this United future the the it physician anticipated in in and the activating clinical world a value development two potential of are or the care on United in trial first also this aware on believe because second

development Finally, of on efforts strength our March execution the available approximately our our with of the of at of sheet focus XXXX us $XXX cash commercialization end million to for enables XXXX, balance and XHANCE. the plans

in by efficacy sales to will from increasingly adoption. further continue force that messaging the growth now confidence continued strategy us XHANCE, have can will of the enhanced XHANCE help last gives growth visual of adoption robust execution us XXXX X, support delivered key and in Turning the term. longer strong sustain prescription to strong produce levers months the we by I'd our continued focus commercial to continued XHANCE. patients believe drive on evidence eight over that highlighting growth Slide start The like we We believe using our

In many with where fill paired an patients broad addition, the access, and environment can market the programs of create September, costs. low affordability commercial out-of-pocket last patient implemented refill we combination XHANCE for

support refills, trends by to our which a internal excited convert an team strong and suggests field completed was to about than sales growth to contract our April of the begun very sustained ever being I'm in has pleased to produced sales transition XHANCE. us patient force. we've say efforts more hit The Xst believe Importantly, their with sales by from has force smoothly sales satisfaction the led decide in see XHANCE. positive force to model we

new previously. I will share prescription we've territory expansion few this for to these growth our of physicians through sources moments. in our driving create previously that of on XHANCE in against opportunity existing primarily of This our expansion by clear detail salesforce, XX%. approximately execution geographies core recently footprint, in will managers addition completed strategy a reach not sales also as is physician new increasing details called In commercial growth more we our a to expansion an target

We new treatment. believe our provide from the XHANCE starter with it sample may during drive sample right with increase starting since territory and we've through satisfaction seven rates away fill the has to treatment variety of day at mail. time by and visits. the offered initial opportunity process now and of This filled the this launch prescription including obviously of is seven the It starter of XHANCE prescriptions. patient a channels, help to take receive patient a will physicians offices. be additional help increase XX day physician different available are the get to potential allow Third, to distributing a The a may on for time will physician also managers an day started office to patients

low out-of-pocket probability that pharmacy cost, a the at increases location the to objective increasing the of that in that plan fill has prescription is will a payers fill two lives This do increasing a Next, with coverage in we XHANCE. who benefits; engage number to rates commercial in able covers continue that the of with a patients so first, are driver be that channel. retail

Second, increasing patient we amount to of profitability reducing by provide that the coverage affordability co-pay improves programs. our dollar our assistance

to of direct-to-consumer more long-term approach driver, by a of is that to this field potential and future growth three be result we half of and the our marketing successful XXXX. with significant markets in I second we the driver plan continue judicious Finally, test XHANCE. in from our We're could If pilots in could increase programs, are a become DTC to believe further growth. test excited

build universe. of earlier, XX% our increase Territory mentioned Turning plan April X; XHANCE uncalled-on know of Having organizational of on access deployment. to sales call Baltimore, The their on These In key territories geographies XX entire to product Managers now we prior types, new in to launching new or of I been awareness, cities for on new of and XX,XXX Territory it our slide, programs. Territory target new physicians team include from Nashville, number the on we takes gleaned have XX last excitement Slide territories Managers in compared increase I we have quality were approximately time geographies patient a the prior started physicians. team, X,XXX States. also and this to as of the in our Boston, and into sales could our and appropriate launch total in in Still, product Managers from into clinical territories XXX new United deployed the as sales the the largest be individuals with Memphis, learnings are physicians, the to with the level benefit the enthusiasm. in many The patient raising our physicians to recently total, of XHANCE representatives the which more appreciation locations the year. new not territories the about previously over shown over the affordability in excited among such Portland differentiation target educate

they will achieve prescriptions these for half As sustained into meaningfully of we contribute growth we as -- XHANCE objectives, second toward those the they progress XXXX. expect

to and very also quarter quarter XXXX. exceeded month in both refills. part of growth early number in growth XHANCE patients at am the That attracting observed over prescription second X, new the XXXX. XX% is and the consecutive XXXX. the quarter or growth XX% yet. of pleased representing of with success we've full XXXX of continuing of is prescriptions have strong we're Turning don't into strong volume the the in XX,XXX, for the fourth X; Slide prescription continued of volume product encouraged quarter Slide in first of increasing first trends We the the of above by number prescription The of second results April of I

I grow to of few prescriptions will the If imply on quarter the Goldan third this regarding ended now the and for of moments be sinusitis of closing four number XHANCE was that growth program regarding XHANCE XXXX call previous of will the XXth a X,XXX, will I quarter represents consecutive second weeks However, April approximately quarter weeks growth. comments update XXth. ended XXXX. that rate, March full first the will approximately you to the our results XX% prescriptions compared And continue to over which XX% perspectives provide CFO, turn Keith remarks. four some and our chronic would in at In year

Keith Goldan

you and everybody joined thank who today. Thank you, to Peter, has

$X.X including of to the as licensing of million net XHANCE product we of revenues. million in recognized revenues product revenues million revenue net earlier OptiNose $X.X and Turning reported net Slide XX, quarter, -- first $X

As quarter. XHANCE per for dividing net useful number generated of by metrics of revenue believe net the is noted during prescription, on revenues We the calculated calls, this net per which that we that the quarter to is by average a is prior one prescription. dispensed metric track evaluate prescriptions estimated revenue

the subject XHANCE our from first price for not utilization acquiring variability range factors. patients of the customers which sell XXXX of XHANCE, slightly we of on pharmacy paid patient benefit Based expected change third purchased patterns $XXX insurance data ordering our data net for the by per to prescription individual from our directly, unit of affordability through our $XXX, is XHANCE wholesale to proportion and That necessarily than pharmacies and reflect and impacted higher for programs, revenue was quarter was the rates inventory factors parties levels $XXX. an that and available that average partners, an to metric this other is prescription of do including is in variability. that However,

quarter copay prescription, was respect annual per quarter the net insurance assistance due to to decrease with deductibles. expectations revenue for first due reminder, anticipated, a the fourth primarily XXXX reset from of As the to average higher

prescription, a Importantly, favorable I'll the our in observed review that per I'd for quarter like expectations XXXX that net revenue supports year which moment. for to full add average we trends for

to first full the to continue $XXX $XXX range plus $XXX million including expenses, sales, are operating be general to on that, XXXX, Based to stock-based million. million the million. were for XX; the excluding of to to to of Slide in expected defined of to range to we compensation operating quarter -- expect expenses $XX the for million total be million development Total stock-based be $XX.X of expected operating stock-based compensation administrative expenses and and Moving of expenses, $XX research XXXX, which in million $XXX compensation. year is

and Finally, $XXX we between be average Factors full in expect XXXX market closing the update support give will remarks. to to turn refills revenue to year the out-of-pocket continue to net patients of now deductibles improvements Peter? back increase proportion call meeting thresholds projected to include also their more $XXX. this pipeline per prescription the I'll over and increase and brief in a Peter prescription access.

Peter Miller

Thank you, Keith.

XX, the follow-on value sinusitis treatment by launch could of to significant chronic we or be in pursuit long-term to for the believe additional created a Slide XHANCE, indication the of of CS. Turning addition

we physicians. first significantly the by clinical drugs an which this for on universe before, the FDA we execution quarter trial XXXX, to condition of plan As sites. larger previous higher approved mentioned prevalence which we the a is of our of focused is was are and have of no indication aware and activate treated In

add continuing the Although in first investigational sites multiple the sites to enrolling, second to trial are we screening additional are quarter. and now

two this the CS quarter. expect We start of planned to also trials the continue to in second

encouraged rate sustained the in to we in Turning that volume are growth are reporting Slide today. very prescription we by XX; conclusion, of

including to continue Thank provides agreements we objectives other conclusion, look and in future future therapeutic the We feel I pleased We program. leading on this to building transaction In updates. in strategic categories. ENT chronic important in Allergy based for and a progress, Specialty will that confident of Also Company, you. are forward was progress believe our that quarter, EDS other sinusitis first template the succeed to Inexia. I technology completed also we're making a our toward licensing our our

Now for I'd up to it like open Q&A.

Operator

comes with Gary Thank line the Capital question of And Nachman you. Instructions] BMO Markets. [Operator first from our

is now open. Your line

Unidentified Conference Call Participant

Gary. volumes It's rest you Thanks on trough morning. for should indicated taking year, spray? the is expect Rozae question. good we for I Rx to believe Hi, the that the summer for since impact intranasal period previously seasonality How for of

Peter Miller

say on know I last bit I'll to believe us this how We it's Yeah, for going it's handle -- Peter that say you have impact it's year, for us lived too a reasons. of couple here. good early really obviously is and a to seasonality through a We year. little

differences year versus this However, year. there really last are important

impact important seasonality current and this of the proportion should and I that year. way, higher saying, rate with virtually by off, begin had what us, we've been But are we this will Last are total pleased sort we of year, potentially said, year growth our our differences year seen significant the our we've growing. last First -- very have refill. of we a in at the no refills, by this refills -- significantly of TRx's including, I terms as reasonably strong between number that year on

new our The day last versus program important which changes last year patient this year. levers, important didn't year. And we have we seven made second, have we our finally, sample, such to as affordability some

it's to us a us. for summary, is in bit So, seasonality understand too to how little early really impact going

Unidentified Conference Call Participant

revenue than Thanks. prescription also on XQ. more color provide expected you And could net drove what the in some higher per

was middle the the of previously trending for XQ? you indicated toward have guidance range it think may I

Peter Miller

pass Yeah. Keith. that I'll to you.

Keith Goldan

I guided $XXX. to we're -- we of $XXX mean, that Rozae, I range thanks question. we're obviously, to in We slightly a for you as the the Yes, -- know $XXX. pleased of came range had above

back that included had revenue the -- first the the beat PBMs per we impacted expected to of some we the stocking prescription sight a that slight pay on the insurers as in saw rebates average Some than factors lower as and that net to quarter. well

Unidentified Conference Call Participant

Thank you.

Keith Goldan

Thanks for question. the

Operator

question Amsellem David Thank our Jaffray. of with line next you. And the Piper comes from

Your line is open.

Michael Ingerman

a Ingerman quick First Hi, that Couple there revenue this of at plans And still it good guys with steady realistic access, for that or prescription? What regards to morning. this are trying state is smaller plans? onboard, and to point desired is David ones, Mickey get payer This national morning. on once state net then, you regional you are insurance per coverage. is

Peter Miller

the part first and you can Yeah, you second Keith, to part. Tom, pass maybe the I'll and take

Tom Gibbs

Hi, thanks for the call. Mickey.

and and half nasal And We D national continue to of have payers, the productive of increased discussions with potential expect, at regional the level. launch has second biologics Part XHANCE the polyps for may as with Medicare level interest for XXXX. of the commercial you both the in

payer we're So having we about conversations feel good that all really across to-date types. the

Peter Miller

reason -- total to good out about, ability of percent actually I think about increase the too Tom still it's very part and feel there we fair we to that a -- good the are there covered. that our few say there of lives we're is talking to, nationals that that's are pretty

Keith Goldan

if to you with we're $XXX. comments about question per achievable your net average which last $XXX standing right full of for but XQ, in the We recall, year $XXX respect range, our in prescription, revenue the exited guidance I $XXX. longer-term the And my year, by that stated is at that to or ended midpoint regarding

for we believe are those So, targets still us. that achievable

Peter Miller

we do thing expand proportion term, because to the even expect feel business and do see going become continue to to Keith, again, pressure that upward a is, that And higher to measure, continued coverage. of we I to on expect longer do we're we add would refills,

Keith Goldan

drive increases drive factors long-term definitely long-term will two prescription. in to revenue average Yeah. expected our are -- net Yeah, per those

Michael Ingerman

coming guys quick Got IQVIA? prescriptions see it. what population. follow-ups; you the And speak the if Thanks. the a talk difference if could significant we between just what portion few to XHANCE can on in of first, you guys non-polyp and And of you usage then report to from

Peter Miller

you take Tom, and one -- the first Keith part that. don't so second why of you can and Yeah, the take Jonathan,

Tom Gibbs

XX% look polyps. it chronic as and between support NDTI to physician the where all survey their chronic a is that sinusitis indication. half within on of from to about polyps at across we umbrella, data, indications, survey as relates the say which I'll Mickey, split physicians like is -- all prescribing prescribing indications, or for? our If are I they distribution obviously the what promotional sinusitis usage for sales details you The force first XHANCE written and Sure. -- is across ask they're nasal efforts product would prescriptions promoting the focused are thing that the of nasal of what the data the Thanks.

is all is other predominantly which allergic The other rhinitis.

Peter Miller

respect we're with week-by-week our it XX% in we're varies volume And for seeing basis. But the that available, purchase. a full prescription on -- I of numbers about reliably, are Mickey question, your to publicly IQVIA think second reflected XX% seeing to

Michael Ingerman

you. Got it, thank

Operator

comes from you. the Thank following our David from question line of Jefferies. And Steinberg

now line open. is Your

David Steinberg

Okay, thank you.

items So my higher gross expected, of a is or XX% like your so, Is throughout looked result. the this margin, there this is year gross sustainable margin or led one-time a bit first that to some quite question on than sort

I to track is IQVIA numbers, can the we actually what jump, the look since versus the because say one one couple now Could specialty Secondly, the can mentioned did territory reps of know like the the have know sales added related that Baltimore take new reps? Are already abnormally retail percent pretty there progress -- that's these you it's in -- into ago, your And productive IQVIA of you or sales reps a you reps or Boston. amalgamated weeks we can you week was at then, jump the a if numbers. the to you way specialty, and new roughly you the pharmacies large places big long had scripts of and that every high actually these will it effectively first that, adding numbers? ratio specialty? track how at what's to And become then, for you've you

Peter Miller

I'll You I then and two know last -- and will two. Keith the the pass first handle Tom to David,

Keith Goldan

meetings guiding David, have we're guiding margin, So that say I will not we device drug we that, be a I is not of said gross expect, are think with this to always and the think product, Peter revenue, on on in gross pharma margin. respect -- XHANCE although product, typical I margins. is there's In launch type a to to achieve expect able combination we variability. there consistently always

If you look all normalizing. is the in chain as gross across margin product launches supply

was think a in question, that, start and see With I our worked IQVIA normalization gross proportionality respect of believe we I we're the total seeing less So variability the lot should margin. through about we some being asking you first commented to of XX% your prescription and hopefully you the volume to XX% are which numbers. to IQVIA in reflected

previously the that And don't our there additional IQVIA the always not data the was You combined report. IQVIA volume from QX like call, was others our that we the large a of reported beginning those pharmacy partners necessarily, but one hadn't was spike are reported When correct. that volume internal IQVIA was in that reporting our number on we terms that data XHANCE of that pharmacy with IQVIA large TRx, numbers. report we Company to presented for receive TRxs we, during the in -- in partners from the volume fact absolutely reported in organic

Peter Miller

We universe and impact as will new you significant And be now a stated there all We territories, territories virtually in have in could driver uncalled the be is the X,XXX regions, growth we regarding physicians sales highlighted. highlighted, in pretty what XX,XXX And a these are are regions. of and new force, if sort remarks, largely of will. lever previously regions have these of but start new will, we about you did physicians in real, that's few the why it territories. our we of the to if territory David, presence managers it's minimal as think

again that. way, the very Regarding we're the seeing. remarks about by impact, made by time of the some results encouraged to we We're, early that

of But access as the product the as taking build to have access. done to to benefit, we've learning. advantage time launched well that having territories. it does this, the as mentioned, of differentiation We obviously understanding We're take of product build get we market in territories,

have So as very billed -- impact. said, add? I however, terms of in the anything encouraged you we're to if Tom,

Tom Gibbs

very the the half we would second excited we The early you've very contribute by think that I signs managers No, to about toward would new sustaining growth we're although that expect, really the of summarized in well. thing encouraged would and one say I hired, that expect territory is XXXX. other the the team meaningful we've it

Peter Miller

listening say Yeah, as of converted David, -- about We start call. hired, -- at the and group. folks it's who benefit terrific are for sales with probably who our I'll of, as really the hopefully well we've the a the our just the our some on team, group this, great is I sales team feel just us

Operator

you. Brandon comes the line with Thank Folkes from our Fitzgerald. following And question Cantor of

Your now line is open.

Brandon Folkes

taking and for my results. thanks the on congratulations Hi, questions

where new fully understand percentage the that terms calling have this the that Firstly, of on you can bit in talk affordability of simplified you're you that a program are and physicians you about of XHANCE. co-pay

think XHANCE? those know you it too XHANCE how dynamic market insight can you to help us the for compete when lastly, and referrals complement call, the I currently talked but biologics any products? come might have persistency Thank is market do you. is And perhaps either into to with on about Secondly, through where early to

Peter Miller

the Tom, second the take one Ramy will and third. to I Yeah. one on to want pick the I'll first and you start

Tom Gibbs

I'd the tell the executing, appropriate terms awareness have their team in that program. specific it don't do in thing terms and patient can site. of are of program; sales our appreciation Thanks patient to as of is they define affordability our tracking the relates of first data patient I awareness strategy that Peter, you we affordability our

If that now executing thing message the do of have. drive the efficacy The the patient by physician is is the and target representative really that element many prescribed universe home they total And our our of number total amplified XX% ensuring XHANCE, each affordability the we about affordability which appreciates people I videos universe, that and really program. look of is that's understands of having a the of we our think have third good at how second strategy they're it's -- program. of appreciation patient

Peter Miller

the add, with the Brandon, managers having thing And product, they talking who the the ultimately -- just experience been work just or I'll getting And territory of of want out confidence are to with builds that majority to with get what also really patients they know some $XX. hear had of we the that patient see the for product affordability their get and doctors is they efficacy -- they our frankly that like is zero experience and either program. product the

Ramy Mahmoud

into which we parts. between The some benefit look will were this are in in at Analog it following cost you And think that comparison XHANCE, we're acting and products that the the look if and likely way medical productive kind think performed to like in conversations the trials and XHANCE cost the other is see paradigms. discussions behind. XHANCE. TRICARE your related topically treatment of emerging two approval They're biologics component, interesting, that biologics that payers part a to addition relationship now. the used the in divide that second The they having payer payer have and look components. to extraordinarily question at benefits expensive I same a more from the is you suggests of are clinical said indications, if we've to these labeling the with medical biologics. for that to having with some the a in with potential the other you space already There and at of component, you And be to if asthma, that there's that and of then question Dupixent clinical steroid I'll The of sort

good products complementary. will competitive, a there's be but be think we these So that chance will not

Peter Miller

element for question Yeah. compliance, and on do as really to too said And I understand patient that refill launched a pleased we've we said compliance in with our regarding yet. is we've last people very still on affordability will September, year trends little persistency, We really have true it. key of don't before program early current this say, Brandon, data It's however, full bit we we're really refilling. of which new the and a obviously because mean refill.

Brandon Folkes

Great, for that, congratulations again. much thank you very and

Peter Miller

Brandon. Thanks

Keith Goldan

Brandon. Thanks

Tom Gibbs

Thanks Brandon.

Operator

further you. at like would turn I'm questions this remarks. not back for I showing Thank Peter any Miller now And time. closing to call the to

Peter Miller

want updates. this we thank you future Well, to and very just look to we joining us Thank much. forward you for morning

Operator

all have a wonderful Ladies and disconnect. does gentlemen, thank you may you for participating in today's conference. day. This conclude and the program Everyone

OptiNose (OPTN) 10 May 192019 Q1 Earnings call transcript