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Vivus (NASDAQ:VVUS)

Q4 2012 Results Earnings Call

February 25, 2013 4:30 p.m. ET

Executives

Timothy Morris - CFO

Leland Wilson - CEO

Michael Miller - Chief Commercial Officer and Senior Vice President

Peter Tam - President and Director

Analysts

Cory Kasimov - JP Morgan

Steve Byrne - Bank of America

Marko Kozul - Leerink Swann

Lee Kalowski - Crédit Suisse

Thomas Wei - Jefferies & Company

Alan Carr - Needham & Company

Simos Simeonidis - Cowen & Company

Jonathan Aschoff - Brean Capital

Jason Butler - JMP Securities

Operator

Good day, ladies and gentlemen, and welcome to the VIVUS fourth quarter and year end 2012 results call. [Operator Instructions] I would now like to introduce your host for today’s conference, Mr. Tim Morris. Sir, you may begin.

Timothy Morris

Thank you, operator. Before we begin, I'd like to remind you that during this conference call, VIVUS will make certain statements that are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements may be identified by the use of forward-looking words such as anticipate, believe, estimate, expect, forecast, intend, likely, may, opportunity, potential, plan, predict, and should, among others.

These forward-looking statements are based on VIVUS's current expectations, and actual results could differ materially. There are a number of factors that could cause actual events to differ materially from those indicated by such forward-looking statements, and investors should read the risk factors set forth in the VIVUS Form 10-K for the year ended December 31, 2011, and periodic reports filed with the Securities and Exchange Commission. VIVUS does not undertake an obligation to update or revise any forward-looking statements.

During the November 12 investor teleconference, and then in January 2013, during the JPMorgan healthcare conference, we provided an update on the actual number of Qsymia prescriptions dispensed for the rolling four-week period ended November 23 and December 21, 2012.

On today’s call, we will provide a similar update for the subsequent rolling four-week period ending January 18 and February 15 2013. In addition, as previously stated, we make no attempt to reconcile this information to data provided by third-party prescription reporting services.

I will now turn the call over to Mr. Leland Wilson, CEO of VIVUS.

Leland Wilson

Thank you, Tim. Hello and thank you for joining us today. With me on the call, along with Tim, are Peter Tam, our president, and Michael Miller, our chief commercial officer.

The focus of today’s call is to provide an overview of the 2012 highlights and financial results, update you regarding the launch of Qsymia, and share our vision for how Qsymia will become successful in the near future.

2012 represented a landmark year for VIVUS, during which we earned FDA approval of two products, Qsymia, our unique combination of phentermine and extended release topiramate for obesity, and STENDRA our next-generation PDE5 inhibitor for erectile dysfunction. We are proud of the entire team here at VIVUS for these tremendous accomplishments.

You may have seen a report last week in Bloomberg about a recent study published in JAMA. This study found among patients undergoing weight loss surgery, the cost of hospital stays due to complications exceeded the savings from obesity-related illnesses.

The study’s lead author was quoted as saying, “Bariatric surgery isn’t going to be the answer to healthcare costs,” while Kenneth Thorpe, chairman of health policy and management at Emory University’s Rollins School of Public Health, was quoted as saying, “We need more options to address the issues around overweight and obesity that are less interventional and save money.”

Studies with findings of this nature are among the reasons we believe that current trends strongly favor a robust, largely untreated market for oral obesity medications such as Qsymia. It has been 5 months since we launched Qsymia, the first FDA-approved once-daily oral medication that has been shown to achieve an average weight loss of 10% in obese patients.

We continue to see steady growth in Qsymia prescriptions, prescribers, and patients. As we work to build our position with thought leaders, we also continue to make progress with payers and we are working closely with the FDA to gain approval to expand our distribution outlets to include certified retail pharmacies.

Monetizing STENDRA through a regional commercialization of alliances remains high on our priority list as well, and we are pleased that several key development milestones have been reached that will help accelerate this process.

Mike will now speak to the specifics of the Qsymia launch. Peter will provide an update of our REMS modification request with the FDA and the status of the cardiovascular outcome trial study. Tim will then outline the financial results for the year end, and give an update of the STENDRA partnering efforts. Lastly, we’ll take your questions.

Now, I’ll turn the call over to Mike for some specifics on the Qsymia launch.

Michael Miller

Thank you, Leland, and good afternoon, everyone. As Leland mentioned, we continue to see positive trends in the prescription growth and gain traction with patients, providers, and payers. The launch has not been without challenges, but we are working hard to address each and every one.

The challenges include the REMS mail order only certified pharmacy network. This has been both an access and prescribing burden issue. We believe that certified retail pharmacy access will significantly help this issue, and once we attain that, providers will be able to simply send their patients to certified retail pharmacies with prescriptions - or they can call them in - in a traditional manner. Patients will be able to fill prescriptions for Qsymia consistent with the manner in which their other prescriptions are filled, without delay or lapses in treatment.

Second factor: the patient’s out of pocket costs for Qsymia due to lack of reimbursement. The situation is improving with our announced ESI agreement and progress with other payers. We have a full slate of payer and employer meetings scheduled throughout 2013 to establish our presence, build our credibility with our substantial pharmaco-economic evidence, and further our covered success. We believe that our pharmaco-economic models will help managed care embrace medical obesity treatment and Qsymia.

Further, our “Get Started” free trial program has helped mitigate the out-of-pocket burden for many patients, and has driven trial and adoption, and more programs will be announced in the future to extend this effort even further.

Lastly, medical obesity is a new and undeveloped treatment category, and there remains a hesitancy to treat among some healthcare providers because of the history of weight loss medications and the lack of understanding about medical obesity treatment. VIVUS will continue its CME, peer-to-peer, and other educational efforts that have already resulted in a growing Qsymia prescriber base.

We are committed to supporting medical education and to our ongoing presence in medical congresses and societal meetings in 2013, with a target of educating in excess of 20,000 healthcare providers.

Now for an update on Qsymia prescriptions. For the four weeks ending January 18, 2013, total Qsymia prescriptions dispensed were approximately 13,000. This four-week period included the holidays, and was understandably flat versus the previous period ending December 31, 2012.

For the four weeks ending February 15, 2013, total Qsymia dispensed prescriptions were 17,400, which represented a 34% increase versus the previous period ended January 18. Since launch, the total dispensed Qsymia prescriptions through February 15, 2013 were over 57,000.

The next launch metric is the number of prescribers. Through February 15, 2013, we have expanded the prescriber base to almost 12,000 providers, which represents a 56% growth from the four-week period ending December 21. We continue to add to this prescriber base through call activities by our sales representatives, peer-to-peer programs, and other healthcare professional targeted efforts.

The last key metric is unique Qsymia patients. Through February 15, Qsymia has been prescribed over 27,000 unique patients. We often receive questions about persistence in refill rates. One of the unique features about our REMS is the ability to collect longitudinal data on each patient, which then can actually be a better measure of persistence.

While it’s still too early to talk about persistence in a traditional sense, I can report from a snapshot of the four-week period ending February 15 that may offer some insight. Looking at Qsymia patients for the most recent four-week period ending February 15 who received a prescription, 44% of those patients had already been dispensed a Qsymia prescription in a previous time period. So these were existing patients.

We spoke earlier about the patient out-of-pocket costs and coverage as one of the challenges we experienced during the launch. In response to this, we initiated the get started free trial offer, which has been a success in driving trial with Qsymia. Since the initiation of the program in November 2012, and through February of 2013, over 17,000 patients have participated in the program.

In the most recent four-week period ending February 15, 2013, approximately one-third of all prescription activity is the get started free drug, meaning that a large majority of the prescriptions are paid for.

In summary, our commercial efforts are having an impact. Prescriptions continue to increase as prescribers see the Qsymia success with their patients. We are pleased and encouraged with the support and enthusiasm provided by numerous Qsymia prescribers to the FDA in favor of our REMS modification and expansion to retail pharmacy.

Reports from the field are very positive, and a number of patient success stories are starting to emerge as a result of emphasizing this trial. Direct to patient efforts are just now beginning to bear fruit, and we are planning for a DTC campaign subsequent to the retail pharmacy rollout.

Certified retail expansion will be a catalyst, but the results will not translate to scripts overnight. Implementation, retail pharmacy certification and channel stocking will take a couple of months. However, it will be well worth the wait.

For an update on progress on the regulatory front, I will now turn the call over to Peter.

Peter Tam

Thank you, Mike for the update on the Qsymia launch. We recently received feedback from the FDA on our proposed REMS modification to allow select certified retail pharmacies to dispense Qsymia to patients. While there are many details to work through, we believe the FDA is in agreement with the goal of broadening and expanding access to Qsymia to those certified retail pharmacies that are able to comply with the REMS requirement.

As a reminder, while the amendment is designed to broaden the point of access from certified mail order to select certified retail pharmacies, the requirements and goals of the Qsymia REMS remain the same, and all of our pharmacies will require certification.

As part of the FDA review process, we are in ongoing communication with the agency regarding the REMS modification plus. We anticipate a final decision or agreement from the FDA regarding the modification around April 2013.

The potential for broad distribution that provides greater access to Qsymia to patients presents an exciting opportunity to resolve a major challenge that has frustrated patients and providers since the launch of Qsymia. If approval for the modification is received in April, we will begin implementation with the target of the first Qsymia prescriptions being filled in retail by around mid-year this year.

We will begin building our certified retail pharmacy network by focusing on the high-volume pharmacies by zipcode, based on prescriber data that meet the immediate needs of Qsymia patients and prescribers.

The [profits] to build the Qsymia certified network will require education and acknowledgement by the pharmacies to comply with the FDA mandated REMS. Once certified, the retail pharmacy will be added to the network. Once added to the network, doctors can begin to refer their patients to the individual location and prescribe Qsymia in the customary manner.

We will also work at the corporate level with our current pharmacy partners to assist with the implementation at the local level in the first phase. Subsequent phases will include more certified retail pharmacies for the network.

If all goes as planned, we should begin to see the full benefit of the select certified retail access in the second half of 2013, and patients will be able to have their Qsymia prescription filled at their certified retail pharmacies just as they would any medication.

Changing gears a bit, I would like to provide some details on the cardiovascular outcomes trial. We are currently finalizing the protocol for the Qsymia cardiovascular outcomes study. The ACCLAIM study, as it will be known, will be a multinational trial designed to examine the cardiovascular outcomes of patients treated with Qsymia, compared to placebo.

The trial is designed as a superiority study, with a planned enrollment of approximately 16,000 patients. The primarily endpoint will be a composite of non-fatal myocardial infarction, non-fatal stroke, and cardiovascular death. There will be pre-specified interim analyses conducted, and the results will be reviewed by an independent data safety monitoring board to assess noninferiority, superiority, and futility, also known as the probability of achieving the primary efficacy endpoints.

These interim analyses may therefore inform and guide decisions on patient enrollment, thus the total cost of the study may vary. Enrollment is expected to begin in the fourth quarter of 2013. As an initial estimate, the cost of this study could range from $180 million to $250 million. The study costs through 2015 are expected to be approximately $100 million with $10-15 million in 2013.

I will now turn the call over to Tim to discuss the financial results and STENDRA partnering activities.

Timothy Morris

Thank you, Peter. in the fourth quarter of 2012, we recognized net product revenues of $2 million from the sale of Qsymia. The net loss for the period was $56.7 million, or $0.56 per share, as compared to a net loss of $11.5 million, or $0.13 per share, in the fourth quarter of 2011. The increase in net loss is attributable to increased SG&A expenses related to to commercialization activities for Qsymia.

For the entire year 2012, our net loss was $139.9 million, or $1.42 per share, as compared to a net loss last year of $46.1 million, or $0.55 per share. The increase, again, is primarily due to the same factors cited for the fourth quarter 2012. For more information on the financial results, I refer you to the press release and the 10-K filings.

On guidance, we’ve received several requests for revenue guidance. It is still early in the launch of Qsymia, and at this point it’s difficult to accurately predict future revenues. As such, we expect the future revenues to fluctuate period to period. We also believe that the REMS modification request, if granted, will have a significant impact on revenues, but only after implementation.

For STENDRA, on February 21, 2012, the company entered into an amendment with Mitsubishi Tanabe Pharmaceutical Corporation. The amendment included, among other things, an extension of the launch date to December 31, 2013. We have made significant progress in our partnering discussions, and this amendment should facilitate the partnering process in the United States and in the remainder of our territories.

We have also made excellent progress on the transfer of the supply chain. We have identified the API division of a global pharmaceutical company that can become the contract manufacturer, or CMO, for avanafil. We are currently negotiating a technology transfer agreement, which will serve as the basis for a commercial supply agreement. The identification of this CMO is a critical step in establishing a high-quality, reliable supply chain.

With the amendment from [MPPC], and the identification of the CMO, we can now accelerate our licensing negotiations with potential partners. Outside the U.S., [Svedra], as it is known, we have requested and have been granted a 30-day extension to respond to the CHMP’s 18-day list of outstanding issues. We anticipate a decision from the EMA on the [Svedra] application in the second quarter of 2013.

I’ll now turn the call back to Leland for some closing remarks.

Leland Wilson

Thank you, Tim. In summary, we are continuing our efforts to expand our thought leader prescriber base. Now, with almost 12,000 physicians prescribing, and more than 57,000 prescriptions having been written since the start of the launch, we are working closely with the FDA, and continue to believe that we will gain approval to expand to retail by the middle of April.

Although the launch has not been without its challenges, we are making excellent progress at overcoming these challenges. In the end, we know we have a well-tolerated, highly effective product, and because of that, we are confident that a large and successful market will develop.

With that, I’ll now open the call up for questions.

Question-and-Answer Session

Operator

[Operator instructions.] Our first question comes from the line of Cory Kasimov with JPMorgan. Your line is open.

Cory Kasimov - JPMorgan

First, I want to ask about the REMS modification. I appreciate the feedback that you gave us, but I’m just wondering if there’s anything else, anything more granular you can say about the FDA feedback so that investors can understand your confidence in the ongoing review process. Is there any issue that the FDA is harping on that makes this a risk? Is there anything else you can tell us?

Peter Tam

Yes, we remain very confident that we’ll be able to get this REMS modification across the goal line. A lot of details will need to be implemented, and we’re working through those details with FDA. Certainly we believe that they are doable, but again, we’re still in the process of working out those details with FDA. But as we’ve articulated previously, we are confident and our goals with FDA are aligned.

Cory Kasimov - JPMorgan

And then my follow up question, just trying to get a better understanding of the dynamics of the Qsymia get started program. When you have 17,000 patients, I believe you said, that go on the program, get the low dose for free, when they get that, they are at the same time paying for the four-week mid-dose script too? Is that accurate?

Michael Miller

That is not the case every time. What I would say is that about 70% of those free trial offers result in a paid-for script for the recommended dose.

Cory Kasimov - JPMorgan

So they go on there. It’s basically just a trial for two weeks, and if they like it, then they go on, and you’re seeing a 70% retention rate? That’s a fair way to look at it?

Michael Miller

Correct.

Operator

Our next question comes from the line of Steve Byrne with Bank of America. Your line is open.

Steve Byrne - Bank of America

Tim, I was hoping you could give a little outlook on SG&A spending. Was the $50 million in the quarter a reasonable run rate? And would you expect that to accelerate in the second half if you move into a DTC campaign?

Timothy Morris

Again, we haven’t given any guidance on expenses, but I would remind you that we’re in the launch mode here. So we would expect the spending to be fairly heavy in the fourth quarter.

Steve Byrne - Bank of America

And can you comment on the abandonment rate post the implementation of get started?

Michael Miller

The most recent abandonment rate that we have based on our tools in the pharmacy was 22% post the free trial offer program implementation.

Steve Byrne - Bank of America

And just one last one for you, Mike. Can you provide any comments on any other PBMs that you are engaged in active negotiations with with respect to formulary access?

Michael Miller

We are engaged with a number of them. I can’t say until it’s contracted, unfortunately.

Operator

Our next question comes from the line of Marko Kozul with Leerink Swann. Your line is open.

Marko Kozul - Leerink Swann

I wanted to ask if you could maybe explain to us the process of negotiating reimbursements, starting with the [unintelligible] WAC pricing, and ending with the Express Scripts, tier 3, $50-60 per month out of pocket copay.

Michael Miller

I’m just trying to understand. How the negotiation goes on?

Marko Kozul - Leerink Swann

Essentially the negotiation and the process. How do you go from a WAC pricing to the final deal terms, and should we expect additional PBMs possibly [unintelligible] sweet spot?

Michael Miller

We actually engage the PBM very much on a clinical level by going through what we call the P&T Committee. And it’s a pretty extensive clinical review. Once we get the medical and clinical support for the plan, we then engage on the business side. With a tier 3 placement, and the kind of copays that we have been seeing, it’s not a long, exhaustive process to come to terms by any means. So we are very pleased with the way the negotiations have gone.

Marko Kozul - Leerink Swann

And maybe a quick follow up. How do you think about the future [unintelligible] or couponing in terms of drawing in more patients to Qsymia therapy? In other words, what are some of the key factors or drivers that you might think about in this decision?

Michael Miller

As I said, the out-of-pocket costs are always going to be an issue for this market. And we believe that driving trial is absolutely paramount to our success, because the drug works so well in patients. So we will continue the type of offer that we already have in place, and we will certainly explore other types of offers that we think will motivate patients to try Qsymia. And these programs appeal to both patients and providers.

Operator

Our next question comes from the line of Lee Kalowski with Credit Suisse. Your line is open.

Lee Kalowski - Crédit Suisse

I was hoping to ask one commercial and one financial. On the commercial side, can you give us a little bit of clarity on what the average selling price is of a Qsymia prescription that is paid for by a third party?

Michael Miller

You’re asking what the patient would pay for a covered script?

Lee Kalowski - Crédit Suisse

Well, the average selling price.

Michael Miller

Right. So that’s what a patient would pay, so that would be a copay, and that’s about $60.

Lee Kalowski - Crédit Suisse

And then is there anything additional from the third party? Or is the $60 it?

Michael Miller

$60 is what the patient pays.

Lee Kalowski - Crédit Suisse

Okay. On the financial side, Tim, I was hoping you could give us a little bit of clarity. I know you’re not giving guidance, but just following up on a previous question, it sounded like you said there might have been some launch expenses in Q4 in SG&A. Again, just to follow up, do you expect some of that to continue through ’13? Or is some of that to come out? And then is $50 million a good baseline run rate as we think about 2013? And similarly, for R&D, do we think about the [7750], give or take, plus, layering on top of that the $10-15 million that you talked about?

Timothy Morris

A couple of things. We are still in launch mode. But again, we haven’t given any specific guidance for all those details for 2013. I think the other thing that we did say, just to try to put in perspective the potential spending for the [CVOT], so we did talk about $10-15 million, particularly once we start enrollment. So that would be most likely in the fourth quarter of 2013.

Operator

Our next question comes from the line of Thomas Wei with Jefferies. Your line is open.

Thomas Wei - Jefferies

I just wanted to get a little bit better of an understanding of how to interpret all of these script numbers. The 70% thing that you actually mentioned, about the conversion from the free prescriptions to the paid prescriptions, was very helpful. But could you give us a sense of what your estimate is right now of the overall discontinuation rate? How many patients who have initiated therapy that you have enough longitudinal data on have ended up dropping off?

Michael Miller

To be honest with you, we really don’t have enough of that data yet for persistence. It takes a couple of months to get that data. That said, I’m pleased, as I said, the number of patients for the most recent four-week period that are existing, meaning patients who have filled a script in a previous time period, is a significant amount. So we are pleased with the return business that we’re seeing.

Thomas Wei - Jefferies

And you had mentioned that 44% were patients who were returning from a prior time point. Was that correct?

Michael Miller

That is correct. That had filled the script in a prior time period.

Thomas Wei - Jefferies

And then you had also mentioned that a third were getting their first prescription during that same time period? I guess I just wanted to understand where the rest of the prescriptions are.

Michael Miller

Sure. So for the four-week period ending 2/15, 44% of the patients during that time were existing, and 56% of the patients were new.

Thomas Wei - Jefferies

Oh, I see. And then a third actually got a sample. So it’s about 33% got a sample and 20-some percent actually paid for their first prescription. That’s the reconciliation?

Michael Miller

70% paid for the recommended dose. Does that make sense?

Thomas Wei - Jefferies

I think I’m confused. But I can take it offline. I don’t want to let my confusion hold up the call here. And then maybe one other thing that I’m getting confused about. Do you have how many patients actually do get both of the first and the second prescription at once versus just the solo first prescription?

Michael Miller

I don’t have that in front of me. I would say that the majority of patients fill their scripts at the same time. So I would say that more than half fill at the same time. Just to be clear, again, on the FTOs, just to make sure that we’re really clear on that, of the prescriptions in the period ending 2/15, one-third of those prescriptions were FTO prescriptions. Okay? And in our analysis, about 7% of all FTO prescriptions, meaning free goods, result in a recommended dose paid for prescription in the following time period.

Thomas Wei - Jefferies

Okay, that’s very helpful. Thanks very much.

Operator

Our next question comes from the line of Alan Carr with Needham & Company. Your line is open.

Alan Carr - Needham & Company

Can you give us an update on the size of the sales force now and where you expect to go with that later this year? How much scale up in terms of commercial infrastructure, I guess in conjunction with this DTC campaign that you’re planning later this year? And then another one is can you give us an update on your estimated number of lives covered, both with Express Scripts and beyond that?

Michael Miller

I’ll take the second question first. On ESI, according to ESI, about two-thirds of all ESI members have access to Qsymia on the national formulary tier three, at $50-60 copay. So we’re pleased with it. So, of the 26 million. In addition to ESI, we have had other coverage wins that we’re pleased with, and on the representatives, we have 150 representatives in the field at present. And I think that was all the questions you had.

Alan Carr - Needham & Company

The growth in the sales force this year?

Michael Miller

Yeah, we have not given any guidance on that. Again, we’re looking at the retail expansion. We’re looking at DTC later on this year, and at some point we would reach further into primary care. But at this time we’re not commenting on how we would do that.

Alan Carr - Needham & Company

I guess one last one then. Can you give us a sense of percent of the prescriber base that’s primarily care now? Has that continued to grow?

Michael Miller

Sure, it’s about 61% of all the scripts are written by primary care.

Operator

Our next question comes from the line of of [Yasmin Sunja] with Cowen & Company. Your line is open.

Simos Simeonidis - Cowen & Company

It’s Simos, actually, from Cowen. In terms of the ramps program, change that might happen in April, can you walk us through what a pharmacy has to do in order to become a certified retail pharmacy? And also, can you give us a rough estimate what percentage of retail pharmacies are certified in a metropolitan area? Is it, for example, 10%? 50%? 80%?

Michael Miller

Sure. On the retail certification, we’re looking at this in a phased approach. We would initially go with the retail locations of our current partners. And I think you’re familiar with who they are: CVS, Walgreens, and Walmart. We would begin initially with those, and then in subsequent waves go further and further out to more and more retail.

The retail certification process is really a pretty simple one. It’s one that the pharmacy understands the REMS, and agrees to distribute the product along with the proper materials to the patient, that they agree not to sell it or resell the drug, and attest to that. And that’s really it. So we have kept that fairly straightforward.

Simos Simeonidis - Cowen & Company

It’s hard to predict, but this is doesn’t seem to be a very cumbersome process, so you could envision a situation where a majority of retail pharmacies, CVS, Walgreens, or any chain that’s participating, is able to carry Qsymia. Is that a fair assumption?

Michael Miller

Yeah, I mean, anyone that complies with the REMS would be able to be certified, and we would work with, as I said, those partners that we’re already in place with initially, and we could look at ways of certifying numbers of those in one fashion rather than do these individually. So we look forward to rolling this out.

Simos Simeonidis - Cowen & Company

A question for Tim. From the $2 million in net product revenue reported this quarter, is there a way to help us get to a gross number somehow? Last quarter you had talked about a roughly 22% discount you were offering. Is there a way to help us understand the type of discounts you’re offering? I know it gets grouped together with get started, but what would be a good way to think about a gross revenue number for these scripts in Q4?

Michael Miller

I wouldn’t change what I had previously said, although I would remind you that there probably are some startup costs that were in the 2012 results, that would be considered some one-time costs that we’re amortizing. So they wouldn’t be a function necessarily of volume in the scripts.

Simos Simeonidis - Cowen & Company

And final question for Lee. There’s been, in the third quarter, and now in the fourth quarter actually, some of your larger shareholders have voiced their dissent with the marketing strategy. Any plans to change and go with a large pharma partnership, or are you still planning to continue with the current sales force?

Leland Wilson

First thing I’d say is that we listen very closely to all of our shareholders, and respect their opinions and are trying to drive the best decision that we possibly can for all of our shareholders. The second one is that the work at hand right now is the expansion of the REMS. Once the REMS is expanded, that opens up the opportunities for us to a number of options to expand our footprint with primary care physicians.

And so we are going to be discussing ways to expand our footprint when we have the REMS expansion in hand with various companies. And I would prefer just to wait to see how those discussions go in order to define exactly what the deal structure will be like at that time. But clearly I think you understand that there’s a number of options there.

Operator

Our next question comes from the line of Jonathan Aschoff with Brean Capital. Your line is open.

Jonathan Aschoff - Brean Capital

Regarding the terms with Express Scripts, how does it work to prove post phentramine? Can you take just one phentermine? Or must you prove you’ve taken more to get the discount on Qsymia?

Leland Wilson

On a prior approval, it’s the acknowledgement by the physician that the patient has tried phentramine at some point in the past. Also tried diet or exercise. And once the provider checks that, the prior authorization is complete, and the drug is reimbursed.

Jonathan Aschoff - Brean Capital

What’s with the absence of Qsymia on [January] and February 7 for the ESI Rx formulary? If you go look it up, it says it’s not there.

Leland Wilson

On the national formulary, Qsymia should be on there. It’s definitely on national formulary.

Jonathan Aschoff - Brean Capital

Yeah, it’s funny. It hasn’t been for those two dates of it being updated.

Leland Wilson

Okay, we can check this. We have a signed agreement in place. But I can verify that. But I can tell you we are seeing reimbursement by ESI at the levels I’ve told you. In fact, through the ESI pharmacy, we’ve seen very, very high levels of reimbursement.

Jonathan Aschoff - Brean Capital

And would the average reimbursement be in that $50-60 range that Express Scripts provides? Because the overwhelming majority of people who actually pay for a script have that benefit.

Leland Wilson

The average copay is $50-60.

Jonathan Aschoff - Brean Capital

Right. And that could be driven by the only people who pay for prescription are those people who have that benefit. So it’s limited to wherever Express Scripts has a reach.

Leland Wilson

That is correct. That is the average copay for a prescription that is covered by any payer. The average is $50-60.

Jonathan Aschoff - Brean Capital

Okay. Earlier this year, I remember hearing that you… What to do with get started? Are you going to continue get started, do you think? Have you given much thought to keeping it? Abolishing it? Expanding it?

Leland Wilson

We have it in place right now, and as I said, we would consider other programs, or other enhancements, as we go forward.

Operator

Our final question comes from the line of Jason Butler with JMP Securities. Your line is open.

Jason Butler - JMP Securities

Just a quick one on the existing patients and the weeks ending February 15. Of the 44%, can you give us a sense of what proportion were doses that were higher than the recommended dose?

Leland Wilson

Patients on higher than recommended, I would say that based on the makeup of the two, the existing patients, almost 100% of them, are on the recommended dose or higher. Very few go to higher. So I would say that the overwhelming 44% during that time period is the recommended dose. The 56% of new patients are almost always [unintelligible].

Jason Butler - JMP Securities

And then just a couple quick questions for Peter on the outcomes study. First of all, have you spoken to European regulators about the design of the trial yet?

Peter Tam

We’re obviously looking at various options, but we haven’t commented on the next steps with regard to European regulators. We will provide that as we move forward. But right now, no decision has been made in terms of next steps.

Jason Butler - JMP Securities

And then just in terms of the endpoints and the interims, are you going to still include a secondary endpoint of progression to type 2 diabetes? And will any of the interim analyses include a noninferiority assessment?

Peter Tam

Yeah, the plan is that we would always look at noninferiority first, and then look at superiority. There are several secondary endpoints, as you would imagine. It’s not just about the composite endpoint of non-fatal MI, non-fatal stroke and cardiovascular death. There are numerous benefits associated with this degree of weight loss that we can capture with Qsymia. So you can imagine all the secondary endpoints that would allow us to provide publications going forward. So it’s going to be a fun study.

Operator

This concludes today’s question and answer session. I would like to turn the call back over to Leland Wilson for closing remarks.

Leland Wilson

Thanks everybody. I just want to remind everybody, it’s not something that I don’t think you understand, but I just want to reinforce that there are two real key keys to this market. One is reimbursement, and we’re working diligently to achieve that. And you can look forward to some significant progress, hopefully in the not too distant future, in addition to what we’ve announced with ESI. And so we’re making progress there. Actually, I think we’re ahead of where a lot of people predicted we would be with reimbursement at this point.

The second one is I think you all understand how critical the REMS expansion is to us. The challenge with doctors and with patients being able to fill prescriptions today has been considerable, to say the least. And so we believe that once we get the REMS expansion, that will allow physicians to write a prescription with less burden on them, and less burden on the patient. So I think it will have an impact on prescribing.

The second point is it also is enabling to allow us to go out to activate the consumer. And I think all of you know that have heard me that I believe strongly that the consumer is a key part of the promotional mix in this marketplace. Activating the consumer to ask for this product I think will ultimately be a very powerful tool. And so we’re very anxious to get to that part.

So we have a number of things here, just in the next couple of months, that are going to be huge in our business model. Clearly the REMS expansion and reimbursement. And so we’re very favorably disposed at this point to achieving both of those goals, having excellent results for both of those goals. So we’ll see that in the very near future.

With that, I want to say thanks to everybody for the support, and if anybody has any additional questions, please give us a call. Thanks a lot.

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