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Aegerion Pharmaceuticals (NASDAQ:AEGR)

Q4 2012 Earnings Call

March 06, 2013 8:30 am ET

Executives

Mark J. Fitzpatrick - Chief Financial Officer and Principal Accounting Officer

Marc D. Beer - Chief Executive Officer and Director

Analysts

Nicholas Bishop - Cowen and Company, LLC, Research Division

Steve Byrne - BofA Merrill Lynch, Research Division

Salveen J. Richter - Canaccord Genuity, Research Division

Robyn Karnauskas - Deutsche Bank AG, Research Division

William Tanner - Lazard Capital Markets LLC, Research Division

Cory William Kasimov - JP Morgan Chase & Co, Research Division

Eun K. Yang - Jefferies & Company, Inc., Research Division

Kimberly Lee - Janney Montgomery Scott LLC, Research Division

Chad J. Messer - Needham & Company, LLC, Research Division

Operator

Good day, ladies and gentlemen, and welcome to the Aegerion Pharmaceuticals Q4 2012 Earnings Conference Call. [Operator Instructions] And as a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mark Fitzpatrick, Chief Financial Officer.

Mark J. Fitzpatrick

Good morning, everyone. Thank you for joining us today on our call to review Aegerion's financial results for the fourth quarter and full year 2012 and to provide a business update on our progress during the quarter. I would like to introduce the members of Aegerion's management team with me today on the call, Marc Beer, Chief Executive Officer; Anne Marie Cook, Senior Vice President and General Counsel; Martha Carter, Chief Regulatory Officer; and Craig Fraser, President, U.S. Commercial and Global Manufacturing and Supply Chain.

At the conclusion of the prepared remarks, we will open up the call for questions.

Please note that we have slides posted in conjunction with the webcast and supplement some of the information we will be discussing during today's call. These slides can be found on the Investor Relations section of our website under the Events & Presentations tab.

If you're following along, please turn to Slide 2.

Before we begin, please remember, we will be making certain forward-looking statements on today's call, including statements and forecasts regarding the commercial potential, estimated market size, reimbursement and IP coverage for JUXTAPID; our forecasted future financial and operating performance and results; anticipated timelines for the potential approval and launch of lomitapide in the EU and other international markets; and our regulatory clinical supply chain and commercial plans, goals and estimates; as well as other statements which relate to future events.

These statements are based on the beliefs and expectations of management as of today. Our actual results may differ materially from our expectations.

Investors should read carefully the risks and uncertainties described in our earnings release and in our reports filed with the SEC, including the risk factors section of our Form 8-K filed on January 10, 2013 available on the SEC's website at www.sec.gov.

We assume no obligation to revise or update forward-looking statements, whether as a result of new information, future events or otherwise.

At this time, it is my pleasure to turn the call over to Aegerion's Chief Executive Officer, Marc Beer.

Marc D. Beer

Thank you, Mark. And thanks, everybody, for joining us at Aegerion's fourth quarter 2012 conference call. We're pleased to update you on the progress since last investor call following FDA approval.

I'm going to provide you with an update of our business activities, including commercial launch, and then Mark Fitzpatrick will provide analysis and insight into our fourth quarter and year-end financial results and our 2013 guidance.

Martha Carter and Craig Fraser are also here for the Q&A portion of our call.

Please turn to Slide 3. You're probably aware, in December 2012, Aegerion marked an important milestone when the FDA approved JUXTAPID for the treatment of HoFH. More importantly, the approval represented a significant medical milestone for patients with this terrible disease. With the FDA's approval of JUXTAPID, HoFH patients and the physicians now have a treatment option that may help them significantly reduce LDL cholesterol levels or bad cholesterol.

In our Phase III study, JUXTAPID treatment led to a meaningful reduction in LDL-C levels in patients with HoFH with a safety profile that we expect will be manageable in most patients with proper monitoring as required in the risk evaluation and mitigation strategy, or REMS program.

As demonstrated in the Phase III clinical study, among the completers, we saw a 50% reduction in average LDL cholesterol levels through the 26-week efficacy stage. Importantly, 65% of the patients who completed the trial ended the efficacy phase with between 50% and 93% drop in LDL-C.

In addition, a majority of the completer patients had an LDL-C below 100 milligrams per deciliter at one or more points during the trial.

On the safety side, the most common side effects in the trial were GI-related. We had -- we also had 4 patients that had an LDL elevation north of 5x the upper limit of normal, but we had no discontinuations due to LLTs [ph] during this trial.

Armed now with the approval, in the U.S. we have begun our efforts to reach HoFH patients and make a meaningful impact for them, and we're working swiftly on this progress.

Turning to Slide 4. Not unexpectedly, the JUXTAPID label includes a boxed warning citing the risks and hepatotoxicity, or liver toxicity. This reflects the fact that JUXTAPID is active in the liver and can cause elevations in liver enzymes and hepatic fat. A risk evaluation and mitigation strategy, or REMS, is in place to ensure the safe and appropriate use of JUXTAPID.

The goal of the REMS is to educate prescribers about the potential risk of liver toxicity associated with JUXTAPID use, the need to monitor patients during treatment as per the product labeling and to restrict access to patients with a clinical or laboratory diagnosis consistent with HoFH. As part of the REMS, Aegerion is certifying all health care providers who prescribe JUXTAPID, as well as any specialty pharmacy that dispense the medicine.

Now let me turn to a review of the commercialization progress since the approval. Turning to Slide 5, please. Before we discuss the successful activity that has led to great progress in our launch, I want to share some terrific news about a patient many of you heard me speak about or may have met at our advisory committee meeting with our physician panel.

Christian, who went on JUXTAPID therapy over a month ago, has given us the approval to talk about the impact JUXTAPID has had on his disease, which is remarkable. This young 21-year old had a clinical profile that included uncontrolled and extremely high LDL-C levels, even while on apheresis and up to 5 different medications, including statins. For the first time in his life, immediately following a recent apheresis treatment, he achieved an LDL-C level of 70 milligrams per deciliter, which I'll remind you is goal for HoFH patients at high risk.

Importantly, in addition to the promising efficacy thus far, he tolerated the drug well and having no side effects.

We are overjoyed by the prospect of giving hope for the future, not only to Christian, but other patients with LDL-C levels that may -- that we may bring to goal.

We were well-prepared for the U.S. launch of JUXTAPID in January, and it is evidenced by our early success. First, let me provide you with an overview of the status of the launch, and then, I will give you an outline of the factors driving to this success.

We're off to a strong start. I am extremely proud of how well the Aegerion team has executed during the first weeks of the launch. We do not intend to provide the patient numbers every quarter, however, because we think it's helpful for you to understand the traction of our launch in its early stages, I will provide you with some metrics, which will give you a snapshot of our progress.

To date, we have had over 400 REMS trained physicians and 85 prescriptions globally. Our early results also provide confidence in our estimates of the total addressable market of 3,000 patients, with a clinical and laboratory diagnosis consistent with HoFH in the U.S. Each day following launch, we had greater clarity on the significant unmet medical need of the HoFH market.

The early success of our launch is a direct result of the commercial team that we have built, with an emphasis on successful rare disease launch experience. You probably heard me say that our focus is to be a world-class customer facing organization made up of a team of experts who will be representing Aegerion's physicians, patients and insurance carriers.

It is a fully integrated team, currently incorporating 25 sales representatives called specialty managers and case managers, as well as national account directors calling on payors. They are supported by our sales directors in our customer care organization. We also have a very experienced group of medical science liaisons, who serve as a medical and scientific resource for physicians and payors.

We work hard to educate and support our patients, their physicians and their physician staff. Our experience in the rare diseases tells us this is the way to accelerate appropriate patients on therapy and to keep them on drug.

We're very proud of our sales team, which is the center of this effort. They average 16 years of experience, and all have orphan disease backgrounds, and many have experience calling on cardiologists. They're among the best performers in prior orphan companies, and many have multiple successful product launches under their belt. We're extremely confident in the ability of this group to successfully deliver JUXTAPID to patients in need of this important therapy.

We have worked very hard in the last year to understand where the projected 3,000 patients are. We estimate that there are approximately 100 academic lipid specialists, about 400 speciality lipidologists who are in community-based setting and about 1,300 cardiologists who, together, specialize in treating about 70% to 80% of the HoFH patients. Our LSMs, or Lipid Specialty Managers, are currently focused on targeting about 1,800 physicians.

And through our initial outreach efforts, we entered 2013 with approximately 1,500 potential patients in our global patient tracker. There has been a high level of interest from physicians to be REMS-trained right out of the gate. As I previously stated, we now have over 400 physicians who are REMS-trained.

The progress we have made working to educate payors about HoFH about the unmet medical need in this patient population where existing drug therapies are inadequate, is evident. Through our previous efforts, including payor research, a payor advisory board and calls upon plans representing approximately over 80% of the covered lives in the U.S., we feel confident that the payors will support reimbursement of JUXTAPID.

And though we're still in the early days of launch, the approval process has been going according to plan. At this point, the vast majority of payors are supporting a physician that does not require genotyping in order to approve reimbursement. The payors understand the patients' need and it's a true need for immediate treatment and also appreciate that HoFH is typically diagnosed clinically and genetic testing cannot always accurately diagnose the disease. Anecdotally, at this time, none of the payors that our medical team has actually met with face-to-face are requiring a policy that includes genotyping.

From a manufacturing and supply chain perspective, we're prepared for launch, which was critically important to assure our ability to ship product as soon as the prior authorization approval started coming in. We are also actively engaged in the process of establishing our global supply chain infrastructure to enable sufficient and consistent supply worldwide, should lomitapide gain approval in new markets.

Based on our current progress, as measured by both active patients, whose initial prescriptions have been filled and those patients whom prescriptions have been written and are pending initial shipments, we believe we're on track with our previous guidance that we expected to have 250 to 300 patients on JUXTAPID globally by the end of year 2013, which will set us up for a very successful 2014.

To review our patent protection for JUXTAPID, turning to Slide 6, you'll see that in the U.S., the composition of matter patent provides protections through February 2015. We have applied for an extension under Hatch Waxman for time lost during drug development and FDA review, which would provide an additional 5 years. Additionally, in the U.S., if we expand the label to include pediatric HoFH, we will be potentially eligible for an additional 6 months of pediatric exclusivity. In total, we have the potential to extend the composition of matter protection through mid-2020.

In the U.S., we also hold the method of use patent, covering dose escalation in the administration of JUXTAPID that expires in 2027.

In the EU, as a new chemical entity, we qualify for 8 years of data exclusivity and an additional 2 years of market exclusivity. This exclusivity is granted from the time of approval, which assuming JUXTAPID is approved in 2013 translates to protection into 2023.

Also in November, we announced that the EU, or European Patent Office, issued a method of use patent for the treatment of hyperlipidemia or hypercholesterolemia with JUXTAPID using dose escalation, which expires in 2025. We feel we're well covered in the U.S. and EU from an IP and exclusivity standpoint.

Now turning to Slide 7. In an update on the development program, we are actively investing in JUXTAPID in order to potentially expand HoFH opportunities on a global basis.

We continue in the review process of our marketing authorization application in EU and are in receipt of the Day 180 List of Outstanding Issues. Our interactions with the EMA continue to be productive, and we believe our filing remains on track for a midyear decision in the EU.

Based upon our assessment of the Day 180 List of Outstanding Issues, we believe the EMA is focused on similar issues to those of the FDA. And so, we are well-prepared to address those questions. And we feel confident that the EMA understands the disease and the effect of our product in the severe patient population.

If approved, we will pursue reimbursement on a country-by-country basis. The timetable for this process varies greatly country by country and can range from 3 months to 12 months or longer depending on the country.

We have begun the same commercial preparatory work in Europe as we did in the U.S. prior to launch, and have country managers in place in key markets, building relationships with KOLs, who are helping us to understand the HoFH market in Europe and to identify patients for the patient tracker.

While we expect a launch in the EU in late 2013 Q3, we expect minimal revenue contribution from this market in 2013 due to reimbursement approval timelines.

In addition, we have plans to study lomitapide in Japanese HoFH patients. We initiated an enrollment of Japanese and Caucasian subjects into a PK/PD study late last year. To file for market authorization in Japan, we will also need to conduct a small bridging study of lomitapide in Japanese HoFH patients, which we expect to be less than 10 patients in size.

As we have said in the past, Japan is an important market for lomitapide, and we have potential to help meaningful number of HoFH patients there. We will do further research to help us better understand the potential market size in Japan in the near future.

We're also very focused on studying JUXTAPID in pediatric HoFH patients who are in need of this treatment. As a part of these efforts, we are assessing an alternative presentation of JUXTAPID that would allow administration to children who are -- who may have difficulty swallowing capsules. We are now positioned to evaluate the bioequivalence on this sprinkle presentation to the approved capsule presentation.

Additionally, the FDA has required that we conduct a juvenile tox study in rodents to look at the impact, if any, of JUXTAPID on growth development prior to initiating the clinical study of JUXTAPID in pediatric patients. We're prepared to initiate this study imminently. If this study is successful, we expect to start our clinical study in pediatric patients to begin in 2014.

In January, after meeting with many of you at the JPMorgan conference, we raised approximately $83 million in a follow-on offering of our common stock. We felt it was prudent to raise capital to maximize our ability to execute this commercial launch on a global basis. We believe we're now in a sound financial position to execute on these plans in the most effective and reasonable way possible.

This concludes my prepared remarks. I'd like to turn the call now over to Mark Fitzpatrick for a review of financials, cash position and cash guidance. Mark?

Mark J. Fitzpatrick

Thank you, Marc. Turning to a review of our financials on Slide 8. Total operating expenses were $21.6 million for the fourth quarter ended December 31, 2012, including $8.6 million for research and development and $13.1 million for SG&A. This compares with operating expenses of $13.6 million, including $8.4 million for research and development, $4.3 million in SG&A and $0.9 million of restructuring costs in the fourth quarter of 2011.

We have a net loss of $21.8 million or $0.86 per share for the fourth quarter of 2012 compared with a net loss of $13.9 million or $0.66 per share for the fourth quarter of 2011.

Total operating expenses were $60.6 million for the year ended December 31, 2012, including $25.2 million for research and development, $34.1 million for SG&A and $1.4 million for restructuring costs. This compares with operating expenses of $39.3 million, including $24.4 million for research and development, $14 million for SG&A and $0.9 million for restructuring costs for the year ended December 31, 2011.

We had a net loss for the year ended December 31, 2012 of $62.3 million or $2.64 per share versus a net loss of $39.5 million or $2.03 per share for the year ended December 31, 2011.

The fourth quarter and year ended December 31, 2012 operating expenses contained $3.8 million and $11.7 million of stock compensation expense, respectively.

The minimal increase in research and development expenses in the fourth quarter and full year of 2012 over the comparable periods in 2011 was primarily related to cost of increased headcount required to support the company's regulatory and medical affairs activities, as well as costs for our production validation runs, partially offset by decreases in clinical trial expenses related to trials which had been substantially completed in 2011.

The increases in selling, general and administrative expenses in the fourth quarter and full year of 2012 over the comparable periods in 2011 were primarily related to costs of increased headcounts to support the planned commercial launch of JUXTAPID and in administrative functions.

Turning to the balance sheet. We ended the year with $82.2 million in cash, cash equivalents and marketable securities, as compared to $73.2 million as of December 31, 2011.

Our cash use from operating activities was $12.7 million for the fourth quarter and $42.6 million for the full year of 2012.

In 2013, we expect total operating expenses, excluding stock-based compensation expense, to be between $75 million and $85 million.

As we previously stated, we continue to expect net revenue between of $15 million and $25 million in 2013.

We also expect to exceed a $100 million annualized revenue run rate and to achieve cash flow breakeven operations in the second half of 2014.

Consistent with best practices, on a going forward basis, we are going to give linear guidance only.

Now I'd like to turn the call back over to Marc Beer. Marc?

Marc D. Beer

Thanks, Mark. Operator, can we open up the call to questions, please?

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Nicholas Bishop with Cowan and Company.

Nicholas Bishop - Cowen and Company, LLC, Research Division

It's helpful that you provided a snapshot in time for us, but I'm hoping to get a little more detail in terms of the rate of change over time. So I wonder if you could tell us at all what rates the physicians are getting trained under the REMS, and what rate over time the prescriptions are coming in. And for example, I know you have 50 REMS physicians at the -- within the first few days of launch. Is that kind of continuing at about 50 on a weekly basis, or just how should we think about that?

Marc D. Beer

So Nick, excellent question. I mean, it's the natural question when we give you a static number what the trend has been. The first thing I'll comment on is that we gained approval on the 21st of December, we announced it on the 24th, and our sales force, believe it or not, was finding physicians on Christmas eve to train, which were early physicians that were excited about being effectively trained on JUXTAPID. And then we had our training the week of January 15. So if you go out to January 15, you get everybody back in the field on the 18th or 19th. We've got about 6 weeks of data, where our sales force has been effectively trained with the right tools. So if you look at the last 6 weeks, the best way I can describe it is that we're trending nicely, without giving a weekly scripts. We've seen nice trend up of performance week in, week out. I caveat this with we're only 6 weeks into a launch. It's early, but the 2 things that I shared with everybody at the JPMorgan conference was that the unknown in this launch is how the clinical utility of the product looks versus our tracker and the progress we've make on pre-auth. And I can report to you that we're looking at appropriate patients going on this products, that the clinically utility, how the physicians are using it, we're happy with. The excitement about getting the patients on therapy is high, and the trend of scripts coming in-house has trended up from the first couple of weeks to the last 2 weeks. So there's a nice trend. Again, I wish I had 12 weeks or 24 weeks to share that with you, but in the first 6 weeks, we've been trending up nicely from a scripts standpoint. From a REMS-trained physician standpoint, as you know, we're targeting 1,800, and we already have 400 trained. That's really good progress. Our sales force is very focused on transitioning patients out of the tracker and identify the patients in the office onto therapy. And that takes an effort to make sure that the pre-auth is done effectively and filed effectively. And so the focus isn't how many REMS-trained physicians can we get. It's how many appropriately REMS-trained physicians can we get who have patients. So that's where their focus is, and we're really trying to get them to focus on that because those are the patients that need this therapy the quickest. The last thing I'll share with you with a caveat that it's early, but really good progress is the pre-auth. The pre-auth, obviously, Christian is on therapy. Not only do we have patients on therapy, we have patients that have reordered. That's all good signs. That's good sign that the pre-auths are going through. That's also a good sign that our nutritional counseling is working with this patient -- these patients early on. When you see a reorder, that's a good sign. So it's all good progress. Again, I wish I had 12 weeks or 24 weeks to report to you, but in the first 6 weeks, it's all good progress. We're on track, and we just keep saying that right now, it looks like we're on track in '13.

Nicholas Bishop - Cowen and Company, LLC, Research Division

Okay, that's great. Just one follow-up, and I'll get back in the queue. Are you willing to share either the number of physicians that underlie those 85 prescriptions or the number of patients that are currently on commercial therapy?

Marc D. Beer

No, we're not going to talk about breaking them out, although you can imagine that those prescriptions stand across a bunch of different physicians. You don't walk -- it takes time to actually get the patient in and have the rep there to answer any questions and then help the practice with the right documentation for the pre-auths. So there's only so many patients each rep can process in 6 weeks. So you would expect those scripts to span out over a lot of different physicians. And your second question, Nick, was what?

Nicholas Bishop - Cowen and Company, LLC, Research Division

The number of patients on commercial therapy.

Marc D. Beer

Yes, we'll chat about that next quarter, I'm sure, but we're not talking about number of patients that we've actually shipped at this time. I can just tell you that the pre-auth process is going well. Everybody in our reimbursements center came to Aegerion with multiple years of experience. The woman who heads that area up has been in this field for over 15 years, and they're doing a spectacular job. So the pre-auths are going through, on track, and we're not dealing with resistance right now from new carriers. I think there's tremendous buy-in from new carriers. Our NAMs have done a spectacular job of doing the preparatory work for our in-house reimbursement team to succeed with pre-auths, but we'll talk more about patients on therapy in the quarters to come.

Operator

Our next question comes from the line of Steve Byrne with Bank of America Merrill Lynch.

Steve Byrne - BofA Merrill Lynch, Research Division

Can you comment on the geographic distribution of these 85 scripts you've received so far?

Marc D. Beer

Yes, Steve, I want everybody to view this organization as a global organization from the start because these patients in need out there are obviously not just in the U.S., and we can do name [ph] patient sales in certain countries. The vast majority, like the vast majority of the patients in the patient tracker from the U.S., I would say, very much the vast majority of these 85 are in the U.S., but we're not going to get into breaking out the patients on a geographical basis. I don't think that's in the best interest of how we report on a go-forward basis, but our firepower is in the U.S. The reimbursement process is an engine that's well -- it is working well in the U.S., and the name [ph] patient sales outside the U.S. will be slower because of the process that you do in Brazil, in Turkey and in other countries. So we won't comment about breaking the scripts up by country, but the vast majority of those 85 are focused right here in the U.S.

Steve Byrne - BofA Merrill Lynch, Research Division

And do you have LDL data on the patients in your tracker database? And as you are post-launch now, are you finding some of the patients that you had in that database are indeed not eligible?

Marc D. Beer

Well, we have actually -- and I've commented a couple of times at financial conferences in the last 2 weeks that we have actually turned down some patient scripts that have come in because we didn't believe they met the right criteria of our REMS, and we're very disciplined to that. I've messaged before that I believe we're going to take a lot of patients out of harm's way, and I don't want to put a few patients in harm's way because they don't meet the severity criteria for our label or our REMS commitment to the FDA. So Steve, we've actually turned some scripts down and went back to the physician and made sure they were appropriately REMS-trained. That said, the patients that we have prescriptions on are perfectly positioned, I believe, for this product. And I think that they mimic the patients that are in our tracker. And I'll also say that we've had some ahas in this launch, we always do. And one of the ahas that we have had is that there's a fair number of prescriptions that have come in from non-targeted physicians and from patients that are in the tracker. So what does that say to management? It says that we feel very good about the fact that there's 3,000-plus patients out there, and we're very focused on how to find those patients and work with physicians to get them on JUXTAPID. So early progress is good. Majority of the patients, obviously, were in the tracker and are from targeted physicians, but there's a fair number of both prescriptions and physicians outside of our tracker and outside of our target list. Cardiologists that have a busy practice that have contacted us because they're aware of JUXTAPID, we've brought in, we've REMS-trained them and we've moved their patients onto therapy. So it's confirmatory on a couple of levels. Most importantly, I think that investors were trying to figure out prior to panel, are we going to be successful getting this product approved and then the transition went to are there 3,000 patients out there. I can comfortably commit that our data tells us that there's 3,000-plus patients out there, given what we're looking at and where these scripts are coming from.

Steve Byrne - BofA Merrill Lynch, Research Division

And then just one brief financial question. Can you comment on what you expect non-cash comp to be in 2013, or what it was in the fourth quarter?

Mark J. Fitzpatrick

Yes. Non-cash comp for the year last year, Steve, was $11.7 million. In the fourth quarter right out of the script, that number is -- just bear with me one second -- $3.8 million.

Marc D. Beer

And Steve, I wanted to comment on that as well. Mark and I really like to give you the most factual data so you can build your models effectively and look at what we're looking at in the future, and we made a conscious decision to give non-stock based operating expense guidance. So you knew the real cash that we're spending to build operations versus trying to forecast what the stock may do over the next 12 months and how that may impact our GAAP accounting. So hopefully that's the number that gives you the best picture as to how we're looking at building the organization in 2013.

Operator

Our next question comes from the line of Salveen Richter of Canaccord Genuity.

Salveen J. Richter - Canaccord Genuity, Research Division

I'm just curious, Marc, when you look at the 85 scripts that have been written in about 6 weeks, whether you think your guidance of 250 to 300 for 2012 is conservative? And I have a follow-up as well.

Marc D. Beer

Salveen, if I -- I'm cautiously optimistic right now. I think that we're on track. Nick's question was very important at the beginning of this call, what's the trend then? It's been a nice steady trend. I continue to see acceleration of our capability. Another thing that's very important to me is how I look at where the scripts are coming. They're coming across the sales organization. We hired half the sales organization 9 months before launch, the second half at launch. We obviously see a productivity coming out of the sales force that's been out there for 9 months because they have profiles that are a little bit more complete. So we haven't seen the full engine of the sales organization, and we'll feel the full engine of it as we go in the back half of this year, just giving sales reps more time to profile effectively. So I would be cautiously optimistic. I feel like the guidance is right on. When we make a commitment in this organization, whether it's approvability at the U.S. or Europe or our commitments on sales, we take them seriously. And I feel very comfortable that we're going hit the commitment this year of 250 to 300, and we're going to hit that commitment of $15 million to $25 million. And obviously, we'll report at the end of the year how many patients we have on therapy, which will give you a really good guidance for '14. I'll also remind everybody that if you look at the slope of growth in the back half of '13 and you apply that growth until you exit revenue of '13 and you look at '14, it should set us up for a very exciting '14 as well.

Salveen J. Richter - Canaccord Genuity, Research Division

Okay. And then Marc, just wondering, so the 400-plus docs that have been trained on REMS, are you seeing doctors come on right before they -- pre -- wanting to put a patient on drug? Or how should we think about when these doctors want to get trained? And then I know you don't want to break it out by geography, ex-U.S., but do you have patients on a named patient basis, ex-U.S., right now, and in which countries?

Marc D. Beer

So we have effort going on in Europe and Latin America. We won't comment about the number of the scripts that have been generated. I will, again, guide you to -- the vast majority of these 85 are U.S.-based, and we've just started the effort in Latin America. We've got early traction on awareness, which is what we're focused on. So the vast majority of this early success is U.S.-focused. And Salveen, you're asking an important question about trend and when the physicians get trained, are they being trained to put somebody on therapy? I'll remind everybody that the process is a very diligent process where it takes us 20 to 40 minutes, depending on how well free read the physician is, to do the REMS training. And then one of the things that -- an activity that we have found to be helpful is that as the physician took down and goes through the patients in his practice that he has targeted, but then he has the schedule to bring those patients in. So when we have somebody who's REMS-trained, it doesn't mean we're going to get a prescription in a week. In the range of scheduling that patient to come in ranges from 1 week to 8 weeks depending on the physician's schedule and the patient's schedule. And then after that, sometimes there's a second visit before we get a prescription, and then we do the pre-auth. So there is a time delay, but obviously, a physician's not going to spend 20 to 40 minutes with one of our representatives going through a tutorial, and then being certified and they formally sign on, on the certificate unless they think that there's value of JUXTAPID in their office. So they obviously have patients identified in their practice they'd like to put on therapy, but it does take time. So it doesn't happen immediately, which I think is your question, do they ask us to come in, train and then boom, they put them on a prescription. That's just not how the process works. It takes more time than that.

Operator

Our next question comes from the line of Robyn Karnauskas with Deutsche Bank.

Robyn Karnauskas - Deutsche Bank AG, Research Division

Marc, I guess 2 quick questions. Number one, can you help us understand how to think about how your -- how you're thinking about compliance and maybe an early read on compliance and how to think about your guidance and what you descend perhaps for gross to net in compliance and dropouts? And then my second question is more on the patient tracker. So you have identified 1,500. Are you adding to that tracker and actively following patients maybe identified from your new salespeople?

Marc D. Beer

Yes, so 2 excellent questions and truly incremental to what we talked about, so I'm glad you brought them up, Robyn, because in the comments, the prepared comments I didn't talk about compliance and dropout. I think it's too early to comment on compliance and dropout, but I'll share with you the level of focus on this and how we're managing it. And I'll also share with you one of the key metrics. If you go to our clinical data prior to approval, it tells you that if we ship the third bottle, that we probably have that patient. So specifically, in the dropouts, did not happen after 26 weeks. And you get them through the first 60 to 90 days, the patient really understands how to maintain the diet, and the titration of the patient has gone to the effect dose usually within that timeframe. So we are very focused as an organization on wrapping a lot of nutritional support and reimbursement support and just general support around these patients. We have both technology and direct personal tactics that are put in place to make sure were handled in these patients effectively. And some patients want more, some patients want less. So compliance and dropout is too early to quantify. I can tell you, I believe, looking at what I'm looking at, that we're off to a great start on dropout and compliance. The team is managing it very well. Having reorders is always a good sign. So not only do we have patients on scripts, but we have reorders. But the numbers are too small for me to say, "Well, let me give you a range of dropout and compliance that we're looking at." That's just too early, but it is a tremendous focus in this organization because if you think about it, the natural next question, we're on track with on-boarding patients. We're on track with pre-authorizations going through. We're on track with insurance carriers we visited, which is now approaching 100 carriers. We're on track with their feedback, they understand the disease and they understand our therapy and they're not putting restrictions in front of us. So all that's on track. The next natural question is the exact one that you're asking, which is compliance and dropout. And I can just say that the management team, the processes and the systems that we've put in place are put in place to literally communicate with these patients on a daily basis and make sure that the diet is understood and they remain on therapy. Christian's having a great experience. He's authorized us to talk about it. He's just having a great experience with no side effects. And he sent me an e-mail. I'll just share with you the excitement of this patient. He sent me an email with his results. He -- that's the level of commitment these patients have when they get a result like that. For the first time in their life, they're at goal. The second question you asked, Robyn, was about the tracker. We are definitely adding patients to the tracker, but the focus of the organization right now is not to take the tracker from 1,500 to 2,500. The focus of the organization is to get to the physicians who have patients in the tracker, who have interest in being trained and getting patients on therapy. We feel that's our obligation. So our sales force is very focused right now on following up on the targeted physicians and the non-targeted physicians that contact us. I've been in the field personally 4 days. I've committed to be in the field 3 days every month for the next 12 months. It's really important for me to stay in front of the physicians and understand how we best serve them. And I can report to you that the physicians that I've seen, with the cardiologists and the lipidologists and the preventive cardiologists, they have a great excitement about the potential of this product.

Operator

Our next question comes from the line of Bill Tanner with Lazard Capital.

William Tanner - Lazard Capital Markets LLC, Research Division

Marc, just you sort of alluded to it on the last -- in your response to the last question. But what is the totality of the date of the clinical data or the clinical experience in the 85 patients for which the prescriptions have been written? Is there really much anecdotal or not? And then I do have a follow-up.

Marc D. Beer

Yes, Bill. First off, thanks for asking the question, Bill, and it's great to go through this again with you from all the experience you have in the organ space. I -- it's too early to get any anecdotal clinical response other than the authorized response that we have from Christian, which is just really exciting. I've commented about how devastating his disease is and that nothing has worked with this young adult. So it's just too early to comment. But it is something that we're really committed to not only reporting on, but publishing on as time goes on. We take the registry commitment that we have with the FDA very seriously. And regardless of the registry commitment from an FDA standpoint, I just think it's really important to have good discipline, registries that we can publish off the registry. So Bill, we look forward to getting results published on patients that are on therapy in the future, but it's too early to comment on that data right now.

William Tanner - Lazard Capital Markets LLC, Research Division

Okay, fair enough. And then as it relates to the Christian experience, I mean it seems like there is some willingness of payers to undertake the cost of both JUXTAPID as well as Lipid apheresis. And I'm just curious how uniform or widespread is that and would it be contemplated then that these patients would, I guess, the ones that are responding to both or need both then would generally be -- the cost of both of those would be borne by the payor? I'm just trying to understand a little bit better that dynamic.

Marc D. Beer

Yes, that's good observation, Bill. I don't see pushback if patients are apheresis. But the majority of our patients won't be apheresis just because of the number of patients that are apheresis. The majority of the patients that meet our criteria of a clinical diagnostic -- diagnosis consistent with HoFH are not being apheresis in this country. It's a little different in other countries outside the U.S. But in this country, the majority of the patients in the next 3 to 5 years won't be on apheresis. But Christian is a good early sign that it went through fine with his carrier. That pre-auth went through very smoothly, and he's on for apheresis and he's on really kind of the max dose of apheresis, weekly apheresis. So the other thing, Bill, that is important strategically is that we're not targeting apheresis. I think the patients that are being apheresis are natural patients who go on the product if they meet the criteria, because some patients that are apheresis don't meet the criteria. But the majority of apheresis patients that meet our criteria, they're a natural person to go on the product, but we're not targeting apheresis because there's a tremendous need out there that -- of patients that are just not being apheresis, but that one went through smoothly.

William Tanner - Lazard Capital Markets LLC, Research Division

And then maybe just a last question. I think, Marc you made it early part of your comments about how the payers were not viewing this as meeting genotypic evidence of HoFH. And I think Dr. Radar at the panel indicated that there were complexities with that. So is this something that relatively uniformly across the payers, do you think that's going to be the position that they adopt?

Marc D. Beer

I do, Bill, and the reason why is, I'll tell you when I have a good end to comment on and I don't have a large enough end to comment on. I have a large enough end of payers that we have sat down for an hour-and-a-half meeting with the decision makers in our national account in our medical affairs organization, and it's a large, large portion of the payers. And when they -- when we take them through the morbidity, mortality of this disease, the diagnostic of this disease and then JUXTAPID's ability to course-correct the disease, they get it. And we have not had one payor who we have sat down with and taken them through that education, decide to require genotyping. They have agreed to the genotypical definition consistent with our REMS, which is really powerful. That's an early success that makes me feel very good about the next 3 to 5 years.

Operator

Our next question comes from the line of Cory Kasimov with JPMorgan.

Cory William Kasimov - JP Morgan Chase & Co, Research Division

Most of my questions have been answered, but I wanted to go back to the 85 prescriptions to date, as I agree this looks like a big number in the context of your guidance of 250 to 300 patients on therapy by year-end. So I guess just asking about this another way, I'm wondering whether you expect prescriptions to be somewhat front-end loaded with the bolus effect given the number of patients that have been anxiously awaiting for a therapy like this? Or should this simply be or can this be characterized as a better expected start, albeit very early on? And then I have a follow-up.

Marc D. Beer

No, Cory, I think it's a very creative way of asking the same question previously asked by Salveen. But I think it's one that let me be very direct about. From my experience in the ultra-orphan and orphan experience, it's a steady climb. It's not a balloon effect. So I could share with you, expect the commercial organization to do the same preparatory quality work that our regulatory and clinical program management manufacturing team did prior to approval. And Craig and the team have done that. So I think we're off to a very strong start. And my expectation is that you'll see a steady climb, but it's too early. I mean 6 weeks in, I'll just caution you that I'm just cautiously optimistic. It's too early, 6 weeks into this launch, to assume anything other than what we've given you guidance on right now because that's 250 to 300 patients. That's a lot of patients. We plan on getting them on therapy before the end of the year, and I think that equates to the revenue number that we've given you guidance on. So I'm cautiously optimistic. I wouldn't change guidance, but it's a good strong start. But in the orphan state, I don't think you see a balloon effect, and then you see a trail-off. You typically see a steady climb. We'll get better at processing patients. We'll get better at moving pre-auths through. So this year's our year of working all the kinks out. And then '14, I think, will be the first year we'll really have an optimized engine.

Cory William Kasimov - JP Morgan Chase & Co, Research Division

Okay, fair enough. And then, I mean I agree that the 250 to 300 patients would represent a good start for this year. When you put that then in the context of the over 1,500 patients that you've already identified, I guess I'm wondering what's the primary rate limiting steps you think to getting these patients on drug, at least the ones that are in the U.S.? Is it hitting the physicians on board? Is it actually convincing the patients to go on a therapy like this? Is it the payor or something else? I mean, can you give a little context there?

Marc D. Beer

Yes, it's very multi-variable. There's a physician discussion with the patient. There's a patient discussion in the orphan space. You've got physicians and patients that are getting used to a reimbursement level. This is the first orphan or ultra-orphan in the cardiac space, so you have physicians getting used to that. Then you have patients that, obviously, have not been on a med that is an orphan-priced med, and they've got lots of questions about that. So we can get them through that, but it just takes time. It just takes time. And I think early progress is that our sales team, and I'll go back to them because we really worked hard collecting up a masterful job of looking at the top orphan sales organization. And being out with 4 of them and spending time with them at the launch meeting, I think we got the right team in place and space to work the clinician and the patients through this and make them feel comfortable, but it takes time. So that's probably the #1 thing, is there's multi-variables that both the patient and physician need to get comfortable with. And you work your way through that 1,500-plus patients, and you work through those issues.

Cory William Kasimov - JP Morgan Chase & Co, Research Division

Okay. And then if I can just toss one more question in there. You mentioned in your prepared remarks, the IP for JUXTAPID and you have the titration patent mentioned in there that would significantly extend the runway for the products. Is there anything you can give us on the potential strength of that patent? Is that something that people can start to kind of think about in terms of actually offering protection for that period of time?

Marc D. Beer

Yes, I -- Cory, I usually guide individuals to like -- you build kind of a base model and then you build an up-model. Build a base model in any way you feel comfortable from an IP protection standpoint, and I know several people have said, I'm just going to count on the Q3 2020 in the U.S. and mid-2023 in Europe. I will be making operating expense decisions based on the 2027 to 2025. I have studied it very carefully. I've got 2 formal opinions from 2 different law firms. I did that after we had the patent issue in the U.S. I feel very comfortable about the protection. It gives us 6.5 years of peak sales, additional protection in the U.S. and it gives us, obviously, another couple of years in Europe. I think it's a very powerful patent, both in the U.S. and Europe, and I've done enough homework where I will be making infrastructure, clinical investment decisions and all operating expense decisions based on protection out to '25 and '27. So that's my view after doing a lot of work on it. And I feature it because we've look at it very carefully, and management feels very comfortable with that protection.

Operator

Our next question comes from the line of Eun Yang with Jefferies.

Eun K. Yang - Jefferies & Company, Inc., Research Division

So Marc, so $15 million to $25 million in [indiscernible] sales this year, what's your assumption for growth to net discount?

Marc D. Beer

Mark, if you want to answer that?

Mark J. Fitzpatrick

Sure. Eun, thanks for asking the question. We have made in our own models and assumption as to the government mix versus the commercial mix, but we're just making assumptions at this point in time. It's very early, so I wouldn't want to guide you with respect to the gross to net discount until I have more color on it as to how the mix is shaping up. We, from a bad debt perspective, we're getting prior authorization so we don't expect too much in the way of patient bad debt. So -- but we do have to be mindful of what the government payor mix will be and what that price will be given that we've got the count on pricing at $295,000 per patient per year. So we've got a few variables in there, Eun, and we've not been articulate as to what that percentage will be at this point in time because there's just -- there's too much uncertainty around it right now.

Eun K. Yang - Jefferies & Company, Inc., Research Division

In terms of over 1,500 patients that you've identified, do you have any information on patient profile in terms of whether they are -- they have a private or a government payor?

Marc D. Beer

Yes. Eun, we're not commenting on the insurance mix yet. We'll give you a sense of that in potentially quarters to come. But there's no surprise there. We're not surprised. Obviously, the pre-auths are being processed effectively. So we're not surprised by it. If there was something there that was material that we should make you aware if I would, but it's usual of course to commercialization, so to speak.

Eun K. Yang - Jefferies & Company, Inc., Research Division

Okay. And then in terms of EMA discussion currently ongoing, based on the discussion [indiscernible] so far, do you expect their label to be quite similar to the U.S.? Or is there a potential of that label could be limited to typically homozygous patients in Europe?

Marc D. Beer

So it's too early to tell. I think that the European authorities have had similar questions, as we said in the prepared remarks, but it's too early to tell what our final label will look like in Europe. We look forward to giving that news to you as soon as we have more clarity around it.

Operator

[Operator Instructions] Our next question comes from the line of Kim Lee with Janney Capital.

Kimberly Lee - Janney Montgomery Scott LLC, Research Division

Just one quick question here. In your prepared remarks, you did comment that there are already some patients who are reordering. So of the 85 scripts that have been written to date, how many of those are reorders versus new scripts?

Marc D. Beer

Yes. So I look forward to reporting that kind of quantification going forward simply because it's going to be an important number. But it's too early to really comment about the number of patients that have reordered. We've had patients reorder, which is a great sign. It's great sign that we've worked effectively with those patients through the early weeks and through the nutritional change that they have made, and they've made that effectively, but it's too early to comment about the numbers in the reorder category.

Kimberly Lee - Janney Montgomery Scott LLC, Research Division

Okay. But just to clarify, there are -- the 85 scripts trend, do you also include some reorder numbers?

Marc D. Beer

I'm sorry, Kimberly, can you ask that question again?

Kimberly Lee - Janney Montgomery Scott LLC, Research Division

Yes. So just to clarify, of the 85 scripts written to date, there are some that are included that are reorders?

Marc D. Beer

Well, when I count scripts, I'm counting de novo patients. So the reorders, I'm not counting in that number to be clear. And I'm also -- and also, Kimberly, to be clear, those are net scripts, not gross scripts. If I turned down the scripts, it's not in that number. I would never guide you that way.

Operator

Our next question comes from the line of Chad Messer with Needham & Company.

Chad J. Messer - Needham & Company, LLC, Research Division

As I'm sure you'd agree, it's a really exciting time for HoFH patients. They've actually gotten not just 1, but at least in the U.S., 2 new treatment options. I was wondering if you could comment, even just qualitatively, on how -- what affect the Sanofi sales force may be having being out there just on patient awareness, on physician awareness? Do you see these guys as more of a headwind or a tailwind to your effort?

Marc D. Beer

It's too early to comment on that, but I can comment on this that Craig's strategy is 100% focused on our sales force going to our targets talking about JUXTAPID. We don't have a head-to-head studies that compare these products, and I don't think it's a competitive field. This is a field that the patient is waiting. We have patients in the tracker. We have identified targets that want to be trained. So I wish we had extra time in the day to worry about anything other than just our targets and the patients. So it really is 100% look out the windshield, look at the targets, look at the patients that are queued up to go on therapy, and there's just not an extra minute in the day to do anything other than focus on that, Chad. So we're not focused on anything other than just that.

Operator

This does conclude the question-and-answer portion of today's call. I'd like turn it back to Marc Beer for any closing statements.

Marc D. Beer

Great. Thanks, operator. So in conclusion, we're excited about the early execution of our commercial launch. Everything is according to our plan in the U.S. It's an important market for us to get off the ground successfully in 2013 with.

We look forward to obtaining approval in markets around the world. There's a lot of effort going into that, and we look forward to updating you on our progress over the next several quarters in 2013. So thanks for joining us, and we look forward to talking to you soon. Thank you.

Operator

Ladies and gentlemen, this does conclude today's conference. You may all disconnect, and have a good day.

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