Orexigen Therapeutics' (OREX) CEO Mike Narachi on Q2 2016 Results - Earnings Call Transcript

| About: Orexigen Therapeutics, (OREX)

Orexigen Therapeutics, Inc. (NASDAQ:OREX)

Q2 2016 Earnings Conference Call

August 04, 2016, 05:00 PM ET


McDavid Stilwell - IR

Mike Narachi - CEO

Tom Cannell - COO and President of Global Commercial Products

Peter Flynn - Head of Global Development

Jason Keyes - CFO


Ryan Tochihara - JPMorgan

Maxim Jacobs – Edison Group

Stephen Chen - Bank of America Merrill Lynch


Welcome to the Second Quarter 2016 Orexigen Therapeutics, Incorporated Earnings Conference Call. My name is Adriane and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later we will conduct our question-and-answer session. Please note this conference is being recorded.

I would now like to turn the call over to McDavid Stilwell. McDavid Stilwell, you may begin.

McDavid Stilwell

Hello and thank you for joining us this afternoon for our conference call to review our second quarter financial and business results.

Before we begin, please note that all of the information discussed on the call this afternoon, is covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act. I caution listeners that during this call, the company’s management will be making forward-looking statements. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company’s business. These forward-looking statements are qualified in their entirety by the cautionary statements contained in today’s press release and the company’s SEC filings, including the quarterly report on Form 10-Q the company intends to file with the SEC on August 5, 2016. The content of this conference call contains time-sensitive information that’s accurate only as of the date of this live broadcast August 04, 2016. Orexigen undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call.

On today’s call, among other topics, we will be discussing Contrave, naltrexone hydrochloride/bupropion hydrochloride the extended-release tablets, which was approved by the United States Food and Drug Administration in September 2014 and by the European Commission under the brand name Mysimba in March 2015 as an adjunct to a reduced calorie diet and increased physical activity for chronic weight management in adults who are obese or overweight with certain weight-related comorbidities. The Contrave label includes a boxed warning for suicidal thoughts and behaviors and neuropsychiatric reactions as well as other warnings, precautions, contra-indications and adverse events that must be considered for the treatment. The approved indications for Contrave contains two limitations of use. First, the effect of Contrave on cardiovascular morbidity and mortality has not been established and second, the safety and efficacy of Contrave in combination with other products intended for weight loss have not been established. For the complete safety information, please refer to the full prescribing information for Contrave available on Contrave.com.

For today’s call, please reference the slides posted on our website this morning, which will include some of the information we will be discussing. The slides are available on the front page of the company’s website and on the Events and Presentations tab of the Investors section of the site.

On today's call Mike Narachi, Chief Executive Officer will begin with an overview of strategic implications of the Contrave US rights acquisition. Dr. Tom Cannell, Chief Commercial Officer will then provide a commercial update, Pete Flynn, Head of Global Development will provide an overview of our post marketing development programs, and Jason Keyes, Chief Financial Officer will deliver highlights of our recent financial results and discuss an integrated view of our commercial business development and financial strategy, the keys to our plan for profitability by full year 2019.

With that, I will now hand the call over to Mike.

Mike Narachi

Thank you, McDavid and good afternoon and welcome to our second quarter 2016 earnings conference call.

Earlier this week we completed our acquisition of US rights to Contrave, transforming Orexigen into a fully integrated commercial pharmaceutical company focused on the mission of helping to improve the health and lives of patients struggling to lose weight. We believe obesity is a chronic disease with detrimental consequences for the health of individuals and for public health systems around the world and we are firm believers in the many benefits patients experience with weight loss. We are motivated by the persistence that’s required to lose weight and keep it off and feel that patients and health care practitioners deserve new medicinal alternatives to help patients succeed in their weight loss and weight management goals.

As you know, Orexigen developed Contrave based on novel insights about how the body and brain work together to regulate body weight and Contrave is the only medicine which acts in two separate areas of the brain. It is surprising to us that generic amphetamines despite being indicated for only short term use, their risks of abuse liability and other shortcomings remain by far the most commonly prescribed weight loss medicine.

While Contrave rapidly became the preferred branded obesity agent, Tom Cannell will speak to the opportunity we have to grow our overall market share by differentiating our products from generic amphetamines. We at Orexigen are solely focused on our mission, since announcing the planned acquisition of US Contrave rights in March, we have hired a commercial organization that has exceeded our expectations for both talent and experience. The team we have assembled shares a belief that Contrave can improve the health and lives of millions of individuals who are struggling to lose weight. I'm excited to have them on board and I'm impressed by the execution of our team to develop this independent commercial capability very rapidly, enabling us to complete this acquisition two months ahead of schedule.

Having completed the acquisition, our focus over the next few months is business continuity, or in other words, stabilizing the business as our team builds the relationships with health care practitioners and we can begin to implement our new plan. When stabilized, we would then expect to see growth in prescription volumes beginning into New Year.

Owning full US rights to Contrave is transformational for Orexigen. We believe it greatly increases the likelihood and the magnitude of our projected long term profitability while also opening new strategic possibilities for shareowner value creation that were previously unavailable to us, including the opportunity to grow the company organically, or to pursue strategic partnerships.

With that, I’ll turn the call over to Tom Cannell.

Tom Cannell

Thank you, Mike. And good afternoon everyone. I'd like to take the next few minutes to provide an update on, one, the U.S. commercialization of Contrave, and two, our partnership strategy outside the U.S.

So let's begin with the U.S. market. If you’d please turn to Slide 7, you will see that there has been 4% growth of the overall anti-obesity market through the first six months of 2016, compared to the same time period last year. In the second half of the year we project market growth of 3% to 5% and looking ahead to the 2017 to 2019 timeframe we project annual market growth in the 2% to 6% range.

Turning to Slide 8, you can see our projections for our share of the overall anti-obesity market. Contrave had a 6.6% share in June of 2016, the transition from Takeda started in July and we'd expect Contrave share to stabilize in the fourth quarter in the 6% to 6.5% share range. Consistent with previous guidance, we expect share to begin to increase in the first half of 2017, achieving an average share of 10% to 11% by 2018 with continued growth into 2019. And as we've mentioned previously, even if you take the lower bound for market growth and the lower bound for market share, we remain on the path to profitability in 2019 that Jason Keyes will be discussing in a moment.

So please turn to Slide 9 which describes our U.S. commercial strategy. This is a slide we introduced on the May 4 call when we described our commercial strategy and plans for Contrave in the U.S. I'll briefly now touch on each of those six strategies. So you can see that strategies 1, 2, and 3 are core strategies that we expect to drive our path to profitability consistent with the US prescription and revenue guidance we will detail in our call today. Strategies 4, 5, and 6 are more innovative sources of future opportunity and represent significant upside beyond the guidance range if we're able to realize the potential of any of those strategies.

If you turn to Slide 10, which focuses on strategy 1, we have now launched what we believe to be a highly effective and efficient U.S. commercial organization focused on the concentrated 20,000 health care practitioners who write the majority of prescriptions for Contrave and other anti-obesity medicines. We're ahead of even our own aggressive expectations on our speed to market and the quality of our organization.

We've hired and trained all customer facing individuals which includes our region sales managers, health science associates, professional relations, call center, market access team, multi-channel marketing team and 160 sales representatives. We've established our end-to-end supply chain which is an extension of our global manufacturing expertise that has been in operation for over two years. We've now assumed packaging and distribution responsibilities for Contrave product and we have established distribution agreements with all major wholesalers.

We have our customer call center up and running and we have completed a seamless transition from Takeda which includes communications across customer segments and joint calls where Takeda employees introduce Orexigen representatives to key healthcare professionals.

Overall we made our first commercial calls roughly three months earlier than planned. And we're very grateful for Takeda support during this transition. Early feedback from our representatives to just the customers are accessible and very interesting discussions on how Contrave can help their patients with weight loss.

So if you please turn back to Slide 9, let's turn to strategy number 2 which is about differentiating versus generic amphetamines. We continue to believe that there is a significant unmet need for many patients that have tried amphetamines, especially those who are seeking and help seeking and motivated to lose weight.

Our messaging is focused on key differences, such as first, the unique dual mechanism of action of Contrave which as described in our PI works on the two areas of the brain involved in the regulation of food intake: the hypothalamus or appetite regulatory center and the mesolimbic dopamine circuit or reward system.

Second, Contrave is not a scheduled or controlled substance, as it does not have the risk for abusing dependent like amphetamine. And third, Contrave can be used for long term therapy while amphetamine is indicated for short term therapy or courses of treatment.

Turning to strategy 3, I'll remind you that we project an improvement of the gross net ratio through appropriate discounts and pricing strategies. As we guided previously we expect gross net to improve to the 40% to 45% range in 2018. We also project that patients with commercial reimbursement will grow to 23% to 30% in 2018. Our managed care customers appear to be very interested in discussing potential contracts given that Contrave has roughly 40% share of the branded market significantly higher than the number two branded agent. Jason will be providing more information on gross net in a few minutes.

So now let me comment on the innovative strategies. We continue to make progress testing creative approaches which could help encourage patients to ask their doctor about Contrave which is strategy number 4.

Strategy number 5 is about finding the right behavior modification program that could be a valuable adjunct to therapy with Contrave and help improve persistency and compliance. We've launched our first pilot test and we'll be providing more information on this on future calls.

And strategy number 6 is about driving reimbursement through innovative contracting strategies and while it's early there does seem to be a lot of interest from customers in this area and we're doing a great deal of work to find win win solutions that benefit our customers and the patients they treat.

So please turn to Slide 11 and I'll provide a quick update on our partnering strategy outside the U.S. As of June we successfully launched Contrave in Korea through our partner Kwangdong. The coordinated efforts of Kwangdong and Orexigen enabled a seven month regulatory approval in Korea and an earlier launch than anticipated. Kwangdong has implemented a comprehensive promotion campaign that combines sales professionals, multimedia, symposia and conferences. They're executing the launch very well and we're already seeing a strong market response including the participation of over 600 physicians at the launch symposium.

The market for anti-obesity medicines continues to grow rapidly in Korea. In 2015, sales of anti-obesity medicines exceeded $71 million, a 21% increase over the prior year. We feel confident our partnership with Kwangdong will enable strong growth and a realization of the sizable opportunity in the Korean market.

In central and eastern Europe, we are preparing for the launch of Mysimba in 11 countries in 4Q ‘16 followed by launches in two more countries in 1Q ’17. Valeant, our partner in the region, has a reputation for successful market development and strong launches in CEE and is a leader in developing customer relationships and market access.

And as we announced a few days ago, we have partnered with ROVI in Spain and we are preparing for a launch of Mysimba in the fourth quarter. ROVI is a well respected and recognized company and has a proven ability to launch brands in the endocrinology and primary care space. Their leading Spanish endocrinology sales team will launch Mysimba and we believe position it for long term success.

The launch in Korea and projected launches in Spain and 11 CEE countries represent an important milestone for Orexigen. Later this year we look forward to updating you on those launches as well as new partnerships in other key markets outside the U.S. as they are finalized.

So that concludes my update. In closing, I believe that we have hired a very strong team of experienced and motivated employees. We have the right strategies in place and we feel confident that we can execute and deliver strong and sustained growth for Contrave and Mysimba.

So with that I'll hand the call over to Pete.

Peter Flynn

Thanks Tom. Please turn to Slide 13. As a result of the Contrave acquisition and the transfer of the Contrave NDA and IND to Orexigen, Orexigen is now responsible for executing all post-marketing development programs of Contrave in the U.S. and we continue to be responsible for Mysimba developments in Europe.

As we've stated previously, we're working internally and communicating with both regulatory agencies to further optimize the Contrave, Mysimba post-marketing requirement studies for the company’s global needs. The post-marketing development program for Contrave and Mysimba includes preclinical, clinical and observational studies to be conducted over the next eight years. We currently estimate the cost of these studies to be approximately $260 million.

Shortly after the acquisition announcements in March, Orexigen contacted the FDA and reaffirmed our commitment to meeting the postmarking requirements of Contrave which include completion of the cardiovascular outcomes trial with study report due to both the FDA and EMA in 2022. Orexigen’s goal and commitment is to conduct high quality trials on time and in the most cost effective manner. To that end, we have an active process working with our Contrave research organizations and with the regulatory agencies to build efficiencies into the postmarking studies. We will keep shareholders apprised of any changes that affect the anticipated timing or cost of the post-marketing requirements.

With that, I will turn the call over to Jason.

Jason Keyes

Thanks, Pete and good afternoon. Today I will begin with an overview of corporate financial performance in the second quarter of 2016, and then I'll take a few moments to highlight how the recently completed acquisition of the Contrave U.S. business will impact our financial reporting and how the March 2016 convertible debt financing has changed our capital structure. I’ll then conclude with updated financial guidance before turning the call back over to Mike.

Starting with Slide 15, for the three months ended June 30, 2016 Orexigen generated total revenue of $7.8 million compared to $5.2 million a year ago. Orexigen earned $2.5 million in royalties on $12.3 million in net sales of Contrave in the second quarter as reported to us by Takeda. That compares to $3.1 million in royalties earned on net sales of $15.7 million in the second quarter of 2015. The decrease in net sales was driven primarily by an increase in gross to net deductions despite track demand increasing by 11%.

Additionally we reported $2.4 million in collaborative income and for the first time we reported net product sales of Contrave to our Korean partner totaling $2.9 million. Gross to net deductions in the second quarter represented 67% of U.S. gross sales and have been on an increasing trend. Now that Orexigen has full control of the Contrave business in the United States we will be working diligently to stabilize and ultimately improve gross to net to increase our net revenue per script.

Cost of goods sold for OUS product sales in the second quarter were $1.8 million. Total operating expenses for the second quarter of 2016 were $39.2 million compared to $25.9 million for the second quarter of 2015. The increase was driven primarily by an increase in SG&A associated with the hiring and build-out of our global commercial organization.

For the three months ended June 30, 2016 Orexigen reported a net loss of $25.2 million or $1.73 per share. This compares to a net loss of $22.5 million or $1.80 per share for the second quarter of 2015. Cash, restricted cash and short term investments at the end of Q2 totaled $264.4 million.

Slide 16 highlights some important changes to our financial reporting resulting from our changing business model and the acquisition of the Contrave US commercial business.

First, with respect to revenue, as I mentioned earlier, in Q2 we began reporting net product sales associated with delivering launch supplies to our Korean partner. With full control of the US Contrave business we are now also reporting 100% of Contrave US net sales.

Given the transition completion on August 1, revenues for the third quarter of this year will include both royalty revenue and net sales revenue. Coinciding with our reporting of Contrave US net sales we will also be reporting cost of goods sold associated with our US sales. You will see these figures reflected in our financial statements going forward.

Now that we have full control over the Contrave US business, Orexigen is responsible for all commercialization activities and expenses. In an effort to provide greater transparency into our expense base, we have begun to provide a breakout of our SG&A spending into two important categories: sales and marketing expense and general and administrative expense.

In addition to the changes to our business that have resulted from acquiring control of Contrave in the US, there have been several important changes to our capital structure arising from the March 2016 convertible debt financing and the recent stockholder approval of certain proposals. Those changes include a 10 for 1 reverse stock split, and an amended equity incentive plan.

Slide 17 summarizes the recent changes to our capital structure and also provides helpful information regarding the conversion prices and exercise prices for our convertible debt, warrants and stock options.

Turning to Slide 18, I’ll now move on to provide updated expectations for our US Contrave business and financial guidance for 2016. As Tom mentioned in his prepared remarks, we expect the prescription of obesity market to grow between 3% and 5% in the latter half of 2016 and expect Contrave share of the overall prescription obesity market to stabilize between 6% and 6.5% during that timeframe. With those assumptions we would expect total Contrave tracked demand of between approximately $329,000 and $356,000 scripts in the last half of the year.

Although we have seen gross to net deteriorate through the first half of 2016 we expect that trend to stabilize at approximately 64% to 68% toward the end of the year with improvements beginning in 2017. Based on those expectations for market growth, share and gross to net, US net sales are projected to be on the order of between $22 million to $27 million over the last six months of the year resulting in full year U.S. net sales of between approximately $47 million and $52 million. We look forward to providing more specific revenue guidance for 2017 at the start of next year.

Slide 19 shows our 2016 expense guidance. We continue to plan for total cash operating expenses this year of between $160 million and $180 million. Breaking this down to a more granular level, we anticipate R&D cash operating expenses of between $47 million and $52 million, sales and marketing cash operating expenses of between $77 million and $87 million, and G&A cash operating expenses of between $36 million and $41 million. As we look ahead to the end of the year we're expecting to close 2016 with a total cash balance of approximately $170 million to $190 million.

My last slide highlights our path to profitability in 2019. It is based on a U.S. net sales range of $160 million to $260 million in 2019 and OUS gross profit potential of over $40 million. We believe that level of gross profit should exceed our total cash operating expense which we expect to average between $180 million to $200 million per year between 2017 and 2019.

In summary, following the US Contrave acquisition and with the related financing, Orexigen has the control and the capital strength to implement a focused US commercialization plan designed to achieve near term profitability while still building and retaining value for the longer term potential of Contrave and Mysimba. We continue to expect that Orexigen will become profitable in 2019 and that the capital we raised in connection with the Contrave acquisition will be sufficient to get us there.

With that, I'll now turn the call back over to Mike

Mike Narachi

Thanks, Jason. With the completion of this acquisition, our strategy, corporate structure, capital structure, revenue and expense structure are all new and geared for execution of our plan to grow Contrave in the U.S. with our targeted commercial organization and to grow Mysimba and Contrave revenues outside the U.S. with partners.

As Jason discussed, executing on our plans we expect to achieve profitability in 2019. The next 12 to 18 months will be exciting for Orexigen. In the near term we expect formation of additional partnerships for territories outside of the U.S. and European countries where the drug is already approved and in other key regions.

In the United States, our focus over the next few months is all about execution and execution on our plans that were described by Tom Cannell. When we held our sales launch meeting in San Diego recently, at our closing dinner the entire company was gathered to focus on our plan to deliver on our growth expectations for Contrave market share and overall sales. I shared with everyone that Orexigen is betting on our product Contrave, betting on our focused commercial plans and importantly on the performance of our people. I believe the team is exceptional, the business plan is well conceived and the product is unique in the market. We have aligned the incentives and so everyone on the team is highly motivated to succeed. If we execute on the plans extremely well and deliver against our expected results we have the potential to make an enormous difference in the lives of patients and in doing so to make Orexigen a profitable and valuable company.

With that, we can now open the call to questions.

Question-and-Answer Session


[Operator Instructions] And we have Jessica Fye from JPMorgan online with the question.

Ryan Tochihara

Hey guys, this is Ryan on for Jessica. Appreciate you taking my questions. I guess, as you guys started thinking about launching on your own, can you maybe talk about some of the key learnings you learned -- you picked up from Takeda and sort of what the key focus is as you start launching the product?

Tom Cannell

Yeah, hi Ryan. This is Tom. Thanks, I’ll take that question. So we learned a great deal from Takeda and we're actually very thankful for having their partnership as they launched the product. In the first 18 months post-launch Takeda delivered over a million details to over 100,000 targets and it was very much as appropriate for primary care launch as a breadth strategy. What that did was that allowed us really to understand the market and one of the first things we learned was how concentrated the market is. So by them going to 100,000 doctors we could really identify the 20,000 doctors who are really the high prescribers, are the profitable targets and have a positive promotion response.

The second thing we learned was a lot about managed care access. So again Takeda went out and got a good broad access from a managed care perspective. If you look at Fingertip Formulary now we have approximately 64% managed care coverage which positions us favorably against the other branded agents and puts us right in the ballpark even of the generic agents. And what we learned were the other steps in the process that are required to improve reimbursement. They also launched with speaker programs and we learned a lot about the optimal way to conduct speaker programs and a lot about the influence of the key opinion leaders and the best way to help primary care doctors treat their patients optimally. So all of the investment and all of the breadth of activity that Takeda did let us study the promotion response curves, understand our customers deeply and it's enabled us to deliver what's a very focused launch. So we feel like we really understand the key leverage points and we know what it's going to take to to bend the trend and start to grow prescriptions again. Does that make sense, Ryan?

Ryan Tochihara

It does. And maybe to dig in a little bit further in that, when you think about your projected TRX share, as that grows over time, is that converting these high prescribers from competitive products to Contrave or is that getting more physicians comfortable with this product?

Tom Cannell

Yeah, thanks, that's a great question, we're focused on shifting share from Phentermine which currently has a 76% to 77% market share in the overall market to Contrave. So we need to get three to four market share points as you can see to get to our 2018 goals. So it's very much taking doctors that are already high prescribers that are comfortably using Phentermine and the market research we've done has shown that when you explain Contrave, you show them our unique dual mechanism of action and all of our efficacy and safety data, they feel very comfortable switching some of those patients from Phentermine to Contrave. And so that's really -- it's a market share strategy as opposed to a market growth strategy. Does that make sense, Ryan?


And our next question comes from Max Jacobs with Edison Group.

Maxim Jacobs

Thanks for taking my question. I was just wondering with the Belviq XR getting approved, I know it hasn’t launched but do you have any thoughts on that?

Mike Narachi

Yeah, I mean I won't say much, Max, about the competitive situation. What I'll say is if you're asking kind of about dosing and taking a product once a day or twice a day, we've done a lot of market research in obesity. And what we've seen is that once or twice a day is not a major driver of prescribing, it's very similar to markets like the pain market. In fact, I think patients that are actively doing a diet and doing exercise are comfortable taking a product twice a day to achieve their desired results. What we found again when we did our intensive prescribe work in our broad quant in terms of the market research is the biggest driver of prescribing choice was very much around our dual – our unique dual mechanism of action and all of ours are real compelling safety and efficacy data. So we feel pretty confident about our ability to grow the brand as I described. Does that make sense, Max?

Maxim Jacobs

Yeah definitely. And just one more question just given -- because it's been in the news, the whole CVS like exclusion list, and so it looks like especially at CVS they're really being tough on a lot of the branded medications. I mean I was surprised, for example, that Lantus ended up on the exclusion list even though that's like a mainstay for a lot of diabetics. So I was just wondering, I mean you’re talking about getting more commercial pay coverage. How – what strategies do you think you'll be able to do -- make that happen given that the payer seems to be less likely to want to include branded drugs on formularies?

Mike Narachi

Yeah, it's a great question. This is such an interesting market. So again we're pleased, we're actually a little ahead of schedule in terms of national reimbursement rates at 64% and we continue to work with other plans to be added to formulary or put in a preferred position. But the real work to be done -- there's three more steps beyond getting that national coverage where we're really putting a lot of effort. What we've learned in obesity which makes it different from diabetes or lipids or things like that is you actually have to have local employer or local health plan opt-in for them to cover obesity prescriptions. So we're doing a lot of work at that level at the local level with employers and health plans and that's really about demonstrating the value of the cost of obesity to the employer and demonstrating the potential benefits, if they're able to help their patients lose weight appropriately.

The next level then is there's a lot of work to be done in terms of educating physicians on which of their patients do have the appropriate third party reimbursement. So there's a whole field of reimbursement kit of tools which help them understand what the access is for their patients and also understand the step that is in the restrictions and how to manage those appropriately. One of the values of the specialty sales force that's dedicated to promoting Contrave is they can go into those in-depth discussions with health care professionals so that as many patients as possible are getting to third party reimbursement which again means the patient is only paying $1 dollar a day or $30 a month for therapy.

And then the final area where we're doing some work is that -- is with pharmacists and is at the pharmacy terminal level. So even when the patient shows up with the prescription with the pharmacy discount card and is a member of a plan that reimburses, we need to make sure that gets pulled through at the pharmacy level at the point of sale and that the patient is getting the appropriate coverage. So we'll keep doing that national work but we think the other three levers that that make us hopeful that we can achieve those goals I described are really part of the solution as well. Does that make sense?


And your next question comes from Stephen Chen from Bank of America.

Stephen Chen

Hey guys, this is Steve Chen on for Sumant. A quick question. So you mentioned that managed care coverage of Contrave is around 64% right now. Can you discuss what percent of Contrave prescriptions are actually reimbursed by managed care right now? I think in the past it was around 16%. So just wondering what do you think you need to drive that in order to really start hitting an inflection point in sales?

Mike Narachi

Yeah, on the last call on May 4 I did give the guidance that 165 of the prescriptions have third party reimbursement. In June we thought that number increased to 19%. And so we think some of the early plans we put in place are starting to have an effect. We've guided before that we would expect that to be 20% to 30% by 2018 in order to get us to that gross net of 40% to 45% that I mentioned. So given that we're starting to see the uptick, there actually may be a chance and we're working real hard on this to even go beyond the 20% to 30% guidance we gave for 2018. And it is those four steps that I just mentioned that are required for us to -- there's four key leverage points for us to improve that reimbursement percentage. Does that make sense, Steve?

Stephen Chen

Yes, got it.

End of Q&A


[Operator Instructions] And we have no further questions, I will turn the call back over to Mike Narachi for final remarks.

Mike Narachi

Thank you for your time this afternoon. We remain extremely confident in our product and believe the recent acquisition of all U.S. rights to Contrave set Orexigen on the course to build significant shareowner value. We're excited to be out there, sort of the gun went off on August 1, it’s fantastic to be ahead of schedule and we look forward to sharing additional updates in our results with you soon.


Thank you ladies and gentlemen, this concludes today’s conference. Thank you for participating. You may now disconnect.

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