Aegerion Pharmaceuticals Management Discusses Q2 2013 Results - Earnings Call Transcript

Jul. 30, 2013 10:00 PM ETNovelion Therapeutics Inc. (NVLNF)
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Aegerion Pharmaceuticals (AEGR) Q2 2013 Earnings Call July 30, 2013 8:30 AM ET

Executives

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

Marc D. Beer - Chief Executive Officer and Director

Craig E. Fraser - President of US Commercial & Global Manufacturing and Supply Chain

Mark Sumeray - Chief Medical Officer

Analysts

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

Nicholas Bishop - Cowen and Company, LLC, Research Division

William Tanner - Lazard Capital Markets LLC, Research Division

Steve Byrne - BofA Merrill Lynch, Research Division

Robyn Karnauskas - Deutsche Bank AG, Research Division

Joseph P. Schwartz - Leerink Swann LLC, Research Division

Eun K. Yang - Jefferies LLC, Research Division

Kimberly Lee - Janney Montgomery Scott LLC, Research Division

Andrew Buscaglia

Operator

Good day, ladies and gentlemen, and welcome to the Aegerion Pharmaceuticals, Inc. Q2 2013 Earnings Conference Call. [Operator Instructions] I would now like to introduce your host for this conference call, Mark Fitzpatrick, Chief Financial Officer. You may begin, sir.

Mark J. Fitzpatrick

Good morning, everyone. Thank you for joining us today on our call to review Aegerion's financial results for the second quarter of 2013 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; Martha Carter, Chief Regulatory Officer; Mark Sumeray, Chief Medical Officer; and Craig Fraser, President, U.S. and International Commercial and Global Manufacturing and Supply. At the conclusion of the prepared remarks, we'll open up the call for questions. Please note that we have slides posted in conjunction with the webcast that 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 and Presentations tab. If you are 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 and growth opportunity for lomitapide, estimated market size, our forecasted future financial and operating performance and results including our updated financial guidance; the potential and anticipated timeline for approval and launch of lomitapide in the EU and other international markets, and the potential timing and ramp of revenues from EU sales; our expectations with respect our regulatory and clinical activities; the potential impact with the competitive products; and our 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 10-Q filed on May 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. Also during this call, we will discuss non-GAAP operating expense guidance. The difference between GAAP and non-GAAP operating expense guidance is addressed in today's earnings release. 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 on Aegerion's Second Quarter 2013 Conference Call. We're pleased to update you on our continued progress this quarter. I'll be providing an update on business activities and then I'd like to ask Craig Fraser and Dr. Mark to provide an additional bit of color around the U.S. launch experience to date, including the significant need that exists for HoFH patients and how JUXTAPID is having a meaningful impact. Mark Fitzpatrick will provide analysis insight into the second quarter financial results and the revisions of our 2013 revenue guidance. I'd like to also mention that we have Martha Carter here to address any questions you may have during the Q&A portion of our call.

Please turn to Slide 3. I'm pleased to inform you of the solid execution of a commercial launch of JUXTAPID in the U.S. and that it continues. We're gaining significant traction in the market and most importantly, are already receiving great feedback of the LDL-C reductions being seen in patients on therapy which is so important in these patients, given their disease. In this still early stage of launch, relaying the foundation for long-term growth, a foundation to maximize the commercial opportunity which we continue to believe is significant. As our commercial experience grows, our confidence in the long-term opportunity of lomitapide results largely from a reinforced belief in the potential size of the HoFH market. It is common that the patient populations of a rare disease such as HoFH could be underdiagnosed prior to available therapy. With increased awareness created by approved therapies, often more patients are found. We believe this may ultimately be the case with HoFH. While HoFH patients had statins and other treatment options available to them prior to the approval of JUXTAPID, as you know those treatments are inadequate to bring these patients to the goal of LDL-C.

Due to the unique mechanism of action of lomitapide, HoFH patients now, for the first time, have a therapy that works regardless of the degree of LDL receptor defect inherent in their disease. We continue to believe that based on our estimates of prevalence of HoFH in countries where we are likely to obtain reimbursement for work on pricing, factoring in founder effect in early ongoing efforts of disease awareness where we are present in certain markets, that there may be as many as 15,000 potential patients appropriate for lomitapide therapy in total on a global basis, with at least 3,000 of them being in the U.S.

Now turning to Slide 4. As we've communicated previously during the early launch period, it has been our goal to provide meaningful data so that you can formulate an accurate picture of our progress as we ran sales of JUXTAPID. We're moving down the continuum of launch metrics with the goal of arriving at revenue as the sole measure of the launch traction.

Today, we're going to discuss the metrics for prescriptions in patients on therapy, as well as early indications of dropout and dosing compliance, and hope these wounds build confidence in our continued early progress. I want to be clear that we do not plan to provide these detailed metrics after today's call. And going forward, we ask that you focus solely on our financial results and our guidance.

We currently have 463 total unique prescriptions written globally compared with 185 as of April -- as of our April 30 earnings call. And while we cautioned in the past, not every script will result in a patient on therapy, we are extremely pleased with the continued acceleration of prescriptions on a weekly basis. As a reminder, the script number includes not only scripts written in the U.S. for commercial product, but also scripts written outside the U.S. on a named-patient basis prior to approval. We now have 215 net patients currently on therapy. Recall that during our April 30 call, we announced that we had 75 patients on therapy.

Turning to reimbursement. Our ability to obtain coverage for JUXTAPID, is meeting our expectations, and a significant majority of scrips approved by payers thus far had that first cycle approval. Our highly experienced customer care organization had done a commendable job of supporting physicians and patients and working through denials received through the appeal process. And in most cases, I've seen the denials overturned. We continue to feel confident in the support our team is providing on the reimbursement front. The process has become more efficient and has resulted in meaningful reduction in time between prescriptions written, to the patient coming on therapy.

6 months in the launch, our experience with dropoff compliance with respect to JUXTAPID has been well within expectations of the trends and are encouraging. Most patients are tolerating the product well, which we believe is largely as a result of the dietary counsel and the nutritional support materials that we have provided every patient who consents to interact with our customer care team. In fact, physicians appreciate that our dieticians are able to work closely with their patients to help establish them on a low-fat diet that many patients have not previously been able to achieve. We also have services in place or are being rolled out in the near-term such as medication reminder system that are assisting on those compliance. Thus far, we've experienced a dropout rate of less than 10%, primarily due to GI side effects. However, we are cautious to note that in the early phase of launch, many patients are still on a low dose during titration phase, with many patients being still on the 5- and 10-milligram doses.

Compliance with therapy has been in the range of 80% to 90% and factors in all potential reasons for a patient's noncompliance, including GI tolerability and LFT elevations. Both our current dropout and compliant metrics represent a promising snapshot of how well patients are tolerating therapy thus far. And we're pleased that our strategies for managing dropout compliance have been effective.

Moving forward, minimizing patient dropout and ensuring compliance with therapy will continue to be a primary focus of our team. As you know, this is chronic therapy, with manageable dropout and compliance rates, the cash flow with compounded revenue growth from this single product can lead to significant value creation. For these reasons, as well as our traction to date in obtaining prescriptions, we are steadily and appropriately have been investing areas such as our customer-facing organization.

With that, I briefly turn the call over to Craig Fraser, to provide you with additional detail on our commercial experience in the deal with the U.S. and how it's impacting our growth of our business. Craig?

Craig E. Fraser

Thanks, Marc. We continue to feel very encouraged by the team and product performance in the early stage of commercial launch. Physician and patient receptiveness is reaffirming our belief that JUXTAPID has the potential to become the standard of care for treating HoFH patients. I have personally spent a number of days in the field with my team discussing JUXTAPID and its use in the adult HoFH population. In mine and the team's interactions with cardiologists and lipidologists, it is becoming apparent that there may be even more HoFH patients than we previously estimated, who may benefit from JUXTAPID treatment. While we are still in the early commercial launch days and much work is being done to fully understand the potential of this market, the early signs are encouraging. As Mark discussed, dropout and compliance trends have been well-managed thus far and we believe this to be a direct result of having clear insights into our business and patient status, and by providing the physicians, patients and office staff with the education and support they need to optimize treatment. We're seeing that within each practice. It is not uncommon for a physician to want to gain experience with JUXTAPID in their first patient before committing to further prescriptions. With each patient treatment success, we often unlock greater potential opportunities for practice penetration.

6 months into the launch, it is clear there is a well-understood need to treat HoFH patients and that JUXTAPID is an important new option for these patients. We believe there's much opportunity for growth and that we're just getting started. I'll turn the call over to Dr. Sumeray to elaborate further on the early medical learnings in the commercial setting. Mark?

Mark Sumeray

Thank you, Craig. I believe one of the most important points that has been reinforced for launch is that there may be a more significant population of homozygous FH patients in need of therapy than we had initially anticipated. As we might have predicted based on the number of mutations identified, we believe that the incidence of both homozygous and heterozygous FH is almost certainly greater than reported in the literature. Consistent with what we might expect, recognizing that homozygous FH is a disease that is imprecisely diagnosed and has a very broad spectrum of severity, we've seen that the range of LDL cholesterol levels among HoFH patients is wide. However, anecdotally, the patients we're seeing prescribed JUXTAPID in the commercial setting have a severe clinical xenotype that demonstrates aggressive advanced cardiovascular disease. These are, without question, patients at high risk of cardiovascular events. They are also patients that, for the most part, we don't believe will be adequately treated by potential future therapies currently in development, such as TKFK9 [ph] and Emetepsin [ph]. Patient experience with JUXTAPID thus far appears to be very positive, and we're encouraged by the many individual stories of patients with reductions in LDL cholesterol that has not previously been achieved. We look forward to presenting our expansion study data later this year, which we believe will provide good insights into the continued demonstration of JUXTAPID's clinical benefit. Marc?

Marc D. Beer

Thank you, Dr. Mark. Turning to a brief update on our regulatory clinical progress on Slide 5. Following the positive opinion for the CHMP in May, we continue to expect formal approval from the European Commission in August and expect to begin launch of LOJUXTA, the brand name for lomitapide in the EU, in a prioritized country-by-country manner. As you know, we will have to obtain pricing approval in each EU country which can take up to 9 months or longer. We plan to commence launch of LOJUXTA in late Q3 on a limited basis in certain countries where we can begin marketing and selling activities without formal pricing approval. The drug agency in Italy recently launched -- excuse me, announced that LOJUXTA has been included in the 648 list for priority for a period limited to the next 12 months. Meaning, we can sell LOJUXTA, bear our named-patient basis while we're working through the negotiation process for pricing and reimbursement.

Our Phase III clinical trial was conducted in Italy, among other countries and the positive physician and patient experience with the product, together with the efforts of our team there, helped to make the 648 pre-reimbursement approval access a reality. We believe we are appropriately measured in our approach to build infrastructure in Europe, which as we've communicated previously, will be a more challenging market than the U.S., particularly due to pricing and reimbursement hurdles in the macroeconomic environment. The EU will be an important market for us. However, we expect the ramp to be considerably slower than the U.S. and that the EU will not begin to make a meaningful impact on our revenue until 2014. Our focus on swift global expansion is important and our global regulatory filings continue, with filings complete or on track for completion in important countries such as Taiwan, Mexico, Argentina, Canada, Brazil and Israel.

Following the successful completion of the PK/PD study of lomitapide required by the Japanese regulatory authorities, expected in Q4, we plan to submit the Phase III report results to the Japanese regulatory authorities and to conduct a small therapeutic study of lomitapide in Japanese adult HoFH patients. If we receive no further request for additional data or analysis, we plan to dose the first patient in this therapeutic study in either the fourth quarter of 2013 or the first quarter of 2014. The sooner we are able to file the following completion of the 26-week efficacy phase, we plan to be in a position to submit our Japanese NDA as early as the first half of 2015. Our Japanese regulatory team recently received the MHLW/PMDA letter recommending the designation of lomitapide as an orphan drug in Japan. And we believe this is a very positive sign.

On the pediatric HoFH front, the FDA has required that we conduct the juvenile tox study in rodents to understand the impact, if any, of lomitapide on the growth and development prior to initiating a clinical a study on lomitapide in pediatric patients. And we initiated a nonclinical rodent study in the first quarter of this year. We expect the clinical study in pediatric patients to begin in 2014.

Now I'll turn the call over to Mark Fitzpatrick to review the financials and revised guidance. Mark?

Mark J. Fitzpatrick

Thank you, Marc. Turning to a review of our financials on Slide 6. Net product sales for the second quarter of 2013 were $6.5 million. For the first half of 2013, net product sales were $7.7 million. While the vast majority of net product sales this quarter come from U.S. prescriptions, our net product sales also include product shift to fill new patient orders outside the U.S. that were for multiple months of therapy.

Total operating expenses were $24.5 million for the second quarter ended June 30, 2013, including $16.8 million for SG&A and $7.6 million for research and development. This compares as operating expenses of $13.7 million including $7.7 million in SG&A, $5.4 million for research and development and $0.5 million for restructuring costs in the second quarter of 2012. In second quarter of 2013, operating expenses contained $6.8 million of stock compensation expense. We had a net loss of $18.9 million or $0.66 per share for the second quarter of 2013 compared with a net loss of $13.9 million or $0.63 per share for the second quarter of 2012. Operating expenses reported $3.5 million for the 6 months ended June 30, 2013, including $30.1 million for SG&A and $13.4 million for research and development. This compares with operating expenses of $24.3 million including $12.9 million for SG&A, $10.1 million for research and development and $1.4 million for restructuring costs for the 6 months ended June 30, 2012.

Operating expenses for the first 6 months of 2013 contain $10.4 million of stock compensation expense. We had a net loss for the 6 months ended June 30, 2013 of $37 million or $1.30 per share versus a net loss of $25.6 million or $1.18 per share for the 6 months ended June 30, 2012. The increases in selling, general and administrative expenses in the second quarter of 2013 over the comparable period in 2012 were primarily related to the increased headcount in both selling and administrative functions, as well as outside services required to support the commercial launch of JUXTAPID and our global expansion.

The increase in research and development expenses in the second quarter of 2013 over the comparable period in 2012 was primarily related to increased employee costs related to the company's medical affairs and international regulatory activities, as well as increased clinical development expenses in connection with the potential marketing authorization application for JUXTAPID in Japanese HoFH patients, partially offset by a decrease in manufacturing development costs.

Turning to the balance sheet. We ended the quarter with $129.1 million in cash, cash equivalents and marketable securities. This compares to $82.2 million as of December 31, 2012. Our cash used in operating activities was $12.1 million and $33.6 million for the second quarter and first 6 months of 2013, respectively. We continue to believe that we have sufficient cash to achieve cash flow positive operations.

Based upon the results we have seen to date and our current insights into launch, we are revising 2013 full year revenue guidance upwards. We now expect to achieve between $30 million and $35 million in net product sales in 2013. While we expect the number of patients on therapy at year end to exceed our prior estimates of 250 to 300 patients, consistent with our plan to discontinue offering specific launch metrics other than sales, we no longer plan to provide guidance for the number of patients on therapy at year end. We continue to expect total operating expenses excluding stock-based compensation expense to be between $75 million and $85 million in 2013.

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

Marc D. Beer

Thank you, Mark. I want to reiterate that we continue to be conservatively optimistic and diligently focused on our launch, mitigating risk and calibrating our activities so we can enable continued growth. It is critical that we continue to build up the structure and scalable processes that will support this growth for many years to come. I'm confident we have the right people in place to continue to execute on this build. There's still significant work to be done to optimize our launch, based on our early experience, and we are aggressively pursuing these activities. We've built a very capable team in all disciplines here in Aegerion. If the time is right, we plan to leverage our collective experience, knowledge, infrastructure and passion, to find and develop a second product candidate for patients with a rare and debilitating disease. In the near term however, we continue to focus on the HoFH patients.

Operator, let me turn over the call for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Cory Kasimov with JPMorgan.

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

Two questions for you. First of all, I'm wondering what the conversion rate to date has been from patients who are originally written a prescription to actually start in therapy?

Marc D. Beer

Cory, first off, thanks for the question and thoughts on the quarter. I -- we haven't given that percent -- it's high, it's very high. And we're not trying to message that there is an issue between prescription and patients actually going on therapy. In my experience, in every rare disease, these are significant diseases and these patients are going through a lot, and sometimes they choose not to go on therapy. It's not common but it does happen. So we haven't quantified that, but we just didn't want to set the expectation on an ongoing basis. I said the same thing in the last couple of quarters that you will get prescriptions that some patients don't go on therapy. But the vast majority of patients go on therapy.

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

And then my follow-up question, in many ways, related to this and I'm curious as to maybe the granularity of the acceleration of new prescriptions. And Marc, I believe you said it continues to accelerate on a weekly basis. You guys are obviously off to a fantastic start in terms of getting patients on drug at the halfway point of this year. I'm wondering if you've started to see growth taper off at all because the guidance that you've put out, it's a healthy bump, but it still seemed quite conservative relative to where prescriptions seem to be tracking.

Marc D. Beer

Yes, Cory, that's a question obviously that I planned on somebody surfacing because you just do the -- you know what I mean, all of you out there crunching the numbers now and you do the math, you see tremendous acceleration from Q1 to Q2. And you see it in the fundamentals that are important to the business. You see it in the prescription and you see the patients coming on board. And I want to commend our sales team in the field because they're doing a spectacular job of educating physicians appropriately, and our COMPASS team is doing a spectacular job dealing directly with reimbursement and the patients. Now can we count on that acceleration continuing forever? No. We're early in the launch. I just like to caution everybody, it's early. We're only 6 months into this launch. We're learning a lot. Early signs are good, but it's early. So I think it's probably not prudent to expect the kind of acceleration that we're seeing to continue forever. We are seeing it, though. We're seeing it at Q2 versus Q1, and we're seeing it week per week. I just think that it's early in the launch. It's probably irresponsible to take guidance up beyond where we feel comfortable right now.

Operator

Our next question comes from Nicholas Bishop with Cowen and Company.

Nicholas Bishop - Cowen and Company, LLC, Research Division

Since the quarter, just to follow up a little bit on what Cory asked. You have seen pretty dramatic acceleration from about 50 prescriptions a month at the last update to closer to 90 by my math at this point. I wonder if you could talk a little bit about the source of those new prescriptions? Are those still increased penetration of the U.S. market or is there more x U.S. contribution at this point? Just any granularity there would help.

Marc D. Beer

Yes, the majority -- the vast majority of this is really the U.S. As we expected at this stage, and as we expect to the remainder of this year, we do see international named-patient scrips coming in nicely but they're dwarfed by the scrips that we see in the U.S. So the vast majority of the growth that we're seeing is U.S.-based. And it's just our sales organization, going from finding the physicians with the patients in the first quarter, to real fundamental commercial-phasing execution in the second quarter, we just start to see it really kick in. I really believe we hired the best in the field and I think that they're doing a spectacular job of education and working with physician after physician, and they're really gaining good traction in Q2. That's what you're saying. There's -- it's nothing more than just good optimization from Q1 to Q2 and having the right people out there doing the right things.

Nicholas Bishop - Cowen and Company, LLC, Research Division

And if I could put in one additional question. On the drop-offs, so you mentioned a less than 10% discontinuation rate. Could you put a little bit of a bar around the -- sort of the timeframe we're talking about? I mean, is there a number of drop-offs after 3 months of therapy or after 6 months? Should we expect the number to rise over time? Just the time element would help.

Marc D. Beer

That's a great question, Nick. I want to remind everybody about this dropout focus because at the JPMorgan Conference, I think I emphasized that I believe that our commercial organization could significantly beat the experience that we had in our Phase III, to the point where I think I made the comment that if Craig Fraser and his team can't beat the Phase III metric of 20% dropout, I'm going to take him out to Springfield, Mass. and shoot him. I just want to emphasize that this dropout is being managed and complianced by a spectacular team of customer-facing people. And it's not without a very concerted effort and programs and execution of those programs that are all in the interest of patient care and keeping these patients on therapy. We can't keep these patients out of harm's way if we can't keep them on the drug. And so this has been a concerted effort. I think that it is a beating heart. I don't think -- I know it's beating our external expectations. And the dropouts, as we educated you prior, if we do have a dropout, it's early. Typically, if we ship the second product -- excuse me, the second bottle and definitely, if we ship the third bottle, that patient's going to remain on therapy. Our clinical trial experience, where we couldn't have the high-touch support with physicians and patients, demonstrated no dropout after the second bottle through the end of the trial at 78 weeks. So if we have dropouts, Nick, they're early. Usually caused by GI and the patient just not complying with the nutritional counseling. The vast majority of our patients, greater than 90%, appreciate the counseling, they're listening to it. And I think I've shared previously, if not I'll share it now, that I had a physician share with me when I was in the field, that, "Marc, I couldn't keep my patients on a diet but your nutritional counseling, your organization combined with the effect of the drug, are just keeping these patients on diet," which was spectacular. So Nick, I don't see that number changing drastically. We're going to do everything we can do to make sure that it doesn't. And it comes down to real execution. That's not by happenstance. On the compliance, you didn't ask about compliance, but I'll reiterate it again. We take compliance very seriously. If we ship 30 capsules for a month, we really know you can take 27, you can take 28, you can take 29, before we ship the next bottle. So we monitor adherence and compliance very carefully. It's very important to the long-term effect of the drug and keeping these patients healthy. So both we take very seriously, and I commend Craig and his team for doing a great job of managing.

Operator

The next question comes from Bill Tanner with Lazard Capital Markets.

William Tanner - Lazard Capital Markets LLC, Research Division

I don't know who this question would be for, but Marc, it does dovetail on your last comment as it relates to compliance. So I'm just trying to understand that dynamic a little bit better, that it sounds like it's a little bit more complex and just patients remembering to take the drug in the press release, obviously, their comments about GI tolerability and liver function tests. So I just wanted to understand a little bit better the general landscape there, or are most patients impacted, a handful of them? I would assume there's variability in the length of discontinuation, and I just really want to understand, is that kind of 80% probably the -- or 80% to 90%, is that a steady-state or is that something that you think could be improved upon? And then I had one follow-up if I could, please.

Marc D. Beer

Okay. Thanks, Bill, thanks for the question. First off, everybody on this call, I think, is well aware that compliance with a small molecule usually is at 80% to 90%. It's usually 70% or less across all the small molecules. And the #1 reason for compliance with a pill or a lack of compliance is just remembering to take it. And that is going to be, and it's too early in the launch, but that's going to be most likely our biggest challenge. That's why we have a lot of support wrapped around the patients to remind to their take therapies. It's important, it's a life-saving potential therapy. It's important you stay on it. So I am very pleased about -- with 80% to 90%, and I hope that the commercial organization can continue to wrap the support. I can tell you, everything we're doing is scalable, and the leadership team focuses on processes, processes that are scalable across everything we do. And we don't think about how do we serve the 200 patients effectively, it's how do we serve the patients that we're going to get in '14, in '15 and '16, effectively. So we really do think scale and processes when we're thinking about compliance, and yes, in dropout support and nutritional counseling. So Bill, I hope that we can maintain that. It's a pretty steady number right now. But I'll emphasize, it's early in the launch, and if you think about the ramp of prescriptions and patients coming on therapy, we haven't had a lot of time to demonstrate compliance. But I've got a big enough end that I feel -- I felt comfortable coming out with the numbers, as everybody on this call knows that I don't like to come out with numbers that are not either material or they're not large enough for me to make a material statement. So I feel like the compliance number is real and the dropout number is real across a large number of patients and one that we feel comfortable coming out with. And I hope we can maintain that and never be satisfied with it and take it up. We can count on that but what can you do to actually approve on that metric as well as the dropout metric?

William Tanner - Lazard Capital Markets LLC, Research Division

And so Marc, then based on your commentary, it sounds like the comment in the -- notwithstanding the mention of GI tolerability and LFTs as it is maybe just more of your garden-variety compliance with an oral med than it is something specific to lomitapide and any of the side effects thereof?

Marc D. Beer

That's our belief, Bill. That's our belief.

William Tanner - Lazard Capital Markets LLC, Research Division

And then just to follow up. Any commentary that Craig could offer or you guys could provide in terms of what is a general sort of an average lag in terms of when the prescription is written until when a bottle is shipped. And is that trend improving?

Marc D. Beer

Yes, I'll make a comment and then, Craig, please chime in. Bill, it's improving from first quarter to second quarter, time of script to bottle being shipped. I am so proud of the team we have. Internally, our COMPASS team, they're all very experienced. They all have a tremendous tenure on reimbursement working with the insurance carriers and working with the patients. I continue to get nice compliments from the patients, specifically about the relationship they've built with the COMPASS team. And I also am just really happy with the time of script to shipping, decreasing it. That's evidence that that team is executing well with the insurance carriers and also with the patients. And then our outside sales organization obviously works in concert with the COMPASS team. So that's working smoothly. Craig, anything to add to that?

Craig E. Fraser

No, Marc. Just that we really diligently monitor and manage the systems and process, and we've learned a lot along the way and have applied those learnings. I think that's what -- that along with the scale is really leading to the meaningful reduction that we're seeing at this time.

William Tanner - Lazard Capital Markets LLC, Research Division

And can anybody throw out a number then in terms of months on average?

Marc D. Beer

No. It's not something that I want go out there with a metric. It's still too early in the launch. But it is tightening down, it is tightening down, though. It was the nice trend to see.

Operator

Our next question comes from Steve Byrne with Bank of America.

Steve Byrne - BofA Merrill Lynch, Research Division

And earmarked for free drug due to a lack of insurance. Are those patients included in your metrics?

Marc D. Beer

The free drug patients are not included in these metrics. No.

Steve Byrne - BofA Merrill Lynch, Research Division

And would the 215 patients that are on drug, does that metric include patients that have been denied coverage, or are these all reimbursed patients?

Marc D. Beer

No, those, Steve, are patients on therapy, and we don't ship until pre-office approves. So those are approved insurance on therapy patients.

Steve Byrne - BofA Merrill Lynch, Research Division

Okay. So for those patients that are denied coverage, are those patients then referred to one of the free drug programs?

Marc D. Beer

So the process that we take these patients through is that if they're denied, the vast majority of denials get overturned. The vast majority. And when we get down to the very small numbers that we can't get through reimbursement and they go on a free product, we have a handful of patients that are in that category, and they're not included in the numbers that we'll be sharing with you going forward.

Steve Byrne - BofA Merrill Lynch, Research Division

Okay, and then Mark, Mark Fitzpatrick, can you comment on the net price in the quarter, net of any discounts that are out there?

Mark J. Fitzpatrick

The gross to net percentage, Steve, is running at approximately 7% of gross revenues. Still early days to determine where this mix will settle out between commercial and government payers, but that is the gross to net percentage that we're experiencing today.

Steve Byrne - BofA Merrill Lynch, Research Division

Okay, and just lastly, how are the physicians generally handling patients that have the elevated LFT? And how does that contribute to noncompliance?

Marc D. Beer

So I'll ask Dr. Mark to comment about what he's seeing. But we look at compliance just strictly on how many pills they should take that we ship out, and how many do they take at the end of the quarter. Before we ship another bottle, we ask how many pills are still in the bottle, so we can maintain compliance and support the patient appropriately. But Dr. Mark, do you want to talk about how physicians handling LFTs and compliance?

Mark Sumeray

So we've educated the physicians on the label. The label includes very specific recommendations about how to adjust to those in the drug, or temporarily discontinue the drug depending on the magnitude of the difference on elevation. As you know, each physician has to go through REMS training. And that's a very important component of it. And from what I've seen, looking at the few patients that have had LFT elevations thus far, the physicians following the guidance system provided to them which is consistent with the advisements and the label for the drug.

Operator

Our next question comes from Robyn Karnauskas, Deutsche Bank.

Robyn Karnauskas - Deutsche Bank AG, Research Division

A lot of my questions have been answered, but -- and 2 things. It looks like if you give -- look at the metrics you gave for just the quarter and the sales that you booked, that perhaps there was a lot of patients that came on toward the end because it doesn't seem like given your compliance numbers and your gross to net numbers, that the revenue matches like the number of patients very well. And maybe you can talk a little bit about the lumpiness during the quarter? And then my second question is about global patients. So you mentioned in the beginning that you're seeing, or you believe now there's probably a lot more patients than you initially thought, and that there's at least 3,000-plus in the United States. When do you think you'll have a better sense of how we should think about maybe the Turkey, Brazil, the x European countries, and how they'll contribute to global sales?

Marc D. Beer

Thanks, Robyn, and good question. So on your first question, I'm curious as to what metrics would lead you to believe a lumpiness. We're seeing a good steady acceleration of prescriptions in patients. I mean, you have week-to-week variation, you have month-to-month variation, but if you look at the first 6 months, it was a nice steady climb. So I don't have anything internally that's telling me that it's extremely lumpy. And again, on the prescriptions side which is really our leading indicator for future revenue, it's -- the scripts specifically have been at a nice steady climb. And then on the ex-U.S. versus U.S. For '13, I would counsel everybody to really focus our revenue performance and our cash flow performance based on the U.S. We're seeing nice traction on scripts in certain countries outside the U.S. The vast majority, the material growth in revenue and cash flow success in '13 is going to come from the U.S. Now in '14, the traction on scripts in the international markets is going to contribute, I think, significantly, to our revenue and continued growth on cash flow in '14 and '15. But in '13, it's going to be really U.S.-based.

Robyn Karnauskas - Deutsche Bank AG, Research Division

Just a follow-up, and do we have any sense, if you're saying there's at least 3,000-plus in the U.S. Do you have any sense of -- and I think, you said before, maybe that same amount in Europe, like how big is this global opportunity and when do we get a sense? And my second follow-up is mentioned at the beginning, that a lot of patients that are going on drug are very sick. And I was curious how many of them were genotyped for HoFH.

Marc D. Beer

The vast majority are not typed. Consistent with what we had communicated prior to launch, and they're not typed on a global basis. Even more so, in the U.S. than in Europe. But they're really not typed on a routine basis. And then your second question, Robyn, was what?

Robyn Karnauskas - Deutsche Bank AG, Research Division

How may -- so it gets to -- you've given metrics around 3,000 in the U.S. plus now and 3,000 ex-U.S. or in Europe. But there's still no color on Brazil and Turkey which is, I understand, are small, but they still are contributing and will contribute more. Do we have any sense of how big those markets are versus Europe and the United States?

Marc D. Beer

Yes, we do, Robyn. We've got a good team in Brazil. And we have a European team that has been focused on Turkey to characterize that market. I also can share with you that in the last 2 weeks, I personally was in Turkey for 3 days, meeting with thought leaders and government reimbursement individuals and really got a very hands-on personal view of how we're characterizing that market. Turkey's a healthy market. There's a population of Mediterranean and Lebanese families that over the last decade or -- excuse me, century or 2, have migrated into that country, and there's a founders affect that affects that population. So Turkey's a healthy -- has a healthy a population of HoFH patients. Brazil does as well. We've got a spectacular team on the ground in Brazil, and we've got a good patient population that's well-characterized there. I don't feel comfortable yet giving prevalence numbers by country. I just -- I don't think we're there as an organization. But I do think that the global opportunity I have quantified, I think in the countries that we believe we can ultimately get reimbursement and that we've studied enough to date that the potential of as many as 15,000 patients on a global basis does exist. It's going to take us a while to get out to those countries because we're still a small organization. But that patient population, we really believe, does exist on a global basis.

Operator

Our next question comes from Jim Schwartz with Leerink Swann.

Joseph P. Schwartz - Leerink Swann LLC, Research Division

So I was wondering if you could give us some insight into how many physicians have prescribed JUXTAPID or LOJUXTA or both so far? And how many physicians that are prescribing the drug have you had the opportunity to be in front of?

Marc D. Beer

So I'll take the second one first because it's the easiest. We're in front of every physician who's ever prescribed the product as we need to be and it's the responsible thing to do. We REMS-trained any physician prior to accepting the prescription, and it's a really important training that we take very seriously. Now we emphasize this organization that we want appropriate patients that meet the FDA label and REMS requirement, and it's critical that we do the proper education of both risks and benefit of what we studied in clinical development, with the physician that had an intent to prescribe. So we have a high comfort that our organization, our sales organizations has done that in a high-quality way. And so we're in front of every physician, Joe, prior to a script. Now your first question was how many docs have written these scripts. We haven't given that number publicly and for a lot of reasons. I felt that it's in our best interest competitively, and probably one of the most important ones, that we're not the only one in this market. So given the roadmap on how many physicians are writing these prescriptions or where they are, we definitely don't want to do. I will emphasize this still. We have not gone to the vast majority of physicians that are out there, that have the potential of having these patients. And it's important that we continue to add individuals to our customer-facing activity so that we can get out to the physicians of need, so that they get to the patients in need. Because we haven't called on anywhere near all the physicians that we need to to educate them on the potential of this product. So we got to a good number, it's -- but it's a small percentage of the total population of physicians out there. So we still have a lot of education to do in this market. Joe, was there a follow-up?

Joseph P. Schwartz - Leerink Swann LLC, Research Division

Yes, actually, you kind of led into it. I was going to ask you about some of these systems that you've alluded to, as they're evolving, and how many of the patients do you think you're able to interact with on a regular basis, with whatever means that you have?

Marc D. Beer

Well, the patient touch is high. We get a consent from the patient, we monitor whether they're happy with that high-touch from our COMPASS team, and I think the vast majority of the patients really appreciate that high-touch. We're actually in the process now of going back and doing market research with the patients to make sure that we are giving them the service that they need, and I look forward to the optimization of our internal organization as we listed in that market research. But the touch point with the patient after consent with our COMPASS team is very high.

Operator

Our next question comes from Eun Yang with Jefferies.

Eun K. Yang - Jefferies LLC, Research Division

Thanks very much. Out of the 215 patients currently on JUXTAPID. What percent of the patients were previously on a apheresis?

Marc D. Beer

Eun, we haven't been public about that number but I'll tell you the vast majority of them are not on apheresis. And that's probably more a point of just how many patients are on apheresis in this country, which is not a large number. So the majority of our patients that are going on JUXTAPID or the 215, are not probably on apheresis. We do have a good number that are, but the majority are not.

Eun K. Yang - Jefferies LLC, Research Division

Okay, then what's the kind of average or median LDL-C baseline for patients on the drug?

Marc D. Beer

We haven't given that number publicly. We look forward to getting the registry and publishing off the registry. And I think we're going to have tremendous data in the years to come on the mean, both the mean entry of our patients which are -- these patients are very severe. And we plan to publish off the registry of the long-term benefit to keep that LDL-C down, but we haven't given that number publicly.

Eun K. Yang - Jefferies LLC, Research Division

Okay, the last question. In the ex-U.S., the patients who are on named-patient basis, is the pricing settling JUXTAPID pricing there? Is it similar to U.S. pricing?

Marc D. Beer

It is, Eun. That's our objective, is to keep that global price consistent. And to date, we have succeeded in that.

Operator

Our next question comes from Kim Lee with Janney Capital.

Kimberly Lee - Janney Montgomery Scott LLC, Research Division

A couple questions for you here. I guess one for Mark. Are you still -- has your outlook changed for the timing of reaching profitability? That's the first question.

Marc D. Beer

So typically, I assume that you don't want to ask that of Dr. Mark?

Kimberly Lee - Janney Montgomery Scott LLC, Research Division

No. Mark Fitzpatrick.

Mark J. Fitzpatrick

Yes, I mentioned during the script that we believe we have sufficient cash on hand to reach a cash flow positive operation. I know we've said in the past that the company expects that cash flow breakeven point to occur in the second half of 2014. So on this webcasted call, we're reiterating the fact that we believe that that is still the case.

Kimberly Lee - Janney Montgomery Scott LLC, Research Division

Okay, and then how many, I guess, can you kind of detail the mix of type of physicians who are currently prescribing and seeing these HoFH patients? Are they still more cardiologists, are you seeing a lot more physician -- other types of physicians prescribing?

Marc D. Beer

No, Kimberly. My comments after the first quarter release are consistent today which is, we're getting more prescriptions from cardiologists than we are from lipidologists. We do have a large percentage of our patients coming from lipidologists as well. But the larger percentage, and again it's probably just -- it's consistent which just more cardiologists, and just where the patients reside. But we are very getting a bunch of those lipidologists and cardiologists, but more from cardiologists than lipidologists.

Kimberly Lee - Janney Montgomery Scott LLC, Research Division

Okay, great. And then if I can ask a question on -- 2 questions. One on the Japanese -- I guess size of Japanese population that you anticipate you could target? And then also on the pediatrics study, can you delineate what you're thinking of as a design for that pediatrics study?

Marc D. Beer

Sure. 2 good questions, Kimberly. Both of which we will get more clarity on a go-forward basis. The first one, the Japanese market. We've mentioned before that we see the Japanese market as 1 of our top 3 markets in our LRP, our long-range plan. So it's a very healthy market. I don't believe that we have it characterized well enough for me to get more quantitative in that. We will in the future though, as we get closer to commercialization in Japan. On the pediatric front, we look forward to the approval of this protocol and then once we get the approval to protocol, we will be more regular about what that protocol looks like. We haven't, to date, gained that approval and would like to gain that approval on protocol prior to coming out with it. That will be short stone and we hope to come out with the protocol to give you more clarity around the pediatric study in the near future.

Operator

Our next question comes from Salveen Richter with Canaccord.

Andrew Buscaglia

This is Andrew on the line for Salveen. I was just wondering if you're giving a kind of breakdown of how much of each dose has been prescribed thus far?

Marc D. Beer

No, and we haven't given that color around how many patients are on the 5s, 10s and 20s. The penetration is, from our view, on track and the physicians are enjoying a very responsible job of successfully keeping the patients on therapy through the titration phase, but we haven't given more color around that. We look at it very closely. I'm very pleased with it. It's as expected. We expected some physicians to go a little bit slower, to get comfort around the titration that's happening. And it probably has a little bit to do with the success that we have on keeping patients on therapy, which is good. But the penetration, I would say is what we expected.

Andrew Buscaglia

Okay, great. And then just one follow-up. I think earlier, you said that you're getting a lot of scripts that are written, or some scripts that are written and not filled because the patient chooses not to go on. Can you just kind of qualitatively give how much is the script that's written and not filled? It's because the patient decides not to go on versus an insurance problem?

Marc D. Beer

Yes, usually it's probably the insurance problem. It's something with the patient, in the nuance of the patient. But again, it's consistent with my experience on multiple rare diseases. So I just didn't want anybody to come, take every prescription and drive it right to a patient on revenue in your models. So it's typical. It's not alarming in any way, and we'd like to keep minimizing that to the smallest possible number, and we're doing that through education. But that's what it is. It's not reimbursement. This is more of a patient issue.

Operator

I'm not showing any further questions at this time. I'd like to turn the conference back to Marc Beer for closing remarks.

Marc D. Beer

Great. Thank you, operator. Thanks, everybody. In conclusion, we are still in the early days of this launch, but all signs are encouraging, and we're very pleased with the execution to date. I look forward to keeping you updated as our progress continues and our traction continues in this marketplace. Thanks, everybody. Have a nice day.

Operator

Ladies and gentlemen, that concludes today's presentation. You may now disconnect and have a wonderful day.

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