Dermira (NASDAQ:DERM) Q3 2018 Earnings Conference Call November 7, 2018 4:30 PM ET
Ian Clements - IR
Tom Wiggans - Chairman and CEO
Lori Lyons-Williams - Chief Commercial Officer
Luis Pena - Chief Development Officer
Andrew Guggenhime - CFO
Louise Chen - Cantor Fitzgerald
Seamus Fernandez - Guggenheim
Serge Belanger - Needham & Company
Umer Raffat - Evercore ISI
Good day, ladies and gentlemen, and welcome to the Dermira Third Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded.
I would now like to introduce your host for today's conference, Ian Clements, Head of Investor Relations. Sir, you may begin.
Thanks, Jorinda [ph], and good afternoon everyone. I'd like to welcome you to Dermira's inaugural quarterly earnings conference call to discuss the financial results for the quarter ended September 30, 2018. I am joined today by our Chairman and CEO, Tom Wiggans; our Chief Commercial Officer, Lori Lyons-Williams; our Chief Development Officer, Luis Pena; and our Chief Financial Officer, Andrew Guggenhime.
Earlier this afternoon, Dermira issued a press release announcing the company's results for the third quarter of 2018. Copies of news releases and the SEC filings can found on the IR section of our Web site, www.dermira.com.
Before we begin, I'd like to remind you that during the course of this conference call we'll be making certain forward-looking statements about Dermira based on management's current expectations, including statements regarding Dermira's business plans, development programs, strategies, prospects, market opportunities, and financial forecasts and guidance. These statements are subject to numerous risks and uncertainties, and actual results could vary materially from the results anticipated by these statements. Investors should read the Risk Factors set forth in Dermira's Form 10-K for the year ended December 31, 2017, and any subsequent reports filed with the SEC.
With that said, I'd now like to turn the call over to Tom Wiggans. Tom?
Ian, thank you. Good afternoon everyone, and thanks for joining us for our first ever conference call, earnings call. It's a very exciting time here at Dermira as we continue to rollout our QBREXZA launch plan. Today, we have a great deal to share with you about the launch, as well as the upcoming Phase 2b lebrikizumab clinical trial data.
It's not just the last four weeks of the launch, or rather the last four months that have defined a significant turning point for Dermira. The approval of QBREXZA marked an important milestone for Dermira and for dermatology as the first topical prescription cloth approved to treat primary axillary hyperhidrosis. This milestone enabled our transformation into a commercial enterprise. And just as importantly, our ability to deliver a therapy to dermatologists and their hyperhidrosis patients, a therapy that they have been eagerly anticipating.
On October 1, we announced that QBREXZA was available by prescription in retail pharmacies across the country, and that our dedicated sales force simultaneously commenced physician promotional activity, and that these on-the-ground activities were being supported by broad insurance coverage. And four weeks into launch, we have been very pleased with the results and the feedback to date. I'd like to thank all of our employees, our clinical trial participants and investigators, and our advisors and partners without whom this would never have been possible. Shortly, Lori will provide additional information on what we're seeing in the market during the first month of launch. But before that, I'd like to highlight the key activities which we feel are crucial to a successful launch.
Patient activation, physician education, and market access are key to our success. We understand that patients have been waiting a log time for this treatment option, and it was important to us that they did not have to wait any longer. We believe it is imperative for a successful launch that both physicians and patients have easy and affordable access to QBREXZA. So we made access a priority by investing in obtaining broad quality payer coverage and in a comprehensive support program in the form of Dermira Connect. Dermira Connect helps the process so that getting access to QBREXZA is simplified for both the dermatologist and the patient. I believe we've excelled at delivering on these key priorities, which I am particularly proud of as a small company with our first product introduction.
At the same time, as expected, we are witnessing the realities of the healthcare system and the reimbursement environment. We were prepared for this and are working through the inevitable issues that often arise during a launch. Lori will comment on this further. As well as the work we are doing to ensure have good quality access to QBREXZA. I'd also like to highlight the key achievement in our other emerging program, the Phase 2b study evaluating the safety and efficacy of lebrikizumab in patients suffering from moderate to severe atopic dermatitis. We announced two weeks ago that we'd completed enrollment in this Phase 2b study, which puts us on track to announce top line results by early April 2019.
The speed with which we enrolled this study is a testament to the clinical team, our study partners, and to the unmet patient need. Luis will spend time later providing additional details on the lebrikizumab program and why we believe that, if successful, in this Phase 2b study we will be taking a best-in-class therapy for the treatment of atopic dermatitis into Phase 3 studies.
Now, I'd like to turn it over to Lori who will discuss the QBREXZA launch in more detail.
Thanks, Tom. Our headline view of the QBREXZA launch is that we're off to a promising start in the early days. The first few weeks have been encouraging as we continue to lay the groundwork required for QBREXZA's long-term success. As you might imagine, it's an incredibly busy time. In fact, the sales team called on more than 7,500 customers and completed over 1,600 QBREXZA launching learns [ph] in the month of October alone. It's rewarding to see dermatologists genuinely excited to learn about the treatment. I've launched many products, but the QBREXZA launch has a buzz that I haven't quite experienced before. In practice, across the country physicians are offering us immediate access.
At their recent fall clinical dermatology meeting, we say standing-room-only attendance at the QBREXZA presentation. Truly, to be a part of the team introducing this therapy to the 10 million people living with primary axillary hyperhidrosis is invigorating. So we balance that enthusiasm with long careers that have taught us not to get ahead of ourselves, particularly in a launch, especially when you're building a market. We remain disciplined and we'll work diligently to capitalize on this excitement. In short, we're proud of our progress, but we believe it's far too soon to take a victory lap.
We're closely monitoring a number of variables, including both quantitative and qualitative data. As we consider these measurements a success, they fall into three general categories; number one, activating people living with hyperhidrosis; two, obtaining broad quality payer coverage; and three, physician adoption of QBREXZA. We've built momentum across each of these three categories, which we see as an early validation of our strategic planning. First, considering patient activation, we've been running a multimedia disease state awareness campaign, since June, designed to drive people with hyperhidrosis to our Web site, checkyoursweat.com. The numbers continue to impress us, with over two million unique visitors to the site in a few short months.
And of those visitors, over one million have completed an online assessment to determine if they might have hyperhidrosis. Moreover, over 120,000 have entered their contact information into our consumer relationship marketing database. These are the people living with hyperhidrosis we're now engaging through email to make them aware of QBREXZA as a treatment option. Second, on the payer front, we continue to make progress which is clearly critical to our continued success. In fact, it's our firm belief that even if one does every other thing right during a launch but patients don't have solid access to a therapy or prescribers go frustrated by payer hurdles, it can stall the launch in such a significant way that it's often difficult to recover.
So, we've been active with payers since January, and we've tried to be as thorough and as creative as possible with the services we offer patients and physicians. As a reminder, our original goal was to have at least 30% of commercial life cover at launch, and we previously announced we exceeded that goal having secured coverage for approximately 53% of commercial life at the time of launch. In the first 30 days of launch we've added more plans, and can now report approximately 59% of lives with quality coverage. Additionally, of the covered lives, approximately 28% are covered at tier 2. The covers to date include executed contracts with two of the largest pharmacy benefit managers in the U.S., Express Scripts and OptumRx.
We believe we're on track to gain favorable formulary placement with more plans by the end of this calendar year. I believe that some of the success we've seen in gaining coverage for QBREXZA is due to the label. The label positions QBREXZA for first-line use, and we're the only treatment option approved for adolescents, both of which were key components of our negotiations. Lastly, physician awareness of hyperhidrosis and adoption of QBREXZA is another critical element to the long-term success of our business. Awareness is growing through activities including field sales force interactions, industry meetings, and peer-to-peer interactions.
The team of 112 sales representatives have been incredibly busy since joining us in August. Practices are eager to welcome our team. They now have QBREXZA samples in their closets and they're utilizing our programs, like Dermira Connect to drive early adoption. As we work constantly to challenge the status quo, we are listening to our customers, adjusting where we need to and we're relentless in our effort to maximize the success of QBREXZA in the marketplace.
As for early feedback, while patients haven't been on QBREXZA long enough for physicians to form a complete impression of the treatment, we're already hearing success stories. Anecdotally, physicians tell us their patients really appreciate the onset of action they're experiencing and that patients are already reporting improvement of hyperhidrosis. They tell us their patients are excited about how easy it is to use QBREXZA relative to the other products they tried before.
Importantly, physicians have also shared what they're not hearing. They're not hearing reports of irritations and they're not getting called back saying their patients can't access QBREXZA. We believe the positive impressions, physicians and patients are forming of QBREXZA is translating into more prescriptions being written and filled. Although early, the weekly prescription numbers support that notion trending in a positive direction week over week.
The first four weeks of prescription volumes were 298 in week one, followed by 668, 855 and 1,026 prescriptions in the weeks that followed. So we're reporting a total of 2,847 prescriptions to send over the first four weeks including prescriptions filled through our preferred dispensing partner or PDP. Note that the prescription numbers as reported by IQVIA currently do not capture any prescriptions sold by our PDPs. So far we're encouraged by declining volume of prescriptions as well as the fundamentals we believe are important for every successful launch. As you would expect, we will continue to monitor them all very closely.
I'd like to now turn to what we learned in the early weeks of launch. Let me start by saying we strive to over deliver on our customers' expectations which means we can't and won't assume that our programs are perfect. We'll continue to iterate and enhance our programs until we're confident our physician partners and hyperhidrosis patients are getting exactly what they need from Dermira.
While we have no major issues to report, we have certainly identified and are working to resolve a few minor issues. For example, regional pharmacies play a large role in filling dermatology prescriptions. Until these pharmacies fully understand the business rules of our programs, we're seeing higher utilization of our underinsured patient services programs during launch than we expect to see in steady state operations. Although the greater utilization of these programs lead to a higher than anticipated growth to net ratio for the third quarter, we're being proactive in our management of this program which is in our control so as not to detrimentally impact QBREXZA's steady state gross to net margin.
As Tom mentioned, we were intentional in our design of our access programs. We chose to ensure access to QBREXZA even if patients are uninsured or underinsured via a savings card made available to all commercial patients. Our years of experience in dermatology as well as our deep commitment to patients drove these decisions and we believe that short-term investment will pay off with a better sales trajectory in the quarters and years to come.
Having seen a career in sales and marketing I certainly appreciate the stark reality that you only have one opportunity to launch a medication. And to be clear my observations of the QBREXZA launch thus far are very favorable. We're ahead of projections in several key categories. I believe, the early data suggests that the strategy, the timing of key activities, the focus of a talent rich organization and the thoughtful allocation of dollars to build commercial capabilities will prove to be a solid investment for the future of the QBREXZA franchise.
Dermira remains committed to showing a strong return on what we believe are the right investments to make and we're happy with the meaningful advances we've made so far. I look forward to reporting continued progress on future calls.
Now I'll turn the call over to Luis to discuss our Lebrikizumab Program, which we're setting for atopic dermatitis. We believe that the AD market represents the next major opportunity in dermatology with more than seven million patients suffering from moderate to severe disease. We believe that lebrikizumab may offer a differentiated therapy for these patients.
Thank you, Lori. As Tom mentioned, significant progress has been made in the lebrikizumab or Lebri Programs. As announced in mid October, we completed enrollment of our Phase 2b dose ranging trials. In total, 280 patients with moderate to severe AD were enrolled. Based on the 16-week dosing period in the study, we are planning for top line data to be available by early April next year.
We are excited in anticipation of the read out from the trial, but before I tell you more let me remind you of the properties of Lebri that we believe are among the reasons Lebri can represent a differentiated treatment option.
Number one, Lebri is a proprietary, potent, humanized monochromal antibody that binds specifically to soluble IL-13 with low picomolar affinity and blocks downstream IL-13 signaling. Two, IL-13 is a validated target and an important mediator in atopic dermatitis. IL-13 expression is up-regulated in AD patients and correlates with disease severity. IL-13 promotes T-2 inflammation and drives multiple aspects of AD pathophysiology such as formation of normal barrier drug function, sensitivity to itch, fibrosis, and an increased risk of infection. This is supported by an existing body of evidence in preclinical and clinical studies. Three, Lebri has an attractive pharmacokinetic profile giving it the potential to require less frequent dosing which reduces the burden of therapy to patients. And lastly, four, Lebri has demonstrated clinical proof of concept data in atopic dermatitis patients and a potentially favorable safety profile supported by an extensive body of clinical and non-clinical data.
Building on the strong foundation of the positive Phase 2a proof of concept study and making some important modifications including the introduction of drug levels 4x to 8x higher than previously investigated in AD, we expect our current Phase 2b study to deliver a dose that will optimize the clinical profile of Lebri and pave the way to move quickly into Phase 3.
The Phase 2b study is a 16-week study where we are measuring multiple efficacy endpoints including percent change in eczema area and severity index or EZ, proportion of patients that achieve an EZ 50, 75 and 90, proportionate patients that achieve a reduction in Investigator Global Assessment or IGA and reduction in pruritus.
Additionally, we're also examining safety and the durability of effect. As we set expectations for the data read out next year, our base assumption is that Lebri can deliver at least similar efficacy to Dupilumab the market leader, but with the ability to deliver once versus twice per month dosing. This base case, we believe, will result in a very competitive product profile. Importantly, however, there is also the potential for even greater and faster efficacy, greater and faster reduction in itch, a more durable effect and in the maintenance phase the potential for longer dosing intervals.
Any combination of these could result in additional opportunities for Lebri to create a strong commercial foothold in a market that we anticipate will emerge to be even larger than the multibillion dollar psoriasis market and more importantly, a significant step forward for improving lives of the millions of patients with moderate to severe atopic dermatitis.
I'll now turn the call over to Andrew to discuss our financial results for the quarter.
Great. Thanks, Luis and good afternoon everyone. My comments today will cover our financial results for the third quarter of 2018 our expected operating expenses for 2018 and our activities to maintain our balance sheet strengths as we advance our program.
In addition to the results summarized in the press release issued this afternoon, you can find further information in our quarterly report on Form 10-Q. In the third quarter of 2018, revenue totaled $717,000, comprised solely of QBREXZA product sales.
QBREXZA revenue is recognized upon delivery of product to wholesalers or our preferred dispensing partner net of estimated rebates as well as other reserves. We commence QBREXZA shipments in late September to make the therapy available to patients as of the October 1st launch date.
Revenue from the prior year period was comprised of collaboration and license revenue. Moving down the income statement, note that we're now presenting cost of sales in addition to our historical operating expenses in one category titled total costs in operating expenses.
For the third quarter of 2018, total cost in operating expenses were $66 million compared to $179.1 million in the same period of the prior year, which included $128.6 million in acquired in-process R&D associated with the transaction with Roche to acquire the rights to lebrikizumab.
Cost of sales for the third quarter of 2018 was $237,000 related to QBREXZA sales. The higher utilization of our savings card programs during the first few weeks of launch that Laurie discussed in her remarks resulted in a higher gross to net ratio compared to our 35% to 40% guidance for the QBREXZA sales recognized in the third quarter of 2018. This had an impact on both QBREXZA product sales as well as our gross margins. We expect that in the next few quarters, GTN may be higher than our 35% to 40% guidance, but we do remain comfortable with and confident in this gross to net guidance and our gross margin assumptions at steady state.
Third quarter 2018 R&D expenses were $16.3 million compared to $30.8 million in the same quarter of the prior year and SG&A expenses were $49.5 million, compared to $19.8 million in the prior year. The increase in SG&A expenses was a reflection of our investments to prepare for and execute the QBREXZA launch, including sales force hiring and readiness, physician education, and patient awareness marketing activities. The net loss for the third quarter of 2018 was $66.5 million, or $1.58 per share, compared to a net loss of $179.2 million or $4.30 per share for the same period a year ago.
Turning to guidance, we continue to anticipate that our operating expenses excluding cost of sales will be between $250 million and $270 million, with the majority of expenses related to the commercial launch of QBREXZA. This estimate includes non-cash stock-based compensation expenses of approximately $35 million. We are not planning on providing specific QBREXZA product sales guidance for the foreseeable future. However, as we outlined on our October 1st launch date, we believe the opportunities for QBREXZA is significant, and that potential peak sales could be in the $500 million to $600 million range, achievable six to seven years from now. From a balance sheet perspective, we ended the third quarter of 2018 with total cash in investments of $389.7 million.
You may have seen that earlier today we filed the universal shelf registration statement for $300 million, which includes an embedded $75 million ATM facility. The new shelf was a matter of financial housekeeping as it was filed at the same amount to replace our original shelf from November 2015, which will expire later this month. We believe it is prudent financial practice to have an effective shelf and an ATM facility in place, as we have had for the last three years. Consistent with our prior guidance, we expect that our cash on hand will be sufficient to fund our operations through mid 2020, including the commercial launch of QBREXZA but excluding the cost to fund a potential Phase 3 program for lebrikizumab.
Among our various planning initiatives, we are also actively evaluating multiple financing options for a potential Phase 3 program assuming success with our ongoing Phase 2b dose-ranging study. These financing options include non-dilutive sources of capital such as strategic partnering and structured financing, in addition to traditional equity financing. As we have previously stated, we currently are not planning to raise equity capital at these share price levels.
With that, I'll turn the call back over to Tom for closing remarks. Tom?
Thank you, Andrew. A few comments in closing before we open up the call to questions, with a strong balance sheet and high-performing commercial and clinical development teams with a track record of proven success, our priorities for the next 12 months are clear. Continue to execute a successful launch of QBREXZA and deliver top line lebrikizumab results by early April, and if successful rapidly advance the program into Phase 3. We are committed to delivering on these two imperatives, and believe there is great potential for creating substantial value for our shareholders. If we are successful in delivering on these two initiatives, in the future, we intent to consider further opportunities to expand our portfolio.
We have a talented organization that we will seek to leverage both on the commercial front as we consider potential partnered or strategically acquired additions to the commercial portfolio and via R&D as we consider lifecycle management opportunities as well as early and exciting research programs. I look forward to updating you on these activities in the future.
And with that business and financial update, I would like to now open up the call to questions. Operator?
Thank you. [Operator Instructions] First question comes from Louise Chen from Cantor. Your line is open.
Hi. Thanks for taking my questions and congratulations on the launch. I had a few here. So first question I had was with respect to how we should think about contracted coverage and patient outreach through the remainder of 2018 and into 2019. I know you've beat your expectations that you set already, but just future-wise how should we think about it? And then secondly, I know you're not giving guidance, but could you give us any sort of qualitative metrics on the launch curve and how we should be thinking about that, especially as we bridge from 2018 into 2019? And the last question I have was on atopic dermatitis.
And there's a lot of competitors out there developing compounds targeting different pathways, including large pharma companies. So I'm curious as to what do you think Dermira's competitive advantage is with respect to their compound or your compound, and how you want to think about the treatment landscape unfolding? Thank you.
Hi, Louise, this is Lori. Maybe I'll take the first two, and ask Luis to talk about lebri as well. So, first on the contracted coverage, so obviously we're excited that we have beat the goals we've set for ourselves at launch. And today, announcing that we're now at 59% of all commercial lives covered, we remain really excited about. As you know, we saw that as a key priority and we worked very hard to make sure we were, out of the gate, strong on coverage. In terms of how to think about that over time, what we've previously said is we expect that number to be somewhere in the 70% range by January of 2019, and then we would expect that it would continue to improve over time. So it's our goal to get to the point where we have almost all commercial lives with quality coverage, and we believe we're on a path to do that.
Secondly, on the qualitative perspective on the launch curve, I mean as you know, and as you said, we're not guiding on exact projections. We've only talked about peak year sales opportunity, which we see in the $500 million to $600 million range in about five to seven years. I think what we see right now is that we need to focus on the fundamentals. And those fundamentals that we keep coming back to are access and physician education and patient activation. We like the early signals we see. We think they validate our strategy, our execution, and frankly, the strength of our team. So we, as we've said before, expect a kind of slow, steady climb because we do know we have to build the market from scratch. But we like what we see so far in all of the metrics we're measuring.
Louise, this is Tom. Let me give you maybe just a word or two on how we see our strategic advantages, then I'll turn it over to Luis for more of the product and clinical advantage. Strategically, we are brining innovative new products to dermatologists. I would like to think that if you reached out to dermatologists and asked them about Dermira they would have a favorable impression already. But as Lori said, we're committed to customer service where we're committed to brining them products that both they and their patients will find useful. So I think in terms of positioning the company as somebody that dermatologists can count on, that's what we want to be. And we're already seeing that with their reaction to the QBREXZA launch.
So from a -- we want to be their partner, and we think we can bring them a competitive product with a very talented sales force, strategically we think we absolutely can be in the game. Now, with regard to the product advantages, we're excited about those too, and I'll turn it over to Luis.
Okay, thanks, Tom. Yes, so good question. So, obviously this is a competitive space, and we're looking at it very closely. We're excited about lebrikizumab because we think we have multiple opportunities to win with lebri. Dupilumab has been a great advance forward for atopic dermatitis patients, and a significant step forward much like, for example, Enbrel was in the psoriasis space. But as with the psoriasis space, we feel there are opportunities in atopic dermatitis to improve on that. And so, as we look at the profile of lebri, our base case is that we can achieve similar activity to dupilumab, but certainly have the advantage in terms of a dosing regimen where we could dose every four weeks and in the maintenance days, maybe even eight weeks.
But beyond that we're looking, as I said earlier, at greater and faster efficacy, the potential for great faster reduction of itch, the durability of the effect, and the longer dosing intervals in the maintenance phase. So all of those, in totality, we believe will give us an opportunity to be very competitive, not only against dupilumab but also with emergent other therapies.
And lastly, I'd just like to close, the safety profile is very, very important. We have an extensive safety database with this molecule in which we know this is an acceptable safety profile. And I think a lot of the competitors out there still have to prove themselves, like the JAK inhibitors, that this can be used broadly, especially in adolescents.
Okay, thank you.
Our next question comes from Umer Raffat from Evercore. Your line is open.
Hi, how are you? It's [indiscernible] London on for Umer. Just a couple of questions, if that's okay. First is, you mentioned in your DSA campaign before that you had 110,000 or so patients signed up. My question is, back to the launch, would it be reasonable to assume that the vast majority of these that signed up will ultimately start the drug? And then secondly, what proportion of the patients, I suppose the 2,800 or so patients so far that have filled the prescription are you seeing coming back for a refill or a repeat prescription. And thank you.
This is Lori. I'll take that one as well. So first, on your DSA question, yes, we have 120,000 people who have signed up for the CRM database, which allows us to communicate with them. We do anticipate that they are a good patient population for us to ultimately convert over to QBREXZA, so I think that is one source of patients that could come to us most quickly. I think there are other sources as well. I mean, don't forget there are a number of hyperhidrosis patients who are already seeking treatment and were getting other therapies like Drisol [ph], et cetera. So there are some people who are already activated themselves, and we see them as a good patient population to pull from.
And then certainly those that we activate, whether it's through just seeing the advertisement and going in or whether it's through our CRM communication, we anticipate that we would see a significant portion of them ultimately go on to the product. In terms of refills, unfortunately I think it's just a little too early to provide any data points on that. As you'll recall, we have four weeks of prescription data, a one-month supply, a 30-day box is actually how QBREXZA is packaged. And so it wouldn't be my expectation that we'd see any refills in these early days. Now, as we start to progress through the months in Q4 we may start to see some refills, but we just don't have the data available to us quite yet.
Fair enough. Thank you, Lori. And just one more if I can. What proportion of the patients accessing underinsured payment programs have no insurance or have an insurance policy which isn't currently under your coverage?
Yes, we're approximately 10% to 20% of the claims coming through with no insurance at all. Now, that could mean that there is no insurance or it could mean that it's being entered as no insurance. So as we talked about in the prepared remarks, one of the things that we're working through is just making sure that the adjudication of claims and that the business roles associated with the Pay No More Than program are completely executed as we expect. And so, again, I think it's early days to know if that number will stick. But what we would expect over time, if I could remind you of what this patient population looks like, you see about 85% to 90% of people who have hyperhidrosis with commercial coverage.
There's a very small number of people who have government insurance or who are completely uninsured. So I think it's more likely that the people accessing that program are underinsured not uninsured.
Okay, thank you.
Our next question comes from Bill [indiscernible] of Cohen & Company. Your line is open.
Hi. Thanks, and congrats on the early launch. Do you have any sense so far of whether patients have been compliant on the daily regimen or if you might expect some dose stretching? And I know it might be too much to ask for specific numbers, but do you have any broad parameters on where the gross-to-net might shape up in the early days or in the coming year or two? Thanks.
Sure. So maybe I'll take the compliance question, and I can also provide some thoughts on gross-to-net and have Andre the same. So on compliance, we don't have any data yet to point us to how often people are using the product. I think what I would maybe guide you to is what we're not hearing from physicians, right. So a number of us have been out in the field with customers. And for those of them who have talked to patients, who have already trialed the product for the few weeks, what they say is that they're not getting callbacks to say that the patient is complaining that they can't tolerate the product, or they're not seeing any unusually AE that they didn't expect. And so there's no reason for us to believe that patients won't be compliant.
However, having said that, as well all chronically managed conditions, we know that people aren't perfectly compliant. And so that is a key component of the model over time. We believe we've made really reasonable assumptions on the number of prescriptions we can expect per year, as we talked about in previous communications, we've kind of assumed right now, it'll be in the range of about three per year in totality of the average. So I don't have any data yet, I would just say we're not hearing anything that would lead us to believe that people would be using it less compliantly than expected.
And then on the gross-to-net, I would say that -- and maybe I'll give some broad strokes, and then ask Andrew to supplement with anything he wants to say. We do believe that we will over time see growth in that settle into the range that we previously communicated. So we believe that we will see it get into the 35% to 40% range. I would maybe just guide you to the fact that over time as the coverage continues to improve, there is kind of less and less of a need for certainly the $70 program that's really designed for the uninsured and underinsured, and it would be our intend to be able to see lower utilization of that program, and potentially even not have that program in the long run. So there is nothing that we're seeing right now, there is nothing that would make us say we need to change what that long-term guidance is, and we expect that as we get through the rest of 2019, the coverage continues to improve, people become aware of how the programs work that will get into the range that we previously talked about.
Yes, Lori, this is Andrew. We just confirmed that we talked earlier, recall, at the Investor Day back in May, kind of we characterized steady-state as of the beginning of 2020 when we anticipate it to be about 90% coverage levels and expect kind of a ramp to be over that period. So we're comfortable with the 35 to 40 that we have outlined being achieved, as of that date if not earlier in terms of overall gross to net.
All right, thank you very much.
Our next question comes from Seamus Fernandez of Guggenheim. Your line is open.
Thanks for taking the question, and I will offer my congrats on the launch, great to see you guys out with products in the field. Just a couple of questions, first on lebri, can we talk a little bit about what you guys are hearing from physicians as you are out in the field asking about the weaknesses of dupixent, obviously dupi has got a lot of strength, but beyond the product profile. Are you hearing about anything as we hear from some competitors in the market, they talk about conjunctivitis as an issue, I'm just trying to get a sense of are there other opportunities for you to capitalize on some of the things that you're learning about in the field beyond just dosing where lebri might have an opportunity to edge into the market?
And then, can you just talk a little bit about, you know, you guys in the past have done some deals, working to kind of develop other asset in the phase, just wondering how you are thinking about advancing other potential assets, or perhaps addressing pipeline in the product type opportunities, how do you see expanding the market opportunity with other treatment location in hyperhidrosis? Is that really how we develop the path to $500 million to $600 million opportunity? Thanks.
Seam, this is Tom. I will speak first, him now the commercial team's worst nightmare, I am a CEO who has been in the field and thinks he knows everything. But seriously with regard to your question about dupi, I will echo what Luis said that if you talk to physicians about dupilumab, it is a huge advance in this space, and it's great for patients and it's great for dermatologists, it is a huge advance, but I'll just share an anecdote, I was out there and talking to a dermatologist who had a patient who tried to extend the dosing, instead of every two weeks, they were saying could they go every three weeks. And they couldn't, they broke through, and the patient's question to the dermatologist was, "So, will I have to do this for the rest of my life?" One of the potential advantages Luis mentioned is can we dose less frequently as well as a lot of other things, a lot of other opportunities? So that's the way we see the market, a number of potential ways to show an advantage, make no mistake about it. Dupilumab is effective as well as safe. So in terms of safety and tolerability, a very good product with a number of areas that we think we can improve upon.
And then, so you also mentioned the potential for lifecycle management in hyperhidrosis, and absolutely, I mean that is an area that we've been planning for a long time among multiple areas. And so, one of the things we can think about is other body areas, and certainly we are assessing that as well as other opportunities for delivery and improvement over the product over time.
And then, Seamus, this is Lori. I will just add that your question about peak year sales opportunity in the $500 million to $600 million range that is actually what we're guiding to for just the axillary opportunity, so that actually does not assume any lifecycle management additions. Obviously we are doing those commercial assessments as well, but that is what we actually have talked about for future potential, just with the current indication.
Great. And then, if I can just follow-up on that, the limitations of Botox, obviously a number of injections, things like that, but I think the estimate of in-market Botox sales is running $50 million to $75 million? What are the key points of differentiation just apart from delivery and price, and realized price, what do you think are the key points of limitation there, or is it really just delivery that expands the market that much?
Yes, I think you hit on a couple of them. I think delivery is certainly one, and I think as maybe we've talked about before, Seamus, I really saw looking at the data for QBREXZA and seeing the response and kind of comparing that to what I was accustomed to in Botox, I thought like the delivery alone and seeing those types of results would definitely create a huge market opportunity. So I do think delivery is significant.
The second thing is I think people don't want to get -- only a few number of people want to get any type of procedure, right. So if you compare it to what they can have topically delivered, I just think there is fewer patients who are interested in those types of therapies, where you have to have injections or any kind of procedure. The price is certainly one. So obviously, QBREXZA is a lack of $550 a month, and that would be -- that prescription would be filled multiple times per year, so obviously that has some impact on the model.
The other one I would draw your attention to is just coverage. I mean the fact that we have 59% of lives of quality coverage right now, and there aren't hurdles to have to jump through to get there, I think is a significant advantage over Botox, right. So for Botox, every single patient has to have a PA, every single patient has to fail another therapy, because that's what their label indicates, whereas in QBREXZA, it's first-line therapy, in the market we're seeing many payers cover it with second-tier coverage, which means that there's a an ease-of-access that I think you can't discount.
And maybe the final piece I would add and this was kind of a part of what we heard from both physicians and payers is that the fact that we have indication all the way down to age of nine is a significant differentiator versus something like Botox, where it's only indicated down to age of 18. So I really think it's the totality of all of those things that make this a better opportunity in the long run, at least as the way we see the world.
Perfect, thanks so much.
Our next question is from Serge Belanger from Needham. Your line is open.
Hey, thanks for the question. So about the QBREXZA, you mentioned that's approved for nine or older, how much market should you expect there to be for the pediatrics population?
Yes, we don't have any specific things that we're guiding to on that. I would say we are hearing from physicians that they're interested in using the product because it is easy to use. They're interested in using it for younger patients. We know that payers are going to get access to it. I think honestly some of the most compelling stories we hear when we talk to patients are those of either younger people or frankly parents of younger people who talk about the huge impact that hyperhidrosis have on their lives, and they are looking for something that they could easily use and have as an option for their children. So I think if you look at our advertising efforts right now, we're really targeting kind of a slightly older population. In that, it's millennial age people who we're currently targeting, but I still expect there will be a number of people who use it as younger patients. So I mean we will start to see some of that over time, but we just don't know yet exactly how it will evolve.
Got it, thank you. And for the lebri, what kind of data points are you looking for the Phase 2b data to possibly guard [ph] a Phase 2 trial, and what are some of the -- I guess data that are considered to be successful data points from the Phase 2?
Yes. So we're looking at -- our primary endpoint in that study is the percent reduction in overall [indiscernible] area are Easy. That is really -- it's a good way to compare doses with a smaller sample size, but we're also looking at the typical endpoints that are used in the Phase 3 studies, IGA patients who have responded and dropped an idea of 01 with at least a two-point drop in the IGA scale. The easy scores are 50, 75 and 80 [ph]. And so, I mean, as we look at the target product profile, I think the two key endpoints that are used currently are the IGA score and the Easy 75. So we'll be looking at those and the outcomes of those to make sure that we have a competitive product. And one of the things that we will be very objectively looking at is the outcomes in our trials, the totality of the data, and our ability based on that target product profile to be very competitive in the AD [ph] space. So we will be very conscientious about that before moving forward.
We got a follow-up from Umer Raffat from Evercore. Your line is open.
Hi, thanks so much for taking my question. I just wanted to spend a quick second on the mix shelf you guys just filed, and I asked that especially in the context of your 290 million converts relative to the 550 million market cap. And my question really is there a strong interest internally on changing your corporate -- changing your cap structure prior to the atopic Dermira readout in April?
Hi, Umar, this is Andrew. I'll take the question. Really I would characterize that the shelf we filed as simply financial prudence and good corporate housekeeping. You may recall back in 2015 we first became eligible to file a shelf we did so with an embedded ATM facility. We did not utilize that ATM facility over its life. We drew up on the shelf at one point in connection with our equity offering in 2015. So I really chalked it up as good corporate housekeeping and something I would advice frankly all public companies to have in place.
With respect to your second part of the question, what might we be looking at in advance of the trial, look, I think part of our job is to look at all options, and we are looking at multiple options to ensure we maintain the strength of our balance sheet and ensure we have the sufficient capital to fund our programs, options that exist upon the data and options that exist in advance of the data. We talked about in the prepared remarks, for example, the opportunity for strategic partnering as it relates to lebri with a specific focus on ex-U.S. opportunities. That's one of many arrows we have in our quiver to ensure that we have the capital, and frankly, that the capital structure is appropriate for a company of our stage, and just to remind as we said in the call, at these share price levels in advance of the lebri readout, we do not plan to raise equity.
Got it. Thank you very much, Andrew.
I'm showing no further questions at time. I'd now like to turn the call back over to Tom for closing remarks.
Thanks very much, Jorinda, and thanks everyone for joining us today on our first ever earnings call, and your continued interest in Dermira. We look forward to continue to provide updates on the progress we're making at upcoming conferences and on future calls. If you have any further questions, you can call my direct line in the Investor Relations Department, 650-422-7753. Thank you all.
Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may disconnect, and have a wonderful day.