BioDelivery Sciences International, Inc.'s (BDSI) CEO Herm Cukier on Q4 2018 Results - Earnings Call Transcript

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About: BioDelivery Sciences International, Inc. (BDSI)
by: SA Transcripts
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Earning Call Audio

BioDelivery Sciences International, Inc. (NASDAQ:BDSI) Q4 2018 Earnings Conference Call March 14, 2019 4:30 PM ET

Company Participants

Herm Cukier - Chief Executive Officer

Scott Plesha - President and Chief Commercial Officer

Thomas Smith - Chief Medical Officer

Terry Coelho - Chief Financial Officer

Conference Call Participants

Brandon Folkes - Cantor Fitzgerald

Esther Hong - Janney Capital Markets

Tim Lugo - William Blair

Matt Kaplan - Ladendburg Thalmann

Oren Livnat - HC Wainwright

Operator

Greetings and welcome to BioDelivery Sciences Fourth Quarter and Fiscal Year 2018 Earnings Call. [Operator Instructions] I would now like to turn the conference over to your host Terry Coelho. Please go ahead.

Terry Coelho

Thank you and good afternoon everyone. Welcome to our fourth quarter and year end 2018 earnings conference call. Leading the call today is Herm Cukier, Chief Executive Officer. We're joined by Scott Plesha, President and Chief Commercial Officer and Dr. Thomas Smith, Chief Medical Officer. Following our prepared remarks we will conduct a question-and-answer session.

Earlier today BioDelivery Sciences issued a press release announcing its financial results for the fourth quarter and year end 2018. A copy of the release can be found on the investor relations page of the company's website. Before we begin I would like to remind everyone that certain statements may be made during this call, which may contain forward looking statements. Such forward looking statements are based upon current expectations, and there can be no assurances that the results contemplated in the statements will be realized. Actual results may differ materially from such statements due to a number of factors and risks, some of which are identified in our press release and our annual quarterly and other reports filed with the SEC. These forward looking statements are based on information available to BDSI today March 14, 2019 and the company assumes no obligation to update statements as circumstances change. An audio recording and webcasts replay for today's conference call will also be available online in the investor section of the company's website.

With that I'll turn the call over to Herm Cukier. Herm?

Herm Cukier

Thank you very much, Terry, and thank you all for joining us this afternoon. It is my pleasure to welcome you to the BDSI fourth quarter and full year 2018 earnings call. To begin with, I would like to welcome Terry, our new Chief Financial Officer. Terry brings broad expertise in business and leadership across all areas of finance and will play an integral role as we focus on our commercialization strategy through our next phase of growth. Welcome, Terry. We're delighted to have you as part of our executive leadership team.

As Terry indicated, we are also joined on the call today by Scott Plesha, our President and Chief Commercial Officer and Dr. Tom Smith, our Chief Medical Officer. Each of these executives will share more details on our continued accomplishments and positive expectations for 2019 and beyond. By every measure, the fourth quarter and full year 2018 was a vast success for BDSI, I'm very pleased by our results today and have the utmost confidence in our ability to sustain this positive momentum moving forward.

We have made significant strides in transforming the company into a rapidly growing commercial stage enterprise. I would like to thank all of our employees for their hard work and dedication throughout the year. It is their commitment and constant positive energy that has enabled this transformation to occur. Because of their efforts, thousands of patients living with chronic pain are benefiting from the therapeutic effect of a truly novel and important product like BELBUCA. And we are just getting started.

We have achieved our stated intent to strengthen the company, control our own destiny and be well positioned for sustained growth. When we started this transformation in May of last year, I laid out a straightforward plan that would enable the success to occur. First, it was imperative to significantly accelerate the growth of BELBUCA, recognizing it is in early stages of its launch and has a distinctive clinical proposition for patients. While, I will let Scott share more of the details of the success, I am very pleased to see scripts reach an all-time high during the fourth quarter. In addition there was record number of new and unique BELBUCA prescribers throughout the quarter, also reaching all-time high in December.

Second, ensuring patients had access to BELBUCA was of the utmost importance and became one of our top priorities throughout the year. I am very proud that we have secured preferred position across the majority of the largest national insurance companies. In fact, we've been adding more than 25 million lives in the fourth quarter alone. And so as we exited 2018 more than 100 million covered lives across the country had preferred access to BELBUCA, an outstanding accomplishment considering we entered the year with only 8 million having so. This number continues to expand as we enter 2019, a testament to the growing recognition of BELBUCA as an important treatment option in this patient population.

Third, we strongly believe that it was necessary to more broadly and effectively communicate the scientific evidence supporting BELBUCA as an important treatment option for chronic pain. This meant ensuring we have the right sales team to appropriately reach HCPs using opioids in treating chronic pain and building a medical team to leverage scientific platforms such as publications, congress' et cetera. We made a strategic decision to hire, train and deploy the new teams during the second half of 2018 that would hit the ground running as the New Year began. Tom and Scott will share more of the details, but we are already seeing the impact of our new colleagues across the country and certain disinvestment will help ensure success in 2019 and beyond.

And finally, having a senior leadership team with the experiences and skills to both accomplish the near term task and be capable of driving our ambition for the longer term was of the utmost importance and a personal priority of mine. I am extremely proud to have industry leaders such as Tom and Terry, in addition to Jim Vollins, our General Counsel and Chief Compliance Officer joining existing top talent such as Scott and Jody Lockhart, our Head of Operations. We are unified in our ambition and confident in our ability to make BDSI a highly successful specialty pharmaceutical company. In summary, the fourth quarter and full year 2018 were extremely successful for BDSI. We accomplished each of the key strategic imperatives laid out last year and have positioned ourselves for continued growth and success.

I will now turn the call over to Scott who will share more details of our operational performance. Scott?

Scott Plesha

Thank you, Herm. As Herm noted, we experienced a very strong fourth quarter and 2018 with BELBUCA, not just increasing, but accelerating prescription and revenue growth. BELBUCA’s strong growth resulted in our reaching an all-time high during the quarter at over 56,000 prescriptions. We've now reached all-time consecutive quarterly highs ever since we re-launched BELBUCA and the growth we experienced in Q4 was the largest quarter-over-quarter growth we've seen at almost 12,000 prescriptions.

We accelerate our prescription growth in Q4 and believe they are key drivers supporting this growth. Since early 2018 we have seen a consistent increase in our new prescribers as well as the number of prescribers this quarter. During the fourth quarter, we saw that trend continue and even accelerate. During the fourth quarter, there were more than 5,350 unique BELBUCA prescribers and nearly 1,100 new prescribers. Both of these metrics represent meaningful increases over Q3 2018 and are all-time highs since we launched BELBUCA.

During the quarter, we increased our prescriber base and for our prescriptions and share growth across every [indiscernible] of HCPs, which demonstrates growing acceptance of BELBUCA. In addition, all of our BELBUCA dosage strengths exhibit accelerated growth during the fourth quarter with every strength growing greater than 22%. This not only demonstrates the comfort HCPs have in prescribing BELBUCA across all dosage strengths, but also how having seven dosage strength importantly allows our patient's care to be tailored to the lowest efficacious dose.

During 2018, we greatly increased the number of patients that received BELBUCA for the first time. As we entered 2018, there were approximately 1,700 chronic pain patients per month being prescribed BELBUCA for the first time. By Q4 of 2018, the number of new BELBUCA patients had increased to over 4,000 per month. This increase in patients receiving BELBUCA for the first time demonstrates that healthcare providers identifying patients that are appropriate to receive BELBUCA at an increased rate and this is critical to the accelerate growth of the brand.

As Herm mentioned, we improved our market access greatly in 2018, increasing the number of lives from under 8 million with preferred access to over 100 million. In November, BELBUCA was added to OptumRx's preferred formulary list, adding over 25 million covered lives with access to BELBUCA. Most recently we announced that BELBUCA had been moved from not covered to preferred formulary in Cigna Healthcare. This win became effective February 1, 2019 and provides improved access for BELBUCA for over 7.3 million lives.

With our recent wins there are over 50% of combined commercial and Medicare lives covered and preferred Tier 2 position which is up significantly from 3% of lives covered at the beginning of 2018. With these recent wins BELBUCA is now covered or better in 92% of commercial lives. Importantly, the BDSI commercial team has done an excellent job of executing against these wins and is driving consistent prescription growth in each PBM or plan since the contracts were executed. We continue to see strong interest and acceptance by the commercial and government payers of BELBUCA’s differentiating qualities and we are very optimistic about adding more wins.

While it's difficult to predict when these wins will occur, we are confident that over time, the number of lives having preferred access to BELBUCA will continue to rise. We are excited by the progress we've made in 2018 and are confident that we can continue to build upon our current growth. We believe that our sales force and market access team expansions that were both completed the end of Q4 will be key to our success in 2019 and beyond. These increases in personnel will allow us to continue to build improved market access to BELBUCA and allow for the proper reach and frequency with our 10,500 targets to maximize results.

We're encouraged that early into our expansion, we've already seen an acceleration in new and total prescribers. I'm excited by the success we had in 2018, and the fact that BELBUCA growth has continued in 2019 resulting in all-time treatise for January and February. As we go forward into 2019, we'll continue to focus on improving market access, growing the number of patients receiving BELBUCA for the first time and expanding our prescriber base. I'm also very excited about how our medical plan will complement the efforts of the commercial team.

And with that I'd like to turn things over to Dr. Tom Smith our Chief Medical Officer to provide the highlights of medical plan and the initiatives that are being executed.

Thomas Smith

Thank you, Scott. It's a pleasure to update everyone here on the progress we have made since we have last spoken in November. I had been in my role now for eight months and I'm very pleased by the scientific discourse, the increased understanding and the impact that I'm consistently hearing in meeting with our prescribers, key opinion leaders and other customers. Late last year, I shared with you 2019 medical plan and the importance of cementing and the understanding around BELBUCAs efficacy, safety and tolerability.

This past Saturday at the American Academy of Pain Medicine's Congress in Denver, BDS I sponsored a scientific symposium and three of the world's top KOLs presented on BELBUCAs mechanism of action, pharmacology, clinical data and use in chronic pain. The medical team has identified several additional key scientific Congress's which will focus on this year and for each of these meetings we have plans in place to ensure a steady stream of medical communication and education around BELBUCA.

One of the events that I spoke about last year was the expert opinion consensus program. It is moving forward will provide recommendations for conversion as well as address the appropriate use of opioids in patients suffering from chronic pain. Given the importance of this topic, I would expect that the manuscript will be submitted to a top tier medical journal. There is a real need to elevate the scientific understanding and awareness around drug safety, given the rising number of Americans dying each day due to opioid overdose.

Chief among these adverse events is the very real possibility of life threatening respiratory depression in patients taking any CNS depressant, and our team plans to explore a new clinical study looking specifically at this critical topic. To further solidify, BELBUCAs efficacy, safety and tolerability the team is moving forward with a very robust publication plan. Already they are overseeing the development of manuscripts and Scientific Congress abstracts. Our plan is to have a steady cadence of medical literature to help inform our healthcare providers.

Finally, to further strengthen the team, serve as a resource to our prescribers and others throughout the scientific community, and to ensure appropriate use of BELBUCA, we will expand our M Access team next month. So in summary, we are fully executing on the medical plan exactly as was outlined last year. As I mentioned then, what gives me as a physician, the most satisfaction is knowing that this plan through its initiatives and education will create awareness and understanding around BELBUCA, allowing millions of patients who are suffering from chronic pain to now have access and to benefit from this medication.

With that I will turn the call over to Terry Coelho, to cover the financials in more detail. Terry?

Terry Coelho

Thank you, Tom. Fourth quarter financial results exceeded both third quarter and prior year quarterly results, as well as exceeding the high end of the expectations that we provided last quarter.

Total net revenue for the fourth quarter ended December 31, 2018 was $18 million, an increase the 27.4% compared to $14.2 million in the third quarter of 2018 and an increase of 44.1% compared to $12.5 million in the fourth quarter of 2017.

Total net revenue for the full year 2018 was $55.6 million. A decrease of 10.2% compared to $62 million for the year ended December 31, 2017.

Total net revenue for 2017 included $20 million in contract revenues recorded in January 2017 as part of the termination of the licensing agreement with Endo and the return of BELBUCA rights to BDSI.

2018 total net revenue growth was 32.5% excluding the aforementioned $20 million in contract revenues. The total net revenue Growth was driven primarily by BELBUCA, which comprised 88% of our total net revenue in the quarter.

BELBUCA net revenue in the fourth quarter ended December 31, 2018 was $15.9 million, an increases 28.3% compared to $12.4 million in the third quarter of 2018 and an increase of 68.3% compared to $9.4 million in the fourth quarter of 2017.

Gross to net deductions in the fourth quarter were 47.9% for BELBUCA and were essentially in line with the third quarter deductions at 47.8%.

Gross profit for BELBUCA was 86.6% in the fourth quarter and reflects the higher yields and lower costs resulting from our transition to new packaging equipment that we discussed last quarter.

Total gross margin from both commercial products increased to 81% in the fourth quarter compared to 76% in the third quarter.

Total operating expenses in the quarter reflects our continued investment in our commercialization efforts. For the fourth quarter ended December 31, 2018, total operating expenses were $18.5 million, compared to $14.2 million in the third quarter of 2018, and $21.6 million in the fourth quarter of 2017. The quarter-over-quarter increase in operating expenses was driven primarily by the sales force expansion and medical team growth.

Total operating expenses for the full year 2018 were $63.5 million as compared to $71.9 million for the full year 2017. The year-over-year reduction was primarily due to 2017 costs associated with joining the opioid consortium, along with remaining R&D expenses.

On a GAAP report basis, the net loss for the fourth quarter was $7 million or $0.10 per share, compared to a loss of $18.9 million or $0.29 per share in the third quarter of 2018.

The GAAP net loss for the full year 2018 was $46.4 million or $0.73 per share, compared to net income of $5.3 million or $0.09 per share for the full year 2017 on a comparable basis. The full year 2018 GAAP net loss included a onetime non-cash charge of $12.5 million or $0.19 per share for the beneficial conversion feature of the Series B preferred stock.

Non-GAAP net loss for the full year 2018 was $33.9 million or $0.54 per share, excluding the impact of the beneficial conversion feature just mentioned, compared to the full year 2017 non-GAAP net loss of $22.1 million or $0.40 per share, which excludes the bargain purchase gain of $27.3 million from the reacquisition of BELBUCA.

At December 31, 2018, BDSI had cash and cash equivalents of approximately $43.8 million. This compares to cash and cash equivalents of approximately $21.2 million at December 31, 2017 and $49.5 million at September 30, 2018.

As a reminder, in Q2 of 2018, the company successfully completed a $50 million equity financing raise, which together with the solid performance over the past few quarters has strengthened the balance sheet.

In the coming months, I will be focusing on identifying opportunities to further improve our cash position and profitability as well as our business processes and our finance capabilities to ensure we are well positioned to invest in and fully capitalized on the growth potential of BELBUCA.

Finally, looking ahead to 2019 and based on the strong momentum with which we entered the year, we see 2019 BELBUCA net revenue to be in a range of $80 million to $85 million and total company net revenue to be in the range of $85 million to $90 million.

This outlook incorporates an estimated net impact of approximately 5% from the BELBUCA price increase effective earlier this week. As a result of the higher net revenues along with our ability to leverage our SG&A expenses as we grow, we currently expect that we will be operating cash flow positive in 2019.

In the longer term, we believe our sustained momentum will allow us to achieve annual sales in the range of $250 million to $300 million as BELBUCA continues to evolve into the therapy of choice for the management of chronic pain.

At this point, I'd like to turn the call back over to Herm for some concluding remarks before we open the call for Q&A. Herm?

Herm Cukier

Thank you, Terry. As the team has highlighted, 2018 was a very successful year for BDSI, further exemplified by continued strong performance in the fourth quarter and early momentum in the New Year. We had accelerated the growth of BELBUCA, put the right people and teams in place and have the funds to properly capitalize on our opportunities. We have increased BELBUCA expectations for 2019, expect to be operationally cash flow positive in the year and have expanded our long-term vision for the product. In conclusion we have become a rapidly growing commercial company with a very bright future.

I will now turn the call back to the operator for Q&A. Operator?

Question-and-Answer Session

Operator

At this time we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Brandon Folkes with Cantor Fitzgerald. Please proceed with your question.

Brandon Folkes

Hi, thanks for taking my questions and congratulations on the strong results and guidance. Firstly, can you talk about some of your access win assumptions that go into your [indiscernible] peak sales estimates? And maybe given the success that you've seen with BELBUCA since the last time we heard from you guys, do you still think your sales force is right sized or has the success made you think otherwise on that? And then lastly, how should we think about capital allocation going forward, the stock has done quite well. Would you consider an equity raise to expand either the sales force or bring in additional products? Thank you.

Scott Plesha

Thanks, Brandon, it’s Scott. I appreciate the question. So first off talking to market access and its impact on our peak sales, right now, we've mentioned we're a little over 50% preferred lives. We're really excited about the progress we've made in 2018. It was actually an excellent year for us in opening the access to patients. However, we still have work to do probably on the Medicare side more than anything and on regional plans. We recently completed expansion of the market access team. So we are seeing really nice follow through in our market access wins. So our share grow higher within them. So a lot of upside there, though. So we're excited about continuing that pull back through. The trends have been very consistent within those wins. And there's really no reason to believe that that would change going forward. We'll continue to try to layer on additional wins as we go forward.

As far as the sales force size, we're really confident that we've done some good work up front on the sizing. Zeroed in on about 10,500 targets, so each rep has somewhere between 80 to 110 targets. We feel that's right sized for where we are right now. Keeping in mind that the opioid space is really consolidated and the pain management doctors primarily are the large drivers there, so allows us to have a very focused and specialty pharma sales organization. And I'll let Herm handle the last question.

Herm Cukier

Yeah. Thanks so much, Scott. And good afternoon, Brandon, thank you for your questions, really appreciate it. And I would say that right now, we have to remind ourselves that BELBUCA is still very much in the early stages of its launch, still a lot of hard work and heavy lifting. Obviously, we're very pleased by the success we've accomplish in 2018 with the product. The transformation of the company as we just described, the early momentum that we have through the first few months of this year, but we still have a lot of hard work to truly fully capitalize on the opportunity that we have at hand with the product. But we put ourselves in a position of strength and we put ourselves in a position of controlling our destiny. We now have a leading commercial infrastructure and Scott and his sales team did a tremendous job with customers day in and day out and over time we'll clearly have more opportunity to do more with that commercial infrastructure and we'll be opportunistic and we'll strike on the position of strength that we see something that makes sense, but that's down the road. Right now, we're keenly focused on ensuring that we fully execute flawlessly day in and day out with BELBUCA and continue to drive the further acceleration uptake of that product.

Brandon Folkes

Thank you very much. And maybe if I can sneak in one more if I may. Did you take a price increase this week on BELBUCA? Am I correct in that assumption?

Herm Cukier

Yes. That is correct as Terry pointed out. That did go into effect early this week. And we think the net result to be approximately in the 5% range.

Brandon Folkes

Okay and did you see any buying at the end of the quarter? I'm just trying to think about how we should model 1Q going into Q2. Is there inventory and channel potentially at the end of 1Q just when we model in?

Herm Cukier

Right I understand your question and I appreciate that Brendon, and I guess, I would say that at this point there's no difference in buying patterns from what we've been experiencing since the re-launch of the product.

Brandon Folkes

Great, thank you very much.

Herm Cukier

Thank you, Brandon.

Operator

Our next question comes from the line of Esther Hong with Janney. Please proceed with your question.

Esther Hong

Hi. Congratulations on the successful quarter and year, and thanks for taking my question. So just a few, so first, can you talk about the market share for BELBUCA and any trends that you're seeing. And then regarding the new prescribers, are these physicians who are already familiar with BELBUCA but didn't prescribe it because of coverage or are these prescribers who were not previously familiar with BELBUCA, but gained access through the sales force and other types of awareness? And then third, can you tell us what you've been seeing with prescribing patterns in terms of different dosage strength. I know that there was - you'd mentioned it was growth across all strengths, what are the most highly prescribed dosage? Thanks.

Scott Plesha

Hi, Esther, it's Scott. I'm sorry, I'll take these one at a time. So along with our growth, our market share has been growing quite rapidly, so to kind of frame that, in the long acting opioid space we entered the year about seven tenths of the share point, so under 1%. As we exited, we're up to 1.8% in the month of December. And Herm and I both mentioned the acceleration we've even seen into 2019 and as we sit here in February, it's up to 2.2% market share there and then even looking at the buprenorphine market, which really is a subset we're up to almost 34% in the month of February. But keep in mind when we look at our data, we're not just taking patients from a long acting opportunity, majority of our patients are either coming - being switched from or added to short acting, so it's a much broader marketplace.

And as far as new prescribers go, I think this is playing out right into our expansion plans. When we looked at our reach and frequency and our market share and penetration, it was probably light in the middle of [indiscernible]. And in fact, when we look at our - it's early yet, so the expansion really just got completed at the end of the quarter, end of Q4, but we are seeing an uptick within those middle [indiscernible] due to our activity in those [indiscernible], growing across all of them but probably more - the largest growth within that area. So again, that was part of our strategy.

As far as dosage strengths go, we break them down a couple different ways. So the 75, 150 and 300, we will call those be starting our initiation doses per label. But those are the areas where patients most frequently start on BELBUCA and in fact, the 150 and the 300 are the most prescribed and patients don't always go beyond that, but in our studies, a lot of times they were titrated up as needed to get efficacy. And there's really not a big shift between those doses and a higher doses. So the 450 through 900 it moves a percentage or two. However, we have seen every quarter really since we re-launched those titration doses that increased in pure growth. And I think what that points to is patient staying on long-term having good results and being happy with the product. So that's crucial. And then the other part is the funnel or new patients coming in at 150 to 300 has accelerated as well, so those two things are both important and we're really encouraged by what we're seeing there. And I'm sorry what's the…?

Herm Cukier

That was the third.

Scott Plesha

Yeah, was there a fourth, I think that was a -

Esther Hong

I could, if can I ask a fourth?

Herm Cukier

Sure.

Esther Hong

Okay, just a follow up.

Herm Cukier

I think Scott's ready for one more.

Esther Hong

Okay, all right. So there was a recent ANDA filing by a few generic competitors and can you speak about any sort of previous settlements and anything that gives you confidence that the patents will be protected moving forward? Thanks.

Herm Cukier

Hi, Esther, thank you so much for your questions, greatly appreciate it. And as is public, there's been two additional Paragraph IV filing on top of the first to file, which was Teva. And to your question, we have obviously reached an agreement with the first-to-file Teva, which was done after their diligence and discovery process, which I think speaks to the, the fortitude, and the resilience, of our intellectual protection, which we are extremely confident of, and which we will continue to defend as needed with rigor and the utmost confidence. So there are two other Paragraph IV filers and they're on the same patents. And so for us, this is a continuation of maybe a sign of success that if the product grows there will be others that that will follow afterwards, but for us this is just a continuation of the rigorous defense of our intellectual property protection and there's nothing different from the process that was instituted by first-to-file, which was Teva.

Esther Hong

Excellent. Thank you, congratulations.

Herm Cukier

Thank you so much.

Operator

Our next question comes from the line of Tim Lugo with William Blair. Please proceed with your question.

Tim Lugo

Thanks for the question and congratulations on all the BELBUCA growth in 2018 and 2019 so far. I guess a little bit broader picture. We have a major player in the opioid field of discussing bankruptcy protection. Can you give us an idea of what you're seeing from the field, potentially due to their marketing pull back? And what stage are you in terms of benefiting from this? I just don't quite see how this could do anything, but be a positive for BELBUCA.

Herm Cukier

Hey Tim, how are you? This is Herm. Thank you so much for the accolades and for your question. No, I think - I'll turn it over to Tom in a minute to talk a little bit more about some of the things that he and the medical team are working on the medical perspective and just how different BELBUCA really is from the C2 opioids. But I think that our focus is, as we've been saying all along, is ensuring that we help the medical community fully understand the clinical value proposition that product like BELBUCA offers to this patient population, not only in the safety profile which I think we've exemplified continuously and I think there's an appreciation for, but it is indeed an extremely effective adrenergic agent and we believe that it warrants merit as a core therapy for the treatment of chronic pain. But I'll turn it over to Tom, maybe he'll talk a little bit more about, from a physician perspective, just how differentiated the molecules really are and the aspects of historical concerns that have existed with C2 is just not something that applies in the same way to BELBUCA.

Thomas Smith

Great. No, thank you, Herm and no, thank you for the question. But yeah, the environment has changed a lot just in the past several months certainly in the past year and I was sharing this weekend - we have the scientific symposium at AAPM and we had standing room only right and the very few people left even before the Q&A wrapped up. So there's a lot of interest and I remember just a year ago buprenorphine not even being a discussion in as many of these maiden Congress's around pain. So physicians are wanting to know right, there's a lot of external pressures that are on right now there's the pressures from Medicare to get folks under 90 MMEs of a C2 opioid. I highlighted during my talk this evening that we're going to do this study looking at the very real possibility of respiratory depression. Every day we hear stories about people who are taking their chronic pain medication, their opioid then they go home and they have a glass of wine at dinner and then perhaps at night when they go to bed they take their benzodiazepine to help them sleep and unfortunately some of those people do end up passing away. So we believe as Herm mentioned, BELBUCA is a different molecule. We know its safety profile. And when you think about the adverse events of these opioids, chief among them is the possibility of respiratory depression. We know we have a ceiling effect when it comes to that. So we think this is a great opportunity to expound on that, so really looking forward to the plans that we have in place for this year. But it's a great question.

Tim Lugo

Understood and may be following up on the clinical study. Can you talk about maybe how many patients you're expecting to enroll, what's the timeframe of the study? And also maybe for Terry, we've seen R&D at pretty low level of over the past few quarters, I expect that to - probably will pick up as you start off a new study?

Thomas Smith

Right, so this was the study I was talking about late last year when I laid out my medical plan there at the analyst day in October and then spoke further about it in November. So this has all been accounted for. What I what I see is that we'll work on that protocol here yet this month hopefully get an IRB approved in the next month or so. It will take several months to conduct the study, but be comparing ourselves, be comparing BELBUCA directly against a schedule to opioid right. So I really think that news will be informative and will really help the physicians in their decision making.

Terry Coelho

Hi, Tim. This is Terry. So just to address your question on the R&D spend, what I would say at this point is that any spend that Tom is contemplating is already factored into our cost structure. And we're continuously evaluating our strategic choices, prioritizing our spends and I think you can expect to see pretty steady trends.

Tim Lugo

Understood, thanks for the question.

Thomas Smith

Thank you, Tim.

Operator

[Operator Instructions] Our next question comes from the line of Matt Kaplan with Ladendburg Thalmann. Please proceed with your question.

Matt Kaplan

Hi, guys. Thanks for taking the questions and congrats on the quarter. Just wanted to circle back a little bit to your access wins and I guess the question is are there additional pairs you're in negotiations with to gain preferred access? And when could we see some of these negotiations start to have an impact and have a resolution?

Scott Plesha

Thanks for the question, Matt, its Scott. So we're always obviously out doing clinical presentations and talking with market access companies, plans and PDMs, there's really no way to predict the timing of them. You saw that last year, we sprinkled them throughout the year. I'll also say as we're having really meaningful conversations. We made really important progress last year, if you'd kind of benchmark where we are, it's getting close to where some of the top brands have been over time, so there'll be more the more regional plans. Medicare, we need to do some work, but we're confident we'll add more, we'll be 25 million lives at a time there's really not many of those left out there. So I can promise that we're committed to providing the proper access to this product to patients.

Matt Kaplan

Great, great, and then given the success you've had with BELBUCA over the last year, especially last quarter, what are your thoughts now in terms of BUNAVAIL and the potential for that product? What's your thinking now?

Herm Cukier

Hey Matt, it's Herm. Thanks so much for the questions and the accolades. I'm very proud of the work the team is doing. I think as we've been saying, really since I joined the organization, our core strategic focus is capitalizing on the opportunity with BELBUCA and I think again we're off to a tremendous beginning of that process with a significant ramp still to go and many more years to make these numbers happen. And that will remain and continue to be our core strategic focus. BUNAVAIL, and then the revenue that we received from ex-US opportunities are complimentary. We continue to manage them as such, where it makes sense we take advantage of that, but it's not an area that is a focus our attention. And as I've said all along, we will look for ways to continue to optimize the value proposition of all of our strategic assets, including BUNAVAIL. But for now our focus remains and will remain to be the execution of BELBUCA.

Matt Kaplan

Great and then for Terry I guess, she mentioned in her prepared remarks on potential for increased operational efficiency. Looks like you've had some good results in terms of bringing down the cost of goods. Terry, could you give me some more color in terms of what you're thinking what you're referring to in terms of operational efficiencies?

Terry Coelho

Hi, Matt, it's nice to meet you. So yeah, I mean, look I think tomorrow marks two months that I'm with the company and obviously they've been in a very busy time of the year and getting up to speed and I'm looking across a number of areas, working with the rest of the leadership team to understand the processes and what the business is doing, looking at everything from the operations through to working with sales and marketing and how we allocate our resources and prioritize as I mentioned earlier. So I'll share more in the future. I think as we as we start to uncover that, but I think there's definitely opportunities.

Matt Kaplan

And thanks for taking the questions guys.

Herm Cukier

Thanks so much Matt, really appreciate it.

Operator

Our next question comes from the line of Oren Livnat with HC Wainwright. Please proceed with your question.

Oren Livnat

Hi, thanks for taking the questions. I was hoping to follow up on this head-to-head respiratory depression study. Firstly, could you just help us understand what really - what the study is in terms of what are you comparing and what kind of patients or subjects and how? And I guess more importantly, do you think this is data that could actually make it into the label? And how long might that take if so and would that give you a very important differentiator when you start going back to either guideline recommendations or managed care where people are still having to step through C2 opioids in some cases and maybe we get a big picture change in the notion of the even stepping through IR C2 opioids before getting to your product.

Thomas Smith

Hi, Oren, no, thank you. Thank you. Thank you for the question. And as I mentioned, we're still kind of exploring what that study looks like, right. So as I mentioned, we're considering the study design and the protocol itself, but the issue of respiratory depression again, if you look among the adverse events of any of these agents is respiratory depression, so it's hard to say. Is this a study that we've taken to the agency, no, but it'll be interesting to see what the data shows us and I think it'll informed us that appropriate parties as it comes out right.

Oren Livnat

Okay, sounds like it's a work in progress. Okay. That's it for me thanks.

Thomas Smith

Okay, thanks Oren.

Herm Cukier

Thank you, Oren.

Operator

Ladies and gentlemen, we've reached the end of the question-and-answer session. And I'd like to turn the call back to Herm for closing remarks.

Herm Cukier

Thank you very much operator. Again, thank you everyone for joining on our call today. We're extremely proud of the work that we've accomplished in the fourth quarter and full year 2018. We're pleased by the early year momentum that we have in 2019 and we look forward to coming back in early May and sharing results of the first quarter of operation of the company, so wishing everyone a wonderful rest of the afternoon and great rest of the week. Thank you very much.

Operator

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.