Aerie Pharmaceuticals, Inc. (NASDAQ:AERI) Q2 2019 Results Earnings Conference Call August 7, 2019 5:00 PM ET
Ami Bavishi - Director, IR
Vicente Anido - CEO and Chairman
Richard Rubino - CFO
Thomas Mitro - President and COO
Casey Kopczynski - Chief Scientific Officer
John LaRocca - General Counsel
Conference Call Participants
Annabel Samimy - Stifel
Ken Cacciatore - Cowen and Company
Serge Belanger - Needham and Company
Esther Rajavelu - Oppenheimer
Elemer Piros - Cantor
Difei Yang - Mizuho Securities
Elliott Wilbur - Raymond James
Oren Livnat - H.C. Wainwright
Good afternoon, ladies and gentlemen. Thank you for standing by and welcome to the Aerie Pharmaceuticals Second Quarter 2019 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 follow at that time. Today's conference call will be recorded.
It is now my pleasure to turn the floor over to Aerie's Director of Investor Relations, Ami Bavishi. Please go ahead, Ami.
Thank you, Don. Good afternoon and thank you for joining us. With me today are Vince Anido, Aerie's Chairman and Chief Executive Officer; Tom Mitro, Aerie's President and Chief Operating Officer; Rich Rubino, Aerie's Chief Financial Officer; Casey Kopczynski, Aerie's Chief Scientific Officer; and John LaRocca, Aerie's General Counsel. Today's call is also being webcast live on our website email@example.com and it will be available for replay as indicated in our press release.
Now for forward-looking statements and non-GAAP financial measures. On this call we will make certain forward-looking statements including statements, forecast and guidance regarding our future financial and operating performance including our updated full year 2019 net revenue and net cash burn guidance. These statements will include observations associated with our commercialization of Rhopressa and Rocklatan in the United States. They will also include expectations regarding the success, timing and cost of our clinical trials.
Additionally, we will discuss progress regarding maintaining, requesting or obtaining approvals from regulatory agencies of our products and product candidate, including our efforts on international expansion.
Lastly, we will address our manufacturing activities and capabilities, the potential of our pre-clinical product candidates and research findings, our financial liquidity and other statements related 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 today's press release as well as the risk factors included in our filings with the SEC. We assume no obligation to revise or update forward-looking statements whether as a result of new information, future events or otherwise. Please note that we'll file our 10-Q by tomorrow.
In addition, during this call we will be discussing certain adjusted or non-GAAP financial measures. For additional disclosures relating to these non-GAAP financial measures, including a reconciliation to the most directly comparable GAAP measures, please see today's press release, which is posted on our website.
With that, I will turn the call over to Vince.
Thanks Ami, and good afternoon everybody. Thanks for joining us.
I recognize that all the current interest lies in the performance of our glaucoma franchise in the marketplace and certainly as we’re going to spend most of our time today. We haven’t seen this level of volatility to much as stock performance for our company since back in roughly 2015 days when we missed the primary end point for Rocklatan, certainly it’s been - that was a tough year and certainly we came back from that pretty strongly, and I certainly believe, we are going to do the same thing now.
Today we’re a lot stronger than we've ever been with two innovative glaucoma products in the market are performing very well on the patients that they're trying it. We have expansion plans underway in Europe and Japan that are proceeding very nicely in two exciting sustained-release implant product candidates retina that are in our pipeline.
And I personally believe it and sort of have more confident in our future today at any point in our history. Certainly we derisk the company and plan on moving forward towards achieving our goal of becoming the next major ophthalmic pharmaceutical company.
Now getting to the short-term concerns on Wall Street, as I'm sure you saw in our earnings release, we are lowering our full year 2019 net revenue guidance range to $70 million to $80 million, down $110 million to $120 million. The approach to the updated guidance was to end grid only on the trend we've seen in a very short commercialization story.
I view the updated guidance range as conservative case and it is calculated based on the recent historical growth rates. We obviously will be aiming to achieve revenue levels beyond the updated guidance range for 2019.Now we will continue to provide regular updates, we’ll talk about our Med D wins, we’ll talk about shipments out from wholesalers to retailers etcetera. So none of that is going to change on a going forward basis.
Now as we look at where we are today, we see consistent growth in our product line and we’re going to be talking about that during this call. In fact, there’s recent reference point. Last week our sales out to pharmacies achieved a new record of nearly 14,200 units, which is roughly about a 1000 units more we saw in the prior week and so we're very excited about many of the things that are happening and will be talking about those.
Let’s start by looking at second quarter result in associated commentary that will help further clarify what we're seeing in the market. Our combined Rhopressa, Rocklatan revenues in Q2 totaled $15.8 million, bringing our year-to-date total revenues to shy of $27 million.
As a reminder, we launch Rocklatan and in May of this year, so we just have three months of experience. And we launch Rhopressa roughly about 15 months ago, so again very new into the marketplace with both products.
As we said in our press release, our net revenues per bottle for the franchise is $94 for the second quarter and $96 year-to-date, not surprising that as we continue to penetrate Medicare Part D, as we said before, our net price to - our net price will decline. Remember that the rebates are steeper in Medicare Part D plus we required by law now to pay for the 70% pharma funded portion of the donut hole. We expect that net revenues for bottles may continue to decline slightly to the extent our Medicare Part D mix continues to increase.
If we take a look at our latest corporate presentation, you could look at Slide 4 and you get a feel for how much of our business is coming from Medicare Part D, roughly 51% versus commercial pay portion of it which is about 34%.This is roughly in line with what's happening with other glaucoma products in the marketplace.
We internally view netarsudil as a franchise in both Rocklatan and Rhopressa specific segments to fill in that glaucoma market. This is we haven't guided to revenues Rhopressa versus Rocklatan. We also did not break out the actual net revenues for Rhopressa versus Rocklatan.
It is very early in the U.S. Rocklatan launch and Rocklatan revenues were immaterial to this quarter. But the pricing of each product is ultimately consistent, remember we priced and pretty darn close to each other, and so as Rocklatan picks up additional coverage, we do expect that the rate between - the price difference between the two products to narrow.
Of course, for those of you who are interested, you can look at our separate sales out volumes to pharmacies, which we report on a monthly basis for both Rhopressa and Rocklatan and you can see sort of which way the products are trending.
On the last month or two, many of us, certainly Tom and I and others on the commercial side of the organization have spent an awful lot of time in the field because we wanted to understand what the issues were that that was keeping us from achieving some of the revenue projections that we put out there.
And the good news is that we didn't find that there were any issues related to the products themselves. The physicians and the patients are very happy with what they're getting with Rhopressa and well as Rocklatan. So that’s terrific from a long-term perspective because we do think that that allows us to continue viewing these products in the same light as we've always looked at in terms of Rhopressa being roughly 350 million future revenues and Rocklatan hitting that $1 billion mark.
The majority of the feedback we’re receiving from the field continues to be very positive as it relates to the performance of both of these products in patients. And some of you and many others have done, independently performed physician surveys can also confirm this kind of feedback. Again, the products are doing what we expected them to do in the marketplace.
Physicians often tell us that the biggest hurdle to greater Rhopressa and Rocklatan usage is managed care coverage not product performance and we think this points to a very bright future, because the coverage will come. A number of prescribers continues to grow which totaled nearly 11,000 eye care professionals haven't prescribed either Rhopressa or Rocklatan and represents roughly 75% of our total target audience of about 14,000 eye care professionals.
Well over 3,400 physicians are writing the partial that is Rhopressa or Rocklatan scripts on a regular basis. And by the way, just about a couple of weeks ago, that number was 3,000 and now we have 3,400, so we continue to grow the number of prescribers that are writing for one or the other on a regular basis, in this case weekly.
We had about 6,600 of our target audience that are now writing monthly, which means that overtime these guys will continue to build the amount of prescriptions, the writing for our products in their practices and a tool to move towards writing on a weekly basis.
Focusing on Rocklatan, we have over 1,900 physicians have already Rocklatan prescription. We’re also currently have over 300 writers of Rocklatan only. And interesting, about two-thirds of those have also become weekly writers. We often as part of that of the 300 or so we have about 200 of those physicians who would never prescribed a Rhopressa prescription that have written for Rocklatan. So we do think that there's an awful lot of positive that's going on in the marketplace in terms of what’s happening and I view this is an impressive sign recognizing that it is early in the launch.
That important metric is that approximately 17% of all prescribers already writing prescriptions for both Rhopressa and Rocklatan as they are now gaining experience within netarsudil franchise and learning how best to use our products in the treatment regimen. Netarsudil market share in the top decile practices is double what we're seeing in all practices and about 2.5% market share in the top decile 7, 8, 9 and 10 versus just about 1% or so everywhere else.
These large-volume practices will continue to lead our volume growth going forward while a smaller practices continue to make gains. One other interesting note is that many optometrist are becoming early adopters of Rocklatan. We have roughly about 2,000, 2500 of our call audience that represents optometry, so we’re very excited about the fact that those are becoming early adopters for Rocklatan.
Others leads to growth and prescription volume. Our franchise prescriptions grew 26% in Q2 over Q1,that’s pretty nice growth compared to the overall glaucoma market, which grew at only 2%.Each product to simply needs time to settle in. We've guided in prior calls that once we get to that complete coverage, north of 75% our Med D coverage both Rhopressa and Rocklatan that's when we're going to see these products truly beginning to find their niche and settle into their prescribing habits of positions.
We're looking for example so that we can give you in terms of what we're seeing and the closest example that what we’re experiencing now for Rocklatan is what we saw back in 2007, when Combigan was launched by Allergan.
Alphagan [indiscernible] was one of the flagship products for company companies in alpha blocker ,and peak revenues about 350 million or so in the marketplace and launched in 1997.For those of you who don't know, Combigan is a combination of Alphagan plus Timolol.
So Alphagan was launched, 10 years later Combigan was launched and so that is the early - that's the only example that we can come up with that is close to the Rhopressa and Rocklatan story. What’s interesting is when Combigan once launched, it took about nine to 12 months for each of the products to find its place.
So again, like we're seeing in the marketplace today between Rhopressa and Rocklatan there’s an awful lot of turn going on in the doctor’s office as they find a place for both products. What’s interesting also is that this is when Allergan was at its prime. So this is - it was in their heydays and so even they couldn't force any bigger adoption of Combigan even though they thought that was a much better product over Alphagan it’s been out for a long time. And so we're seeing many of the same dynamics occurring and awful lot of churn as the doctor try to figure out a home for both products. But this is close to a good example as we can give you as to what we see happening in the marketplace today between Rhopressa and Rocklatan.
Another important gate to demand that we look at which is valuable leading indicator is the prior authorization volume which is obviously a part of the Medicare Part D programs. Rocklatan has generated more than double the number of prior authorizations that we solve for the same period of time during the Rhopressa launch. This is an excellent indicator of demand and helps point to greater likelihood of gaining market access sooner as payers try to minimize our costs.
That by that I mean that is we get more and more prior authorizations written that certainly in sense the plans the managed care plans to sign of contract with us for rebates et cetera to bring their overall cost down. Some retail outlet perspective, we have now about 25,000 retail pharmacies across the country that have filled the Rhopressa-Rocklatan prescription up from about 21,000 we reported for our first quarter earnings call in early May.
That represents nearly 40% of its retail outlets in the country. However, even with that growth and a number of dispensing pharmacies, inventory levels at retail are essentially the same today as they were back at the end of 2018. So we have not seen any inventory build at retail as some folks have try to speculate in terms of how we reach our revenue targets.
To give you further statistics on this at the end of 2018, the number of bottles in the retail channel is in the 45,000 bottle range that's when we were - at that time we only had about 17,000 pharmacies that filled the prescription for Rhopressa at the time. As of now our products are being filled across 25,000 pharmacies and a number of bottles in the retail channel remains right at 45,000.
Additionally for Rhopressa wholesale inventories remain two weeks in future demand demonstrating our sales growth is real growth. Also channel inventory for Rhopressa at the end of the second quarter was approximately two weeks of future demand consistent with the beginning of the quarter. Rocklatan of course is consistent with what we saw with Rhopressa in the second quarter of last year and that there is more of a channel effect which will diminish over the next quarter or two as it did for Rhopressa.
So what are the things we’re hearing out in the field, let me just point to a - few of them. Physicians are gathering increase experience with Rhopressa and their impressive levels of intraocular pressure reduction they have seem. Hyperemia were still occurring does not appear to be a major issue with a large majority of patients that is generally transient, mild and not causing high levels of discontinuations.
Rhopressa is primarily being used as add-on therapy where patients are already on one or more other drugs. They are some eye care professionals who was hesitant to change from historic prescribing practice are not as inclined to remove therapies. It came as a surprise to us and as recent as couple weeks ago I had dinner with a number of [indiscernible] physicians and was really surprised that once they get the patient under control say by adding Rhopressa even on top of three other medications.
They are not in a hurry to start decreasing the number of prescription that that patient is getting because they are pretty happy once they get those pressures down as low as possible. We believe this change in practice will happen however through time as they gain confidence in Rhopressa effectiveness and also as the patients begin wanting to decrease the number of eyedrops that there are subject to on a given day - on any given day.
Those who are gravitating to just Rhopressa on top of FPGA which we believe is the ideal combination are seeing good efficacy with just two drops along with less hyperemia as eye is exposed to fewer eyedrops. Rhopressa has majority formulary access across both commercial and Medicare Part D plans we still have more to go. Some of this relates to plans with which we contracted but we’re the underlying formularies have not yet instituted coverage.
This may include custom formularies or other instances were newly merged payers still don't have Rhopressa on all of their underlying formularies. We experienced the latter with a recent contract with a large PBM that recently merged with insurance company but we have yet to gain coverage in a legacy insurance company formulary. We do expect to obtain that coverage later this year as we conduct separate discussions with that particular formulary team.
So we do have the contracts in place, but not all of these sub plans are signing up for so again we think that that has something to do with some of the uptake issues that we've been seeing. The experience thus far with Rocklatan has been very promising. Physicians are not only sampling Rocklatan and getting great results, but what’s interesting is and it perhaps because they're only on one eye drop or perhaps because the efficacy rates are so much better. There is not a whole lot of feedback that we’re getting relative to hyperemia associated with Rocklatan.
So as Rocklatan is in its early stages of gaining formulary placement after the Rocklatan samples are provided and coverage is not yet available we are seeing doctors wait for the coverage or provide either sample or prescription of Rhopressa to be taken on top of their favorite prostaglandin on an interim basis until the Rocklatan is covered. This is in addition to the prior authorization activity I discussed earlier.
Now this creates a situation where the patient need to return to the physician's office a few times not only to get there interim Rhopressa script but also ultimately to get their Rocklatan script. The cycle time for this churn as I call it could take months especially when we consider that some of the business practices may not be able to schedule the patients for a return visit for up to 60 days. Here in lies the key reason why comparison of the Rocklatan launch to Rhopressa launch is shortsighted and doesn't really reflect the ultimate potential for Rocklatan.
Launches are very different Rhopressa was approved in December of 2017. We did a soft launch including sampling to the top prescribers in March of 2018 and launched and physically actually launched the product in May of 2018 once our sales force was in place. Rocklatan was approved in March of this year launched in May of this year and with that was sampled over the launch and with Rhopressa already on the market. This causes a different launch dynamic, but the success of Rocklatan of 12 or so weeks after launch is premature to say at least.
And so the most important message here is that the unique position of gaining coverage for Rocklatan while we continue to grow Rhopressa. We haven't had too many of the companies try to do this in Glaucoma space and I said the only example I can give you was roughly about 12 years ago. Physicians are learning the benefits of both Rhopressa-Rocklatan in their practices and their experience of product performance have been quite positive and this is why we believe so strongly that the ultimate value of this franchise is going to be as we've always talked about.
With that the longer term promise of both Rhopressa-Rocklatan remain intact and we continue to believe Rhopressa ultimately has the annual sales potential as I mentioned earlier of 350 million plus in U.S. annual sales and we believe Rocklatan ultimately has a potential to reach over billion in annual sales in the U.S. that’s first and only fixed dose combination product in this country for the reduction of IOP that includes a prostaglandin. And the only fixed dose combination product available in the United States that is dosed once a day.
Just look at our Phase 3 data on how effective Rocklatan was in getting pressures down to low normal ranges. In fact in that data from our Mercury trial Rhopressa also performed even better than it did in its own clinical trials and certainly it did better than even latanoprost did in getting patients pressures down to really low ranges.
Now we need to be patient and work through the transitional phase where Rhopressa continues to gain share not only by additional coverage but further penetration of covered lives by physician continuing to experience to see the positive aspect of where Rhopressa and Rocklatan fit into each treatment and to each patient's treatment paradigm.
Catalyst for growth and remainder of this year and in future will be formulary coverage for Rocklatan. We expected by the end of this quarter that commercial coverage for Rocklatan will be consistent with where we were relative to Rhopressa for the same period of time last year. Very importantly as we progress through this quarter Rocklatan Medicare Part D market access is exceeding where Rhopressa was at the same period of time last year.
We are pointing to 30% Medicare Part D access for Rocklatan compared to 12% that we had for Rhopressa at the end of Q3 last year. We’re also aiming to have majority formulary coverage of Medicare Part D for Rocklatan by the end of 2019 which would be significantly more accelerated than we experienced with Rhopressa. As a reminder today we have about 75% Medicare Part D coverage with Rhopressa and about 90% coverage on the commercial side and we did that about a year or so after launch.
All of the aspects of the Rhopressa and Rocklatan launch I just walk through other drivers for our revised guidance. Quite simply, while the franchise potential is unchanged, the volume - the volumes obviously are taking more time to build than we originally had estimated. The issue is simply time.
When all the dust settles and doctors have [indiscernible] experience with both products, we do believe Rocklatan will become the leader in the marketplace with this proven efficacy in one drop convenient and we believe Rhopressa will settle in as the add on just on top of the prostaglandin. Those are the original positioning statements for both products. With that I am confident we will achieve incredible long-term success.
To change topics briefly, as we continue to derisk our supply sourcing, I am happy to report that our own Ireland plant is making excellent progress in terms of readiness and is expected to be ready for commercial production in the early 2020 timeframe. This is on top of the FDA approval of a second drug eye contract manufacturer that I mentioned last quarter.
Turning to our initiatives beyond the united states, we expect to obtain European regulatory determination of Rhokiinsa that's Rhopressa in Europe has the approval later this year, which assuming its positive, we result in us filing for Rocklanda, which is Rocklatan in Europe, sometime early next year.
We also expect to readout topline Mercury 3 results in the first half of next year. As a reminder, Mercury 3is Rocklatan study and only in Europe comparing it again for the leading combination product in Europe and it's done primarily for pricing reasons.
The biggest positive surprise for us was the extraordinary level of interest in Rhopressa in Japan, which taught us to enroll our Japanese Phase 2 trial far faster than we ever anticipated. We now plan to readout Phase 2 data by the end of this year on that Japanese Phase 2 trial.
Moving on to our retinal implant programs in spirit of brevity and I will say is AR-1105, our sustained-release steroid program is progressing well in the clinic and we expect our Rho kinase Protein kinase C inhibitorAR-13503 to enter the clinic very shortly. Our early stage research initiatives are also advancing at least for own molecules in the dry eye space and psoriasis just two examples of what we’re doing.
Now before I turn the call over to Rich, I’d like to address that one of the other concerns that investors have had and that's our perceived need for financing. As always our job to ensure that we’re adequately finance and it's also our job to obtain financing at the lowest possible cost and with the least amount of dilution possible.
And so as a reminder, let’s just do some quick math. Our opening cash balance for 2019 was over $200 million and our updated net cash burn guidance for 2019 is now between $160 million and $170 million.
Now when you add back in our available credit facility of $200 million that leaves us with a projected year end 2019 liquidity of over $200 million. We've been spending roughly about $200 million to $220 million over the last couple of years and if we were to do that next year we have enough cash almost to make it through the entire year even if you assume we don't sell one bottle of either Rhopressa or Rocklatan. So I do think that we have the liquidity that we need in the financial capacity that we need in order to sustain ourselves and move forward and continue building our company.
Now with that I'll turn it over to Rich to cover the financials, Rich?
As Vince mentioned we recorded $15.8 million of net revenues in the second quarter, a 46% increase over the first quarter of 2019. Our franchise net revenues reflect volumes of over 169,000 bottles for the second quarter.
Our gross margin for the quarter ended June 30, 2019 was 95.5%.Our normalized gross margin was approximately 94.5% when considering inventory costs that were expensed prior to FDA approval of our products. Our second quarter 2019 GAAP net loss was $47.2 million or $1.04 per share, when excluding the $10.7 million in stock-based compensation expense, total adjusted net loss was $36.5 million or $0.80 per share.
Adjusted total operating expenses for the second quarter of 2019 were $50.5 million with adjusted selling, general and administrative expenses of $27.4 million, adjusted preapproval commercial manufacturing expenses of $5 million and adjusted research and development expenses of $18.1 million. For additional information regarding our second quarter results and prior period comparisons please refer to today's press release and our form 10-Q,which will be filed by tomorrow.
Net cash burn for the six months ended June 30, 2019 totaled approximately $92 million with $109.4 million in cash and cash equivalents remaining on our balance sheet as of June 30, 2019.Shares outstanding at quarter end totaled 45.9 million\.
Vince already discussed or revised net revenue guidance at length. Also as Vince just outlined, our net cash burn guidance has been updated as a result of the cash flow effects of the lowered revenue guidance.Net cash burn for the full year 2019 is now estimated at $162 million to $170 million compared to the previous guidance of $130 million to $140 million.
Once again we have $109 million in cash and cash equivalents on our balance sheet as of June 30, 2019 plus we have the $200 million undrawn credit facility giving us total liquidity as of June 30, 2019 an excess of $300 million.
Now I would like to turn the call over to the operator for questions. Don?
[Operator Instructions] Your first question comes from Annabel Samimy from Stifel. Your line is open.
I have a few, so I'm going to ask the obvious question first. So when you think about the original guidance you gave, I guess, what were some of your assumptions that went into that trajectory and why did you think it will be so much stronger than what’s you are experiencing now? And I guess with the 92 million burn and 109 million lost, clearly that should attenuate over time as you have increased, so how should we think about coming out of the year and into next year and where that cash might take you? That’s first question.
And maybe you can help us understand also on price, I understand that price sometimes afloat 90 imagine clearly that that Medicare commercial mix, but what’s going to allow you to bring that back up to that 100 level that you targeted?
And then lastly, just on some recent work that we've done, a good majority of docs who were using Rocklatan had used Rhopressa and probably less than 50% of patients and you also mentioned you are reaching new target some of them being optometrist and maybe you can lower thus far physicians. So do you have any plans to expand your target audience beyond just a high deciles and maybe take advantage of some of that interest from the optometrist population that could be a vast audience for you? Thanks.
All right. Let me see if I’ve got all these straight.
I can repeat that.
I’ve got these. So on the sales assumption stuff, like you we did a lot of market research and everybody else did too and if you sit out there and you start showing these doctors the product profiles and the differences between Rhopressa and Rocklatan ,everybody tells you immediately that they’re going to use an awful lot of Rocklatan and maybe they’ll find a home for Rhopressa.
Nowhere in the market research and nowhere that we’ve done or anybody else is done that anybody ever get into this churn thing. It was more of a - soon as I get it in my hands I am going to use it. Some of you have had physicians on some of your panels and they talk about immediately moving all their patients over to Rocklatan they were on Rhopressa etcetera, et cetera.
So it always leaves you with a feeling like it all going to move very, very fast and in realities as we talked about before that was happening in the marketplace, a lot of it is attenuated considerably by managed care coverage and so that certainly gives you a dose of reality
And so when we put the assumptions together, it was trying to do a balancing act between the fact that no new product have been introduced in its category for over 20 years plus the enthusiasm that we saw for the kind of data that we were showing in the clinical trials and so we certainly felt very good about sort of the uptake year.
When reality hit and we started seeing the managed care impact, where we're doing really well in some of the markets and not so well on others where we didn't have the coverage even with we’re writing prior authorizations only about 40% of those prior authorization even though almost 80%/90% were approved only 40% of the ones that were approved we’re actually picked up because the co-pays were too high. So the patients were coming back so that started creating an awful lot of churn.
So again the basic assumption that we made didn’t factor in as much of this reality picture as we're now seeing without the product profiles, themselves and the enthusiasm that the doctors has especially the high end glaucoma guys that we would move through some of the stuff pretty quickly and it just reality hit and it just didn't happen
So those are the basic differences and the assumptions and now we’re just going back to only - doing what we've already accomplished which is just watching our own growth patterns and forecasting off of that and if they accelerate I guarantee you, we will be the first ones to tell you. So that’s on the sales assumptions.
On the price, we do expect that we’ll get back to again the guidance we provided roughly $100 per bottle price over time as we take price increases. Because again when you first get hit with all these rebates and covering the donut hole et cetera, et cetera, et cetera. The Medicare Part D coverage takes the biggest whack out of the rebates those are the highest rebates we give versus the commercial side where we can use co-pay cards.
And so over time as we take further price increases remember we took one in late fall of last year. And so as we take other ones we’ll start seeing that price start hitting the floor and then start bouncing back up. We do currently have all the sales force that we need to move forward. They are reaching lower decile doctors over the years this hasn't been particularly fruitful for any company. And so expanding just to get more of those just don't make much sense.
And as I mentioned during the call or during the prepared remarks about 2,000, 2,500 of our current call audience of 14,000 already optometrist. And so those are the high volume guys which is - that's why they are on our call list. And so, we expect that that's going to continue. On a cash side which I think was actually your second question I am going to turn that over to Rich so that he can give you some more details.
Thanks Vince, hi Annabel so as you mentioned, we do have the net cash burn in the first half of the year of $92 million. The second half of the year will be less by definition because we will have increasing revenues over the next couple of quarters while our gross cash burn remains fairly even in the back half of the year. In fact gross cash burn maybe slightly less in the back half of the year than the front half year.
So remember we gave a new range for net cash burn of 160 million to 170 million for this year if you just picked the midpoint 165. If we already at 92 in the first half of the year then you’re going to end up with about 72 million in net cash burn in the back half of the year. So you can see it declining first half from 92 to say about 72 or so in the back half of the year. And also Vince gave some math towards the end of his prepared remarks just to address liquidity.
We started 2019 with $203 million in cash and equivalents on the balance sheet. With a net burn in the mid range of the current guidance of 165 million that leaves you with about 38 million of cash at the end of the year end of 2019. Then you have the credit facility for 200 million that you can add on top of that and you end up with year-end 2019 liquidity of about $238 million.
The point that Vince was making was even if we had zero revenue next year that $238 million in liquidity could carry our gross expenses through the entire year next year.
Your next question comes from Ken Cacciatore from Cowen and Company. Your line is open.
Thanks for the different metrics for the first time in a long time I had to put my pen down there were so many. But just wanted to cut through a little bit of what you’re trying to say about the manage care and taking little bit more time. Can you just talk about how you're supporting those patients so as your Rocklatan sampling program a little bit heavier and little bit longer than you would have thought.
And then also similar we've been doing doc checks and hearing back that the hyperemia with Rocklatan is surprisingly lower than Rhopressa. Just actually curious as to why sounds like that's what your hearing as well. And then just lastly can you just remind us I think you gave us information, but by the end of the year where the coverage should stand for Rocklatan? Thank you.
Ken it’s good things that were taking this thing so that you can follow up on some of those numbers right. So I want to answer one of the two questions that you asked regarding the hyperemia rates et cetera because we’re pretty excited about still what we're seeing in the marketplace and I’m going to let Tom talk a little bit more about the commercial side - the commercial question that you asked.
And so on the hyperemia rate yeah this is kind of interesting so again you know we’ve been on the field talked to lot of the docs. And so these guys are surmising the following. Rhopressa position with a lot of the high-end glaucoma guys has always been sort of max medical therapy than they add Rhopressa to it. Those patients maybe on three or four medications already - that's an awful lot of preservative that’s hitting those eyes to begin with much less the fact that some these drugs are also irritants to the eye on top of that.
Until that time you add the fourth one they are already pretty sensitive and so they may have been seen a little bit more of sensitivity reaction to the vasodilation caused by Rhopressa. It wasn’t pain, it wasn't irritation or anything like that it was just the vasodilation causing the eyes to go a little bit further, get a little bit redder and it became a little bit more noticeable for them.
And so what’s really interesting about all that and again what we’re seeing from an attrition rate when they do get the hyperemia after either adding into prostaglandin or after max medical therapy. Is that the IOP goes down the same number of patients that we always talked about they are roughly about 10% or 15% of them just really can't tolerate it so they are basically saying hey look yeah I know my precious is lower but I just can't do this red eye thing.
That means that the balance roughly 90% of them are pretty happy with a lower pressure and with whatever incremental hyperemia they're getting there saying well is worth it given that my pressures is lower. So we like that but in case of Rocklatan we think that it's simply because many cases they're not adding it to a lot of stuff it just using it by itself. So it just one eye drop, one load of benzalkonium chloride BAK which is our favorite preservative in the industry.
And therefore they're not seeing some of those effects and also balanced out by the way with really low pressures. And so, I think it's the key I think it's the hyperemia is a problem if you don't get a good pressure drop and if you do if you get a great pressure drop they won’t live with hyperemia and they just don't talk about it as much. So let me turn over the first question to Tom.
So Ken well thanks so I’ll talk a little bit about the commercial aspects of the managed care [indiscernible] this is what we find first off we’re quite happy with our coverage for Rhopressa where it’s bad really the first year of having the product on the market with a brand new company. We’ve actually done very, very well. The thing I’d say that really drove that was the PAs that are field for us was able to encourage the physicians to prescribe because the PA really in essence made managed care really pay attention to Rhopressa.
So anyway that was very good but what we find on the other side from managed care, is that many of them as you know have gone through consolidations and acquisitions. And when you put organizations together usually what happens is all formulary movements as additions stop until the organizations come together that certainly happened to us earlier this year with the second largest payer in the marketplace who had suggested to us that we're going to get Rhopressa on their formulary early in the first quarter and actually not to be in the middle of the second quarter as a good example.
Nonetheless I think managed care is still a very good story for us if you look at Rocklatan you will see that there has been since we’re running towards 30% there which is [indiscernible] now and we already have the number one plan in the nation that is covering Rocklatan we think others are going to come as the year progresses. So, this got of answer if I can with anything else please let me know.
Your next question comes from Serge Belanger from Needham and Company. Your line is open.
Question from me on Rocklatan and Rhopressa Vince you’ve mentioned it was a matter of time but you still believe in the long-term prospects of both products. You’re expecting to see a big bump or a bump in Medicare coverage at the end of Q3 here When do you expect to see an inflection in Rocklatan should we see that in the fourth - starting in the fourth quarter?
With the current win, the most recent win in terms of Rocklatan occurring, it actually occurred earlier this month and so towards the back end of this month and beginning of September, you start seeing some inflection point there.
Obviously, right now because of vacations and all acquiescence you know, it sort of gets attenuate a little bit, but in fact, we think that some of the growth that we’re seeing in the marketplace in terms of shipments from wholesale to retail, it simply could be reflecting not only of more uptake for Rocklatan but also and because the better coverage but also just the normal increase we would see just because it is covered much better than it was just a few months ago.
So it's a - it's a regional issue. They get the plan that we signed what it's a national plan, it is concentrated on parts of the country. So it's not in every state but it certainly in many of the states and so we are seeing some nice bumps there and so if this win meaning getting to roughly 30% after three, four months relative to Rhopressa getting to about 12% in the same period of time is any indicator and hopefully we will be able to speed up our race to get to about 75% Medicare Part D coverage and do it sooner than we did with Rhopressa.
Remember Rhopressa took us about a year, and so if we can get there then say as we exit this year beginning of next is when we’ll start seeing sort of both products in the marketplace and then the physician being able to write for either one depending on which one he prefers.
And maybe this next one is for Tom. Can you just comment on any recent changes in salesforce and at this point in the launch do you think it’s adequately sized and staffed to promote both Rhopressa and Rocklatan?
Yes, first I’ll answer your second part of that question first. Yes, we definitely think that we were adequately sized to handle the people that are writing the most covered prescriptions in the marketplace. And as been said, that it was 2500 or so optometrist - being ophthalmologist. So we don’t see any material change in the size there.
The other question what we think is going on here is we think that our sales force is doing a really nice job. We’ve certainly had our changes in salesforce, which is common when you put in an organization in your first year, you'll find some people that say, I really want to be with a small company and I really want that spotlight every day and sometimes they don't.
Sometimes they come in quite natural for them to say, actually I am much better with a larger company, where probably don't have as much attention on those, but we go out through those growing things and we think our salesforce from a quality standpoint is in fantastic shape right now and we're quite happy with their productivity and what they are able to do with both products at this point.
And I guess one last one. Vince you walk us through some of the cash burn projections and expected cash balances. I think some of the rental programs are expected to readout either late this year or early 2020, is this higher cash burn, kind of change your strategy with advancing these programs, the Phase 3 trials?
It really doesn't. When you think about the timing related to some of the programs that we currently got going. So the retina programs, they are actually will be reading out a little bit later this year for the first part of next year. So about time, we sort those out and actually get more clinical trials back out having talked to the FDA etcetera, et cetera, et cetera. We’re looking at those things impacting more the second half of next year, so their impact is not as dramatic as perhaps you would expect it to be as much like what we're seeing with the Japanese study.
I mean, we were able to accelerate it, so we’re actually get results this year and then we'll sit back and kind of formulate based on the results what the protocol should look like go back to the FDA version of in Japan, the PMDA and go talk to them but by the time that we get back out into the clinic there, it could be in the back end of next year.
So as a result we’ll have plenty of runway by then. We think the products will continue growing and certainly will be decreasing our cash burn, because we will be selling more. So I don't think it impacts Phase 3, because we don't have anything scheduled to come out where the Phase 3 - huge Phase 3 program would start early next year, everything sort of backend loaded.
Your next question comes from Esther Rajavelu from Oppenheimer. Your line is open.
I have a couple. Vince for you, can you extend a little bit about on the trend of optometrist you are prescribing the portfolio of products and what’s driving that and it sounds like you are alone surprised by that and so kind of curious to see how that compares to optometrist prescriptions for other glaucoma products historically.
So typically we have a situation where glaucoma specialist - I am sorry an optometrist who focuses on patients and sees a lot of glaucoma in their practice tends to say, yes there the first one is to identify it and to diagnose it and in many cases will ship it off and send it off to a local glaucoma doc.
And so that's relatively common, and then we'll start picking up prescriptions from them later on, a few months later, when the glaucoma doc is actually got the patient on a prescription and then the patient goes back to the optometrist and the optometrist is following up. And so you will see a little bit of that dynamic.
What’s interesting is and I take you back to the optometrist that we know, especially the high-end guys who are really more clinical optometrist and anything else, you themselves is the patient advocates and so what we may be seeing here is that for those optometrist, for those doctors that they view something like Rocklatan, where they can just give them one eye drop and get two powerful drugs, get their pressures down really, really low, decreasing their co-pays etcetera, et cetera.
So they may be seeing is like their perfect answer for what their patients are really looking for. They maybe more than willing to do that for a number of different reasons maybe they get to keep the patients longer. They don't have to reform up because the pressures is under control and again, some of these guys are really high in from a clinical point of view, so I think it's 55,000 optometrist. So I am not sure that I can take our 2,500 and project that out to the full 55,000,but certainly the guys that we’re talking to that are writing these scripts are the highest in optometrist they write glaucoma meds and so it’s a hell of a start for us
But again, surprising that they just popped out that quickly. I have to admit that. But again as we thought about it and talk about it internally, I happen to visit with one of them at the Fort Lauderdale area and he was all over Rocklatan and he had not had much experience of Rhopressa but then that he sort of told me what I just told you, which is he viewed himself as patient affricates. So this was a perfect drug for them.
And then in terms of the churn you had mentioned that about the churn of about two to three months, do you anticipate a step up for doc visits among the patients who walked away with the sample, let’s say in 2Q or early 3Q later this year and how does that kind of work itself off over 2020?
So we think that the - what we’re seeing with the higher decile doctors, that are supporting us the most. So they are culminating for more patient visits and they are trying to get these patients back and little bit sooner. So they try to sort of bypass it by giving the patient a sample of Rocklatan and say, hey, if you don't have any troubles, call me and we will set up something later on if you can tolerate it etcetera, etcetera.
Other ones want to see him back in a shorter period of time, because maybe their pressure isn't under control, and it's sort of spiking and they are worried about it, so they are making room for but I think every practice is different. So not everybody can bring them back on a short basis, so it could very well be but the high-volume guys had such a big turnover in their practice meeting a lot of patients on any given day. For some of them it's easier to slot these patients in, because of other patients not showing up etcetera, etcetera. We’re seeing quite a bit of that churn but it's very practice-specific.
Your next question comes from Elemer Piros from Cantor. Your line is open.
Maybe a couple of numbers related questions to Rich, if I may. Rich I presume that the preapproval manufacturing line item would disappear beginning in the third quarter, would you be able to confirm that please?
It will basically get small over time and it will be pretty much gone when we get into next year.
Okay so it's a decline number.
So if I'm correct if I remember correctly your first half revenue was 26.7 million and I also see 25.7 million in accounts receivable. Would you please tell us what is the trend in terms of days sales outstanding as the moved into this year?
Yes so you really have to look at account receivable and not so much from the beginning of the year to the end of this quarter. But you have to look at how we progress in the course of the year. So generally the first quarter our accounts receivable were about 14.8 million now it's 25.7 million. From DSO day sales outstanding perspective you really dealing with just a few wholesalers or distributor if you will.
Each of whom has their own terms, the terms can range to about 60 days give or take some are little bit some are little bit less. So there is not an issue with regard to collections everyone is paying in accordance with their individual contracts.
You just - just follow the trends again not using the starting point of the year but follow the quarters and follow the revenue growth and going forward you'll see a more consistent relationship.
Okay thank you so that’s right. And Vince I was wondering if you could address how you’re going to address the first potential sustained release of eye drop that might come to the market next year [indiscernible]?
You mean that the bimatoprost?
Yes, so we’ve know about this drug for quite a while and so it is a surgically induced procedure that’s going to have to take place. We are aware of a number different things and specifically that there are some doctors that will try it and for some patients. The procedure itself and the kind of patients that are likely to be able to take advantage of something like this is not the entire market it certainly not all prostaglandin and taking patients because the size of the angle that is required for that insert to fit is - got to be pretty big so only certain patients are getting qualified for it.
Number two, if you take a look at the clinical trial results and while they were able to achieve what they wanted to achieve they're not as good as if you did the same thing with a eyedrop version of their drug. So it’s purely for convenience's sake so for compliance sake. And so and lot of is going to determine - be determined in terms of their uptake by the patient willingness to do a surgery.
And the co-pays associated with that relative to take it once a day eyedrop and the co-pays associated with that especially by the time that this product gets out the door bimatoprost will be generalized. And so it's going to be an interesting reimbursement fight for them and so from our perspective again they were shown to be non-inferior to timolol not as good as their own eyedrop. And yet our drug Rocklatan was actually shown be better than latanoprost And so I think I'd rather have our drug than theirs.
Your next question comes from Difei Yang from Mizuho Securities. Your line is open.
Thanks for taking my question. Just a feel here so the first question yes with regards to Rhopressa commercial coverage that I think you have talked about at 90%. I'm just curious out of these 90% what percent are all the way flow through to the participant 10 level?
Difei it’s Rich could you clarify are you asking how much of it ultimately goes to the benefit of the patient?
No how much actually, I think Vince was talking about when you sign these management, yeah?
Oh, I got you point, right yeah you’re asking we gone to the 90% which is overall contract access what is the underlying specific of formulary access?
Exactly so to what extent the patient from?
They are very close actually up as I recall in the 80 plus percent range.
So in that case it’s fairly narrow what happens remember with Rhopressa we started getting our coverage very early so you get that contract coverage and then it takes you sometimes a few months to get all of the underlying formulary coverage as Vince explained in his prepared remarks. So right now those two numbers are very close on the Rhopressa commercial side.
What about for Medicare side?
Medicare is got a little bit more to go using the example that Vince also used in his prepared remarks, but we do have the majority for Med D for Rhopressa covered. So the contract coverage is 75% as we said and over 50% is already covered in the formularies.
And again that's quite will narrow over time.
Yes, so then as you gain access to all these coverages more specifically with regards to the Medicare coverage we went from 40% to 75% on May 1. Do you think we have seen the inflection point from prescription perspective or are you expecting to see that inflection point?
So we started seeing some of the inflection point if you go back into the April timeframe, May timeframe remember we were sort of stuck at halfway through the first quarter things weren’t moving well. We were expecting a big win we didn't get it in Q1 it ended up trickling into Q2. And then as soon as we got it we started seeing a nice bump we starting seeing another nice bump now. And so it just it feels like it's going to be a, not as dramatic a big step as we had with Rhopressa where we went up to 12%.
Then another three, four months later we jumped up to 40 and then another three or four months later we jumped up to 75. I think it’s going to be a steadier growth rate to the ultimate target of in excess of 75% Medicare Part D.
Yes, thank you.
It’s kind of hard not to believe that the increase that we just had that I was talking about from last week and shipments from wholesale or retail have jumped in the thousand units in one week wasn't in part due to the incremental coverage we received. We see Rocklatan continuing to grow really, really nicely relative to the market and yet we still see Rhopressa growing. So I think it's both sides are just winning which is a great thing for us.
Thank you Vince for that clarification then changing subject to Rocklatan. So when you go out to have these coverage or managed care coverage discussions. How is Rocklatan viewed as a class of a drug is it viewed as a rocking inhibitor or is it viewed as s a PDA or maybe something else?
Yes, I could handle this is Tom by the way so maybe managed care organization may do a little bit differently but in most of the time they look at as a fixed dose combination product so, neither Rho kinase inhibitor not necessarily a prostaglandin but a fixed dose combination product.
So it’s a category by itself?
In many situations I can’t say all but certainly in many situations.
Okay thank you for that clarification then my final question with regard to liquidity need so leaving the increased cash burn do you still feel comfortable that with your current liquidity you are able to get to breakeven point?
Yeah so there is no increasing cash burn right, so the gross cash burn now is still expected to be $210 million to $220 million that's what it was when we gave guidance. Remember Difei there is an offset to that gross cash burn to get us down to net cash burn and that's basically the collections of accounts receivable from revenue offset by some repay payments. That net cash burn rate is going to decline I tried to explain this earlier.
So we had net cash burn in the first half of this year of $92 million. But the full year range is net cash burn of $160 million to $170 million. So by definition in the back half of the year that net burn declines and so should be the case is our revenue continues to build over the next several quarters.
Your next question comes from Elliott Wilbur from Raymond James. Your line is open.
I'm just following on that one question real quickly, so based on all the commentary around cash resources and expectations for performance of the franchise, doesn't really sound like there’s going to be any real changes to the game plan over the next four to six quarters, at least in terms of trying to become a little bit more fiscally prudent or cash conservative?
We’re obviously going to keep watching everything that we’re doing now by the way welcome back. I think the - we look at these things and we want to continue growing the business. We want to make sure that we’re prudent with the cash that we do have and we feel pretty comfortable, obviously with the guidance that we provided and are comfortable with our liquidity.
But it also we know the timing of things that are going to be happening and so it's not because we plan it, it just happens, sometimes you get lucky and from a planning point of view, we know that as I mentioned earlier that some of the big expenses aren’t going to - the preclinical trials aren’t going to start kicking in until the back end of next year and so that does help us sort of feel pretty good about not having to scale back a whole lot.
I mean, we’re always cautious about adding heads, we’re cautious about capital expenditures, cautious about all sorts of different things but I would say we're going to do it any differently than we've done in the past.
Thanks, Vince. And then just want to ask a few question going back to your comments at the beginning of the call regarding sales expectations for Rhopressa and Rocklatan and you are consistent with the numbers you put out there historically. Question really is more about the time to realization. I guess if you look at historical launch models most products of reach - peak number kind of in the five to seven year time frame, but it just seems like in the current environment launch curves just seem like there are a little bit more compressed kind of on the front end. So I just want to get your thoughts sort of around your timeline to realization of the big numbers that you put out there?
As I said earlier, we always started the uptick would be a little bit better than it obviously has been mainly because of everything that we were hearing, everything that the doctor is hitting us back relative to their expectations of how quickly they would start writing for one or the other product etcetera, et cetera.
And so I think that the normal trend would be based on what we’re seeing now you would expect to see a little bit of delay and so if we thought that we’re going to get the peak sales and five maybe it becomes a six or seven year time horizon.
The difference is, which is what I've been trying to point to which is that assume certain trajectory in terms of your managed care uptake. And so if we are able to accelerate our managed care uptake and we are as successful if not more successful with Rocklatan as we were with Rhopressa getting into that again 75% Med D coverage after year 90% commercial and so if we can move that up a little bit for Rocklatan that could allow us for have to start bouncing back from sort of this churn period and things like that to where we can get back to more an accelerated timeline, back to our original timeline.
So again it goes back to how fast can we get to that for the 75% Medicare Part D component and the sooner we do it, the better off we’re going to be and the sooner we'll get to those peak revenue numbers.
And by the way, while we’re talking about all this we’re looking the sort of the uptake on managed care for some of the other glaucoma products that have been launched and in the same relative period of time whether it was us or Rhopressa, I am sorry, Xiidraor Vyzulta or any one of those.
So its getting to where we did with Rhopressa in one year. The 75% Med D and 90% commercial stands out pretty nicely for us and so we certainly not happy - it's not happening across the board that quickly, so we like that.
And then last question, any updated data points you can provide with respect to Rhopressa and some more specific metrics in terms of combination use of the product. I think the reason I asked the question I always assume that Rhopressa was obviously being used extensively in combination therapy and most likely in combination with latanoprost, so is really just as sort of a Rocklatan proxy and when Rocklatan launched obviously thought that there will be strong uptake but there will be much greater cannibalization of Rhopressa then there has been thus far.
So you maybe that impression is not correct maybe in fact utilization, combination of latanoprost is just been a little bit lower than we had anticipated, but I was just curious sort of on thoughts as to why Rocklatan perhaps you had a cut in the Rhopressa franchises is much as we would have anticipated and you can sort of see that in the fact that I guess that you don't at least as of the latest week launch is still little bit behind where Rhopressa was trading at some point in time. Thanks.
This is Tom. I am happy to take this down but couple of your question there. First off, we do know that about 50% of Rhopressa’s current business is for initial therapy or treatment naïve patients. So they're not - they are those people that for some reason are not candidates for prostaglandins, right because that's what normally people start off with. So by the way we’re quite happy with that.
The second thing is when Rhopressa first came out it was added onto therapy, meaning it was we call maximum medical therapy or the end of line therapy prior to surgery, so the patient layout they would be using three products, they throw in Rhopressa just to see what happen.
Many were impressed with the results that they got because they certainly did not expect much and final out that they were getting a lot, so now what they're doing is that they are moving up in their treatment paradigm and their medications are replacing therapies with Rhopressa, meaning they are using as second or third line but not the fourth line that’s one thing. So we like that.
The other thing we’ll is its interesting because you are talking about the trade-off with Rhopressa and Rocklatan there and how Rocklatan you assume might either enter the Rhopressa business. Quickly, I can give you this fact. Since the launch of Rocklatan which course was just in May, we have picked up 1400 new prescribers of Rhopressa and we believe the primary driver for that is the physicians get infatuated with IOP lowering of Rocklatan.
They tried Rocklatan, funnel up that it wasn't covered at a high copay to it, brought the patient back to the office and then they gave them Rhopressa because like in start [indiscernible] used two bottles than rather use one in Rocklatan. But they sometimes just used two bottles.
So we like it. I mean we like the fact that we picked up more 1400 new Rhopressa prescribers since May even in the phase of having what we consider to be the most efficacious high appealing agent on the market.
Your next question comes from Oren Livnat from H.C. Wainwright. Your line is open.
I just want to follow-up on that combination product answer with regards to reception you are getting for Rocklatan from some payers. It occurred to me that maybe and you can [indiscernible] in the case. Are any payers sort of keying Rocklatan like it's in a vacuum and that really think about hey, you are the Rhopressa guys, come in with your second product such that.
They looking hey, Rocklatan is just a combination of two drugs that are out there and we've a policy for a long line of companies before you that will try to do sort of line extensions and convenience play than we say no, on all of those things. So we push back pretty hard and are you seeing that, and if that is the case is it possible that you won’t be able to get any premium over Rhopressa and some number of plans. Thanks.
So really - the answer to that really is no that as they - nobody is really putting us to a vacuum ticking or they are thinking this is just like any other combination product. And there’s really two reasons for that. First off, this is the first time they've ever had a company come in and say, this product is statistically better IOP lowering than the top-selling product in the United States effect the world latanoprost, right. So this is a whole different playing field for them.
The second thing, remember the pricing strategy that we took forward with Rocklatan was the price of very minimally above Rhopressa. So at the end of the day, it doesn't really make a material difference for them whether they're going to use or reimburse Rocklatan or Rhopressa. It’s not a monetary issue for them. So because of that they were quite willing to accept where we are with Rocklatan.
At this time, I would like to turn it back to Aerie's Chairman and Chief Executive Officer, Vicente Anido for any further comments.
Thanks, well thank everybody for joining us this afternoon. We try to give you some clarity about why we made the guidance changes et cetera and hopefully we’ve achieved that. And more importantly however, hopefully walking away from the call - and with a clear understanding about how we feel about the long-term prospects of both these products Rhopressa and Rocklatan.
There is nothing that we have seen in the marketplace that give us any pause at all - that wouldn’t want continue to make us bullish about the future for both of these products. Everything that we're seeing is positive from a patient and doctor interaction point of view. This is all about two things number one, making sure that we get enough managed care coverage, and as we pointed to the past trying to get to about 75% Medicare Part D, 90% commercial is really sort of the trigger where just about every doctor out there can write either product Rhopressa/Rocklatan to their hearts content for specific patient needs. And that’s what we’re trying to strive for.
Number two is, until we get there we’re seeing an awful lot of churn in the practices and that's what's taking an awful lot of time to finally get those prescriptions out to show - into the retail market et cetera.
The good news is, that we are making that progress. We are getting to managed care wins and coming and so hopefully over time the churn will decrease, and not too distant future we’re start seeing the physician practices around the country find the two home which both Rhopressa and Rocklatan.
So and while that’s not the entire story of the company, certainly that's where we wanted to focus today and hopefully we’ve answered everybody's questions. So again I want to thank everybody for listening and then sorry that we ran a little bit long today, but have a good evening. Thanks.
Ladies and gentlemen, this concludes today's conference. Thank you for participation and have a wonderful evening. You may all disconnect.