OptiNose's (OPTN) CEO Peter Miller on Q4 2020 Results - Earnings Call Transcript

OptiNose, Inc. (NASDAQ:OPTN) Q4 2020 Earnings Conference Call March 3, 2021 8:00 AM ET

Company Participants

Jonathan Neely – Vice President-Investor Relations

Peter Miller – Chief Executive Officer

Keith Goldan – Chief Financial Officer

Ramy Mahmoud – President and Chief Operating Officer

Vic Clavelli – Chief Commercial Officer

Conference Call Participants

Steve Daddeo – RBC Capital Markets

Gary Nachman – BMO Capital Markets

Brandon Folkes – Cantor Fitzgerald

David Amsellem – Piper Sandler

Georgi Yordanov – Cowen and Company

David Steinberg – Jefferies

Operator

Ladies and gentlemen, thank you for standing by and welcome to the OptiNose’s Q4 2020 Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions]

I would now like to hand the call over to Jonathan Neely, Vice President of Investor Relations. Please go ahead.

Jonathan Neely

Good morning, and thank you for joining us today as we review OptiNose’s fourth quarter and full-year 2020 performance, and our plans for the remainder of the year ahead. I’m joined today by our CEO, Peter Miller; our President and Chief Operating Officer, Ramy Mahmoud; our Chief Commercial Officer, Vic Clavelli; our CFO, Keith Goldan. The slides that will be presented on this call can be viewed on our website, optinose.com in the Investors section.

Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements. All statements that are not historical facts are hereby identified as forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated by such statements. Additional information regarding these factors and forward-looking statements is discussed under the cautionary note on Forward-Looking Statements section and the Risk Factors section and elsewhere in OptiNose’s Form 10-K that was filed today with the SEC and available at their website sec.gov and on our website at optinose.com. You are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements during this conference call speak only as of the original date of this call or any earlier date indicated in such statement, and we undertake no obligation to update or revise any of these statements.

We will now make prepared remarks, and then we will move to a question-and-answer session.

With that, I will now turn the call over to Peter Miller. Peter?

Peter Miller

Thanks, Jonathan and good morning, everybody. We appreciate you joining us this morning. Starting on Slide 3. I’d like to begin by reviewing our 2020 full-year results. Not sure any of us would have predicted the pandemic at the start of the year in the face of significant pandemic related headwinds, I’m very proud of the strong growth our team delivered. Though our results were not as strong as we expected when 2020 began, they reflect continued progress towards our commercial and clinical development objectives. For the full year 2020 versus 2019, XHANCE net revenues increased 59% to $48.4 million, XHANCE total prescriptions increased by 70% and XHANCE new prescriptions increased by 31%. It’s useful to have some context for each of these results.

The pandemic environment had two adverse impacts on our ability to grow the business. First, patient visits to physician offices were suppressed due to stay-at-home orders and patient discomfort with going into medical offices. And second, the ability of our territory managers to broadly [Technical Difficulty] person with our targeted physicians was constrained due to offices, not allowing any sales representatives to meet in-person due to the pandemic. Thus, our growth in total prescriptions of 70% was against a category decline of 7% and new prescription growth of 31% was achieving a category that declined 13%.

Not also that our revenue growth lacked prescription volume growth largely due to a temporary patient assistance program that was put in place early in the pandemic. This program has since been retired and we expect revenue per prescription in 2021 to be more consistent with levels in 2019. In addition, we were disciplined with respect to our expenses. For full year 2020, we had $129 million of operating expense, inclusive of chronic sinusitis clinical trial costs. This has aligned with our last guidance range and represents just a 3% increase compared to full year 2019.

Turning to Slide 4. We’ll go into more detail in a moment, but I would like to highlight five key takeaways from today’s presentation. First, new prescriptions of XHANCE achieved another all-time high in the fourth quarter, despite continuation of the pandemic-related market challenges, I already alluded to. New prescriptions increased 7% over third quarter of 2020 and are up 16% compared to fourth quarter 2019. It’s worthy to note as market NRx increased 21% from fourth quarter of 2019 to fourth quarter of 2020 – sorry, market NRx decreased 21%.

Second, after making certain adjustments for the effects of the COVID-19 pandemic, our full-year 2020 financial performance was aligned with our company guidance. Third, we are providing some initial company guidance related to first quarter and full year 2021 performance. We hope that our ability to drive performance in 2020 lens confidence in our projections for the year ahead. Fourth, and I’ll take a moment to dive in here. We believe there are multiple opportunities that will continue to drive revenue growth in 2021.

I will highlight five important factors supporting revenue growth in 2021, the first to begin with the market environment. as summarized in third-party data reports that pandemic reduced the number of diagnostic visits by patients to physician offices and limited the ability of sales representatives to meet in-person with physicians. And importantly, these effects were not limited to the second quarter of 2020.

Broadly speaking the effects on the business environment followed the course of the pandemic. There was an initial shock in second quarter improvement in the third quarter and then softening late in the year and into early 2021 as the wave of infections and deaths attributable to the coronavirus surged again. The fact that we were able to continue to grow new prescriptions in this environment fuels our confidence that XHANCE new prescription growth will further strengthen in 2021.

As we expect both our access to healthcare offices and patient volumes in those offices to improve throughout 2021. We think these two factors alone to provide strong support the growth in XHANCE prescriptions in 2021. Third, we believe there’s an opportunity to get more benefit from our partnership with Kaleo as the pandemic environment improves. Since launch in fourth quarter of 2020, Kaleo’s impact on our business has not been significant as the pandemic has limited their ability to reach many of their XHANCE targets. Early signs of success in places, where Kaleo has been able to reach our customers, leaves us optimistic about the potential for this partnership as vaccination progress serves to both ease physician access and make patients more comfortable resuming office visits.

Fourth and very encouragingly, there is increasing recognition by thought leaders and specialty societies that XHANCE plays a distinct and important role in treatment of patients with chronic rhinosinusitis with nasal polyps, after they try and fail conventional nasal steroid sprays. For example, a recent peer-reviewed publication in the journal of the American Rhinologic Society, the International Forum of Allergy and Rhinology from lead author, Dr. Brent Senior, Chief of Rhinology at the University of North Carolina at Chapel Hill encourages healthcare providers to consider prescribing XHANCE in chronic rhinosinusitis patients with nasal polyps, who remain inadequately controlled by conventional nasal steroid sprays.

Additionally, several medical societies, including the American College of Allergy, Asthma, and Immunology and the American Rhinologic Society have made available patient centric materials also illustrating the growing recognition of the differentiated role XHANCE compliant treatment. We think that this kind of expert specialty recognition of XHANCE, both reflects growing appreciation for the role of the product and treating the inflammation of chronic sinusitis with nasal polyps and offers potential to support broader adoption by making it clear that XHANCE is an important option for maximizing medical therapy for patients with inadequate response to standard nasal sprays.

And fifth, as I alluded to earlier, we also expect 2021 revenue to benefit from stronger XHANCE average net revenue per prescription, compared to full year 2020, because we do not have it – we expect to not field as the assistance program this year compared to last year’s program. Finally, our last major takeaway for today’s presentation is that we expect top-line data from at least one of our two pivotal clinical trials evaluating XHANCE for the treatment of patients with chronic sinusitis by the end of 2021.

Note that pandemic-related issues, including temporary research site closures and decreased patient flows in many countries during 2020 slowed enrollment in our trials. This is the reason we now expect top-line results from one of our two trials to be delayed in the first half 2020, instead of being available by the end 2021 is previously guided. As you are aware, XHANCE could be the first drug ever approved and promoted for the treatment of the 30 million U.S. patients, who suffer from chronic sinusitis. We believe this data could lead to a multifold expansion of our target patient population driving significant additional value for the company, potential primary care partnerships, and opportunities for approval of XHANCE ex-U.S.

Turning to Slide 6. In fourth quarter of 2020, there were 24,600 new prescriptions for XHANCE, a 7% increase in new prescriptions compared to the third quarter of 2020, a 16% compared to the fourth quarter of 2019 and the highest number of new quarterly prescriptions for XHANCE since launch. While the pandemic interrupted our new prescription growth trend in second quarter of 2020, we returned to setting record highs in third and fourth quarter.

As previously mentioned, the magnitude of our full year 2020 goal was constrained by factors related to the pandemic environment, which we expect to improve for the course of 2021. The return to growth and new prescriptions even during the second half of 2020, when the overall market was still substantially down is a reminder of the high unmet need in the marketplace. We anticipate the continued new prescription growth leverage for the high refill rates that result from high patient satisfaction with XHANCE will lead to strong total prescription growth in 2021.

Turning to Slide 7. Refill prescriptions continued to increase year-over-year and quarter-over-quarter to 49,300 in fourth quarter 2020 and now compromise approximately two thirds of the XHANCE business. Note that the slower flow of new prescriptions into the business in Q2 during the peak of the pandemic temporarily slowed refill growth in subsequent months. However, we see this impact washing out as new prescriptions returned to growth.

Pulling together, the new and refill prescriptions, the total number of XHANCE prescriptions in the fourth quarter of 2020 was approximately 73,900. This represents 36% growth over the fourth quarter of 2019 in a market environment, which declined 13% over the same time period.

Turning to Slide 8. As we discussed on our third quarter of 2020 earnings call, we’ve historically defined market share as a proportion of all intranasal steroid prescriptions written by the approximately 10,000 physicians that were targeted by our territory managers. Our co-promotion with Kaleo gives us potential to reach up to approximately 3000 physicians that were not in the called-on universe of our own territory managers. Given that significant change, we are taking the opportunity to update the target physician audience we used to track market share.

Going forward, we will include approximately 18,000 physicians on our target audience for calculation of market share. This target audience includes all ENT and allergy specialist physicians that based on third-party data, write intranasal steroid spray prescriptions. In addition, our current target audience includes specialty like primary care physicians called-on by our territory managers with Kaleo’s sales representatives.

Note that all displayed historical numbers on Slide 8 have been restated based on this expanded universe. XHANCE market share continued to increase in fourth quarter of 2020 and is increased from 3.4% in fourth quarter of 2019 to 5.1% in fourth quarter of 2020 and increased earned despite the previously mentioned disruption to both patient flow through doctor’s offices and territory manager access to physician offices during the pandemic period.

Turning to Slide 9. Breadth and depth of physician prescribing is measured by the total number of physicians, who have patients filling XHANCE prescriptions also continue to grow through the fourth quarter and 2020 as a whole. Regarding breadth in fourth quarter 2020, approximately 6,700 physicians had a patient fill at least one prescription of XHANCE and increase of 14% compared to fourth quarter 2019. Regarding depth, the number of physicians, who had more than 15 XHANCE prescriptions filled by the patients in a quarter of is growing even faster with that number increasing by 54% from fourth quarter of 2019 to fourth quarter 2020, with more than 1,200 physicians now in this segment.

While increasing depth drove more growth than increasing breadth during the pandemic. We see the continuing growth trend from both depth and breadth is encouraging markers of product uptake and continue to believe that driving growth in both depth and breadth is important and focus promotional efforts against this objective.

In a few moments, I’ll provide some closing remarks, but I will first turn the call over to our CFO, Keith Goldan for comments regarding fourth quarter 2020 results and perspectives regarding our corporate guidance. Keith?

Keith Goldan

Thank you, Peter and thanks to everybody for joining us this morning. Turning to Slide 11. As we reported, OptiNose recognized $15.6 million of XHANCE net revenue in the fourth quarter of 2020. As noted on prior calls, one of the metrics that we track is XHANCE average net revenue per prescription, which is calculated by dividing net revenue for the quarter, by the estimated number of XHANCE prescriptions dispense in that quarter. We continue to believe this is a useful metric to evaluate the net revenues generated per prescription. However, we remind you that this metric is subject to variability that does not necessarily reflect a change in the price that is paid for an individual unit of XHANCE.

Based on available prescription data purchased from third parties and also on data that we receive from our preferred pharmacy network, XHANCE average net revenue per prescription for the fourth quarter of 2020 was $211. For the full year of 2020, XHANCE average net revenue per prescription was $185. This is a decrease of 6% compared to the full year 2019 average of $198, that year-over-year decrease can largely be attributed to the assist co-pay program that was an important initiative in the second quarter of 2020, and is helping patients during the early stages of the pandemic. When other treatment options such as elective surgeries were severely limited in number or not – they’re simply not available. While this initiative did not – I’m sorry, while this initiative did support new prescription share growth amid unprecedented disruption in our customer’s practices, the termination of assist is one factor supporting a projection of higher XHANCE net revenue per prescription in 2021.

moving to slide 12. our full year operating expenses defined as sales, general and administrative expenses plus research and development increased by just 3% from $125 million in 2019 to $129 million in 2020. in the same period, XHANCE net revenue increased nearly 60%. The disparity between these two growth rates illustrates that XHANCE net revenues – as XHANCE net revenues increase, we can generate operating leverage in particular from our commercial infrastructure and corporate overhead.

full year 2020 research and development expenses increased $2.6 million or 12% compared to full year 2019 and drove most of the 2020 total operating expense increase. the increase in R&D was primarily driven by ongoing conduct of our CS clinical trials. full year 2020 sales, general and administrative expenses increased $1.3 million or 1% compared to full year 2019. The increase in SG&A was driven primarily by increased fees, paid to PPNs as a result of increased XHANCE volumes and by increased expenses associated with the annualization of the April 2019 expansion of our sales force. These increase expenses were largely offset by expense reductions and delays in response to the COVID-19 pandemic.

Moving to slide 13. today, we announced our first quarter and full year 2021 financial guidance. First, we expect XHANCE net revenues to exceed $80 million for the full year 2021. Earlier, Peter described several factors that we believe have potential to accelerate XHANCE net revenue growth in 2021. However, we’re providing a floor for revenue guidance to start the year to reflect uncertainty regarding the return of business conditions to pre-pandemic norms.

Second, as part of our expectation for full year 2021, we anticipate that first quarter 2021 XHANCE net revenue will decrease compared to fourth quarter 2020 XHANCE net revenues of $15.6 million. This reflects the same pattern of calendar effect on XHANCE revenue as we reported last year. the primary driver for this sequential decrease for revenues in the first quarter of 2021 is our expectation that Q1 2021 average XHANCE net revenue per prescription will be between $120 and $140. Third, as we’ve seen in prior years, we expect XHANCE net revenue per prescription to improve substantially for the remaining three quarters of 2021 over the first quarter.

the cadence for XHANCE net revenue per prescription is driven by two effects that we believe are common for chronic treatments in our industry and that we highlighted last year as well. The first factor relates to patient insurance deductible resets that occur in January, a second factor contributing to this decrease is the delay or loss of refill prescriptions by patients, whose insurance coverage changed with the New Year.

What is important to note is that the major factors that influence our gross to net deductions have not experienced substantial changes relative to 2020. overall market access, which drives rebates, is generally consistent and the terms of our co-pay assistance program will result in similar levels of patient support in 2021.

fourth, with respect to XHANCE net revenue per prescription, we expect full year 2021 to increase compared to full year 2020. as discussed earlier, we do not expect to repeat the pandemic response assist program this year and its termination is expected to increase XHANCE 2021 net revenue per prescription compared to full year 2020 results.

Moving on to operating expenses. Our initial guidance for 2021 includes increases associated with key commercial and development initiatives. These include fees paid to preferred pharmacy network partners and other distribution fees that are linked to increased XHANCE prescription volumes, as well as the conduct of our chronic sinusitis clinical trials as we push towards completion of enrollment.

for the full year of 2021, we expect total operating expenses to be in the range from $137 million to $142 million, of which approximately $11 million is stock-based compensation. total operating expenses, excluding stock-based compensation expected to be in the range from $126 million to $131 million.

I’ll now turn the call over to Ramy to discuss our development programs.

Ramy Mahmoud

Great. thank you, Keith. Turning to slide 15. we believe our chronic sinusitis program is a potential driver of significant growth for three reasons. First, chronic sinusitis is a high prevalence, high morbidity disease affecting over 10% of the U.S. adult population and for which there are no approved drug treatments.

Second, the limitations of current treatments have left high levels of patients suffering as measured by loss of quality of life despite society investing up to $13 billion in direct healthcare costs and suffering over $20 billion in lost work productivity, according to a 2017 study of healthcare economics and chronic rhinosinusitis.

Third, we believe chronic sinusitis affects not only many more patients than nasal polyps alone, but CS is also recognized and treated by a much larger universe of physicians, creating greatly expanded potential for promotion to people, who may benefit from the product. Within our current specialty physician target audience, this new indication could triple the number of patients, for whom we can ask for business promotionally from approximately 1.2 million to 3.5 million patients.

In addition, physicians outside our current specialty audience treat an incremental six million to seven million patients further increasing the potential patient pool, such that it goes from approximately 1.2 million to as much as approximately 10 million. Furthermore, evidence suggests that an additional 20 million people suffering from symptoms of chronic sinusitis have lapsed and no longer seek regular care for their disease. We believe this is often due to a belief that there are no new options or that physicians can offer a little beyond what has already been tried for those patients. Our research suggests that many of these 20 million sufferers can be activated via consumer-directed promotion if and when we are able to offer a prescription option that is approved for treatment of chronic sinusitis.

lastly, regarding the business potential for this new indication, we believe that successful development in CS can create significant leverage of our existing commercial infrastructure and access to non-dilutive capital through a primary care partnership. We look forward to providing more updates regarding this program and the increased market potential it would facilitate as we close in on top-line data.

moving to slide 16. regarding that data, today we announced that we expect to top-line results from one of the pivotal CS trials by the end of this year 2021, with results of the second ongoing trial, not expected until the first half of 2022. this is slower than our previously communicated expectation and that is a result of the global pandemic, which has had a sustained negative effect on patient ability to visit and be enrolled at trial sites in many countries.

Our regulatory and development teams have performed admirably in the environment created by COVID-19 identifying and opening new trial sites, in places where local pandemic conditions permitted and supporting changes to local clinical and regulatory situations as they evolved through the course of the year. We acknowledged that there is continued recruitment risk related to the COVID-19 influence on trial sites worldwide. However, we remain focused on producing top-line data from at least one trial by the end of this year 2021 and we believe this objective is achievable.

As a reminder, both trials have co-primary endpoints. One is a measure of patient reported symptom relief at week four. And the other is a measure of effect inside the sinus cavities at week 24. Also as a reminder, our development program for XHANCE, as a treatment for nasal polyps produced open-label data, measuring symptom relief in patients diagnosed with chronic rhinosinusitis, both with and without nasal polyps. numerically, the symptom improvements from baseline for both of those groups were similar.

Moving to slide 17. changing gears, I’d like to make a few comments about our development product OPN-019. We believe that our OPN-019 product candidate could have utility in the current pandemic and also has potential to improve preparedness for the next pandemic. As a reminder, OPN-019 uses our proprietary exhalation delivery system device to thoroughly coat the deep nasal cavity, including the highest part, where sense of smell is affected with an antiseptic that kills the COVID-19 virus. This is intended to help prevent someone exposed to the virus from becoming sick to reduce the spread of the virus from an infected person to other people, and to reduce progression of disease in people with early symptoms, who do not yet have symptoms or who do not yet have symptoms.

Previously, we reported developing a candidate, broad spectrum antiseptic formulation intended to be effective against any coronavirus variant. we reported having performed in vitro testing against the SARS-CoV-2 with that candidate formulation and demonstrated a four-log reduction in virus count. In addition, we found broad activity against multiple other viruses with that formulation. These results were expected based on previous knowledge, but were necessary to support moving ahead.

today, we announced that we will conduct a pilot proof-of-concept clinical trial with OPN-019 to produce initial human data. The study will be a randomized adaptive single dose study to evaluate change in viral load after OPN-019 in adults with COVID-19. Assessments will include reduction in viral load by quantitative reverse transcription PCR and in a number of infectious viral particles, determined by viral culture.

Evidence suggests reduction in intranasal viral load as we are measuring in this study is a useful indicator of potential ability to both reduce transmission of the disease and to reduce progression of the disease. The study is expected to start in April and is short in duration. We therefore expect top-line results within second quarter of 2021. we believe the development of therapeutics for patients diagnosed with COVID-19 or at high risk of exposure to the virus remains a high priority. As a reminder, COVID-19 is the third pandemic potential coronavirus to make a breakout just since the year 2000 and everyone knows today that the coronavirus continues to mutate.

Moreover, pandemic influenza has been and remains a threat. vaccines are extremely important, but need to be supplemented by a range of therapeutics and we believe that a virus agnostic therapeutic such as OPN-019 that is easy to use by simple outpatient prescription could be an important addition to the therapeutic arsenal for COVID-19 and for future pandemics.

as excited as we and others are by the potential value of OPN-019, our organizational focus remains on growing XHANCE, and on building a leading ENT and allergy company. Accordingly, we are committed to supporting the less expensive initial stages of this development program within our current operating expense plan, but anticipate that grants, partnerships, or other sources of capital will support further development of OPN-019.

I’d now like to turn the call back over to Peter for closing remarks. Peter?

Peter Miller

thanks, Ramy. Turning to slide 19. before moving to Q&A, I’ll take a moment to reiterate that I am incredibly proud of the effort and results, the team produced in 2020. The global pandemic presented the challenges that are unique compared to what most of us have faced in our lifetime. In our outlook for 2021, we have tried to present a balanced view. We assume that business conditions while improving will not immediately return to pre-pandemic norms with the availability of vaccines.

At the same time, we are optimistic that 2021 has potential to include a substantial improvement in business conditions, and there are several factors that can increase the growth of our business. We are laser focused on two very clear objectives, revenue growth for XHANCE and completion of our trials in chronic sinusitis. We look forward to providing updates on our progress in 2021.

And with that, we’ll now open the call up for Q&A.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] And our first question comes from Randall Stanicky from RBC Capital Markets. Your line is open.

Steve Daddeo

Great guys, how are you? This is Steve on for Randall. Thanks for taking our questions here. Just two from me, I’ll desk [ph] and both of fronts. But I’m a guy that realize you’ve got to providing a floor at $80 million and still pretty substantial growth over 2020, but it’s a little bit less than maybe, what the streak was kind of modeling for 2021. I was kind of curious if you can add some color as to what gave you confidence, they’re going to be able to achieve at least $80 million and maybe some of the tailwinds you’re looking that can provide upside there.

And then just secondly, on the CS trials, just maybe, any updates on where you guys are on an enrollment status and when you’re expecting to have that fully enrolled. appreciate the questions.

Peter Miller

Yes. Steve, thanks very much for the question. And I’ll take the first one and then Ramy, I’ll let you or Keith handle the second one. We decided to approach our revenue guidance with the concept of a floor and the reason for that is just because of some of the uncertainty that still remains relevant to the pandemic. So, that was the approach relative to the concept of a floor. So, what’s assumed in that $80 million about the market environment is that we have – we obviously, have an understanding of the current impact of the market environment currently. We expect some improvement through 2Q and then for the back half of the year, we expect the market to be reasonably returning to pre-pandemic norms in terms of what is normally seen relative to patient volumes, because obviously, the impact of the market environment has two impacts. It affects patient volumes and physician offices. It also affects our ability to access those offices.

So, I’m describing the market environment, because that’s what’s embedded in the assumptions around our ability to achieve this floor of $80 million. Now, what creates optimism for us as we think about 2021 is we really do have as I mentioned a couple of drivers that could create an acceleration of our trend. And by the way, I should say that an $80 million floor, we assume the market that I described, we also do not assume a dramatic acceleration in our ability to drive new prescription growth, which is clearly obviously our focus right now.

And relative to our ability to accelerate prescriptions, we think there are two things that have real possibility of driving acceleration. The first is Kaleo that I think everyone is very familiar with. And the second is, as I mentioned in my remarks, increasing recognition in the medical community of what we’re calling a step care paradigm and importantly, recognition as XHANCE as playing an important role in that step care treatment paradigm. There’s been some societies that have already introduced this concept of a step care paradigm. And then frankly, we expect more as we looked at 2021.

So with that, Keith, I don’t know if you have anything to add on – or relative to the $80 million.

Keith Goldan

No, Peter. I think you summarized it pretty well. I’ll comment on the second part of Steve’s question with respect to the timing of CS. If you go back to, I think, it was Slide 16 Steve, where we kind of lay out the – what a patient journey looks like in the trial from randomization to compile visits 24 weeks. So, you can back up now, if we’re announcing – if we’re setting the expectation of having top-line data by year-end, you could expect us to be enrolling kind of last patient first visit around the middle of the year. So, it’s all going to say on that right now, but you can expect us to probably report out once we have that last patient first visit to set the – more definitive expectation of when we expect that to have that top-line data.

Peter Miller

Steve, I don’t know if it’s helpful to you, but I can tell you that we have – we’ve gone to great lengths to add additional trial sites, and we’ve tried to predict which countries will be able to engage in patient enrollment, even some that we’re not able to do. So previously, a lot of Commonwealth countries are vaccinating a lot of clinics that were not previously able to enroll, because resources were diverted to COVID care are beginning to be able to divert resources. So, we expect an uptake in enrollment as the first half of the year goes on and as Keith was talking about. and so we are projecting to be able to complete the top-line report as we guided.

Steve Daddeo

Great guys. appreciate the color.

Operator

Thank you. Our next question comes from Gary Nachman from BMO Capital Markets. Your line is open.

Gary Nachman

Hi, guys. Good morning. First, just your share gains in the face of a declining category, where has most of that been coming from, and what do you think is a reasonable target off of the 5.1% of your target physicians that you’re currently at I think in the fourth quarter? And then for Ramy, what portion of Rx are currently off label, being used for CS and any concerns with the quality of the data coming out of the clinical trial sites, now that you’ve been adapting through the pandemic. and then I had one other follow-up.

Peter Miller

Gary, thanks for the question. I’ll let Vic Clavelli, our Chief Commercial Officer, take your question on share, and then Ramy can address your second question.

Vic Clavelli

Sure, Peter. Gary, thanks for that question. I mean, I think the key point is that we saw our share gain come from really two areas. One is increasing news from our existing prescribers. And I think Peter described that as the depth of prescribing that was the biggest driver of our growth that just reflects the difficulty of the marketing getting in front of new potential customers during the pandemic.

And the second is breath, we continue to grow and bring new people into the franchise last year. And frankly, we expect to the ability to reach even more prescribers as the pandemic kind of lift. But to the point you made success, we saw in growing share last year, we do believe we can build on as we head into 2021.

Peter Miller

Vic, perhaps you can also comment on Gary’s question about the proportion of prescriptions that are for CS versus NP.

Vic Clavelli

Yes. We continue to see that, nasal polyps represent, I think about a third of our business overall and that’s prescriptions that are specifically coded for nasal polyps. A lot of the times, prescriptions aren’t specifically coded. And so we pick up prescriptions from patients that have either chronic rhinosinusitis, I mean indication or an allergic rhinitis indication. Obviously, I should note that those are not – that’s not business that we’re proactively pursuing. We do focus explicitly on nasal polyps, but we do see news outside of the nasal polyp mutation.

Peter Miller

Gary, by the way, I think, I know this is well understood, but I still want to emphasize it that the greatest value of the CF indication is not only, potentially increasing the ability to drive the business in the ENT allergy segment, but the real benefit is expansion to a significantly broader physician audience treating reasonably double the number of patients currently being treated in the anti-allergy segment. And I know that’s reasonably well-known, but I want to continue to emphasize it relative to the value that the CS indication we think will provide to the business. Ramy, I’ll turn it to you on Gary’s question on quality.

Ramy Mahmoud

All right. Thank you. So Gary, one last comment on the CS versus NP, which is it’s the best data that we have available. But I personally I’m not sure that its high-quality data about exactly which diagnosis underlies the prescribing of the product. I don’t know that the incentives for accurate reporting are strong and I’m also a little bit skeptical about whether sort of complete diagnostic maneuvers are completed for all the patients that received this kind of prescription. So, I think there’s reason to be a little bit skeptical about the accuracy of the categorization of diagnosis in this category.

Your other question was about data quality in the trials. It’s a good question, it’s appropriate to ask in the COVID environment. There were a lot of changes FDA and EMA, other regulatory authorities, issued new guidance on how to manage patients, who were unable to make visits. There was a lot of adaptation required. We have been – our clinical team has been just extremely careful about implementation of those kinds of changes. We’re highly focused on the quality of the data that’s coming in. And we’re very sensitive to the fact that this is not all just about completing the trial, but it’s about a positive trial at the end and giving ourselves the best opportunity to have a positive trial should the product in fact be effective for this disease. So, we’re very sensitive to it. We have many measures in place to try to assure the data quality and ensure the right kind of patients are continued to be enrolled despite some of the changed sort of pressures on the trial sites and non-patients.

Peter Miller

and Gary, by the way, I will add one comment on share, you asked us to project share, and we’re not going to specifically give guidance relative to share for this year. But again, I want to remind the listeners that all of the work that we’ve done historically, and we just refreshed with physicians relative to the potential of the product in the market, in the ENT and allergy segment alone before I even talk about expansion and primary care suggests that we believe – continue to believe very strongly that the peak share for this product is in the 20% to 30% range. And we’re already achieving that the confidence of why we have confidence in that number is, we’ve achieved that in this believer segment that we’re currently calling on.

So, once we turn someone into understanding the efficacy of that product, understanding that our market access and coverage really is very strong. we achieved shares in excess of 30%. So, I just wanted to remind as I said, well, we’re not giving specific guidance for this year. We remain very confident in our ability to build a substantial business.

Gary Nachman

Okay, that’s helpful. And then just one quick follow-up, the increase in the target physician audience to 18,000 from 10,000, that’s all an ENT allergy. And just how much of that is coming from Kaleo versus your own sales reps, and just remind us how many reps you have and how many Kaleo have going after that target audience. Thanks.

Peter Miller

Yes, Vic. I’ll let Vic take that. Vic, go ahead.

Vic Clavelli

Yes. Thanks for that, Gary. I mean, so we have Kaleo calling on up to about another 3,000 additional targets. And so that’s 3,000 is included in that revised number. And the rest of the number comes from the expansion of our targets to the rest of the ENT and allergy universe that are using INFS. We’ve basically learned that those are opportunities for us to grow the business and our focus there as well. So, we think this new expanded denominator, if you will, it gives us a better representation of how broadly we can move in the segment. So, as you know, perhaps, a little bit beyond the question you asked, Gary. So roughly, half of the Kaleo effort is coming from targets that we don’t reach the other half increases our frequency of activity against targets, who we do reach, but simply not as often as we would like to believe we can productively reach them. And so that gives us a chance to use the benefit of their relationship to extend the breadth and the depth of our engagement with customers. our sales teams are roughly about the same size. We have about a 100 people in the OptiNose sales team and we have about a 100 within the Kaleo team as well.

Peter Miller

And Gary, just to make sure it’s really clear. I think they can answer that very well. but so – our 100 reps call on about 10,000 physicians, largely ENT and allergy with some primary care lighting and seeing the specialists like primary care. Kaleo has about a 100 reps, they’re targeting 6,000 physicians, 3,000 that are overlapped with our 10,000, roughly 3,000 that are not in our – in not my universe.

Gary Nachman

Okay, guys. That’s helpful. Thank you.

Operator

Thank you. Our next question comes from Brandon Folkes from Cantor Fitzgerald. Your line is open.

Brandon Folkes

Hi, thanks for taking my questions, and appreciate the guidance as well in this current environment. Maybe, just starting there and yes, I heard – well, I appreciate the commentary on 1Q guidance. I heard the comment about to 2Q seeing some improvements, but can you just maybe, talk about what you envision or assuming that we exit the year and I just want to make sure, kind of we thinking about 2021 that ramp properly, just given that it seems to be what we’re implying here with a strong second half of the year. Yes. We’re exiting a pretty solid growth rate as well. So, I just want to get ahead of ourselves there.

And then secondly, can we just talk a little bit more about the net price per script? It seems to come down from 3Q, 4Q. So maybe, can you just one, any inventory in the channel at your – and we should consider for 1Q, and then secondly, can you remind us of the dynamic with Kaleo and how we should think about net price per script in 2021 with Kaleo? Is that going to be – is there a small dilution there we should think about in terms of what you’re going to realize? Thank you.

Peter Miller

Keith, I’ll let you take all three of those.

Keith Goldan

So, the guidance with respect to exiting the year and the velocity at the end of Q4 – expected Q4, because those close to the velocity, and I think Peter summarized in his comments to the first question about the assumptions around what drove or what drove us to guide to an $80 million floor for this year. And what he spoke about the potential upsides, I think that kind of summarize our thinking. We – the second surge of the virus late last year definitely lasted into the first part of this year. We’re obviously seeing that received today, but our assumptions drove a – our assumptions were that the first part of this year, we are going to see significant adverse effect with respect to a, the patient volume that’s going into the physician offices and b, our reps’ abilities to access those offices. I think our reps are doing a phenomenal job in the field in terms of the face-to-face interactions that they’re getting on a daily basis, but the fact remains that they are not able to access a large percentage of their target customers. We see that easing or we see those limitations easing as we move throughout the year.

So, we definitely see an uptick or an increase in velocity as we progress throughout the year. And then I’ll kind of tie that in with average net revenue per prescription, Brandon. similar to other years, you heard it in my remarks, we expect to begin the year at a lower average net revenue per prescription, and then accelerate that as we progress throughout the year, as we’ve discussed, that’s really driven largely by a, a good commercial coverage – the good commercial coverage that we have today and now it enables us to offer a pretty generous coupon program to buy down patients out-of-pocket expenses.

In the beginning of the year, as patients have deductibles reset, whether they’re in a traditional PPO plan or a high deductible plan, they have out of pocket maximums are high deductibles. In the beginning of the year, our contribution to those patients is larger and that affects our average net revenue per prescription in a negative way. And we got it today that we believe that the first quarter would be similar to the first quarter we saw last year in the range of $120 to $140 per prescription. Again, throughout the year, as patients meet those out-of-pocket deductibles, we contribute less to the coupon program. We don’t have to buy down as much out of pocket expense, and that positively impacts our net – our average net revenue per prescription.

for Kaleo, Vic just kind of bifurcated for you, the two different segments of our customers that Kaleo was calling on, and we have a different model to pay for the work, the effort that we’re getting from Kaleo. In segment one; those are the physicians that we do not call on. So, Kaleo has clearly given us additional breadth on targets that we think have the ability to drive XHANCE volume. on those segment one targets, we’re paying Kaleo a – it’s an eat what you kill model, if you will, we’re paying them on a per prescription generated basis. It’s very easy to tell; we can identify prescriptions and link them directly to a physician. So, in those physicians that they’re calling on, that we do not call on, write a script. Kaleo gets remunerated for that.

in segment two, where we have our reps calling on a physician and Kaleo also calls on that physician. As Vic said earlier, we’re getting additional depth or additional reach; I’m sorry, additional frequency on those targets there – it’s almost like a CSO model. We’re paying for activity. So, we’re paying for a second position detail. We have an agreed-upon rate that I would say was, is market for CSO. But the quality of the relationships that the Kaleo reps have with these physicians is much, much deeper than we would expect to see from a typical CSO type of relationship. These Kaleo reps have been calling on these physicians many – in many instances for many years and we’re getting a very high quality second detail based on those deep relationships for what we would pay for a typical CSO contract.

Peter Miller

And Brandon, just to sort of circle all the way back to your question and the impact on our average net revenue per prescription. The second piece of what Keith just talked about is a marketing expense. So, it doesn’t even show up at all, the fee that we’re paying for the CSO type arrangement and the first segment that Keith described, where we are paying a fee per prescription, it’s just not going to be material to affect our ASP or average...

Keith Goldan

Correct.

Peter Miller

Yes. And so we just – we remain very confident as we’ve guided that the 2021 average net revenue prescription will look a lot more like 2019 and 2020.

Brandon Folkes

Okay. That’s very helpful. And I appreciate the color. Can I just squeeze in one more comment that they’re going to hug us? but is it quite an awareness in the prescribing community you call on right now about this CS data? Granted, obviously not going to be able to promote off-label, but yes, just trying to get concept and when it comes out – when we see the one trial come out this year, do you think there’s enough of an awareness that these physicians might increase their off-label usage? Should that data be positive? Thank you.

Peter Miller

Vic, I’ll let you take that.

Vic Clavelli

Yes. Happy to comment on that. So, we would expect there to be increasing awareness of the data as it goes out into the public use to your point, obviously, we won’t be promoting it. But we expect given that there are no approved drugs in this space, if there will be attention and an awareness of it that will be coming into the community, if you will, as soon as that data becomes publicly available. to your point, physicians are already aware that nasal polyps occurs and chronic rhinosinusitis patient. Certainly, they’re aware that they’re treating with an anti-inflammatory drug and a subset of patients already has CRS. We think this new data is going to add confidence for their increased use.

Brandon Folkes

All right. Thanks very much.

Vic Clavelli

Sure.

Operator

Thank you. Our next question comes from David Amsellem from Piper Sandler. Your line is open.

David Amsellem

Thanks. So, wanted to ask a hypothetical here regarding the CS data. To the extent that you show a benefit versus placebo on symptoms, but do not on the objective measure, which is sort of, I guess, uncharted territory in terms of the big randomized trial in terms of that endpoint. Do you still envision that kind of results – with that kind of results, do you still envision significant expansion of the overall XHANCE opportunity in that scenario, that’s number one.

and then number two, to the extent that you don’t find a co-promotion partner here, and to the extent, that you go with a loan in terms of sales force expansion, how should we think about the extent of that sales force expansion in terms of headcounts, how much larger would you go in other words? thanks.

Peter Miller

Maybe, I’ll start and Ramy, you can add some color commentary on David’s first hypothetical. And obviously, David, we’ve done and Ramy sort of mentioned this. The team did a lot of work to understand what’s necessary to define how we measure the objective criteria of mucosal thickening in the sinuses, design the trial to make sure we were sort of getting the right population. And I think, we have evidence already that if we were have the right population that has enough disease, we have evidence that we can improve scan. So, while it is unchartered territory, I just want to make the point that we feel really pretty good about our ability to have success there. I’m going to always give the caveat that with the trial, you never necessarily know the outcome.

Relative to your question though on – but I’ll just reiterate, I think what’s implicit in your question, David, is that because we studied a large population of patients, who have chronic rhinosinusitis without polyps, which is the – obviously, the population we’re studying with CS trials in our open label trials and we did look at improvement in symptoms. We really have pretty good evidence that it’s really likely that we are going to see an improvement in symptoms.

So, relative to your question in that hypothetical scenario, we still think there’s benefit for the business, because this would be the first product ever to show improvement in symptoms in a chronic sinusitis broad population. So, there’s value purely in the fact that we will be the first product to show that benefit on symptoms. The ability to whether or not we could turn that into a label is not clear, but I’ll emphasize a point that we make a fair amount, which is there is no product approved in the CS population at all.

So, while it’s not clear at all, whether we would be able to get an indication that was based on a symptom only improvement, there certainly is the potential of that. So, I’ll sort of start by describing that and that therefore could then lead to the same kind of expansion that we expect if we have positive outcomes in both endpoints. So, I’ll stop there and Ramy, let you add any additional color before I take David’s second question.

Ramy Mahmoud

So David, we did contemplate this possibility in the design of the trials. There are two co-primary endpoints as we’ve mentioned before. But they’re designed in a step-down procedure and we have chosen symptoms as the first step, which means that if symptoms are positive, the trial is positive and then the full – the sort of P value space gets passed on to the CT scan data. So, it is conceivable that we will have positive trials on the basis of symptoms even if they don’t turn out to be positive on the basis of that of that CT scan measure. it’s uncertain whether or not trials of that type could result in an FDA approval for an indication. That’s something that we would have to take up with FDA. And so I can’t guess how that might come out.

But as Peter said, we’re not aware that any other product has had that kind of large sort of regulatory quality sort of confirmed trial support for efficacy in this population. And given the desire to practice evidence-based medicine and the potential for adoption of the product in treatment guidelines and other sort of places that help to direct medical practice, I think it’s reasonable to suspect that there could be substantial adoption for that use on the basis of that kind of evidence.

Peter Miller

So David, I’ll take your second question on – what if the product is not get partnered and I know that’s a hypothetical, but again, I’m going to sort of emphasize while we think there is really reasonable probability of a partner being interested in this product, Vic Clavelli just refreshed research that we’ve done historically on the value of the CS indication, in the sort of broader universe of primary care providers and the full opportunity is expansion to roughly 60,000 primary care providers. So, we just refreshed the market research that we’ve done historically, and there really is a very substantial opportunity in that population and that’s probably just the patients who are currently being treated in physician offices.

So, when you put that concept together with the idea of me being a direct-to-consumer campaign to address the roughly 20 million people, who are lapsed. So as a reminder, 30 million people have chronic rhinosinusitis, 10 million being actively treated that we believe this indication will enable expansion from roughly 2.5 million to 3 million patients that are in the ENT allergy universe to roughly 7 million, who are in the – up in the primary care university. But potentially, the greatest lever of the CS indication is the direct-to-consumer. And it’s very clear from the work we’ve done that while patients have lapsed from physician care, it’s not because of they’re no longer suffering. They’ve just sort of given up relative to the options that are available. We think our messaging is very simple.

So, I just want to emphasize you put that all together and we really do believe the opportunity is very substantial in the primary care space, because that’s going to be attractive to a number of partners in the space. but now to specifically – and by the way, I’ll say the last thing I’ll say is this emergence of this step-care paradigm and I think we’re clear on what we mean by step care, the idea of the experts in the treatment of this disease continuing to put out guidance if you will on an algorithm that says, start with an intranasal spray. If you fail on an intranasal spray before going to surgery or other more invasive and types of things to potentially help with the disease, Exhalation Delivery System of XHANCE should be considered. And potentially, the greatest opportunity for that is in primary care, because it gives a primary care doctor the option of trying XHANCE before referring into a specialist. So, is that paradigm continue – and we’re seeing already the emergence of it, we’re going to continue to believe it’s going to get broader and broader adopted, which we think again, makes the opportunity very substantial.

So now, to answering your question, if we are in a go-to-alone scenario, we would not go to 60,000 physicians out of the gate with 500 additional primary care physicians – our primary – with sales reps, excuse me. But we would target the most interesting part of that segment in a go-to-alone strategy, and I’m not going to give specific numbers, David, but we would not go to the – somewhere in between, where we are today in the 60,000, we think would make sense. And we do think would make sense to the go-to-alone strategy to be broad enough in the coverage in our go-to-alone strategy to be able to do DTC. And I want to be clear, DTC doesn’t necessarily mean expensive broadcast. We’ve learned a lot about how to do very smart targeted digital that kind of give anything to add or Keith or others.

Keith Goldan

I think that’s a great summary. I mean, the only thing I’ll add is we know that primary care physicians are the first stop for patients with CRS. And so we do think reaching them is going to be important. And we know from our research that they are very interested in having a product that they know can help this patient population. So, we’re going to find the ones that have sufficient volumes of these patients and make them aware and confident as how to integrate it into their practice.

David Amsellem

Okay. That’s helpful. Thanks, guys.

Operator

Thank you. Our next question comes from Georgi Yordanov from Cowen and Company. Your line is open.

Georgi Yordanov

Hey, thank you for taking our questions. I just have few. I guess, first, can you talk about the current patient assistance program and how that has changed? And I guess related to that, where do you stand with managed care coverage for XHANCE? And what is the average out of pocket cost to patients? And can you describe the step two requirements, is it just a simple failure of intranasal steroids, or do patients need to fail multiple therapies and based on your market research, what percentage of patients fail these therapies?

Peter Miller

Vic, I’ll let you take all those.

Vic Clavelli

Yes. I’m happy to do that. So Georgi, I’m going to start with your questions about the coverage we have about 77% commercial coverage today. We’re really pleased with that coverage. And in fact, the payers, who have added XHANCE into their formularies are in fact, seeing the benefit in terms of their ability to improve the management of these patients, and frankly, improve their expenses too. As they’re able to be thoughtful about which patients are then referred on a later line, more expensive therapeutic solutions, or even surgical solutions as well. And we see that creating pressure and an opportunity for other payers to continue to what add XHANCE though formulary. So, we’re really pleased with that formulary coverage.

Your second question is around changes to the co-pay affordability program that we have in, and in fact traditionally, what we had is, we had a $0 prescription or commercially covered patient. And if the patient was uncovered, they received the first prescription for $0, the second prescription for $50 and all subsequent prescriptions for $50. And in effect, what we changed is the first prescription payment from a patient is now $25 if they have no commercial insurance coverage. So, if you think about the percentage of our commercial lives that are uncovered, they now pay $25 for that first prescription and $50 for subsequent prescriptions after that.

And that’s important for two reasons. One, it effectively changed the jump in their co-pay and that first prescription to the refills. Instead of going from $0 to $50, we found it’s just easier for them if they paid $25 for the prescription to move to $50 for the second prescription. And frankly, it makes sure that we’re effectively getting as many profitable prescriptions as we can from that pool of patient. You had third question there and I’m sorry. I could use a reminder on that.

Peter Miller

I’ll jump in. I think it was about the average out of pocket. And we have a lot of data on this and nationally approaching 80% of patients pay $0 out of pocket for our product, roughly 5% to 6% pay the $25 or $30 in the balance pay the $50 to pick was describing in the commercial in the commercial population, which is the huge majority of patients in the product.

So by the way, it’s indicative of the coverage we have. We really do have good market access coverage. And the last point I’ll make on our access, by the way, it’s – we do a lot of research among our believer segment and our dabbler segment. And it’s very interesting if you’ve asked the believers, not only do they believe in the efficacy of the product to a high degree, they also say that the product is actually reasonably easy to write in terms of everything that’s required on the backend, prescribing it any prior authorizations, any step therapy that’s required. And it’s interesting, because that group is writing a substantial number of prescriptions. So, if it were in fact hard that group arguably would be the group that would be believing it’s the coverage may not be that good, but that group believes our coverage is good.

Interestingly in the dabbler segment, we learn one of the key things we have to get them to understand is our coverage. In addition to having more of a belief in the efficacy of the product and the reason I just continue to have high confidence in a 20% to 30% share for this business is the product really works and we do have good market access coverage. We just have to continue to convince the dabblers if you will, of the program. So Vic, I’ll let you finish.

Vic Clavelli

Yes. Thanks. And thanks for that, Peter. The last part, Georgi, as you asked about the visibility, what the access looks like. the vast majority of that commercial coverage that we do have is stepped through and inhaled nasal steroid. So, either there’s a history of an inhaled nasal steroid use or the physician documents or some inhaled nasal steroids that’s been used and about 15%. So that’s a 15%, they are – the payers are asking for a diagnosis code. So, they want to know that it’s nasal polyps. But for the most part, they have to show that they’ve used inhaled steroid before they get to XHANCE.

Georgi Yordanov

That’s really helpful. Thank you so much. And I guess just a very quick on the net revenue per Rx, I guess you kind of alluded to that, but if we just ignore the 2020 and the pandemic, do expect net revenue per Rx growth or I guess levels in 2021 to increase over the 2019 levels.

Keith Goldan

So Georgi, we’re not being specific as to what the growth looks like. I think the 2000 – if you recall, in 2019, we achieved average net revenue prescription for the full year of 198. I don’t think, returning to those levels is certainly not out of the question. We did take a small price increase this year about 5.5%. We don’t retain all of that. Obviously, a lot of that goes to channel partners, but the termination or the fact that we don’t expect to be repeating the assist program. So, it should certainly give us some tailwinds from the 2020 level of 185.

Peter Miller

Keith, the last thing I’ll add is that we convicted, mentioned some changes in our co-pay assistance program and that’s also tailwind, because we are – those are benefits in the profitability per script that we’re receiving and we have pretty good confidence, it’s not going to impact prescribing or volume.

Georgi Yordanov

That’s great. Thank you so much, really helpful.

Operator

Thank you. And our last question comes from David Steinberg from Jefferies. Your line is open.

David Steinberg

Thanks and good morning. You showed us Peter, some slides with target universe of prescribers and breakdown of how many prescriptions by doctors who wrote. And so I had some additional questions on physician prescribing behavior, particularly since the products now have been in the market for about three years. The first question is the 10,000 physicians that you’ve been targeting. Have all of them actually been called on at least once, or it would be still waiting to call them some of them?

Secondly, what does the data show in terms of typically how many calls need to be made before a physician actually, write a script? And then third and perhaps more importantly, it looks like of the 13,000 physicians that you are targeting about half have written one prescription. So just curious, given it’s been on the market for three years, why – what are the reasons why half of the doctors that you’ve called on have not yet written a single script? I mean, you’ve talked about some of them don’t realize the coverage or they don’t believe in the efficacy, but after three years, don’t most of them really know that you do have good coverage. And is there any other reasons why half of them it’s still not written the prescription yet? Thanks.

Peter Miller

Vic Clavelli, you take those.

Vic Clavelli

Okay. Sounds great. So, your first question, they have all been called on, we’re able to reach at least in the pre-pandemic worlds about 80% to 90% of all the target physicians. obviously, we would like to be able to reach more of them. And certainly, that became more challenging over the last year. But we are able to reach them at least once. We do know to your second question that we obviously reaching them once is not enough. We really believe you need to reach them between seven to 10 times before we begin to impact their prescribing – their prescribing potential. And we do try and reach them and support or reach with them with a non-personal promotion. So, we do try and reach them from a number of different angles obviously, reaching them through our territory managers is our most effective way to grow that prescription volume.

And so your underlying question is what is it that’s holding some physicians back and it really is two things. first, you need to understand that in fact it is, you have an underlying disease etiology that has characterized by inflammation that’s out of reach of the other solutions that they’re using. And secondly, we need – they need to get very comfortable that that they can get the prescription when they write it. They need to use the preferred pharmacy network that we’ve developed. And those are really, the two key barriers once we can get them comfortable that in fact, it’s – there’s a problem that they need to solve by giving a topical treatment to the site of inflammation that’s causing the growth of nasal polyps.

And the second part of it is making sure that they understand the process for getting the prescription authorized. And it does take us seven to 10 times before we really begin to move their prescribing behavior. Underneath it in 2020, we really changed our focus if you will, from a pre-service – from a post-surgical patient. So, we were identifying patients based on their surgical status to expand out to a broader audience of patients, who are appropriate for nasal polyp treatment. And many of those patients don’t have a formal nasal polyp diagnosis.

And so we’re helping clinicians recognize those symptomatically. And that’s enabled us to then expand the target universe from about the 10,000 that we were calling on that launched about 15,000 today plus of course, the incremental ones that Kaleo’s allowing us to reach. So, you have a number of factors delivering it, or if you will expanding our ability to activate those doctors. And that’s why we look at those – both of those metrics, are we getting more prescriptions from the physicians that we have activated? And in fact, we do continue to grow that depth. And the second part of it is, are we still seeing a consistent growth of adding new doctors into the franchise? And in fact, the fact that we’re still growing our breadth makes us confident that we can continue to activate more doctors. Clearly, that’s the part that got tougher in the pandemic.

Peter Miller

That’s the point I was going to make is that, in the market three years, yes. But about a year now in pandemic environment, and pandemic environment just makes it hard to get to the physicians, these dabbler physicians, it’s easier to get to doctors, who know us – who know the product. So, relative to called-on universe in a pandemic environment. It’s frankly, easy to get to the believers. It’s harder to get to these dabbler doctors.

So, again, while yes, in the market three years, but one year with real constraints, our ability to reach physicians and we believe as the pandemic eases, as we hopefully, we all expect. our ability to get back to get doctor’s writing, we’re going to be able to get that volume really moving, because we do not see things in the way. As I mentioned earlier in this believer segment we have in excess of a 30% share. These doctors are writing it very frequently and our view is that we are going to be able to expand that segment to move people up if you will from that dabbler segment into the believer segment.

The last point I’ll make David and this is true. I think of any product in today’s world is that the payers frankly have created some real sand in the gears and we just got to work through that sand and because we do have good coverage, and I remain confident they’re going to be able to work through that sand.

David Steinberg

Right. That’s very helpful, Peter and Vic. And then just two quick follow-ups. First, where are you on refills, I think at last check you’re over four refills and where do you think that’ll top out at? And then I know over the last year, you’ve mentioned a few times that you’re considering or looking at bringing in other assets. So, your sales people have another product in the bag to detail the doctors. What’s your current thinking about business development?

Peter Miller

Yes. On refills, we remain very pleased with refill, David, and it’s now over four. And it’s – where could that top out? It’s hard to predict, but I think there’s still room on refill rate to continue to move up principally, be for one reason, the product works really well. We just continue to get very good feedback from patients, who are using the product. And by the way, I think you’ll recall that we did a program, we called on the explorer program in 2020. It was hurt somewhat of our ability to reach doctors, because of the pandemic. But we have approaching another thousand patients that we’ve put into this program. When we got feedback from the patient on how well the product works, not surprisingly 80% to 90% of patients say the product works really well.

We, by the way, are taking that data and feeding it back to doctors. So, I continue to believe there’s no more refill. relative to expansion of the product, it’s very clear that as a single product company, we have to get leverage out of the organization we built; we feel we have a terrific sales team. And so certainly in the next 12 months to 18 months, our aspiration is to no longer be a single product company and I’ll sort of stop there.

Operator

Thank you. And that does conclude our question-and-answer session for today’s conference. And I’d like to turn the call back over to Peter Miller for any closing remarks.

Peter Miller

I just thank you all for joining us. We actually understand that we are in an environment, where we got to continue to put up strong results and that’s our focus, both in growing XHANCE revenue and completing our trials. We’re laser focused on that and we appreciate you joining us for the call. So with that, we will end the call. Thanks very much.

Operator

Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation and you may now disconnect. Everyone, have a wonderful day.