BioDelivery Sciences International's (BDSI) CEO Jeff Bailey on Q3 2021 Results -Earnings Call Transcript

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BioDelivery Sciences International, Inc. (NASDAQ:BDSI) Q3 2021 Earnings Conference Call November 3, 2021 8:30 AM ET

Company Participants

Terry Coelho – Executive Vice President and Chief Financial Officer

Jeff Bailey – Chief Executive Officer

Scott Plesha – President and Chief Commercial Officer

Conference Call Participants

Brandon Folkes – Cantor Fitzgerald

Scott Henry – Roth Capital

Lachlan Hanbury-Brown – William Blair

Tim Chiang – Northland Capital

Zach Sachar – Piper Sandler

Oren Livnat – H.C. Wainwright

Operator

Greetings. Welcome to BioDelivery Sciences’ Third Quarter 2021 Earnings Call. At this time all participants are in a listen-only mode. [Operator Instructions]

I will now turn the conference over to your host Terry Coelho, Executive Vice President and Chief Financial Officer. You may begin.

Terry Coelho

Thank you, and good morning, everyone. Welcome to our third quarter 2021 earnings conference call. Leading the call today is Jeff Bailey, Chief Executive Officer. We are joined by Scott Plesha, President and Chief Commercial Officer. Following our prepared remarks, we will conduct a question-and-answer session. Earlier today, BioDelivery Sciences issued a press releases announcing its financial results for the third quarter of 2021. A copy of the releases can be found on the Investor Relations page of the company’s website.

Before we begin, I would like to remind everyone that certain statements may be made during this call, which may contain forward-looking statements. Such forward-looking statements are based upon current expectations, and there can be no assurances that the results contemplated in these statements will be realized. Actual results may differ materially from such statements due to a number of factors and risks, some of which are identified in our press release and our annual, quarterly and other reports filed with the SEC. These forward-looking statements are based on information available to BDSI today, November 3, 2021, and the company assumes no obligation to update statements as circumstances change. An audio recording and a presentation that accompanies our prepared remarks and broadcast replay for today’s conference call will also be available online in the Investors section of the company’s website.

With that, I’d like to turn the call over to Jeff Bailey, our CEO. Jeff?

Jeff Bailey

Thank you very much, Terry, and welcome everyone to our company’s third quarter 2021 earnings call. It is being great pleasure to speak to you again today following closely after our recent ELYXYB Investor Day. I hope that we are able to convey our excitement about our neurology vertical as well as our overall outlook for the future of BDSI.

Before we delve into the details of our earnings call, I want to thank Terry Coelho for her dedication and service to our company as CFO over the past three years, and wish her well in her next role. She leads behind a strong balance sheet and a well managed financial organization. At the same time, we are pleased to welcome John Golubieski as our new CFO, a former colleague who served as CFO at three of my prior companies and who brings over 30 years of financial and operational expertise to BDSI. John and I are well calibrated to each other, and we are fortunate to have him on the team.

The three main takeaways I want to cover with you today. Number one, strong business growth. Our business, continue to reach new highs in the third quarter with product net sales growing 7.5% year-over-year, including BELBUCA TRx volume growing close to 8% year-over-year. I am particularly proud of this growth, despite the unexpected and unfortunate situation with Alvogen, which was described in an 8-K, which we submitted to the SEC on September 21, 2021. More on that to follow.

We’re incredibly proud of our nimble team which finding to action immediately to stem losses to our business. We are just now beginning to see a rebound of BELBUCA prescriptions as a result. We provided guidance on September 21 of an estimated total company that sales range of $38 million to $42 million for the quarter in connection with the Alvogen situation. I am confident that the quarters performers would’ve been even stronger, but for the issue with Alvogen.

Despite these unexpected headwinds, BELBUCA reached an all time high TRx market share in the third quarter of 4.9% complemented by an all time high in unique BELBUCA prescribers of 8,639, which is an increase of 11% year-over-year. We are really seeing this broadening of the base of prescribers of BELBUCA is such an important driver for continued future growth. We’re also seeing signals of stabilization in the long-acting opioid market. Scott will walk you through what we are seeing that gives us this optimism.

Number two, as far as takeaways go, operational strategic efficiency. We’ve been prudently managing our expenses in the quarter and continue to generate healthy operating cash flow. In the third quarter, we generate a $11.1 million in EBITDA with an attractive 27% EBITDA margin and GAAP EPS of $0.07 ahead of market consensus of $0.05. This resulted in generating approximately $7 million in operating cash flow, which enables us to continue to invest in the future growth of our business and to maximize shareholder value.

This quarter, we repaid $20 million in debt, thereby saving $4.4 million in future interest expense payments. We also made a $6 million upfront payment to Dr. Reddy’s for ELYXYB and we ended the quarter with approximately $101 million in cash. Additionally, we strengthen our supply chain by moving to a new logistics distribution partner. And we expanded from one to two distribution centers for our products in order to de-risk our business by reducing the reliance on a single location. This is an important move to support our continued growth.

Moreover, we started to invest behind the ELYXYB launch we also keeping our finger on the pulse with respect to other business development opportunities and remain opportunistic about identifying additional neurology products. If they are a good fit with our existing portfolio.

The final key takeaway, ELYXYB provides product diversity and is a third growth driver with an estimated peak year revenue at a range of $350 million to $400 million. We are incredibly excited for the future of BDSI. We are poised for the growth with an established paying franchise in our anticipating strong momentum with the addition of ELYXYB to our neurology franchise, a logical adjacency to our current product portfolio in pain. The ELYXYB acquisition, diversifies our portfolio beyond pain by establishing a dedicated neurology salesforce and allowing us to leverage our current infrastructure to manage the addition of ELYXYB in a very efficient way.

It’s also important to note that we have a strong team that has significant launch experience, including experience in neurology and migraine. We’ve been energized by the positive feedback from clinicians and the opportunity to get further integrated into the neurology community. We held a successful key opinion leader Advisory Board Meeting in Chicago last month and heard their thoughts about the clinical profile ELYXYB is placed in the market and the potential prescriber ELYXYB as the only ready-to-use oral solution for migraine approved by the FDA. This has only increased our enthusiasm about ELYXYB that we’ll be launching in the first quarter of 2022.

I also wanted to mention to you that we were pleased that ELYXYB was nominated to the prestigious Pri Galien award which recognizes innovation to improve human condition in the best pharmaceutical product category. On the legal front, we remain confident in the validity and strength of BELBUCA’s intellectual property. We can neither predict the decision. The court will reach regarding the people of patent litigation nor the timing of the court’s decision and are not able to comment further regarding ongoing litigation.

Definitely I wanted to call your attention to an 8-K submitted to the SEC on September 21, 2021. BDSI disclosed that it had filed a motion for order to show cause of the United States District Court the District of Delaware. Why Alvogen should not be held in contempt for violating the court’s order of June 28, 2021? The court ordered Alvogen not to launch its generic product until it could reach a final decision on the merits in the pending P4 case. We contend that Alvogen and violated the order in or about August, 2021 by among other things offering generic product for sale through a five compendia price reporting services.

As alleged in the motion after Alvogen’s product launched certain payers began declining insurance coverage for BELBUCA and directing use of Alvogen’s generic substitute and or making it more difficult for patients to obtain insurance coverage for BELBUCA. Alvogen with through is compendia product listings on or about September 9, 2021. The company’s motion to hold Alvogen and contempt for launching its generic product remains pending before the court.

With that, I’ll turn the call over to Scott to provide more details of our performance during the third quarter. Scott?

Scott Plesha

Thank you, Jeff. As Jeff mentioned, during Q3, BELBUCA prescriptions grew by almost 8,700 TRxs year-over-year, the new high over of over 121,100 retail mail order and long-term care TRxs combined. This represents a solid 7.7% increase in BELBUCA TRxs compared to the third quarter of 2020 and sequential growth of 2% compared to the second quarter of 2021.

BELBUCA prescriptions grew year-over-year and quarter-over-quarter. We remain pleased with BELBUCA’s continued revenue and script growth, and it’s improved in Q3 to a new TRx market share record high of 4.9% up from 4.1% in Q3 of 2020 and 4.7% in Q2 2021. During the third quarter, BELBUCA’s new-to-brand market share of 7.6% was generally flat relative to 7.7% in the second quarter and remain significantly above its TRx share of 4.9%, which means there’s still a meaningful opportunity to grow total prescription share as these metrics historically converge. NBRx count was similarly flat in Q3 year-over-year while the NBRx count for the entire market was down by 6.3%. We believe that the NBRx numbers this quarter were negatively impacted by formulary changes resulting from Alvogen’s compendia listings which have now been withdrawn.

Continuing to build BELBUCA’s prescriber base is important to the brand’s growth trajectory. And we please report that BELBUCA prescribers increased in third quarter by 11% year-over-year to 8,639 unique prescribers, a new high for the brand. Sequentially our prescribers grew by 3.5% from the second quarter. We view this as extremely encouraging and expect our prescriber growth to have an increased impact as face to face patient visits, improve overtime within pain practices.

Now moving on to Symproic. Q3 2021 Symproic prescriptions also grew to a record high of approximately 19,200 TRxs or an increase of 7.6% year-over-year compared to Q3 2020 with a 7% sequential improvement from Q2 2021. We expect continue growth for Symproic as our NRx count increased 9.8% from Q3 2020 to a 11,163, a new NRx count high for the brand. This significant increase in NRx count led to a new record Symproic NRx share of 14.3% in the third quarter, as compared to TRx share of just over 13.3%. This difference between NRx share and TRx share should lead to continued momentum Q4 and beyond.

Like BELBUCA, Symproic is well positioned with covered status for 89% of commercial lives with 61% at preferred status. The ability of the commercial team to consistently pull through the 2020 formulary wins with CVS and Prime Therapeutics, where we’ve seen a 26% increase in TRxs from the Q1 to Q3 this year has been an important part of our growth. The growth in these plans as well as a new formulary win effective Q4 2021, where some part coverage improved from non-preferred non-covered with a step through [indiscernible] to preferred status with no step through required providing access to approximately 800,000 lives gives us confidence, and attaining new TRx count and share highs as we finish 2021.

As we discussed on our October 14th ELYXYB Investor Call, we’ve been actively preparing for Q1 2022 launch. We’re planning to leverage an efficient structure in our commercial organization that will allow for ELYXYB promotion within our current BELBUCA salesforce, as well as with the highest potential prescribers and a dedicated ELYXYB salesforce.

During the fourth quarter, the BDSI team is busy preparing for the plan first quarter launch, including supply chain preparedness, hiring for the expanded salesforce, conducting training and preparing marketing materials. In addition, we are focused on establish relationships with migraine key opinion leaders. We’ll be attending The American Headache Society Conference this month. We are incredibly excited to be adding a differentiated and high potential product like ELYXYB to our portfolio and a large market with over $2 billion of annual sales, which represent the logical adjacency to our pain franchise.

As Jeff mentioned, that leverages our commercial expertise, much of our existing infrastructure and our team’s extensive experience with over 40 product launches. I am confident based on our team’s proven track record, that we’ll be able to execute the successful launch in the first quarter of 2022, and look forward to sharing additional information in the future.

With that I’ll turn the call over to Terry to provide an update on the financials. Terry?

Terry Coelho

Thank you, Scott. Total net revenue for the third quarter was $41.1 million an increase of 4% compared to $39.4 million in the third quarter of 2020, and generally in line with the net revenue generated in the second quarter of 2021. This was at the upper end of the $38 million to $42 million guidance range recently provided for this quarter.

Total net revenue growth year-over-year for the third quarter was 29% when excluding the beneficial impact of the Q3 2020 channel refresh and BUNAVAIL net revenue. Total product net revenue growth for BELBUCA and Symproic combined with 7.5% year-over-year or growth of 32% excluding the Q3 2020 gross to net accruals related to the channel estimates refresh in that period. It’s important to note that there was a favorable impact to our product net revenue associated with the transition to our new logistics distribution partner, a certain wholesalers increase their short-term inventory position to ensure supply continuity.

BELBUCA net sales in the third quarter of 2021 set an all time record of $36.9 million, an increase of 6% compared to $34.8 million in the third quarter of 2020 or 33% growth when excluding the beneficial impact in Q3 2020 of the channel refresh. As expected BELBUCA gross to net deductions increased in the third quarter of 2021 as compared to the second quarter of 2021 primarily due to typical increases seen for the Medicare coverage gap.

Net sales for Symproic in the third quarter of 2021 were $4.1 million, which reflects 20% growth year-over -year. As expected Symproic gross to net deductions, also increased in the third quarter due to the typical increases seen for the Medicare coverage donut hole. In the third quarter of 2021, we had $20,000 of royalty revenue, whereas in the third quarter of 2020 royalty revenue was $658,000. And in the second quarter of 2021 royalty revenue was $916,000. Additionally, third quarter 2020 net revenue included $574,000 for BUNAVAIL sales.

Total gross margin for the third quarter was 85% compared to the 86% margin during the third quarter of 2020 and 89.7% in the second quarter of 2021. As a reminder, the second quarter of 2021 gross profits included approximately $1.4 million in recovery of inventory related costs, which helped to increase gross margins in the second quarter. We expect gross margins to be in the mid-80s range going forward.

Total operating expenses in the third quarter of 2021 were $25.5 million compared to $22.5 million in the third quarter of 2020 and $25.8 million in Q2 of 2021. Year-to-date 2021 operating expenses of $79 million compared to $77.4 million for the third quarter year-to-date 2020 period include higher sales and marketing costs and higher litigation costs associated with the P4 case. Partially offset by reduced G&A spend in 2021 compared to the prior year, which included costs associated with the CEO transition in the second quarter of 2020. As always, we continued to closely manage and prioritize operating expenses.

EBITDA in Q3 2021 was $11.1 million or 27% of net sales compared with $13.4 million or 34% of net sales in Q3 2020. Year-to-date through Q3 2021, EBITDA is $33.4 million or 27% of net sales compared to $26.2 million or 23% of net sales year-to-date through Q3 of 2020.

GAAP net income for the third quarter was $6.7 million or $0.07 per share compared to the GAAP net income of $9.4 million or $0.09 per share in the third quarter of 2020. The $0.07 per share EPS for the third quarter was $0.02 per share ahead of market consensus of $0.05 per share.

Non-GAAP net income for the third quarter of 2021 was $10.3 million or $0.10 per share and reflects GAAP net income, excluding stock-based compensation and non-cash amortization of intangible assets as compared to non-GAAP net income of $12.7 million or $0.12 per share in the third quarter of 2020, excluding the same items. Year-to-date non-GAAP net income through September 30, 2021 is $31.3 million or $0.30 per share, excluding stock-based compensation and non-cash amortization of intangible assets as compared to non-GAAP net income through September 30, 2020 of $30.6 million or $0.29 per share, excluding the same items as well as excluding the financial impact of certain one-time items that are non-recurring including the discontinuation of BUNAVAIL and cost associated with the CEO transition in the second quarter of 2020.

The company has a strong balance sheet with cash and cash equivalents as of September 30, 2021 of $100.7 million as compared to $111.6 million at year-end 2020. Year-to-date operating cash flow through Q3 2021 was $27.3 million compared to $14 million for the same period in 2020, an increase of $13.3 million.

For the third quarter, total cash on hand decreased by $19.1 million from $119.9 million on June 30, 2021. With operating cash generation of $7 million being partially offset by $20 million used towards an early penalty free debt prepayment of our term loan and a $6 million upfront payment to Dr. Reddy’s for ELYXYB. As Jeff mentioned earlier, the $20 million prepayment will result in approximately $4.4 million of interest savings over the course of the remaining loan period.

Turning to full year 2021 guidance. The company is lowering its full year 2021, total net revenue guidance range to $162 million to $167 million from $170 million to $180 million previously. The situation with Alvogen with Jeff discussed is a meaningful factor contributing to our amended guidance. We expect net sales in 2021 for BELBUCA to be in the range of $144 million to $148 million as compared to the range of $155 million to $165 million previously. We continue to estimate our total operating expenses to be in the range of $115 million to $120 million, including pre-launch investments to support the Q1 2022 launch of ELYXYB.

We expect EBITDA to be at the lower end of the range of $40 million to $50 million for our ongoing base business. However, EBITDA is expected to come in below $40 million when including the ELYXYB investments. Finally, the company continues to expect that it will deliver positive operating cash flow in 2021.

Now, let’s turn to some of our expectations for ELYXYB. Our projected long-term outlook for ELYXYB net sales is in the range of $350 million to $400 million, including preliminary estimates for the potential pediatric label expansion.

As most of you know, today marks my last day with BDSI. It has been exciting to be a part of the leadership team that has driven tremendous growth and the transformation of BDSI over the past three years, it has truly been a pleasure working with this team and accomplishing as much as we have. I’m also very proud to be leaving BDSI with a strong balance sheet based on profitability and solid cash flow generation and thoughtful financings at the right times. It has been a pleasure interacting with the equity research analysts and so many of our investors.

I will now turn the call back to Jeff for some concluding remarks before we open up the call for Q&A. Jeff?

Jeff Bailey

Thank you, Terry. This has been transforming quarter for BDSI from a few different perspectives. First, our growth continues and we hit new record highs in market share and script volume for BELBUCA and Symproic in a record net sales for BELBUCA.

Second, with the acquisition of ELYXYB, we expanded and diversified our prior portfolio into the exciting neurology sector, focused on the multi-billion dollar market for acute migraine products. So strategic fit between pain and neurology allows us to leverage our current structure to manage ELYXYB in a very efficient way. That gives us greater breadth of business development opportunities going forward.

And third, our employees answer the call to maintain operational excellence and build further growth. I’m going to take a moment to thank our employees for their continued commitment and strong execution. We are very optimistic about the company’s next chapter for patients, providers, employees and our shareholders.

We’ll now take your questions. Operator?

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] And our first question is from Brandon Folkes with Cantor Fitzgerald. Please proceed with your question.

Brandon Folkes

Hi, thanks for taking my questions and congratulations on good results with the tough backdrop. So, I guess maybe just firstly, want to dove a little bit into the, I guess Alvogen actions in the market and 8-K that you did file earlier in the year. I mean do you believe you are seeing a continued disruption in the BELBUCA market from that disruption, or do you think we’ve moved past that disruption now and we sort of back to a bit of a closer to normal environment.

And then secondly, maybe just sort of, it goes hand in hand, I’ll ask it. Yes. Can you just pass up the impact that you’re seeing in the chronic pain space in general? Descriptions across the board do you seem to be a little bit depressed at our patients just staying on their current therapy? Is there a hesitancy to change therapies in the current environment? And if so, is this comes from patient side, the physician side, was it really just a lower patient flow into the office? Any color there would be helpful. Thank you.

Jeff Bailey

Well, first of all, good morning, Brandon, and thanks for the questions. I guess hope you’re doing well. Yes, let me take the first part. This is Jeff, and then I’ll turn it over to Scott for talking about just the long-acting opioid market. On the Alvogen front. Yes, we still see some effect. We see it dissipating at this point, which our team, I could not be more proud of that, when the issue came up and we became aware of the Alvogen action in the marketplace. We jumped on that immediately back in the middle of August and, just to run you that as quickly as possible. And then eventually of course, Alvogen removed their pricing from the compendia. So our team has been all over that. So that was really helpful and that created a bit in the quarter, but we’ve really made great progress since then.

We do see, some residual effect but it it’s, it – we believe it’s on the lower end at this particular point and on a good side of all that. So that’s really important, now we’re seeing, return to growth and all time high, product market share and stuff like that coming to play. So that’s been managed really well. I really am so proud of our team as far as the execution and what what’s played through there with a real curve ball that just something that very unusual in the marketplace. And they also reflect on just part of that, all the different players when it comes to like the electronic medical records, folks, the payers, et cetera. They’ve never seen anything that before.

So our team really had to break some new ground as far as being able to remedy that. So some really good stuff based on the execution by Scott’s team, as far as being able to manage that. So that hope that answered your first part of your question, as far as that right now, there is some effect that’s ongoing, but it’s – we, it’s has been on the minor end based on the work so far. So, let me turn over to Scott to answer the second part of your question about the overall market question. Scott all yours.

Scott Plesha

Thanks, Jeff. Good morning, Brandon. So first all, I think what we see as a positive in the LAO market right now is that it, it seems to have really stabilized on the TRx side of the market. So for example I think if we recall Q1, there was a very large decline in the marketplace itself almost down 6% quarter-over-quarter. And then what was encouraging to see was actually a bounce back in Q2, almost up 1% and only down about 1.3%, quarter-over-quarter in Q3. So when you look at those three quarters, sequentially, it’s pretty flat, so that’s stabilized and that’s encouraging because even in past years we’ve seen larger declines in that quarter-over-quarter. So that’s a positive. I think the one thing though, that’s still a headwind is patient visits face-to-face patient visits.

Based on IQVIA data through recent data, the pain market still really trails dramatically, a lot of the other therapeutic areas. So if you look at, for example, September was down over 40% face-to-face visits versus pre-COVID levels, baseline levels. And then there are televisits also telemedicine visits as well. But those haven’t compensated for that fully. So that is a little bit of a headwind. I think midyear, we started to see things trend back up where we felt like it was improving and I think COVID spiked again and it’s probably had another impact on it. And so, because there’s a decline in face-to-face visit, pain physicians tend to want to make changes in therapy face-to-face a lot of times.

So we do think that face-to-face visits are critical and as that goes up, we should start seeing our, the market reflect that as well. The positive we brought up in our script was the all time high end prescribers, and we saw a pretty nice jump in prescribers, for the quarter. One of the largest ones we’ve seen in the last six to eight quarters. And I think that’s important. So as the patients go back into these offices for face-to-face visits, that should play well for our script growth

Jeff Bailey

Alright, Brandon – what you’re looking for there.

Brandon Folkes

You did very, very well. Thank you. I appreciate the color.

Jeff Bailey

Great. Thanks Brandon.

Operator

And our next question is from Scott Henry with Roth Capital. Please proceed with your question.

Scott Henry

Thank you. And good morning and Terry good luck. It’s been a pleasure working with you these past couple years. A couple questions, first, do you have any color on how we should think about the ELYXYB ramp? I mean the initial quarter be very minor. Just trying to get a sense, and I did miss the first couple minutes of the call, if you commented on that.

Jeff Bailey

So Scott, good morning. This is Jeff. Yes, we did not comment on that specific. So that back the Analyst call, of course, we gave our view of the long-term picture as far as peak your sales into the 2030s, as far as, peak of your sales of $350 million to $400 million. We’d like to given, guidance for next year yet. I think we take a look at unique situation where we’re able to watch, a couple recent launches into the market and you can imagine our algorithm as far as being able to look at that, and the payer piece that’s critical here we know that. And of course, we have all the marketing tactics, and the experience on the team as far as, not only just many launches by the team in neurology, but also specific to migraine previously.

So, we had some really good experience here about, the execution plan in place and really a spec pharma targeting plan, very similar to the playbook. That’s worked well for us with BELBUCA. So just very targeting efficient is our approach. So, when it comes to the ramp next year, I think it’s what you would expect. So in the first quarter, what we do launch is going to be a lot about just getting the payers on board and that we see it as a steady climb next year to be able to get through that the fourth quarter by then. I think that’s where we really see that we’d be getting some traction in the marketplace. So, we’re not getting specific numbers yet. Scott, you’ll get from that, that from us early next year. But it’s one where it’s also something that really gets us really excited here.

The ongoing market research, when it comes to this, our confidence in this only continues to grow, we had just done is Scott highlighted, a major venue with a few sessions up with key opinion leaders in Chicago. And it was really, really just got to see even more excited about where this thing’s going overall. So, we’re not in the position to give you the specifics yet, but it’s one where it’s – it we’re really feeling good about where we get as time goes on with ELYXYB. So, I hope it was helpful Scott.

Scott Henry

That was helpful. Thank you. And then just shifting on to the model, I guess the one thing that jumps out at me the most is the operating expense guidance of $115 million to $120 million would seem to imply a significant boost in fourth quarter. Is that the case or maybe I’m misinterpreting the guidance in some way?

Terry Coelho

Yes. So, hi Scott. So it’s in line, that’s the range we’ve been guiding towards all year? I think we’ve been able to very effectively manage our spend even as the revenue has been a little bit softer than we had expected. But we are preparing for launch. We’re – there’s, you’ll see a slide in there where we’re talking about a number of things we’re hiring for the expanded salesforce. We’re getting all the marketing materials ready, training materials for the – all the salesforce to take on. I think supply chain preparedness. So there’s a number of different areas that we’re getting spending to get ready for the launch.

Scott Henry

Okay. Thank you for that color. And Terry, I guess it would only be appropriate that my last question for you be, when you would expect to report as a fully taxed company, we’ve got two years of positive quarterly numbers. Typically one would take a gain for the tax and start taxing fully. I just want to get a sense, would you expect that to happen in 2022? And I promise, I won’t ask you this question again.

Terry Coelho

You won’t be able to.

Jeff Bailey

You’ll be asking John that question by the way, it’s in the room as well.

Terry Coelho

But Scott, look, we’re looking at it for sure. It’s a consideration. It could be this year. It could be next year, but it is something that we are keeping a close eye on.

Scott Henry

Okay. Thank you for taking my questions.

Terry Coelho

Absolutely.

Jeff Bailey

Thank you, Scott.

Operator

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

Lachlan Hanbury-Brown

Hey guys, this is Lachlan on for Tim. Thanks for taking the questions. I guess first of all, Terry, I think you mentioned that there were some inventory bills that wholesalers in the quarter ahead of the sort of the sort of transition distributors. Can you maybe quantify that or just help us think how much may sort of pull forward there was from the fourth quarter potentially. And then on the topic of the ELYXYB launch, and I think Jeff, you mentioned, getting pays on board in the first quarter and so on. How much on the topic of pays, how much can you get done ahead of the first quarter? I mean, will you be on formularies by the time you launch or is that really not going to start happening until you’re actually launching the first quarter?

Jeff Bailey

Terry you want to go? So Scott and I will take the second please.

Terry Coelho

Yes. So just on the – it was a little bit, your voice had cracked out a little bit, so I think I captured your full question. But we did have some of the – a couple of the wholesalers buy in a little bit, just wanted to make sure they’ve been through transitions like this in the past where companies have had glitches and they wanted to make sure it was not very large, the impact we’re not giving exactly how much it is, but they, a few of them bought into the first week of October just to be actually not even a few, a couple of them to just be sure they’d have enough to bridge any glitches that could happen. That address, – you said something about the fourth quarter, but I okay, all right.

Lachlan Hanbury-Brown

Yes. That’s all. Thanks.

Jeff Bailey

Okay. And then the second part of your question, I believe is tied to how, what do we expect as far as formulary when it comes to ELYXYB and the uptake there. And so a lot of great work’s been going into that by Scott’s team. If you imagine what the major players, I think we’ve also had this really interesting seat to be able to see data and see how some of other players have approached it in the migraine space. So it’s kindly you can see the kind of a framework, a playbook in front of us about how to sequence it. So, I want to make sure everybody’s really well aware that that we’re really in tune on that end. And also our leadership on the managed markets end is really topnotch and very experienced.

And so I mean, let Scott go ahead and weigh in about timing and things like that, but it’s also, we do see, some impact potentially in the first quarter. But as the year goes on that that’s where, just as you would expect more layering in Scott, you want to go and just expand on that?

Scott Plesha

Yes. Hi, Lachlan. So we’ve been working hard since the deal closed. Unfortunately there’s a short time frame to a window that we have to launch. So, what’s been a very positive is we’ve already had clinical reviews at two of the large PBMs. Actually one of them just did a second review also on that side. And we’re actually getting an expedited review at one of the payers that literally a lot of times won’t even review you for the first six to 12 months. So that’s been pulled forward. Our goal is to bring them on as fast as their system can while, making sure we have a contract that makes sense for us.

We are very encouraged. We feel like we’re going to be able to contract with the three largest commercial payers, and it’ll probably be staged over time. So, one could possibly be near at, or near to launch very near launch. Probably a little bit more later in the year and then possibly 2023 the last one come on board, but we’re going to do everything we can to pull this forward. I think the way to look at this though is, we’re going to have a very robust patient services program in place. We wanted to assure that a commercial patient that gets prescribed ELYXYB receives it so early in our launch, even if we don’t have all the commercial coverage lined up it’s going to be about prescript – patient trials, building prescriber bases and making it as seamless as possible so that they don’t even feel that there may not be coverage yet. So that’ll require us having some robust programs in place that over time, as we add the formulary coverage, we’ll – those will get pulled back. But in a way that again, the patient or the healthcare providers don’t feel or see that. So that’s the way it’ll work for us.

Lachlan Hanbury-Brown

Awesome. Thanks.

Scott Plesha

You’re welcome. Thank you.

Jeff Bailey

Thank you.

Operator

Your next question is from Tim Chiang with Northland Capital. Please proceed with your question.

Tim Chiang

Hi, thanks. Jeff, I think you mentioned, or maybe with Scott, you mentioned that face to face physician visits are down 40%. What do you see that figure next year? I mean, do you see it still being down considerably in 2022?

Jeff Bailey

Yes. Although Scott reflect more detail on that, but I think it’s something that it’s quite unique about the pain market compared to other specialties, as far as that goes. And it comes back to some things we’ve seen, like during COVID where some of the capacities been reduced to some satellite offices were closed, but also some of the mid levels like the nurse practitioners, the physician assistants have transitioned here from pain to some other space, so there’s less capacity there. So, we think that’s imply.

We do see that, that there’s some things in the market that will, bring back more capacity to that world, but it’s also one where, I think we need to make sure that we’re doing everything possible to maximize what we have there. So, I think going forward that it seems that, it’s trailing other specialties, but I want to bring it back to just this point about what we are seeing, which is really encouraging on our end is the base of prescribers that are using BELBUCA is growing so nicely as you call yourself from the one slide during the presentation that what we’re doing in spite of the patient face to face visits being down, we’re getting a broader base there.

So that’s really, I mean, helping drive us to new volume highs and market share highs. The fact that we’re getting a much better stronger breadth of prescribers that are coming into play. So growing the breadth of prescribers, by 11% over one year is piece of my past experience is quite remarkable. And the trend is consistent that we’re seeing that’s coming to place. So getting more prescribers in that. So, what we’re doing also within the framework to say, look, it’s a market dynamic that we don’t control, but what do we control is getting more prescribers using our products? So there’s so the combination of not just what our reps are doing in the field, which are doing outstanding job, but on the marketing end, our CRM database bases are growing so nicely. What we’re doing with prescribers and also with patients that’s really helping us kind of behind the scenes.

So it doesn’t get back to hopefully you see, we’re a team, we just don’t report like what’s going on. It’s okay. What are you doing about it? And so we’re growing both sharing volume despite the fact that those visits are down. And Scott, do you want anything else you want to add to that?

Scott Plesha

Yes, I just think Jeff touched on a little bit, but we do feel like some of the capacity, for example, satellite offices and some of the practice have scaled back a little bit, especially on their mid levels. The nurse practitioners and physicians assistants. So, I do believe that, the patients are still out there and that over time such as COVID cases continue to decline that they’ll be get busier again in the offices. I think if patients are stable right now, they’re less likely to go into the office based on current COVID dynamic. But I think we’re confident, again, as Jeff said, we’re building a prescriber based, the market starts coming back, that that’ll have a nice impact, positive impact on our business going forward.

Tim Chiang

And maybe just one follow-up. I mean, obviously there’s been this boom in telemedicine. I mean, what sort of leverage might you have next year for the ELYXYB launch? I mean, is it possible to partially launch ELYXYB through a telemedicine channel?

Scott Plesha

That’s a great question. And we’re not giving all those specifics on our tactics and strategies, but what I will share with you is that we are looking to actively partner with different telemedicine platforms, specifically those that are working in the migraine space. So, I – you’ll see us actively pursuing those channels.

Jeff Bailey

Yes. And we really think the product profile fits nicely to your question. So it’s – we’re excited about that. That’s an important part of our world.

Scott Plesha

Yes. The only thing lacking on telemedicine in the space is if you don’t have – we think samples will be crucial, which will be sampling very generously. So but there is a lot of telemedicine use in the space and we’re aware of that. And again we’ll be partnering there.

Tim Chiang

Okay. Great. Thanks.

Jeff Bailey

Thanks Tim.

Scott Plesha

Thank you.

Operator

[Operator Instructions] Our next question is from David Amsellem with Piper Sandler. Please proceed with your question.

Zach Sachar

Hey everyone. This is Zach on for David. Thanks for taking my question. So just another one from me, following up on the chronic pain market discussion. Do you guys see telemedicine having a meaningful role in this market even once we get pass the pandemic? And if you do, how do you – how does that impact your commercial and promotional efforts for BELBUCA going forward?

Jeff Bailey

So Zach thanks for the question. Yes, it’s interesting in this space. I mean, market research keeps on playing back for patients switches to new medication that for most prescribers, it requires a face to face. They want to see the patient face to face, and telemedicine here is, I think what we’re learning is nice touch point, but the real change is to a new medication actually – really to play off the patient visits. So going forward, we didn’t telemedicine plays a role in this market, but it’s not one that’s the primary driver, because keep on coming back to the – those face to face venues being so much, and especially with BELBUCA where it’s not only just, the switch, but it’s also like the demo that takes place. These offices have really good, our reps really done a great job as far as train the staff about, how to go ahead and use the product and all this stuff it’s very simple to use, but it needs to be demonstrated for like a new patient.

So the face to face means a lot to us specifically. So in telemedicine, in general in this marketplace, it’s just different than some other therapeutic areas where it’s a touch point telemedicine is, but not really where the switches take place. Scott, anything else you want to add to that?

Scott Plesha

Yes, I do think it’s valuable for a patient that’s stable, doing well on therapy already, that it’s a good touch point to follow up. All the data suggests that the NBRx productivity of the telemedicine call is nowhere near a face to face, not just our product, but others, and all markets for the most part are that way. So, as far as like driving growth, it’s still going to be that face to face visit majority of the time.

Jeff Bailey

And just reiterating, I know as I mentioned before Zach, but our tactic within that, the fact that they don’t switch necessarily on telemedicine, and the face to faces are gone, but we are so excited about the fact that our strategies been to broaden and the breadth of our prescribers and that’s growing so nicely. And that really helps us as far as to counter that part about the visits what’s been going on. So, it’s working for us as far as we take a look at our share volume growth that continue despite that market dynamic.

Scott Plesha

Yes, Zach, one thing I’ll add on the telemedicine side, while we haven’t partnered with any platforms there. One of things we’ve done over time here, our marketing, our digital marketing’s become quite sophisticated. And we actually know where the pain management prescribers where they go digitally and we’re actually advertising in those locations to impact those that might be doing more telemedicine. So, it’s not like we’re not in the area, but we’re – we actually do focus some non-personal, and basically digital promotion in those spaces where doctors that are on telemedicine platforms actually go for their information.

Zach Sachar

Great.

Scott Plesha

Thanks Zach.

Zach Sachar

Okay, looks great. That makes sense. And then just one quick follow up on that. Then what is the current mix of the salesforce and salesforce detailing that is being done in person versus virtual as of now, right? Is that still down versus pre-pandemic levels?

Scott Plesha

Yes, so we’re still seeing face to face visits down anywhere from like 12% to 15% over where we were before. But probably 95% to 97% of our interactions face to face. Very little virtual detailing going on our part right now.

Jeff Bailey

Yes. I think during early part of COVID, the offices are super receptive to virtual, they got it to say, look, there’s a different interaction has to take place. I think what we’ve learned from the field is that, the offices have become fatigued by that sort of approach. And now that they have the patient flow and certain practices coming through, it’s back to face to face. So it’s kind of game on, from that perspective, and face to face are down a bit for rep to prescriber. But it’s very high percentage. It’s almost a 100% as Scott said being face to face now.

Scott Plesha

Yes. Not a lot of offices close down to us access wise, but maybe frequency is impact a little bit. Maybe you can’t go in there quite as often. And that’s a office by office basis, but the territory managers have to decipher and work for questions.

Zach Sachar

Thank you so much.

Jeff Bailey

Zach. Appreciate it.

Operator

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

Oren Livnat

Thanks. Can you hear me?

Jeff Bailey

Yes. How you doing?

Oren Livnat

Great. Well first I just want to say so long to Terry, it’s been, it’s been grand good luck in your next endeavor.

Terry Coelho

Thanks, Oren.

Oren Livnat

So just to talk about the dynamics, you’ve touched a couple of times on how, telemedicine isn’t really sufficient to drive therapeutic switches and new starts, which totally makes sense. But that reminds me like, a couple years ago we were talking, when you had Investor Day, and you were sort of earlier in the launch, you were talking a lot about what the process is to switch a patient from, let’s say another long-acting opioid or from IR to ER, and I’m just curious, what is the current state-of-the-art with regards to necessary down titration and up titration of existing opioid treatment. I’m just curious, how easy is it to switch now? How hands on does the process need to be? And I have a follow-up.

Jeff Bailey

Scott, do you want to take that one?

Scott Plesha

Yes, thanks for the question, Oren. So, we obviously – we have our label of prescribing information, so that has not changed one bit. So depending on the level of opioids are on prior to switching to us they’ll get tapered down to an appropriate dose. And then basically they’ll get transitioned over to BELBUCA and then they can either come off their other opioid or they maybe on a low dose of it. And then they will titrate up over time. And a lot of times what they’ll do is get down to 30 MSE be placed on BELBUCA and then with the goal of even further lowering, the short acting opioids as they titrate up. So it’s definitely different than you see with other products.

If you’re, switching from a, like molecule to like molecule from short acting to long-acting, it isn’t always as complex as that. So that’s why that face to face is that I think is important. And also if you remember, obviously the delivery system here using a film versus taking a tablet is quite different. So, it’s making sure the patient knows how to apply it and whatnot, offices have gotten very skilled. I think, the nuance you’re sharing here, maybe the question behind the question is there are a lot of physicians that are very comfortable now in transitioning patients it’s easy. But when they have a new patient, who’s not had the, had BELBUCA before and had a film product they want to be able to demonstrate that for them or have some in their office do that. So that’s where it becomes important face to face of it.

Oren Livnat

Okay. And just to follow up on the ELYXYB launch, so it sounds like you guys will be quite focused on, minimizing friction, so to speak and making sure whoever writes this, sampling it, even aside, whoever writes this, drug will hopefully get to the appropriate patients. So should we just assume, I don’t know if we even know pricing yet, I could have missed it. But should we assume that growth to nets in the early days, sort of, regardless of where we see the scripts going, that we should assume sort of realize net value per script will be quite depressed early on.

Jeff Bailey

Terry, you want to take that one?

Terry Coelho

Yes sure.

Jeff Bailey

Yes. I’ll go ahead and take that one. Yes. So just as you would expect again, we’re pulling the playbook, it’s amazing the data out there to watch some of the other players that are out there or that you just launched over the last couple years. And as you would expect, I think that you take a look at some of their numbers. We feel they’re really mimicking that. So yes, the growth net will be high in the early innings of this, as we get deeper into the year. Next year we see that that dissipating eventually normalizing to about, what we’re used to as a company over time. But it’s one where in the early innings, it’ll be, I guess if you take a look at some of the other products recently launched, we see something very similar on the gross to nets as far as that goes. So, I think you have it right or as far as the going to think about that. So anything else, Scott, Terry?

Scott Plesha

No, just Jeff’s spot on it’s exactly what I stated earlier. We’ll see probably as we pull back, our able to – we’re able to pull back our services as we bring formularies online, then the gross to nets will improve based on that. And we’re really going to be focused on again, patient trials, getting exposure to the product to patients, appropriate patients and adding prescribers in the short run here. That’s really what it’s all about.

Oren Livnat

And I haven’t missed any pricing out. So that hasn’t happened yet, correct?

Scott Plesha

No, we have not. We haven’t provided that externally to anybody else.

Oren Livnat

Great. Great. All right, thanks. Appreciate it.

Terry Coelho

Thanks, Oren.

Scott Plesha

Thanks, Oren.

Operator

And we have reached the end of our question-and-answer session. I’ll now turn the call back over to Jeff Bailey for any close remarks.

Jeff Bailey

Well, thanks everybody for participating today and hopefully saw there’s a lot of good stuff that we were able to accomplish in the third quarter with some interesting things happening in the marketplace. But it’s just really proud of our team about what’s played through, and just the fact that our products are hitting new volume and market share highs, just something really special. I think you take that away. The other one is about ELYXYB that you can see, we’re really setting up for a really upstanding launch with really using the experience of the team to play through. So really the next chapter of our company. We’re so excited about this, about where we are, where we’re going in so many ways.

And as we wrap up just once again, thank Terry for all the impact that she’s had. And also welcome to John who’s also in the room here for smooth transition between the two team members there. And just thank you so much for your participation today. Everybody have a great rest of the day. Thank you.

Operator

And this concludes today conference, and you may disconnect your lines at this time. Thank you for your participation.

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