BioDelivery Sciences International, Inc.
Q2 2020 Earnings Call Transcript

Published: 5 Aug 2020

[Operator:]

Good day and welcome to the BioDelivery Sciences Second Quarter 2020 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Ms. Terry Coelho, Chief Financial Officer for BioDelivery Sciences. Please go ahead.

[Terry Coelho:]

Thank you and good morning everyone. Welcome to our second quarter 2020 earnings conference call. Leading the call today is Jeff Bailey, Interim 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 release announcing its financial results for the second quarter 2020. The copy of the release can be found on the Investor Relations page of the Company's website. Before we begin, I would like to remind everyone that certain statements may be made during this call, which may contain forward-looking statements. Such forward-looking statements are based upon current expectations and there can be no assurances that the results contemplated in 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, August 5, 2020, and the Company assumes no obligation to update statements as circumstances change. An audio recording and broadcast replay for today's conference call will also be available online, in the Investor Section of the Company's website. With that, I'd like to turn the call over to Jeff Bailey. Interim CEO, Jeff?

[Jeff Bailey:]

Thank you very much, Terry, and welcome everyone to our company's second quarter 2020 earnings call. This is my first earnings call with you as the Interim CEO and it takes place during a challenging time for the country and the entire pharmaceutical industry. However, I'm really fortunate to have been inherited a dynamic and growing Para brands, a strong balance sheet, an inspiring, high-quality management team who is extremely focused on execution to this new environment. There are three things I really hope you will take away from our quarterly earnings call. First, we mobilized the internal team very early in the COVID pandemic to ensure we are proactive and operate in the most effective way possible, reviewing in a very structured weekly venue to national and local data, listening to caregivers and employees while observing how other things are approaching this new environment. This has really made a big difference. Second, our team performed very well in the second quarter with BELBUCA continuing to take market share in the TRx long-acting opioid market and BELBUCA continuing to show strong growth year-over-year. The second quarter BELBUCA performance also includes BELBUCA hitting it to the all time high in TRx volume and market share. We also saw Symproic hit all time high for TRx volume and market share as well. This is a real tribute to our differentiate products as well as our standing promotional execution from the BDSI team. While my title is interim CEO and this is the third thing I'd like you to take away, I want to assure you that I plan to remain in a key leadership role for BDSI for the long-term. I am very committed to working with my strong executive team and the BDSI Board to take the BDSI to next level, as we are hyper focused on continuous strong growth of our products as well as concentrating on business development strategies that really bring value to the patients, caregivers and shareholders that we serve. I'm pleased to say that I've been working closely with the management team in my first three months and they have made it easy for me to really hit the ground running. Now let's start and get into some of the details. On the results front, the big positive for BELBUCA is that we outperformed the TRx long-acting opioid market nicely by growing BELBUCA TRx volume by 5.2% over Q1, while the market was down by 1.6%. Additionally, BELBUCA TRx market share hit another all-time high by growing to over 3.8% in Q2 compared to 3.6% in Q1. This growth highlights the momentum for the brand, which was also confirmed by the fact that, revenue for BELBUCA grew 34% year-over-year. It's important to stress that, we are focusing on new tactics during this pandemic to drive new to brand market prescriptions. NBRx scripts were down in Q2 and we believe that this trend was driven by significant decline in patient in-person visits to physician offices, which some estimate in the range of 30% to 40%. As a result, the NBRxs in both BELBUCA and long-acting markets were down approximately 18%. We feel strongly that this change in market conditions requires some new tools to help boost new patient starts. The team has done a really nice job of focusing on this dynamic in the COVID environment. Scott will give you more details when he sees shortly. Scott will also cover additional details on the new selling program that we've implemented during the pandemic. Our sales team has adapted to a hybrid selling model, where reps still have face-to-face customer interactions where possible, but also are effectively using virtual commercial and educate tools to support our work with caregivers. We also recognize managing business during this pandemic is a moving target within local geographies. We therefore remain very vigilant and nimble and use our now well-established process with our weekly COVID dashboard and live weekly team meetings to really stay on top of our game. Now let's get into the slides. Getting back to our rapid response to the COVID pandemic, I'm extremely proud of how our employees have responded to this unprecedented challenge. We acted quickly and swiftly in three fronts. First, we focus on taking actions to ensure the safety and wellbeing of our employees, patients and the communities we serve, very early on proactively procuring additional materials or constant supply of our products as they provide important clinical relief for patients suffering from chronic conditions. Secondly, we transitioned our customer engagement to virtual support and launching a ray of new customer and patient support programs. And finally, the internal COVID-19 cross functional committee we established, which I mentioned before has been vigilantly assessing trends through market dynamics, benchmarking best practices across the industry, and ensuring we are highly focused to navigate through this unprecedented situation. We see that these actions are having a beneficial impact on our business based on the brand trends thus far and believe there will be important components for continued momentum as our customers return to more normal operations. Going to the next slide, you really see that the strong performance both year-to-date and in Q2 positioned us advantageously for future growth. As I mentioned before, BELBUCA really outperform the market and also hit another all-time TRx share high of 3.8%. This continued momentum is so important, especially during time when other products in our space are declining. Next, I want to mention that we have positioned ourselves well by further optimizing our sales force in Q1 by adding new territory managers in the field to grow incremental revenues. I am pleased to say, these territories overall are gaining additional traction in Q2. It's also important to our growth in our company substantial progress of payers to realize more opportunities that make financial sense for us. We continue to make good progress on this front, as Scott will share more detail. We began to capitalize on some recent previously announced market access wins. In addition, we've expanded access within several prominent regional health systems, which offer both their own covered lives as well as potential influence on clinical practice within their metropolitan communities. And lastly, we began the year with a strong balance sheet and have been able to strengthen that in our cash with very successful second quarter, assuring its financial strength is a key strategic priority for BDSI, and we are prudently managing our spend during this period to protect and steer the business through near-term disruption while continuing to invest towards sustained long-term growth. Our strong balance sheet allows me to stand a meaningful percentage of my time along with other senior members of our team, exploring strategic business development opportunities and speaking with potential partners. To conclude, I'm very pleased by the success of the second quarter as well as how the organization responded to their challenges presented by the COVID-19 pandemic. We have therapeutically important products, strong balance sheet and a talented and committed team of employees. We remain poised to successfully navigate through the short-term uncertainty and achieve our ambition of long-term sustained growth. With that, I will turn the call over to Scott to provide more details on our performance during the second quarter. Scott?

[Scott Plesha:]

Thank you, Jeff. As Jeff mentioned, during Q2, BELBUCA prescriptions grew by 5,160 to new high of more than 104,600 retail TRxs. This represents almost a 31% increase in BELBUCA TRxs as compared to the second quarter of 2019 and a 5.2% increase over the first quarter of 2020. This was accomplished despite a 1.6% decline in the overall long-acting opiods market during the second quarter. We were pleased with BELBUCA's continued growth which led to Q2 market share increasing to over 3.8% from 3.6% in the first quarter of 2020. During the second quarter, BELBUCA's new to brand market share of 7.3% held steady from the first quarter, well above its peer share of 3.8%, and there is still a significant opportunity to grow total prescription share as these metrics historically converge. New to brand prescriptions declined from the first quarter to second quarter, a stay-at-home orders were in effect. However, we were encouraged by the improvement and new patients being prescribed BELBUCA as state began opening in June. BELBUCA's prescriber base remains stable in the second quarter as the impact of the pandemic was most pronounced during this period. There were over 7,600 total unique prescribers in the quarter, and we are encouraged by the fact that BELBUCA reach a new monthly high of 6,170 new prescribers are in June, as patients began to return to offices. As of early July, our sales force has been redeployed across all territories, enabling in-person visits in addition to their continued virtual interactions. As we previously announced in early Q2 we are able to improve BELBUCA coverage from non-formulary not covered to cover the preferred status and over 2 million Medicare Part D lives within Express Scripts, Select Health and UPMC Health. It's still early since addition of these wins, but we are encouraged by the growth we are seeing across these plans and would expect the uptake to increase in Q3 and Q4. We continue to believe that with additional work we have the potential to add several million more Medicare lives, as we head into 2021. On the commercial side, in Q2, we improve net coverage within two prominent regional commercial plans, Highmark Blue Cross Blue Shield and the University of Pittsburgh Medical Center or UPFC. These wins improved coverage for over 760,000 lives combined. Again, it's early news wins and we anticipate growth in Q3 and Q4 from these plans. And Symproic Q2 retail prescriptions reached a new high of over 17,200, representing an 11.1% increase year-over-year compared to Q2, 2019 and a 6.7% increase over Q1, 2020. We're also excited to share that Symproic enjoyed this largest quarter-over-quarter prescription growth, since we relaunched it in Q2, 2019. During Q2 2020, we generated a 13.4 NRx share and a 12.3% TRx representing the highest market shares today. We expect continued TRx and revenue growth for Symproic, as NRx share has consistently exceeded total TRx share since May 2019 when BDSI began active promotions. In the second quarter, we successfully added 940 new prescribers for Symproic, maintaining our prescriber unit course of approximately 5000 health care providers. We view Symproic as a highly complementary brand to BELBUCA and continue to believe our early 2020 markets access win with prime therapeutics and CDS will be counted for growth for the remainder of 2020 and beyond. The BDSI sales force has done a strong job taking advantage these lands and improved our TRxs within prime therapeutics by approximately 56% in Q1 and 38% in Q2 compared to the previous quarter. We've also seen consistent growth within CDS where our market share and the promoter class, has increased from 10.5% in Q4 2019, to 14.4% during Q2 of 2020. We're also excited announce that we've recently enhanced Symproic access within independent Blue Cross Blue Shield and Humana Commercial Live. Over 1 million lives under independence Blue Cross Blue Shield have moved from non-preferred status, but a step at it required to a preferred unrestricted status. Within Humana, approximately 420,000 lives will now be covered at a non-preferred level without restrictions compared to a non-formulary not covered status previously. We believe that the BDSI commercial team will be able to pull through these wins and build upon the brand's momentum. We're very proud of the result that the commercial team generated during Q2, especially within an environment and market dynamics that we face due to COVID-19 pandemic. While the influx of new patients to our products and the markets they are in flow during the quarter, we're encouraged by the increase in patient visits and NBRs as states have really opened over the past few months. As the impact of COVID-19 grew, our focus was on supporting our HCPs and their patients while assuring the safety of our employees. We accomplish this by reinforcing the many resources we offer to patients at HCPs and the unique attributes our products possess. We also augmented our patient support by providing enhanced copay coverage for BELBUCA and prior authorization assistance for both BELBUCA and Symproic. As Jeff highlighted, our commercial team rapidly adapted to the new promotional environment. We have equipped our sales team with tools that facilitate effective discussions around the clinical value of our products, either in person or virtually. This includes a virtual customer engagement platform, a dedicated email portal as well as the ability to ship samples and other resources directly to offices. During the quarter, we also adapted many of our marketing programs and amplified our digital marketing efforts. This resulted in an increased digital presence, as we implemented new programs and magnified others. We have built a sales and marketing platform that will allow us to promote our products effectively and compliantly to ACPs and patients during a very unique time. Importantly, it also provides a foundation that will allow us to adapt as a selling environment evolve. We had a very successful Q2 that resulted in yet another record quarter for prescriptions and many other important growth metrics for both BELBUCA and Symproic. Our Q2 results support the effectiveness of our commercial team and more importantly, a clinical value that our products provide to patients and ACPs. We continue to believe that, our high-level of execution, incremental market access improvements, and when patients returning to offices, we're very well-positioned for growth in the second half of 2020 and beyond. In conclusion, I'm particularly proud of the dedication, nimbleness and focus our commercial team exhibited to support our healthcare professionals and their patients during these challenging times. With that, I'll turn the call over to Terry to provide an update on the financial. Terry?

[Terry Coelho:]

Thank you, Scott. As Jeff and Scott discussed, we are excited to report our second quarter results, which have remained strong despite the COVID-19 pandemic. Total net revenue for the second quarter 2020 was $36.6 million, an increase of 23%, compared to $29.7 million in the second quarter of 2019. Year-to-date, net revenue through June 30, 2020 of $74.9 million grew 51% compared to the same period in 2019, driven by strong BELBUCA growth and the impact of the Symproic acquisition, partially offset by lower sales of BUNAVAIL. BELBUCA net sales in the second quarter were $32.3 million, an increase of 34%, compared to $24.1 million in the second quarter of 2019. While TRx sales grew approximately 5% in the quarter, the net decline of 3% in the quarter versus the first quarter of 2020 was primarily due to the timing of shipped orders and a tightening of wholesaler inventory in the second quarter of about four days compared to the first quarter, and compared to the levels of inventory typically held. Year-to-date BELBUCA net sales through June 30, 2020 of $65.8 million, grew 54% compared to the first half of 2019. Symproic which was acquired during the second quarter of 2019 has been an ideal complimentary product for BDSI as we were able to effectively integrate it into our product portfolio and take advantage of the substantial overlap in the target prescriber base. Net sales for Symproic in the second quarter of 2020 were $3.4 million. Similar to BELBUCA, while TRx has grew close to 7% in the second quarter compared to the first quarter of 2020, the net sales decline of 18% in the same period was primarily due to the timing of shipped orders and a tightening of wholesaler inventory in the second quarter of about 6 days, compared to the first quarter. Year-over-year, net sales in the quarter grew 7%. As a reminder, the second quarter 2019 net sales results incorporated the benefit of the distribution agreement with Shionogi, which favorably impacted the second quarter 2019 net sales. BUNAVAIL net sales for the second quarter were $700,000 compared to $800,000 in the second quarter of 2019. In March of this year, the Company announced the planned discontinuation of marketing of BUNAVAIL in 2020 and ceased X-factory sales affected June 15, 2020. Royalty revenues for ex-U.S. sales of PAINKYL and BREAKYL totaled $137,000 for the second quarter, a decrease of $400,000 when compared to the first quarter of 2020. Total gross margin for the quarter was an attractive 85% as compared to 83% in the second quarter of 2019 and consistent with the 85% margin during the first quarter of 2020. As Jeff discussed, management swiftly took action when the pandemic first emerged to ensure we were protecting our cash position in light of the high degree of uncertainty at that time. A key area of focus was to evaluate our operating expenses across all functions to ensure a prioritization of critical initiatives needed to support our continued growth, while making sometimes tough choices about deferring certain planned activities. As a result, excluding the onetime financial impact of costs associated with the transition of our CEO, we were able to reduce continuing operating expenses by $3.5 million in the second quarter as compared to the first quarter of 2020. With that said, total reported operating expenses in the second quarter of 2020 were $28.2 million, compared to $22 million in the second quarter of 2019 and $26.7 million in the first quarter of 2020. Year-over-year and quarter-over-quarter increases are primarily driven by the onetime costs associated with the CEO transition in the quarter, partially offset by lower T&E spend. GAAP net income for the second quarter was $1.2 million or net income of $0.01 per share comparison GAAP net loss of $11.1 million in the second quarter of 2019 or a net loss of $0.13 per share. The year-over-year improvement and GAAP net income of $12.3 million is primarily driven by an $11.7 million decrease in non-operating expenses related to the CRG debt extinguishment incurred during Q2 2019. Year-to-date GAAP net income through June 30, 2020 was $6.1 million, an increase of $21.1 million compared to the same period in 2019. EBITDA in the second quarter of 2020 was $5.1 million, or 14% of net sales, compared with $4.8 million in the second quarter of 2019 and $7.8 million, or 20% of net sales in the first quarter of 2020. This quarter marks the sixth consecutive quarter of positive EBITDA for BDSI. Year-to-date EBITDA through June 30, 2020 is $12.9 million or 17% of net sales, compared to $4.9 million or 10% of net sales for the same period in 2019. Non-GAAP net income for the second quarter was $9.6 million and reflects GAAP net and Income excluding stock based compensation, non-cash amortization of intangible assets, the non-reoccurring financial impacts of the BUNAVAIL discontinuation, and the onetime expenses related to the CEO transition. This compares to non-GAAP net income of $8.3 million in the first quarter of 2020, excluding stock based compensation and non-cash amortization of intangible assets. Year-to-date non-GAAP net income through June 30, 2020 was $17.9 million, compared to $3.2 million for the same period in 2019, an increase of $14.7 million year-over-year. As of June 30, 2020, BDSI had cash and cash equivalents of $91 million as compared to $70.6 million at March 31, 2020. The combination of continued strong revenue and attractive gross margins together with cost reductions discussed earlier and excluding the impact of CEO transition related costs, resulted in positive operating cash flow year-to-date through June 30, 2020 of $6.7 million or $5 million of positive operating cash flow, including those costs. For the second quarter, operating cash flows also excluding the impact of the CEO transition costs were essentially breakeven. The overall $20.4 million increase in the cash position, over the prior quarter includes the net proceeds of $19.6 million from the draw down in May, 2020 of $20 million from tranche B of our existing debt facility. The decision to opportunistically drawdown the expiring second tranche of the loan reflects our ongoing commitment to enhance our cash position, while retaining the flexibility to support the Company's important organic and business development growth opportunities. The Company's total long-term deposition as of June 30th, 2020 was $80 million. We are very pleased to have ended the first half of the year with revenue growth greater than 50% year-over-year, continuing profitability reflected in our 17% EBITDA margin year-to-date, and a strong cash position. Importantly, we are managing our expenditures prudently, ensuring prioritization and continuation of key initiatives. 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. Overall as a company, we are very proud of our resilience and the team's ability to adapt very effectively over the past two quarters. We expect to see continued momentum from our early investments in hybrid commercial efforts and our strategic actions to strengthen and broaden our customer relationships. Our high-quality differentiated products coupled with our dedicated team positioned us well for a strong second half of 2020. We now like to take your questions. Operator?

[Operator:]

Thank you. [Operator Instructions] We will now take our first question from Brandon Folkes from Cantor Fitzgerald. Please go ahead. Your line is open.

[Brandon Folkes:]

Hi. Thanks for taking my questions and congratulations on the progress in the quarter navigating a tough backdrop. I wanted to just drill down a little bit into the funnel of new patients and what you saw in the quarter and maybe also what you are seeing in July? Granted, there's obviously a number of challenges within COVID, but could you just elaborate whether is the challenge patients staying on an IR opioid longer or they -- the long-acting that they're on? Or is it even earlier in the funnel and patients are not even going on IR opioids at the moment? And any color in terms of whether then this challenge around Youtube brand may extend a little bit beyond the lockdowns as we have patients entering this funnel? And then do you have any data on how long patients are actually on either an IR opioid or a different long-acting opioid before they are switched to BELBUCA?

[Jeff Bailey:]

Scott, do you want to read out first and then. I -- you go first Scott please?

[Scott Plesha:]

Yes. Jeff. Thank you. Hey. Brian, this is Scott. Thank you for the question. I appreciate it. So, a couple of dynamics we're seeing and I can give you some kind of round numbers. But in general, if you look at Q1 NBRx numbers for the long-acting market and where we are as well, we see about an 18% decline in NBRx for the LAO market and we're basically in line with that. So if you're looking at what that means, on a weekly basis for us, we did maintain our share in my prior comments, we did maintain a 7.3 NBRx market share. But in fact, that cost you about 300 new-to-brand scripts on average a week during April and May. What was encouraging to see is that, that delta in the month of June once states reopened, actually was cut in half, more than cut in half. So, we started seeing patients coming back in the office. So, we really view the decline as more of a patient into offices. A lot of the pain management physicians want and mid-levels want to actually see a patient face-to-face before they make a change in therapy. We saw -- based on the data that we have missed across all specialties, there was about a 30% to 40% reduction throughout Q2 in office visits. That was supplemented by about 10% telemedicine. However, obviously that doesn't cover that delta completely. So, we believe that the drop that we saw was really just patients not going into the office to be transitioned over to long-acting opiods. We don't have -- obviously, it's new data. I don't think we have enough data yet to make a determination if they're just staying on short-acting longer. I think that's a good assumption in that they're just not moving, not able to go into an office and have a change made. I imagine they're probably just playing around with different dosages, moving patients, dosages, titrating, whatever they need to do in short-acting. So -- and as a reminder, we don't see a lot of in the class whether it's to BELBUCA or from BELBUCA to other long-acting. There's really not much movement. It is really about the short-acting patients being transitioned to long-acting where the primary growth is. So hopefully I answered your question.

[Jeff Bailey:]

Brandon, if I could just add to Scott, did a little good job covering some things there. And also, I think another thing that we really important during the pandemic is that we control a fair amount of some things. We cannot control -- and the patients, their frequency going to their doctors and get in the office quite down. So I'll highlight it was give a trend to go back in the office, but I think really important to note is that we're finding that the hyperactivity by our sales team or there's the combination of face-to-face also their virtual interactions with customers is correlating to total prescriptions and activity and results there. So, I think it's -- with all the noise is out there, we're really paying close attention to data. And I already mentioned, we're very focused on a weekly COVID-19 world and just because we have a weekly venue and a dashboard, where we really look very closely all the data. And we'll see that correlation which we see is really important for us. There is correlation between activity of hybrid, first hybrid when it comes to virtual and also face-to-face interaction by our team. And that means that like, with the BELBUCA this promotionally sensitive that do seeing something. So you always want to feel like you're controlled some things going around you. And while we can't control the patients get back to the office, the NBRx that Scott was referencing, I think that I see takeaway key learning that we are seeing so far in the new environment. So, Brandon, we did answer your question, okay?

[Brandon Folkes:]

You did comprehensively. Thank you very much for that. And one follow-up if I may Jeff and I think I heard business development a few times mentioned today. So, could you just talk about business development priorities and what type of exits you may look at? And how do you see the opportunity set within the current environment? Thank you.

[Jeff Bailey:]

Yes. So, a few things, I mean, just stepping back and looking at, much of my experience has been in the space of business development and really building larger product lines for companies. So, I'm really focused right now, working with the senior management team in that area. And if you take a look at, first of all, we're starting off with a very strong commercial infrastructure. Of course, we always want to make sure we leverage that with our business development activity, and there are a number of attractive assets that are out there, that you have to look at. And that I've given before, but just as examples, because it's certainly not limited to, but neurology, the CNS areas that could be complementary to our focus. And also we're a company that makes and [Indiscernible] we have history with BELBUCA and also the Symproic taking assets, launching them, and re-launching them and doing that successfully. And we've really beefed up in the area. And that is something earlier in the year we brought in and had a business development and something that is really focused on this next chapter with the Company, and there's a lot of work going on, so we'll be very thoughtful, very judicious on what we're doing and with that and really making sure we're focusing on the right things. As far as more specifics on the meeting unmet medical needs, especially commercial products, but also late-stage products as well and really making sure that we are looking at different opportunities out there that could be really in our operating model. So, you can probably tell from my comments that this is a big area of focus and we have a strong team to be able to make sure -- that's where we stand right now, Brandon okay.

[Operator:]

We will now move to our next question from Oren Livnat with H.C. Wainwright. Please go ahead. Your line is open.

[Oren Livnat:]

Thanks for the question and congrats on pretty strong execution. It's got a lot of challenges. I guess if you could just revisit the opportunities for switching, maybe even from other long-acting products. I know that's not a big part of your narrative. I think you've been very clear that IR to ER drives most of your volumes. But I get a lot of questions about all this volume out there in the market for both Oxycontin and even Butrans, which I think, combined with the generic or authorized generic is actually still larger than BELBUCA. And people asked me, why are you not capturing more share from that market, given challenges for brand of those products and stuff? Obviously you have clear differentiation and I imagine the promotion there is flagging. So, what opportunity do you have with or without COVID impacts to capture some of that massive volume sitting out there? And I do have a follow-up.

[Scott Plesha:]

Thanks. This is Scott. I'll take that question. So, first on buprenorphine side of things, we have not cannibalized much of the generic buprenorphine market. That's fact we really have expanded the marketplace. It's actually, if you think it's attribute to the molecule buprenorphine. It's really only a molecule over the last couple of years that's actually been able to grow in the environment while the other long-acting were falling off. We actually up to approximately a 45% share now of the buprenorphine market. We do believe that we can continue to expand the marketplace. Just some color as to how the category is performed during the quarter. We did see BELBUCA outperform the buprenorphine patch on either brand as well as TRxs during the quarter as well. They did not grow as much. WE actually cannibalize some of their business. And, to your point, that it hasn't been our focus. There is the product was promoted by Purdue, very wide ranging primary care. There are a lot of physicians that were basically writing or writing one script here or there. It's kind of an inch-deep mile wide. So when we look at our core group of physicians, we're performing quite well. And we have territories even with 80% to 90% shares of the marketplace within our core targets. As far as the long-acting market, when we look at all the data. And this is not just us, what we see is pretty much every brand or molecules getting patients from the short-acting. It's just the way that PCPs have learned the practice. And honestly, it's been the most effective way for us to gain business is to kind of step in catch people we think it's appropriate, also is when people -- patients are moving from a short-acting to long-acting that it's to BELBUCA. So we've really focused our efforts there. And, and honestly, it's a lot larger opportunity. I know you can look at all the businesses out there, but there are a lot of patients been on Oxy for example, that are doing quite well.

[Oren Livnat:]

Sorry to interrupt, sorry.

[Scott Plesha:]

No that's fine. Go ahead. Sorry.

[Oren Livnat:]

Well, you also highlighted some advantages. You probably had versus others see to opioids, whether the DIR or ER start early in this pandemic with regards to your advantageous scheduling being able to call in scripts, multiple prescriptions. I mean, clearly you've outperformed the market overall. But have you detected a major impact of those properties? Is that something that you are able to promote now and even going forward? I mean, obviously, a lot of fear about resurgence of disruption and you would think that if I was a doC transition, some of that. Want to get them something that. I know I could maintain. And do refills and write new prescriptions much easier if we went into a lockdown again got forbid. Is that something that you're focused on?

[Scott Plesha:]

Yes, as part of our messaging definitely, efficacy first, but some of these other attributes second. And we do feel that if those messages -- so to your point early on, we emphasize those messages. And it was about keeping patients on therapy and making sure that HCPs and patients have the resources they needed to stay on therapy. We've really focused recently on the NBRx side of things and have put some programs in place to accelerate that. And part of our messaging going forward to your point more in the markets have opened up now and states have opened up. Those messages may not resonate the same right now but we are saying in case that they do close down again, if there's an advantage.

[Operator:]

We will now move to our next question from Greg Fraser from Truist Securities. Please go ahead.

[Greg Frazier:]

Terry, you mentioned wholesaler inventory tightening, where inventories for BELBUCA stand? And what do you view as a normalized level? And can you comment on any material gross net changes during the quarter?

[Terry Coelho:]

Yes, absolutely, Greg. So, in terms of the inventory levels, what we have typically seen over, I've been with the Company the last year and a half has been anywhere in the kind of 2.3 weeks to 2.5 weeks, right in that range. So that's where we'd like it to be with kind of our growth trajectory. We saw it drop down at the end of Q2 to under two weeks to about 1.9, and a couple of the wholesalers in particular have really seemed to tighten down in general. We think it's probably maybe a bit of them managing, their own businesses across the board, but that's where we are right now. We personally, I mean, Scott and I watched this very carefully and our idea would be to me around two and a half weeks, I think at least to be able to manage the growth that you have. There were not any material movements in the gross nets overall, pretty consistent quarter-over-quarter. As I typically do see the second quarter inches up a little bit, compared to the first quarter and the third quarter well, again, as patients move into the Donut hole and the coverage step, but I wouldn't call it a material shift or may maybe a percentage.

[Greg Fraser:]

Got it. And the SG&A savings that vested in the quarter, would you say it temporary versus more permanent in nature?

[Terry Coelho:]

I'm sorry you cut out at the beginning of your question. Could you repeat beginning of it?

[Greg Fraser:]

Yes, how much of the SG&A savings in the quarter would you say are temporary versus permanent?

[Terry Coelho:]

That's a great question. I would say that, most of it is what you would call permanent in nature. We've deferred some activity. So, there are some investments or initiatives that we'd like to pursue that maybe we come back to at a later time. Some of it is, I would say is, potentially temporary. It's really G&A savings and reps and others of us are not traveling as much. So, if and when the world gets back to traveling as it did before, I think we'll see that pickup. But we did take a hard look across a number of areas to make some savings in terms of potential new hires and other activities.

[Greg Fraser:]

Got it. And then just kind of bigger question, bigger picture question on the long-acting opioid market. As you think about the size of the market and how big it needs to be and how does that get to peak and how it is shrinking for a number of years? What do you view as sort of a normalized baseline level for long-acting opioid prescribing? And when you think the market could reach that point?

[Scott Plesha:]

Hey, Greg, it's Scott for this question. So, when we're modeling kind of where the market will be. It depends on what products obviously you're throwing into the market. Ours is pretty inclusive, but we're looking at somewhere north of 875,000 closer to 900,000 TRx on a monthly basis.

[Greg Fraser:]

Got it. And as quick last one for Jeff. Are you considering dropping the interim title? Thank you.

[Jeff Bailey:]

I hope everybody can hear me, I understand my connectivity is not great. We had a power out under lastly. So hopefully I think you hear me okay. So as far as the interim time ago, as I mentioned in my remarks before, I plan to very much remain in key leadership role here at BDSI the long-term and very committed working with BDSI's innovation team, which I found just to be excellent but also with the board. And this is all about taking BDSI to the next level. It's a space in now well pharma sector I know well. And we're very much focused on continuing the strong growth and really focusing on differentiated products and all steps being gone business development. Again, as I mentioned before, it really is a key area for us as well. So when you take a look at it. Now I've done this quite a number of times. And I think the challenge right now, I've been in the interim role, and continuing forward indefinitely. There's really no plan to change that at this point. But just anything we can take away as like, as strong team. We have great products committed to making sure we take things to the next level and micro energies are focused on delivering great execution as well so, no change of status at this point.

[Operator:]

We will now move to our next question from Scott Henry from ROTH Capital. Please go ahead. Your line is open.

[Scott Henry:]

Thank you and good morning. I guess just first starting. Do you have any thoughts on revenue guidance? I know you had it out there before and then kind of pulled it back. Any -- do you want to make any comments on it at this point or would you consider it after the next quarter? Just wanted to get that out there?

[Terry Coelho:]

Hey, Scott. So, that's a good question. I think at this point in time where we have a lot of confidence in our brands. We're really pleased because this quarter has progressed and how the business continues to progress through this period of uncertainty, but we really do feel it's important to provide guidance when there is more certainty about the future. And if anything some of the recent trends with the pandemic don't give us that full set of conference. So we'd love to be able to come back and give it as soon as we feel it would be appropriate to do so.

[Scott Henry:]

Okay. Fair enough. Second question, severance $5 million seems like a large number. Any comments on why that number was of that magnitude?

[Terry Coelho:]

So, if that was the number, it's a combination of cash and stock compensation? It is associated with the contract that was the harm had in place.

[Scott Henry:]

Okay. I guess staying on the income statement, the operating expense savings significant. I know you've mentioned that for the roughly the $3.5 million. How much of that do you think was in G&A versus selling expenses?

[Terry Coelho:]

So, yes. So, I would say probably about half and half. Obviously, T&E is a component of spending both parts of the business. And as I mentioned before, with the other question that came in. We did see lower travel with both, but obviously, we have a bigger sales force than management. But they were savings across both areas. I think we typically, early in the year, you kick off some of the marketing initiatives. You tend to spend a little bit heavier in the first quarter. And so, that wouldn't have come in as much in the second quarter, and we delayed some initiatives, as I said before. So, it's probably a mixture. It's a mixture.

[Scott Henry:]

Okay. Terry, the final question for you, as I'm just getting through the income statement, you're starting to stack together a lot of positive earnings quarters. At some point the accountants will tell you to expense for taxes, whether you're paying them or not. When would you expect to start reporting on a fully tax basis?

[Terry Coelho:]

So, we have well over $250 million of notes out there. So I think you wouldn't see us having to pay taxes for federal taxes, certainly for quite some period of time for several years.

[Scott Henry:]

If I recall on the accounting side, won't you have to, one-time you booked a one-time gain for that, and then you'll report on a continuing ops basis tax. Perhaps, we can take that offline, but I believe that's the problem.

[Terry Coelho:]

Yes, we can follow up on that offline.

[Scott Henry:]

Okay. Shifting over to Scott. Scott, it sounds like in 2Q, the sales reps were running at about a 60% to 70% relative productivity rate, based on the numbers you gave. Where do you think that is in real time? I mean, obviously they're not going to be a backup to 100% yet. But, are they making gains sequentially from 2Q to Q3? I imagine they are and I'm just curious the magnitude of that.

[Scott Plesha:]

Yes. I appreciate the questions, Scott. So we were very thoughtful as part of our COVID committee in evaluating when to kind of stagger the release reopening of territories. So, it was very gradual through May and June, actually June. And then in early July was the first time we were 100% all territory is open. I guess, in my opening comments, we talked, I talked a lot about the hybrid role and Jeff mentioned as well. I think what we've done here is, we've realized we're not in this environment and forever along it last, we're probably not going to have the same number of face-to-face visits as we once had. We're really encouraged that numbers gone up each week, except the holiday week, 4th of July week, but we've seen it go up and it's not well over 50% of the face-to-face visits we had pre-COVID. While all the other systems we built, we have the ability to present to HCPs, virtually over a WebEx where we can share materials in a compliant manner. We have a dedicated email portal with information we can significant and then text messages. We've done virtual speaker programs. There are a lot of different ways we're educating. So, our process was if we are not going to get the same number of face-to-face, we need to build a platform that can pivot and it's different across each territory and each office has different protocols even then, maybe how often we can go in. So, we're encouraged by the fact as we blend together everything our sales force is doing. We actually are getting more touch points than we were previously. Now, we do believe face-to-face matters. We've seen that. Jeff touched on, we had a small expansion early in Q1, and that group actually grew at twice our national average from Q1 to Q2. So, plugging in some new individuals into territory that were a little bit under underserved. We saw a nice return. So I think going forward to be a blend we feel we have -- decide just what the reps are doing. We've also augmented with marketing programs also a lot of digital work as well, whether it's banner ads where HCPs are located. We have a Facebook page now for patient access, things like that. So, all these things kind of blend together to be able to adapt depending on what's going on in the world and in each individual territory, hope that helps.

[Operator:]

We will now move to our next question from David Amsellem from Piper Sandler. Please go ahead. Your line is open.

[Unidentified Analyst:]

Hi, everyone. This is Zack on for David. Thank you for taking my questions. Just a quick one for me on Symproic and sorry, if I missed this, but we were just hoping to get some color on what you guys kind of need to do to gain share for the product specifically to gain share on Movantik. Thank you.

[Scott Plesha:]

Hi, Zack, it's Scott. Appreciate the question. And one of the key things I believe, and we announced a couple small wins today, but since we got the product back, one of the things early on was, we had market access that was average. We did have access in certain plans, but we've done a really nice job in Q1 actually end of last year and earlier this year of adding some really large payers with CVS. We were disadvantaged within CVS and now we're basically on equal status is Movantik. And we see our market share grow literally. It's up over 40% since that change in early 2020 same with planned therapeutics, where we've basically more than doubled our business and two quarters. So, we're going to keep chipping away market access a lot of things there. I think it's a marketplace that's very sensitive to market access. And we'll also look to implement some different marketing programs here over the next quarter to as well to accelerate the growth. Again, no matter how many comments, it's meant to be a complimentary product. We believe we can continue to grow it. But we also are mindful that vehicle is first and Symproic is second where is we don't want to lose BELBUCA momentum or BELBUCA call at the expense of the Symproic call as well. So try to balance those two things, but I believe based on some of the things I mentioned earlier we'll keep moving forward and continue to take market share.

[Operator:]

And we'll now move to our next question from Tim Lugo from William Blair. Please go ahead. Your line is open.

[Tim Lugo:]

Thank you for taking the question. Can you broadly talk about price? It seems like the industry is settled into a pretty regular pricing dynamic. However, there's obviously been costly disturbances around the pandemic and certainly hearing worse results into inventory fluctuations. Just what's your current thinking on price maybe been more aggressively or maybe even just less predictable?

[Jeff Bailey:]

So it's difficult, obviously to discuss price. I think it's one where we look at it on a regular basis and what's appropriate for the market and where the broader landscape is. So really don't have any other to [technical difficulty] comment to take beyond. And Terry, if you have any additional comments that you'd like to add as well?

[Terry Coelho:]

Sorry, I was on mute. So, I think on pricing, what we've tended to look at, we feel like there's a balance that you're considering every time. And when you build, if you take a higher price increase, you run into price protection on different contracts, you run onto Medicaid impact and best price things like that. So we tend to say, let's make sure we're pricing appropriately, and basically being able to take advantage on a net basis as much as the price increases, we can. But, I think you've seen us now typically once a year doing the price increase and Scott, I think you would agree that we feel that that's appropriate.

[Scott Plesha:]

That's correct. I think, our price increase, we talked earlier this year, the 5%, we were able to realize most of that based on the contracts we have in place.

[Jeff Bailey:]

Okay. Fair enough. And maybe for Scott, obviously, an important reason for most of the class, can you talk about this kind of what is the reason looked like on the ground right now. We obviously have some weather down in Florida and obviously some compounding effect and anything more kind of sensitive during the quarters and maybe the March timeframe?

[Scott Plesha:]

You've referenced to like the different dynamics evolving during the pandemic and whether, that's what you're referencing so?

[Tim Lugo:]

Yes. Obviously, COVID has been impacted the sunbelt during this quarter and now we have some whether kind of hoping for maybe to real time comment.

[Jeff Bailey:]

Yes. So let me go first and Scott maybe jump in, but [technical difficulty] our customers input every week. And also with other companies as far as benchmarking, what's going on in different regions of the country. So, it's not one size fits all, which I think you were referencing and also how we're approaching the market in a different area [technical difficulty] something that be repetitive from what I said before. But people do make a difference and what we're finding is that no matter we're able to fix with the customer or not or finding is that virtual or face-to-face the combination between the two and the activity does make a difference. And so, that [technical difficulty] focused on making sure we understand the regional differences to your point, which is a really good point. It's one where you recognize that early on that it's not one size fits all. But it locally varies and something that we have to stay on top of it, and we'll continue to stay on top of going forward with the different dashboards we have in place. But also the regular weekly to make sure we're on top of that. Scott, anything else you want to add to that?

[Scott Plesha:]

I think it's well covered Jeff. It is variable from territory-to-territory. I think when we go back to I think we've built a platform that allows our reps the pivot based on the needs, not just territory level, but ACP level. And one of our marketing goals is to have something different venue or different touch point that we can provide almost on a monthly basis especially if it's going to happen at a distance to interact with HCPs. So, something is something different to interact with them even if it's a minor change or points to share. So, we're working closely as a complete commercial team. So make sure we have the right tools in the right hands.

[Operator:]

And we'll now take our last question from Matt Kaplan from Ladenburg Thalmann. Please go ahead. Your line is open.

[Matt Kaplan:]

Hi, guys. Good morning. Thanks for the questions and just want to follow up on the couple of the other prior questions. In terms of looks like you successfully entered into addressing the pandemic and issue that have in this location. And can you help us understand in terms of when you should expect kind of return to growth of revenues with respect to BELBUCA, and Symproic? Given sort of pandemic dynamic that we're seeing right now and what you're seeing on the ground right now.

[Scott Plesha:]

So thanks for the question, Matt. It's Scott. So, we talked a lot about the patients returning and knew the brand. And I shared earlier and it's to be more specific on the numbers. We were seeing just under 1,200 new patients a week for the full weeks in February. That fell down to about 900 in April and May. And we're encouraged that June the NBRx is there averaged 1,073 so already kind of bouncing back. And the market looks like that as well. Last data point we have one data point NBRx share of 7.8%. So it was nice bump up for us. We're not going to just rely on the market though to recover completely. We realized we need to grab more share. We were implementing, we've implemented already three different things I think will help impact NBRxs. First is a prior authorization hub. So, we want to help patients get through the prior authorization process if necessary, especially if offices are understaffed. And then, we've enhanced our co-pay card program which reduces the maximum out of pocket for patients. And we think as patients are financially stressed during this time, it may help them first off, stay on the product if they're current user. But also may make it easier for people to start. And we actually have heard many examples of that. And then we've also literally just kicked off this week, a new to grand program whereby we're reducing or eliminating financial commitment by patients, their first prescription. And this is meant to augment what we're doing. And it's not going to be for every new patient. But I do think, obviously it has to be commercially only and compliant. But I do think literally, what we've demonstrated with the levels we're at, we still had growth. If we want to accelerate that growth, we need to raise the NBRxs in the coming quarters. We believe we have the plan in place to do that.

[Matt Kaplan:]

Okay, thanks, Scott. That's helpful. And then a question for Jack in terms of you mentioned that you use PD element of the business. Can you maybe detail for some of your PD goals for the remainder of 2020 and looking into the first half of 2021?

[Terry Coelho:]

Jeff?

[Scott Plesha:]

Jeff may have dropped.

[Terry Coelho:]

He's been having some connectivity problems. Maybe we can follow up on that in our follow up call.

[Matt Kaplan:]

That'd be great. Thanks guys. Thanks a lot Scott.

[Terry Coelho:]

Yep, thanks man. I appreciate it.

[Operator:]

Thank you. That will conclude our Q&A and that will conclude the call. Thank you for your participation. You may now disconnect.