BioDelivery Sciences International, Inc.
Q3 2015 Earnings Call Transcript

Published: 9 Nov 2015

[Operator:]

Operator Good day and welcome to the BioDelivery Sciences’ Third Quarter 2015 Earnings Call. As a reminder, today’s conference is being recorded. At this time, I would like to turn the conference over to Al Medwar, At BioDelivery Science. Please go ahead.

[Albert J. Medwar:]

Thank you and good morning. This is Al Medwar, Vice President of Marketing and Corporate Development for BioDelivery Sciences, and welcome to the BioDelivery Science’s Third quarter 2015 earnings conference call. Leading us through the call today are Dr. Mark Sirgo, President and Chief Executive Officer; and Erney De Paolantonio, Chief Financial Officer. Andrew Finn, Executive Vice President of Product Development and Scott Plesha, Senior Vice President of Sales will join us for the question-and-answer session following the prepared remarks from Mark and Erney. I’ll now read the company's safe harbor statement. Certain statements of BDSI’s management made during today’s call or in responding to questions and any other public documents of BDSI or statements of its management may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management’s current believes and assumptions about the future but are not statements of fact and therefore involve and are subject to significant risks and uncertainties. Forward-looking statements may include without limitation statements with respect to BDSI’s plans, objectives, projections, expectations and intentions and other similar statements about the future. Forward-looking statements are typically identified by words such as projects, may, will, could, would, should, believes, expects, anticipates, estimates, intends, plans, potential or similar expressions. These statements are based upon the current beliefs and expectations of the BDSI’s management and are subject to significant risks and uncertainties, including those detailed in today’s conference call as well as BDSIs filings with the Securities and Exchange Commission. Please note that actual results, including without limitation results for the commercial launch of BUNAVAIL and the clinical trials for an FDA review of BDSI’s products and development may differ significantly from those set forth in the forward-looking statements. The risks and uncertainties relating to forward looking statements are also subject to change based on various factors, many of which are beyond BDSI’s control. BDSI undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise except as required by applicable law. You are advised to review BDSI’s SEC filings for Risk Factors that could impact BDSI’s ability to achieve these goals described in the forward-looking statements. And with that, I will turn the call over to Mark Sirgo. Mark?

[Mark A. Sirgo:]

Thank you, Al, good morning everyone, and thank you for joining BDSI’s third quarter 2015 financial results conference call. The month of October has been a particularly exciting one for BDSI with BUNAVAIL prescription showing significant growth and the announcement of our third drug approval, when NDA approved BELBUCA, October 23. Together with these events along with the continued progression of our product pipeline are generating strong momentum behind our business and we remain highly confident in our long-term prospects and believe we are well positioned to execute on our R&D and commercial opportunities that lie ahead. On today’s call, I will review our recent achievement over the past quarter and reiterate our upcoming plans and milestones for the remainder of 2015 and into next year. Let’s start with BUNAVAIL and begin by providing you with an update on the status of the opioid-dependence market in general and then our ongoing launch effort of BUNAVAIL in particular. Importantly, there have been a number of significant regulatory related advancements in the market that should help drive further market expansion and access to BUNAVAIL. Most significantly was the U.S. Department of Health and Human Services, or HHS announcement in September of several important new steps to increase to access to treatment for opioid-dependence and prevention of opioid overdose. A component of their plan changes includes they move to expand access to medication assisted treatment by revising the regulation that limit the number of patients, certified physicians can actually treat at one-time. This has been prompted by a recent report from HHS that indicated that 2.5 million people in the U.S. currently need treatment for opioid-dependence. However, fewer than 1 million are receiving it. Under current regulation certified physicians can prescribe buprenorphine treatment for opioid-dependence for up to 30 patients during their first year port credit certification. Then after one year, a physician can requires authorization to prescribe the product up to a maximum of a 100 patients. As a result, access to care is limited and physicians are often forced to turn away patients seeking care. These revised regulations are an excellent step in reversing this trend by raising the patient camp and allowing more patients to enter treatment. Now the exact number of patients these changes will allow for and its implementation timing is still in question, but most people believe the change will occur in early 2016. Improving the treatment landscape for opioid addiction is also a key issue for the Obama Administration. The Administration’s commented this issue was demonstrated by president Obama’s recent announcement of a series of initiatives among the public and private sectors and at all of a government to address the opioid abuse epidemic. President’s announcement focused on nationwide efforts to generate greater public awareness and improve access to medication assisted treatment for opioid addiction as the revised HHS regulations aim to do. Included as an effort to double the number of physician certified to prescribe buprenorphine opioid dependence from 30,000 to 60,000 over the next three years. Together these efforts are likely to play an important role in improving access to buprenorphine treatment and will likely lead continued market growth. So on 2016, we can look forward to an increase in the patient cap along with more federal dollar we spent on the awareness of this major problem that we face in the United States with the opioid addition. Now looking specifically at BUNAVAIL, they were nearly 18,000 prescriptions dispensed during the third quarter of 2015. This represents a 26% increase in prescriptions over the second quarter. Also, BUNAVAIL’s prescriber base continues to increase as we added over 460 new prescribers during the third quarter bring the total nearly 2,300 physicians having prescribed BUNAVAIL. As we said before, this is out of approximately 3,800 active prescribers that we are targeting. We continue to expand the number of physicians prescribing BUNAVAIL with a focus on those with the best managed care access to BUNAVAIL, which is an initiate we implemented during the second quarter. Additionally, based on the impact we are just beginning to see from the recently secured two year contract with Tennessee Medicaid taking BUNAVAIL the only buprenorphine and naloxone treatment opioid dependence. We achieved our highest weekly sales during the last week of October with over 2,300 prescriptions to spent which is an increase of over 65% compared to weeks prior to the implementation that the Tennessee Medicaid contract. We anticipate this Tennessee factor to continue to add BUNAVAIL pro through year-end when improved an additional managed care coverage particularly on the Medicaid side along with our focused sales approach against the managed care plan, we’ll after continued growth through 2016. With that let me review with you some of the key initiatives and associated metrics that are driving the prescription growth you’re seeing with BUNAVAIL. As you may remember, during the last earnings call I discussed the areas of focus including building product awareness, improving pharmacy stocking and increasing the managed care access. I’m pleased to say we’ve made significant progress in all three of these areas beginning with product awareness, which now exceed 90% among our targeted audience. With regards to pharmacy stocking in the majority of the markets in which we have sales representatives, we no longer have product availability issue. In addition, our pharmacy locator service has been a valuable program in supporting both physicians and their patients in locating the nearest pharmacy stocking BUNAVAIL. With regarding managed care access, we continue to focus on the top 40 managed care account that drive 90% of covered commercial lives. As I said on our last call, we estimate, we have third tier access to approximately 180 million commercial lives of which 90% are unrestricted. With regards to Medicaid coverage specifically, we are now on 24 state Medicaid formulary out of the 31 targeted phase. And importantly, have at least at parity access to Suboxone in 19 of these 24 states, which represents nearly 35,000 prescriptions per month. However, the most important is in during the third quarter from a Medicaid standpoint with the two year contract we secured with Tennessee Medicaid making BUNAVAIL the only buprenorphine and naloxone treatment for opioid dependence with preferred coverage status. Be clear, this contract was driven off the differentiation in the value based off in BUNAVAIL. As I mentioned earlier, this agreement is beginning to have a meaningful impact on BUNAVAIL prescriptions and Tennessee will become an increasing important stake for BUNAVAIL going forward. Preferred coverage status for BUNAVAIL means that all patients will receive BUNAVAIL with the exception that non-preferred products can be used only following trial and failure, counter indication or intolerance to the preferred product BUNAVAIL. This is especially important in this state, because Tennessee represents one of the largest state in the country for Medicaid prescriptions of buprenorphine and naloxone products for the treatment of opioid addiction. We have shifted resources to support its limitation of this change in Tennessee and to help support healthcare providers in patients with transition to BUNAVAIL. To-date, we have realized nearly 1,000 new prescriptions per week from this plan. Importantly, we have already had over 200 new physicians prescribed BUNAVAIL in Tennessee that had never written for BUNAVAIL previously. This also provides the potential opportunity to these physicians who have prescribed BUNAVAIL for their commercial and cash paying patients based on a positive experience with BUNAVAIL. In order to further support our efforts with BUNAVAIL, we also continue to strength in our sales team. As I discussed on our last call, we hired a number of highly experienced and successful Salix Pharmaceuticals sales and managed market personnel to complement our existing team, including Scott Plesha as Senior Vice President of sales to lead our BUNAVAIL sales efforts. Scott joined BDSI two months ago and has more than 25 years of sales experience and over 18 years of sales management experience. Most recently he held a position of Senior Vice President of GI Sales and Training for Salix Pharmaceuticals for since 2002 he led Salix’s top rated GI specialist sales force. In addition, we hired Mike Bullock who led managed markets efforts with Salix for the previous 10 years, Mike started for us in June. Both of these gentlemen are having a significant impact already based on their experience and strong leadership skill. In summary, our BUNAVAIL launch is beginning to gain meaningful traction based on solid product awareness, enhanced product access through managed care coverage and on pharmacy shelves. We expect strong fourth quarter growth for BUNAVAIL and anticipate ending the year with approximately 3,000 prescriptions per week providing a solid foundation for 2016 will be the result of four factors. First driving prescription pull through with Medicaid and commercial plans behind our strengthened sales team in a clearly differentiated product. Two, securing potential additional managed care wins including access to Medicaid plans and the seven states we are still focused. Three, increased new patients entering treatment upon the increase or lifting at a patient cap. And four, working on post approval activities that further strengthen product differentiation. With that, let’s now move on to BELBUCA. On October 23, BDSI and our commercial partner Endo Pharmaceuticals received FDA approval for BELBUCA as a Schedule III opioid for use in patient with chronic pain, severe enough to require daily around the clock long-term treatment for which alternative options are inadequate, which is a same labeling as other extended relief opioid. Product label mix BELBUCA available for a wide range of patients including both of those who are naive to opioid and for those who are opioid experienced, including those suffering with severe pain, requiring up to 160 milligrams of morphine sulfate equivalent. BELBUCA has the potential to play a major role in the treatment of chronic pain for a number of important reasons, which I'll outline. First and foremost, BELBUCA is a potent analgesics that the approval of BELBUCA was supported by two very strong Phase III clinical studies where BELBUCA demonstrated consistent and statistically significantly improvement in patient reported pain relief at every week from baseline to week 12 compared to placebo. Second, the key value driver in our view, is that BELBUCA is designated a Schedule III control substance by DEA, meaning it has been defined as having lower abuse in addiction potential than Scheduled II drugs. A category that includes most opioid analgesics including oxycodone, hydrocodone, morphine and hydrocodone is Buprenorphine combination product such Vicodin. Third, besides having lower abuse and addiction potential Schedule III products are also more accessible for prescribers since they can call in the prescriptions by phone and provide resale to the patient. This is not allowed with C2 opioids. Keep in mind an important fact that when hydrocodone combination such as Vicodin were Schedule III, they generated over a 130 million prescription each year. These products have now been moved back to Schedule II leaving a significant gap in treatment options for these physicians. Fourth, BELBUCA will be available on a wide range of doses from 75 micrograms to 900 micrograms, along for flexible dosing and for physicians to individualize titration in treatment for opioid naive and opioid experience patient. And fifth, BELBUCA result in a low incidence of typical opioid like side effects such as constipation in drowsiness, which was significant problems with most opioids. Endo anticipates launching BELBUCA in early 2016 and I’m very pleased with the level of enthusiasm and commitment that Endo has consistently shown towards the launch and long-term success of BELBUCA. Endo has a long and successful commitment to pain behind current products such [21

[Ernest R. De Paolantonio:]

Thank you, Mark. I will now review our key financials for both the third quarter and nine months ended September 30, 2015. For a more thorough review of our third quarter financial results, please see our 10-Q, which we will file this morning. Just to reiterate, BUNAVAIL revenue was based on third-party pull through data that we receive on a one-month lag basis. Therefore, the third quarter results for BUNAVAIL will include the months of June, July and August. Total BUNAVAIL revenue for the third quarter increased 39% to $1.2 million over second quarter of BUNAVAIL revenue. Operating expenses for the third quarter include R&D expense of $4.5 million, a 34% reduction versus 2014 and mostly reflected completion of the BELBUCA clinical program. Selling, general and administrative expense for the third quarter were $14.7 million and represent an 8% increased over 2014, primarily related to stock-based compensation. Total operating expenses include $5 million of non-cash stock-based compensation and R&D and SG&A. Going forward, we continue to expect total cash operating expenses to be in the mid to high-teen range on a quarterly basis. Net loss for the third quarter ended September 30, 2015, excluding stock-based compensation of $5 million, which $15.4 million or $0.29 per diluted share compared to 2014 with stock option expense was $2.4 billion and yielded a loss of $22.9 million or $0.46 per diluted share. When we included stock-based compensation, net loss for the third quarter was $20.4 million or $0.39 per diluted share compared to 2014 with the loss of $25.3 million or $0.51 per diluted share. Year-to-date revenue for nine months ended September 30, 2015 was $16 million versus $36.4 million in the corresponding period of 2014. The decrease in total revenue reflects the two milestone payments totaling $20 million for the BELBUCA program received in 2014 versus the single payment of $10 million received in 2015 to the FDA acceptance for the NDA filing as well as $4.1 million of R&D reimbursement revenue received in 2014 under our licensing agreement with Endo. Year-to-date operating expenses through September increased 3% in total to $56.7 million versus $54.9 million in 2014. General and administrative cost increased $15.7 million to $41.2 million versus $25.5 million in 2014 and includes nine months of full marketing sales and other commercial activities for the launch BUNAVAIL. Concluded in the nine months year-to-date expenses for R&D and SG&A is $12.7 million of non-cash stock compensation. Net loss through September 30, 2015 was $47.8 million per $0.92 per diluted share as compared to $36.6 million or $0.77 per diluted share in the third quarter of 2014. Year-to-date 2015 net loss excluding stock based compensation of $12.7 million was $35.1 million or $0.67 per diluted share versus 2014 loss excluding $4.9 million of stock based compensation was $31.7 million $0.67 per diluted share. At September 30, 2015, we had $54.4 million in cash and cash equivalent as compared to $70.5 million as of December 31, 2014. With the recently secured $50 million BELBUCA NDA milestone from Endo and making no adjustments to the operating plan, we believe we have sufficient cash as Mark has already mentioned to approximately mid 2017. Now let me turn it back over to Mark for the Q&A session.

[Mark A. Sirgo:]

Thank you, Erney. Now I would like to turn to questions before closing remarks and I would ask the operator please open up the line for the first call. Thank you.

[Operator:]

Thank you [Operator Instructions] We will take our first question from Tim Lugo with William Blair.

[Timothy Lugo:]

Thanks for taking my question. I know Endo is leading the launch of BELBUCA, but can you describe maybe what market research may have had prior to negotiating the deal and maybe how that could be updated given the rescheduling and generic Vicodin and when do you expect the first BELBUCA royalty to really start to hit the P&L?

[Mark A. Sirgo:]

Hi Tim, how are you doing? Yes, we’re going to be relatively limited in terms of discussing anything involving in the forecast of BELBUCA and we will have to reserve that for Endo. And I think having listened to their November 5 call, they didn’t give a lot of color on that yet, but I think we are going to have to wait for their review of that in more detail going forward. Having said that, your comment about the rescheduling of Vicodin certainly point to the potential for an enhanced opportunity for more we were a few years ago. As I mentioned in my formal comments, there is definitely a gap now in that space with the movement of those parts back to schedule two. In terms of one we might first - any of the royalty revenue from BELBUCA would be in second quarter of 2016.

[Timothy Lugo:]

And maybe BUNAVAIL question, I think you came in at around $66 of script for BUNAVAIL during the quarter, is that expected to be the run rate for having through Q4 and maybe into next year or does the Tennessee contract dampen out a little bit?

[Mark A. Sirgo:]

I’ll ask Erney to cover that. It's a relatively complicated response and I’m not sure we’ve got all the details that we need for this particular question, but go ahead Erney, I’ll turn it over to you.

[Ernest R. De Paolantonio:]

Yes. And depending on the waiting of the Tennessee contract to our total sales, it could have a slight effect on the cost going forward - or on the sales rate going forward with BUNAVAIL.

[Timothy Lugo:]

Okay. Thanks and I guess one last question maybe for you Erney since you are on. At what time do you think you will be comfortable in being able to start to give guidance, I know obviously you didn’t want to during the early launch period, but now that we’re looking into Q4 in 2015, do you think you would be able to sometime give guidance for 2015?

[Mark A. Sirgo:]

Tim, its Mark. I think I’ll answer that. I don't think it will be in the first half of 2016, I think there are still a lot of dynamics in place in this market that could cause that to be changed. Should we put out any guidance at this point in time, including things like lifting up the cap for these patients, which would bring new patients into the mix and we always had better opportunity of securing prescriptions around new patients than trying to switch patients over from existing products. So I think need to wait to see if that occurs in the first quarter that would have what we think would be a significant impact on BUNAVAIL sales. In addition to that we’re still working with the couple of the Medicaid groups, I mentioned there are seven of them still outstanding depending on how we end up there that could also have an impact. So I think there is just a number of things still outstanding that we can’t clearly put a number on that precludes us from wanting to put out any guidance at this point in time. I hopefully by the second half of the year, we would be in a best position.

[Timothy Lugo:]

Thanks for taking my questions.

[Mark A. Sirgo:]

You’re welcome.

[Operator:]

And we will take our next question from Scott Henry with Roth Capital.

[Scott R. Henry:]

Thank you. Good morning and congratulations on a lot of milestones in the quarter. A couple of questions some of which follow-ups to the prior questions, but first on BELBUCA, as far as the accounting treatment. Is there a one quarter lag in that? is that where we should see royalties in second quarter?

[Mark A. Sirgo:]

No, it’s from the launch, we have to wait a quarter for them to record their sales and report the royalty.

[Scott R. Henry:]

So will it be real time other than that?

[Mark A. Sirgo:]

It will be on a one quarter lag basis.

[Scott R. Henry:]

Okay. So in a one quarter lag, perfect. And then I’m not sure is this the exact question. Your response on BUNAVAIL, but you remodeled it, we try to gauge the revenue per prescription and I guess there is a couple of factors here expanding a launch would tend to make that go up Tennessee Medicare. I assume there is some discounting involved there. So I’m trying to get an idea of the revenue per script, with those factors coming together should we expect that to be increasing, flat or decreasing going forward?

[Ernest R. De Paolantonio:]

Yes. Scott, in the overall gross to net rate, we’re looking for improvements to come from that and there is things that are going to be happening going forward. And I think with things like phasing out certain programs that we had in place such as the 14-day pretty good in the BUNAVAIL savings program in December and that program has been an existence since the BUNAVAIL launch. And in addition to that in covering the question you just had, it’s going to be the evolution of payer mix between the commercial cash and government business. So I think we’re going to have to see how that goes in the next quarter or so.

[Scott R. Henry:]

That color is helpful. And then the final question, I may have missed a little bit of this in the prepared remarks, but for Clonidine Gel, I thought I heard the next trial start by late 2015 date in first half 2017, $5 million to $6 million. Was there any color given on what you would have to do after that trial? Would there be a confirmatory trial and then filing, just trying to get a sense of the timeline of that program?

[Mark A. Sirgo:]

Yes, Scott its Mark, I'll ask Drew to the response to your question.

[Andrew L. Finn:]

Scott, if trial is positive, we think we have an opportunity for an application in Europe with one trial, but for the U.S. we will definitely need a second positive placebo control study. Those issues would be sorted out for Europe in the first half of 2017 and then depending upon the outcome of the study with the FDA the following year.

[Scott R. Henry:]

Perfect. Thank you for the color. Well that will do it for me. Congratulations again.

[Mark A. Sirgo:]

Thank you.

[Operator:]

And we will take our next question from Jim Molloy with Laidlaw.

[James J. Molloy:]

Hey, thanks for taking my question guys. The TennCare formulary when certainly helped the BUNAVAIL scripts in the quarter. Any thoughts on timing of - I know you mentioned some additional - you are waiting on some additional potential wins along those lines. Any thoughts and when the timing those might occur?

[Mark A. Sirgo:]

It’s potentially a couple of states we’re currently negotiating it could occur before the end of this year, otherwise first quarter of 2016 Jim.

[James J. Molloy:]

Excellent, thank you. And you had mentioned as well the HHS potentially raising a limit. I imagine you guys have - here to the ground sort of things - any idea what the number that might go to or why do you think of the early 2016, is there any informal communications you guys can relate to?

[Mark A. Sirgo:]

Well, we’re in pretty close contact with some of our own thought leaders that have been peripherally involved with that process with HHS and that’s really where we give our guidance coming from. So they have indicated in the past, they may lift the cap somewhere around 200 to 250 patients, a little more than doubling of the current allowance. And also for new physician who just get certified lifting that cap as well. So we've heard maybe from 30 patients to 100 patients. Obviously any of those changes would be significant for the number of patients that we know are currently on waiting list to receive treatment and certainly beneficial to any product that participates in the space such as BUNAVAIL. And the timing of that…

[James J. Molloy:]

Well the hurdles - sorry…

[Mark A. Sirgo:]

Well, I was just going to say the timing around is good actually occur before the end of the year although most people think it will be first quarter next year.

[James J. Molloy:]

Got it. Thank you. I know that one of the challenges to launch to-date has been sort of limited number of patients that are sort of up [indiscernible] 15% to 20% of the 100 patients that are perhaps not doing well in Suboxone and here this could be a doubling of sort of the de novo. How is BUNAVAIL doing on when competing, obviously there are other [indiscernible] there are other options for these patients who aren’t being well treated on Suboxone. Can you talk a little bit about how BUNAVAIL is doing for these to de novo patients, is BUNAVAIL winning most of those?

[Ernest R. De Paolantonio:]

Its good question, Jim. It's a tough one to measure, but I think we’ll have an opportunity in the state of Tennessee where the majority of these patients who are on Suboxone are now being switched over to BUNAVAIL. And I mean based on the information we’ve heard over the first few weeks, it’s been a positive transition, but it’s still early, but it does gives us a chance to measure it more quantitatively in that state specifically.

[James J. Molloy:]

And last question, on the call last week, Endo talked quite a bit about BELBUCA, their pipeline is a little bare, so it certainly a nice product for them. And they also mentioned once they delever about making additional acquisition and it’s hard to talk about whether you make it acquired or not, something certainly seems to make some sense of that even some of that you would have a sense on or could talk to about acquisition by Endo of BDSI?

[Mark A. Sirgo:]

Yes, Jim our focus is creating value for our shareholders and that's where our heads are and we do that by hopefully strengthening behind this BUNAVAIL launch going into 2016 and progressing our pipeline and as I mentioned also looking for other opportunities to strengthen the current product mix through potential in licensing. So our goal has always been to build a fully integrated business here and if we become attractive to other parties going forward that will be a decision left up to our board and ultimately shareholders to expect an offer comes forward regardless of who it might be from. So that's kind of how we look at the world.

[James J. Molloy:]

Great. Thank you for taking the questions.

[Operator:]

And we will take our next question from Matt Kaplan with Ladenburg Thalmann. And caller your line is open, if you could please check your mute button or if you are on speaker please pick up the handset.

[Unidentified Analyst:]

Hi good morning this is [indiscernible] for Matt Kaplan. So just a quick question about BUNAVAIL, I just wonder the growth being in the third quarter, how much of that is from the Tennessee agreement?

[Mark A. Sirgo:]

None of it. Yes that agreement began October 1. So although physicians in that state were notified in September 1 of that transition, we don't think very much of the prescriptions in third quarter we’re related to that.

[Unidentified Analyst:]

Okay. Great and so then given this deal, can you provide any guidance in terms of the growth in the fourth quarter and also you mentioned, there is a couple other states in negotiation this quarter and potentially get the results in next quarter, in the first quarter 2016. Just any sort of color on how many states do you expect maybe as similar deal with Tennessee, in this quarter or next early 2016?

[Mark A. Sirgo:]

Yes, so what we indicated by the end of this year based on the TennCare care arrangement, we would expect to be at approximately 3000 prescriptions per week. Last week’s number was about 2400. In addition, your question regarding the Medicaid dates that we’re still focused on there are seven remaining. So we targeted 31 and so far we've secured 24 of those states, 19 in a preferred position, four of those in non-preferred and one Tennessee which we have an exclusive preferred arrangement. So seven additional states that we're focused on that we should know the outcomes of between now and the end of first quarter of next year.

[Unidentified Analyst:]

Okay. Great thank you. Maybe another quick question about the [indiscernible] product just trying to get a better understanding of the market position, if it’s getting to the market, what kind to patient population or what kind of [indiscernible] from your certain product portfolio for other competitive product in the market?

[Mark A. Sirgo:]

Yes, so in terms of the indication for the opioid dependence population, two key factors, or two key problems with the current medication that these patients are prescribed is the diversion of these products for [indiscernible] purposes as well as compliant. So those two major complications are hopefully resolved with the 30-day depot product and that really is what drives the commercial potential for that particular product. On the pain side, you could argue that those two factors are also in play in addition to the fact that there really is no depot product, a pain relief product available by injection for treating chronic pain. So there is significant commercial value and a lot of interest from the prescribers that are focused in these two different conditions.

[Unidentified Analyst:]

Okay. Thank you very much.

[Mark A. Sirgo:]

You’re welcome.

[Operator:]

And we will take our next question from Chiara Russo with Cantor Fitzgerald.

[Chiara Russo:]

Hey guys, thanks for taking my questions. I think my first question, I was just wondering if you could give us a little color on sort of new scripts versus total scripts sort of once you get this patient on drug for BUNAVAIL how sticky are there?

[Albert J. Medwar:]

Chiara this is Al. How are you?

[Chiara Russo:]

Good. Thanks.

[Albert J. Medwar:]

So regarding the scripts, I mean we typically pay most of our attention to total prescription, just because in this category generally what you find happen is the physician won’t give a patient any refills on their prescription. So that each time the patient comes in, it gets recorded often as a new prescription. So new scripts and total scripts tend to be fairly close. So from a percentage wise new [indiscernible] is about 75% of total BUNAVAIL, but it is a little bit in misleading since a lot of script even doses that are being refilled by a patient will show-up in the data as a new prescription.

[Chiara Russo:]

Okay, okay. So once you have that patient on drug. Are they fairly sticky, is that sort of what the feedback has been from the marketplace?

[Albert J. Medwar:]

Generally, yes. At this point in time, it’s hard for us to know longevity wise how a patient on BUNAVAIL stays on therapy. In general in this category patients do tends to discontinue a little bit on the early side, but there is no indication that BUNAVAIL would be any different than the other buprenorphine products in the market.

[Chiara Russo:]

Okay, okay, great. Thank you, that was good. And I know that you said Tennessee did not count in its quarter’s earnings, was Massachusetts in this quarter’s earnings or are we going to have to wait for next quarter to see that come in as well?

[Mark A. Sirgo:]

Hi, this is Mark. No, Massachusetts has been in the numbers.

[Chiara Russo:]

Alright. What percentage had Massachusetts been prescribed? If you can tell us that.

[Albert J. Medwar:]

I’m not sure, we have the number write-off pen, but keep in mind from Massachusetts the agreement is different, Tennessee is a preferred exclusive where as Massachusetts were on a more of parity standpoint. It just happens that Massachusetts is a fairly large-state with regards to the number of patients, who are Medicaid and receive buprenorphine product.

[Mark A. Sirgo:]

Yes, I would add, I know that it grew by over 40% in the quarter Chiara, but I don’t know what percentage that made up of the total.

[Chiara Russo:]

Okay, okay.

[Mark A. Sirgo:]

So we’re still growing, it’s still state where we are putting a lot of resources again.

[Albert J. Medwar:]

Right, you just won’t see the same sort of trajectory it might have been in kind of see where they all come in over several weeks, here it’s going to come in overtime.

[Chiara Russo:]

Right, right. I mean Tennessee is going to be a little bit more of a outlier than sort of the rest of the market that you are playing in. so trying to get an idea there. And I think my last question and this may be a little bit out of your preview, because its BELBUCA. Is there a particular patient profile that you think is more niche for BELBUCA, obviously buckle patch versus pill, I think you make arguments that BELBUCA can sort of fit with more specific patient populations and I was wondering if you have any color on sort of that?

[Albert J. Medwar:]

Sure. And this is Al. I’ll give you a little insight, but that again is probably question that’s more geared towards Endo, as they prepare for launch. The feedback that we heard from very early on is that BELBUCA is a great option for patient who maybe on non- opioid and that who need to kind of move up to the next step; either because of meeting greater analgesia or they are not tolerating their in-sets that BELBUCA fit well there, which would be kind of in place what normally might be a short acting opioid. Also you have a lot of patients who stay on short acting opoids for a period of time and then will move to along acting opioid. And that’s another great place where it’s making BELBUCA the first choice before having to go to any of the other long acting schedule to products.

[Chiara Russo:]

Okay, but you don’t see this as being like hospital based versus more community based?

[Albert J. Medwar:]

No. I mean, I really think that this is going to be a retail type product.

[Mark A. Sirgo:]

Strong retail product, maybe, this is Mark. Maybe I can address, I think where you were going with the dosage form itself. I know I can speak [indiscernible] when we don’t see the marketplace being limited because of the dosage for not being a swallow tablet. We can speak the ONSOLIS product, BUNAVAIL product. This dosage from although it takes a little bit of training on the front end in area of placebo is always supplied to these offices that allow the physician nurse, other office personal to make sure the patient has used few of the placebos in the office before they send them home with a prescription, but it's relatively easy to use and I don't think that’s ever been a drawback to writing.

[Chiara Russo:]

Okay. All right great. Thank you so much guys. Thank you for taking the question.

[Mark A. Sirgo:]

You are welcome.

[Operator:]

And this does conclude today’s question-and-answer session. I would like to turn the call back to our moderators for closing remarks.

[Mark A. Sirgo:]

Yes. This is Mark again. I hope we’ve been able to point out that going into fourth quarter and certainly into 2016 our business had significant momentum driven by continued BUNAVAIL prescription growth, our anticipation of a strong BELBUCA, launch as well as solid progression of our pipeline. So let me close by again thanking everybody for your participation on our third quarter earnings call and we look forward to keeping you updated on our call over the next year. Thanks again.

[Operator:]

And this does conclude today’s conference call. Thank you again for your participation and have a wonderful day.