OptiNose, Inc.
Q2 2021 Earnings Call Transcript

Published: 11 Aug 2021

[Operator:]

Good morning, ladies and gentlemen, and welcome to the OptiNose Second Quarter 2021 Earnings Conference Call. . I would now like to turn the conference over to your host, Mr. Jonathan Neely, Vice President of Investor Relations. Please go ahead.

[Jonathan Neely:]

Good morning, and thank you for joining us today as we review OptiNose's second quarter 2021 performance, and our plans for the remainder of the year. I'm joined today by our CEO, Peter Miller; President and Chief Operating Officer, Ramy Mahmoud; our Chief Commercial Officer, Vic Clavelli; and our CFO, Keith Goldan. The slides that will be presented on this call can be viewed on our website optinose.com in the Investors Section. Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements. All statements that are not historical facts are hereby identified as forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated by such statements. Additional information regarding these factors and forward-looking statements is discussed under the cautionary note on forward-looking statements section of the earnings release that we issued today, as well as under the Risk Factors section and elsewhere in OptiNose's most recent Form 10-K and Form 10-Q that are filed with the SEC and available at their website, sec.gov, and on our website at optinose.com. You are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements during this conference call speak only as of the original date of this call or any earlier date indicated in such statement, and we undertake no obligation to update or revise any of these statements. We will now make prepared remarks, and then we will move to a question-and-answer session. With that, I will now turn the call over to Peter Miller. Peter?

[Peter Miller:]

Thanks very much, Jonathan, and good morning everybody. We appreciate you joining us this morning. This clearly is an exciting time for our company and we believe that we made strong progress in the first half of 2021 towards our 2 core objectives, driving XHANCE revenue growth, and successfully completing our chronic sinusitis pivotal trials that have potential to unlock significant new value. Starting on Slide 3. I'd like to begin by highlighting 4 key takeaways from today's presentation. First, our Q2 2021 financial performance was aligned with our full-year guidance. Second, we believe there are multiple opportunities that will continue to support revenue growth in 2021. We're very excited about the emergence of a step-wise care paradigm for the treatment of chronic rhinosinusitis with nasal polyps, much as the medical community is adopted in other disease areas such as asthma, hypertension and pain. This paradigm was the subject of an algorithm published in June in the International Forum of Allergy and Rhinology, offered by leading independent experts from both the ENT and allergy thought leader communities, that highlighted the role of XHANCE in a step-wise care. Importantly, this expert group recommend that XHANCE be considered in 2 situations. One, when traditional nasal sprays have been tried and found to be inadequate, before a patient progresses to a higher tier care, such as surgery or biologics. And 2, when symptoms recur after surgery. As awareness of the step-wise care paradigm continues to grow, we believe it could be very beneficial for the continued adoption of XHANCE by physicians. Another factor that we believe could support revenue growth in the remainder of 2021 is improvement in patient flow and physician access. Although market conditions have improved during the last several months, we've not yet seen a complete return of the number of diagnostic visits by patients to ENT and allergy offices. Additionally, our sales representatives access to those physician offices, also remains below pre-pandemic norms. Although the future pandemic environment is not entirely clear, we believe our specialty physician environment will remain relatively stable and potentially improve in the last months of the year with respect to both patient volumes into offices, and in our representative's access to those offices. Given the historical high promotional response we have seen with XHANCE, we believe this could be beneficial in driving growth. In addition, we continue to see potential to get more benefit from our partnership with Kaleo, as the pandemic environment potentially improves access for their representatives as well. Finally, we believe there is potential for improvement in the average number of prescriptions filled per patient per year as a result of the changes we made to our co-pay assistance program. Third, we completed enrollment in our first pivotal clinical trial evaluating XHANCE for the treatment of patients with chronic sinusitis in July, and remain firmly on track to have top line results from this trial in first quarter of 2022. We are now focusing all of our recruitment efforts on the second pivotal trial, which we expect to complete enrollment by year-end, and have topline results in the second quarter of 2022. And fourth, we are very enthusiastic about the opportunities for growth that successful chronic sinusitis trials would create. XHANCE could be the first drug ever to be approved by the FDA for the treatment of chronic sinusitis. We believe these trials could not only be a breakthrough for the approximately 30 million patients in the U.S. who suffer from chronic sinusitis, but also a game changer for our business. Chronic sinusitis data could create a multi-fold expansion of the target population, could further increase product differentiation in our current physician audience, could be a strong basis for engaging a partner to help reach a substantially expanded physician audience in primary care, can improve ex-U.S. opportunities, and therefore significantly drive additional value for the company. Turning to Slide 4. We had strong performance in second quarter 2021 and I will briefly touch on the year-over-year growth highlights on this slide in the next. In second quarter 2021, there were approximately 29,000 new prescriptions for XHANCE, a 55% increase compared to second quarter 2020 and the highest number of new quarterly prescriptions for XHANCE since launch. While the market increased 19% over the same period, the second quarter 2020 was the peak of pandemic related restrictions, we're pleased with the disproportionately high increase in new prescriptions for XHANCE. What's important here though, is that in addition to increase in the number of new prescriptions, we've also improved the quality of our new prescriptions due to changes in our co-pay assistance program. This has increased the proportion of covered patients filling first prescriptions, which we expect to drive higher refill rates and improve average revenue per prescription. The total number of XHANCE prescriptions in the second quarter of 2021 was approximately 82,900. This represents 33% growth over the second quarter of 2020 in the market environment, which increased 5% over the same period. Turning to Slide 5. XHANCE market share increased from 4.4% in second quarter of 2020 to 5.4% in second quarter of 2021. As market volumes potentially returned towards the pre-COVID baseline in the later part of the year, we're focused on holding on to or adding to the gains we made in market share. Breadth and depth of physician prescribing is measured by the total number of physicians who have patients filling XHANCE prescriptions increased from second quarter 2020 to second quarter 2021 as well. Regarding breadth, in second quarter 2021, approximately 7,200 physicians had a patient fill at least one prescription of XHANCE, an increase of 16%, compared to second quarter 2020. Regarding depth, the number of physicians who have more than 15 XHANCE prescriptions filled by patients in the quarter has grown even faster with that number increasing by 38% from second quarter 2020 to second quarter 2021 with more than 1400 physicians now in this segment. In a few moments, I'll provide some closing remarks, but I'll first turn the call over to our CFO, Keith Goldan, for comments regarding second quarter 2021, and perspectives regarding our corporate guidance.

[Keith Goldan:]

Thanks, Peter, and thanks to everybody for joining us today. Turning to Slide 7. As we reported OptiNose recognized $18.4 million of XHANCE net revenue, an increase of 79% compared to the second quarter of 2020. Based on available prescription data purchased from third parties and also on data we received directly from our preferred pharmacy network, XHANCE average net revenue per prescription for the second quarter of 2021 was $221, an increase of 35%, compared to $164 in the second quarter of 2020. The year-over-year increase in revenue per prescription is driven by the absence of the one-time assist program that was available to patients in the second quarter of 2020 combined with changes earlier this year to our co-pay assistance program. These changes were intended to increase revenue per prescription by reducing the rate of growth in prescription fills by commercially insured patients and plans that do not cover XHANCE, while sustaining growth in covered plans. Data suggests the changes had the targeted effect and we expect continued beneficial effect on revenue per prescription going forward. Moving to Slide 8. Our guidance for full year and the remainder of 2021 is unchanged with the notable exception of revenue per prescription we have increased our expectation. First, in light of growth prospects for both prescriptions and revenue per prescription, we continue to expect XHANCE net revenue will exceed $80 million for full year 2021. Prescription volume factors supporting this could include the place of XHANCE and stepped-care, being embraced by more physicians in our target audience, potential improvement in the average number of prescriptions filled per patient per year that result from the changes we made to our co-pay assistance program, the changes we made drive a greater proportion of prescriptions coming from patients with insurance that cover XHANCE. As I said earlier, our data and these patients fill are greater number of prescriptions per year. Improvements in patients visiting physician's offices and our territory managers' ability to visit those offices, as well as the Kaleo co-promotion. Second, with respect to XHANCE net revenue per prescription, we expect to see improvement over the remaining 2 quarters of 2021 relative to the first half. And for the full year 2021, we now expect XHANCE net revenue per prescription to exceed $200. Previously, we expected full year 2021 to exceed $185. And finally, for the full year of 2021 we continue to expect operating expenses to be in the range of $137 million to $142 million, of which approximately $10 million is expected to be stock-based compensation. Total operating expenses, excluding stock-based compensation is therefore expected to be in the range from $127 million to $132 million. I'll now turn the call over to Ramy to discuss our development programs.

[Ramy Mahmoud:]

Great, thank you, Keith. Turning to Slide 10. I'd like to briefly remind you here of the basic design of our chronic sinusitis trial. The 2 pivotal trials are similar 6-month studies evaluating both of the FDA-approved doses of XHANCE in a population with chronic sinusitis. Turning to Slide 11, regarding the 2 pivotal trials, which comprise our chronic sinusitis registration program, as discussed earlier, we recently completed enrollment for the first trial, study 3205. That puts us firmly on track to have top-line results in the first quarter of 2022. All of our recruiting efforts are now focused on the second trial, study 3206. We expect to complete enrollment for study 3206 in the fourth quarter and to have top-line results in the second quarter of 2022. We previously reported having performed a planned, blinded interim analysis to compare the observed variance in the first of the 2 hierarchical co-primary endpoints in study 3205 to the variance that we had assumed during initial trial design. In June, we completed a second similar planned blinded interim analysis to assess the variance in the second of the 2 hierarchical co-primary endpoints in study 3205, the average opacified percentage of -- the average percentage of opacified volume, which is the CT scan endpoint. We assessed the variance in the change scores from baseline to week 24. Like the first interim analysis, this analysis was intended to assess whether the variance assumptions in our priori sample size calculations were consistent with the actual variance being observed in the trial. The second analysis was performed on data from approximately one-third of all patients projected to complete the study. The result was at the observed variance was lower than the variance that had been assumed for the purposes of sample size estimation during the initial study design. Given this result and the similar results previously reported for the first hierarchical co-primary endpoint, we reduced the sample size in the study from 378 to approximately 330 patients in trial 3205, while maintaining our originally targeted statistical power for the final analysis. We have planned to allow a similar blinded interim analysis for trial 3206 when sufficient data, including a 6-month follow-up CT scan data becomes available. Moving to Slide 12, regarding OPN-019 our product candidate with potential utility for treatment or prevention of COVID-19 and for preparedness against future pandemics. In early July, we received approval from regulatory authorities in Mexico to proceed with conduct of a randomized, adaptive proof-of-concept single-dose study to evaluate change in viral load after use of OPN-019 by adults with COVID-19. Final approval from the regulatory authority took longer than anticipated at the time of our last earnings call, but study drug was made available in Mexico, and the study is now open for enrollment. Given the design of the study and the endpoints to be evaluated, we expect to have initial results very shortly after each cohort completes enrollment. Recent news concerning COVID variants and breakthrough infection in vaccinated people, leads us to believe that there may be a useful role for a product like OPN-019 to address the evolving pandemic even in the context of widespread vaccine availability. As previously noted, despite the excitement that we and others have for the potential value of OPN-019, we are aware of the need to maintain sharp organizational focus on growing XHANCE and on completing our chronic sinusitis trials. Therefore, when data from our pilot study becomes available, we anticipate seeking grants, partnerships and/or other sources of capital to support further development of OPN-019. Before I turn the call back to Peter for closing remarks, I'd like to take a few minutes to put a brief spotlight on the significant opportunity that we believe will be created if we are successful in developing XHANCE as the first FDA-approved drug treatment for chronic sinusitis. So turning to Slide 14. We believe successful chronic sinusitis development plus engagement with a primary care partner, could enable promotion of XHANCE to up to 30 million patients who have either nasal polyps or chronic sinusitis. Our chronic sinusitis program is important because although we are driving strong growth with XHANCE's first indication in our called on specialty physician audience, there is greatly expanded potential ahead of us if our CS trials demonstrate efficacy. Today, XHANCE promotion is aimed at a patient population of approximately 1 million who suffer from nasal polyps and are actively treated in the specialty setting. We are driving strong growth in that context, as evidenced by our expectation for at least $80 million of XHANCE net revenue this year, which equates to more than 65% growth compared to full year 2020. However, a chronic sinusitis indication would triple the size of the patient population for which we promote XHANCE within our specialty audience, an audience where we continue to grow physician preference share to approximately 3 million patients. Even more potential lies in the fact that chronic sinusitis paves the way for a primary care partnership because the primary care setting is where chronic sinusitis patients seek treatment first and most often. A primary care partnership would enable active promotion aimed at a total population of 10 million patients who are actively seeking treatment, 10 times the patient audience we target today in the specialty setting. In addition, we believe that up to 20 million more patients suffer from the symptoms of chronic sinusitis without regularly seeking treatment from a physician today, possibly because they do not want surgery or do not feel there's anything new that their physician can offer them that they cannot buy on their own. This large incremental pool of patients has potential to be activated by a primary care partner, for example, by direct-to-consumer promotion. This results in a total patient population of up to 30 million for whom XHANCE may be a suitable treatment option. And that's an enormous increase compared to the approximately 1 million patients who have nasal polyps and are treated by the specialty physicians that are the current focus of our promotional sales efforts. As a result, we believe there's opportunity for significant value creation through a primary care partnership. I'll now turn the call back over to Peter for closing remarks. Peter?

[Peter Miller:]

Thanks very much, Ramy. Before moving to Q&A, I'll take a moment to reiterate that we're pleased with the momentum we have built in second quarter 2021 and are laser-focused on continuing to grow XHANCE and completing our chronic sinusitis trials. Thank you. And now we'll open the call up for Q&A.

[Operator:]

. Your first question comes from the line of Gary Nachman with BMO Capital Markets.

[Unidentified Analyst:]

This is in for Gary Nachman. My first question is, have you seen a dramatic change in the number of patients in 2Q for key prescribers of XHANCE? How much more room for recovery is there and how do you expect patient volumes to trend in the back half of the year?

[Peter Miller:]

I think the best place to look at to answer that question -- this is Peter, is in the new growth in the new prescription category in the second quarter versus last year and versus the prior period. And what we've seen tracking sort of new prescriptions, which really is the best indicator of sort of how patient flows are going into offices and this is for the category, not just XHANCE. We have a very significant decline in the second quarter of last year. And since then, you've seen a category that has recovered on new prescriptions. But frankly, it didn't quite reach the levels of 2019, sort of a non-pandemic year, if you will. So, while there certainly has been recovery and anecdotal comments from physician offices suggested, patients really have returned. There certainly is an opportunity for continued growth in patients returning. By the way, anecdotally we do hear that a masking and other things did sort of limit the number of patients who had exacerbations -- chronic rhinosinusitis patients who had exacerbations, which potentially limit all audience even a little bit more during that period. But to answer your question, there certainly is room for more patient volume returning in the back half of this year, obviously there is some effects currently with the Delta variant. But, our expectation is that there certainly is more room, and minimally we believe will be at least a stabilization at the point we're out right now.

[Unidentified Analyst:]

And I have another question. And in terms of -- could you provide some more color around the treatment algorithm for XHANCE recommended by experts? Have you seen any initial impact on Kaleo committee in terms of prescribing a behavior, and how does that fit into your marketing strategy going forward?

[Peter Miller:]

Ramy, why don't you start, and then I'll follow-up with some thoughts.

[Ramy Mahmoud:]

The algorithm -- as we highlighted earlier, the algorithm identifies XHANCE as a treatment consideration at 2 key points. After you've tried sort of a standard inhaled nasal steroid, I'd like to take over counter and before you escalate care to a high tier like surgery or an injected biologic. And then again at our second point in the algorithm, if symptoms are recurrent after surgery, our anecdotal feedback from a variety of thought leaders in the area is that there is a pretty widespread concurrence with the positioning of XHANCE in both of those places, and we do of course see the product using both of those places, and we hope to see adoption increased in both places as the algorithm becomes more widely disseminated.

[Peter Miller:]

Yes, the point I'll make in terms of adoption in the market is that we really just started promoting the algorithm in the latter part of June. So any impact of the algorithm is really not yet seen in any material way in our volumes, if you will, we are hearing very encouraging things. And the part that's exciting to us about this is the group of physicians that have adopted the algorithm is our believer segment. So of the physicians we're targeting roughly 10,000, only about 14,100 physicians have really adopted the algorithm, which means that we believe this expert group of physicians giving this kind of recommendation if you will for -- where XHANCE fits in the treatment algorithm could be a very potentially strong way to influence the balance of people who have not yet really adopted the algorithm in their practice. So we're very excited about it. We just were at a big meeting with some ENT physicians a couple of weeks ago. There is real general enthusiasm, the algorithm is being presented in many of the presentations that were being done by people in presentations, and we look forward to -- ability to really grow the business behind this recognition.

[Operator:]

And your next question comes from Brandon Folkes with Cantor Fitzgerald.

[Brandon Folkes:]

So IQVIA data suggests that XHANCE prescriptions are coming in similar volume from allergic rhinosinusitis - chronic rhinosinusitis and nasal polyps. Given this what's the value of the CF indication for your current target.

[Keith Goldan:]

Well, Ramy Mahmoud have you start, and then I'll add some comments at the end here.

[Ramy Mahmoud:]

So the IQVIA data on prescribing by diagnosis in this specific category has limitations that really constrains its usefulness for understanding this issue may be different from other categories. Our market research and our experience in the market to-date, suggests that although a minority of our prescribers choose to use the product across indications which makes them some of our largest prescribers today, a large majority of our called-on prescribers do meaningfully limit their use to the nasal polyp indication which is part of result of our current promotional efforts, which are limited to nasal polyps. If XHANCE is approved for a much broader indication of chronic sinusitis, we anticipate expanded promotional efforts will produce substantially increased depths of prescribing in most of our current like called-on audience. Furthermore, as the first and only product for the treatment of chronic sinusitis in that scenario we believe there is potential for facilitated payer negotiations and coverage, which will also further lower perceived insurance barriers to physician adoption. So, overall we think that here is a significant volume potential associated with the new chronic sinusitis indication and physician prescribing in the specialty audience.

[Peter Miller:]

Yes, and I'll add to that. Ramy, I think covered it very well, Brandon. Thanks for the question. Is that historically we've said that outside of the believer segment that really, as I said earlier, has adopted not only the algorithm, but really is using our product in a broader group of patients in the nasal polyps patients, as evidenced by the fact they have a very high share of total intranasal prescriptions that are written, which means, in essence they have to be using it a good bit broader. But in that dabblers segment as we call it, we've historically said that insurance is one of the key factors that sort of limits on the physician writing it more broadly and to be clear, if physicians belief that our insurance is not as good as it really is. And as we say all the time, we really have good insurance coverage of not only 75% to 80% of insurance lives covered, but we really had very few limitations to indication in the coverage that we have. So, we have pretty wide and broad access, however many, many physicians believe that of plans limit our product to nasal polyps, which as I said earlier is not, that's not the actual situation, but it is a limitation. So, we believe the CS indication in essence takes that issue away, and really let's our sales reps go in aggressively and say, look, we have this indication and therefore they are not the limitations that you think are in place. And by the way, as evidenced by the fact that will grow in the believer segment, we are chipping away at these perceptions by the fact that we're growing the business, but the indication will eliminate the issue altogether. And as Ramy mentioned earlier by the way, the part that is probably the most exciting part of the indication is opening up the audience to another 50,000 physicians treating 7 million patients, significantly more patients in our current specialty audience that we think can be accomplished via primary care partnership. So we are very, very excited about the potential of the CS indication.

[Operator:]

And your next question comes from Dan Busby with RBC Capital Markets.

[Steve Daddeo:]

This is Steve on for Dan. Thanks for taking our questions here. Two from me, and I'll just ask them upfront here. The first is, I just want to hit back on the guide, based on results you get imply $50 million in the back half of the year, maybe you can talk to what gives you confidence that you're going to be able to exceed the $80 million threshold. Can you talk about if there is any seasonality you're expecting in 3Q or just some of the assumptions you have built with regard to COVID and the Delta variant? And then my second question too just with regard to sales rep access to physicians, any color on what percentage of reps are we seeing face-to-face interactions, and maybe some trends you're expecting in the back half of the year?

[Peter Miller:]

Yes, I'll start and Keith, maybe you can add some commentary as well, but there is obviously two things that drive -- that we believe are going to drive revenue growth. The first that we've commented on is we've seen a really nice increase in average net revenue per prescription. So, that was just a very sort of nice improvement that we've seen and it was not - this is something that's fundamental, because it changes that we made in our co-pay assistance program. So, we have that as a very strong tailwind, but relative to your comment on volume, we feel really good about the ability to grow volume in the back half of the year for the reasons that Keith identified in the script, I'll reiterate, number 1 is the algorithm our ability - and actually maybe back up Steve, because you asked first about the environment, and maybe I should start there. Clearly it's hard to predict what the environment is going to be like with the variants and all the rest. We think that if you look at what's happened to our access and patient flows, I covered this a little bit earlier, but there was a significant impact, obviously on both access and patient flow in the second quarter of last year, you started to see a normal -- a growth if you will, in both areas into about the October, November timeframe. And since then we've sort of been stalled, and if there is improvement but, we're not quite at the level that we were at pre-pandemic. By the way despite, it was -- despite the improvement that you saw in the spring of this year in the general environment, our specialty office environment didn't dramatically improve from the January, February, March timeframe. So, as we look forward, we don't think it's likely to get worse. The environment -- our specialty office environment relative to patient visits, as well as rep access, and we don't have a crystal ball like anybody else. But, we believe there certainly is the possibility of an improvement. And I'll answer your second question right now, but I'll go back to other growth drivers. Our target is to make 8 face-to-face calls. We found by the way the face-to-face calls really are just that much more effective than virtual calls, and virtual calls can be effective but face-to-face are more effective. We're right now at about 6. So, we are not where we want to be and that's largely, because of the environmental issues that I talked about just the moment ago. And importantly, I sort of said this in the call when we have access, we move our business, we are very responsive to promotion, when we get the right number of calls on the right number of physicians. So, we think back half will be minimally stable from a specialty audience environment potentially improvement in the latter part of the year depending on what happens with the COVID, the Delta and other variants. More important that we have other factors that are going to drive growth. Algorithm is we think potentially a game changer in the near term of our ability to get broader adoption by a bigger number of physicians. As Keith mentioned the changes in the co-pay program not only provide value and average net revenue per prescription. We're seeing a real potential nice impact on refill rate, because a higher proportion of our new patients are covered versus uncovered and we see substantially higher refills in people who are covered versus not covered. So obviously you should see a real nice impact on refill rate. We think we've not yet seen the full value we can get from the Kaleo promotions. So, you put all that together and yes, we are confident in achieving $50 million in the back half of the year.

[Operator:]

And your next question comes from Ken Cacciatore with Cowen & Company.

[Kenneth Cacciatore:]

I want to talk about the CS indication, and the partnering discussions for primary care, it really seems as if we're almost looking at two kind of distinctly different products. And what do I mean by that is, a partner is going to need to do DTC like you indicated and you're going to need to have broad access, and there is going to need to be kind of mutual, I would think coverage decision, co-pay assistance decisions, and programs that are a real intimacy, when you're dealing with such an opportunity and dealing with the partner. So, I was wondering, if you could talk about that a little bit and maybe where these negotiations stand. Would a partner not be looking to you that maybe even buyout the whole company. It's just seems like a massive opportunity. And then intimacy with that partner that would be unique and distinct than what we normally deal with, and again congratulations on all the progress and very much looking forward to the CS indication?

[Peter Miller:]

Well, Ken, thanks very much for the question. And by the way, I'm going to reiterate what is, what I, we said before, but we are really excited by this indication, because of the potential value in the specialty audience. But, I think Ramy did a good job of answering the question from Brandon, because I don't think people -- enough people are realizing that there's real value of the indication in the specialty audience. But, as you're highlighting Ken it's a real game-changer. If you think about the significant number of patients over 7 million patients currently being treated in primary care with another 20 million people, who have likely lapsed, because of inadequate good therapies. It's a big opportunity, and for that reason we're very, very excited about it. Relative to the partnering discussions because of the size of the opportunity, I'll say, Ken, we're very confident we're going to get a primary care partner. And relative to the question about the intimacy that would be needed in managing a relationship, a partner relationship. Again, we're confident that we're going to be able to manage that and candidly Ken, it's going to come down to the economics -- is the -- if we get the -- if the economics that can be expected relative to a primary care partnership there is going to be a real motivation on our part to make sure that we have a really very strong working relationship with a partner. So as I said, we're feeling great about the opportunity and very confident, we will get a primary care partner.

[Kenneth Cacciatore:]

Peter, when you're thinking about timing. Obviously, we have the date -- we need the data, but can you give us a sense of where we stand in discussions and maybe timing we should be anticipating?

[Peter Miller:]

Ken, I'm not going to comment on those discussions. I'll just say that -- I'll reiterate, we're very confident we're going to get a partner.

[Operator:]

Your next question comes from David Amsellem with Piper Sandler.

[David Amsellem:]

So in the -- how nasal polyps syndications, certainly clear that you have room for a significant further penetration there. So, just within that indication, can you talk about the need potentially for expansion of DTC activity over time, and the extent to which that can activate patients, really more of a long-term question regarding DTC within that setting? And then secondly, can you just comment on how aggressive you like to be regarding the addition of another asset, whether it's a commercial stage asset, where you can leverage your sales infrastructure that you have in place or even in R&D stage asset and kind of where your appetite lies at this point in terms of bringing in another asset or multiple assets?

[Peter Miller:]

Relative to DTC, as we talked historically, we did do some pilot work with DTC with a nasal polyp indication, and candidly we saw -- by the way we saw terrific patient activation there. The problem that we saw was that we have many patients going into offices, many primary care offices that weren't aware of the product. We also had the issue by the way because the product is indicated for nasal polyps when you put that in a DTC, there are some patients who sort of raised their hand and say, I don't have polyps even though they very well may have polyps. So, we think the real value of DTC David is really with the CS indication, because if you think about the CS indication with a partner, we will have broad awareness of the product among a broad primary care audience, and obviously because the products indicated for chronic sinusitis, we know from a lot of work that we've done. If you say, we have a product for chronic sinusitis, there's 30 million people who say I have that, the product is - the disease is very well known, very well diagnosed people know they have it. So, we think ultimately DTC has the biggest application with the CS indication. Having said that, I think you know we learned a lot in our efforts that we did on the nasal polyp, and really gotten a lot smarter of how we're doing a lot of our digital efforts, specifically against the nasal polyp group. So, I hope that answers that first question. On the second question David relative to a new asset, as we've reiterated, right now we are laser focused on growing XHANCE revenue, and we're confident we're going to get to $80 million by the end of this year. We say this all the time. When we get to an $80 million business that puts us on a run rate certainly north of $100 million potentially approaching $110 million. And with on the expense side, our CS trials going away, you really can see it, the potential to get to breakeven on cash flow from operations. So that's our focus right now, that's where we are, our efforts are all sort of targeted. But, there is real value in leveraging the terrific sales teams that we have in place, calling on ENTs and allergists, and while we don't see anything happening in the very immediate term, we are absolutely looking to -- look to bring in some assets in. Eventually - initially, David, certainly the focus will be on commercial stage assets, but eventually potentially down the road for pipeline as well.

[Operator:]

All right. I'm showing no further questions at this time. I would now like to turn the conference back to Peter Miller.

[Peter Miller:]

Well, thank you very much operator. At this point, we will close the call. Thanks everyone for attending.

[Operator:]

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.