OptiNose, Inc.
Q1 2021 Earnings Call Transcript

Published: 9 May 2021

[Operator:]

Good day and thank you for standing by. Welcome to the Optinose Quarter One 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's call is being recorded. I would now like to hand the call over to your speaker today Jonathan Neely, Vice President, Investor Relations. Please go ahead.

[Jonathan Neely:]

Good morning and thank you for joining us today as we review Optinose's first quarter 2021 performance and our plans for the remainder for the year ahead. I'm joined today by our CEO, Peter Miller; our President and Chief Operating Officer, Ramy Mahmoud; our Chief Commercial Officer, Vic Clavelli; and our CFO, Keith Goldan. The slides that will be presented on this call will be -- 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 of Optinose's most recent Form 10-Q that was 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. The forward-looking statements during this conference call speak only as of the original date of this call or any earlier date indicated in such statement, and we undertake no obligation to update or revise any of these statements. We will now make prepared remarks, and then we will move to a question-and-answer session. With that, I will now turn the call over to Peter Miller. Peter?

[Peter Miller:]

Thanks, Jonathan and good morning everybody. We appreciate you joining us this morning. Starting on slide three, we'll go into more detail in a moment. I'd like to highlight four key takeaways from today's presentation. First, our Q1 2021 financial performance was aligned with our company guidance. This is an important year for our company, getting off to a good start enables continued strong focus on our two core objectives, driving XHANCE revenue and completing the chronic sinusitis pivotal trials, which we believe could create significant additional value for the company. Second, new prescriptions of XHANCE achieved another all-time high in the first quarter, despite continuation of pandemic related market challenges, with new prescriptions increasing 16% over first quarter of 2020. Notably, this growth is against a quarter a year ago, which was not significantly impacted by the pandemic and in an environment where market new prescriptions decreased 30% versus the prior year.

[Keith Goldan:]

Thank you, Peter. And thanks everybody for joining us this morning. As we reported, Optinose recognized $12 million of total revenue in the first quarter of 2021, consisting of $11 million of XHANCE net revenue and $1 million of licensing revenue from a one-time milestone payment we received under our license agreement with Currax Pharmaceuticals. As noted on prior calls, one of the metrics that we track is XHANCE's average net revenue per prescription, which is calculated by dividing net revenue for the quarter by the estimated number of XHANCE prescriptions dispensed during the quarter. We continue to believe this is a useful metric to evaluate the net revenues generated per prescription. However, we remind you that this metric is subject to variability that does not necessarily reflect a change in the price that is paid for an individual unit of XHANCE. Based on available prescription data purchased from third parties and also on data we receive directly from our preferred pharmacy network, XHANCE's average net revenue per prescription for the first quarter of 2021 was $151. This was favorable to our guidance of $120 to $140 for the first quarter and an increase compared to $126 in the first quarter of last year. Moving to slide 10. Our first quarter 2021 financial performance was in line with our prior expectations and as a result, our guidance for the full year and the remainder of 2021 is unchanged.

[Ramy Mahmoud:]

Thank you, Keith and turning to slide 12. Regarding our pivotal CS trial, today we announced that we recently completed an interim analysis to assess the variance in one of the two co-primary endpoints in our first trial 3205. The analysis was intended to assess whether the variance assumption in our priori sample size calculations were consistent with the actual variance observed in the trial. The analysis was performed on blinded interim data on approximately half the number of patients that we project to enroll ultimately in 3205, and to assess the variance in the primary symptom end point. The result of this interim analysis was that the observed variance was lower than the variance that was assumed when we estimated sample size and power during the design of the study. As a result, we've determined not to make any alteration in the sample size of that trial on the basis of this interim analysis. In the coming few months, we may elect to conduct a separate interim analysis of the other co-primary endpoint, which is changing average of percentage of pacified volume, which our CT scan endpoint, which has changed from baseline to week 24. The COVID-19 pandemic environment, particularly at European and Canadian trial centers has continued to influence the rate of enrollment beyond the first month of this year. And that has created difficult to predict patients' recruitment rates. We've continued to enroll patients throughout this period, and we're encouraged by recent improvements in enrollment rates at effected centers. However, we now expect to complete enrollment in that first pivotal CS trial in the third quarter. The top line results therefore in the first quarter of 2022. We continue to expect results from the second ongoing trial in the first half of 2022.

[Peter Miller:]

Thanks, Ramy. Turning to slide 15. Before moving to Q&A, I'll take a moment to reiterate that we are optimistic the 2021 as the potential to bring a substantial improvement in the business environment and that this improvement buoyed by multiple other factors specific to our business and plans will continue to support strong future growth for XHANCE. We are laser focused right now on two clear objectives, revenue growth for XHANCE and completion of our pivotal trials in chronic sinusitis. I look forward to providing updates on our progress throughout 2021. Thank you. And now I'd like to open the call up for Q&A.

[Operator:]

Thank you, sir. Our first question comes from the line of David Amsellem from Piper Sandler. Your line is open.

[David Amsellem:]

[Peter Miller:]

David, we can't hear you. If you happen to be on mute. Operator?

[Operator:]

David Amsellem, your line is open.

[Peter Miller:]

Let's go to the next question, operator.

[Operator:]

And our next question comes from the line of Gary Nachman from BMO Capital Markets. Your line is open.

[Gary Nachman:]

Hi, guys. Good morning. I apologize if you cover this, just something about it on a different call. Have you made any changes to the patient assistance program? Is that something you would consider modifying into the allergy season? And maybe just comment, how much of XHANCE use is allergy versus chronic sinusitis in polyp versus non-polyp patients? Just give us an update there. And then just one other one, any modifications to the specialty pharmacy network? Will that continue to grow, and could that potentially put pressure on the net revenue per RX? I know that's one of the factors that goes into it. Thanks.

[Peter Miller:]

Maybe I'll start and Vic, you can add a few comments and then Keith possibly as well. Gary, we did make changes to our patient assistance program at the start of the year, and it frankly was less about the allergy season and more about an opportunity we thought we had to improve average net revenue per prescription by -- for uncovered patients moving the first prescription. So, commercially eligible, but not covered by an insurance plan -- by their insurance plan, moving the payment from zero, which it was previously to $25. And that has two important -- and those by the way are not profitable prescriptions for us. And the reason we've done that is so that we can go to physicians and say, we have a robust program, ensuring that the majority of patients are going to get the product at a very affordable price. We did a lot of work with physicians and found that move into $25 was acceptable and we've not seen a significant impact on physician prescribing, but it does two things. Number one is we get $25, uh, that we collect on those first scripts. The second is some patients don't sell at the $25 and that's actually a good thing for us, because those are not profitable prescriptions. And that change has the possibility that Keith referenced of contributing to the improvement in our average net revenue per prescription versus prior years. Specific to your question on allergy, so we haven't done anything Gary, specifically in patient assistance to try to capture allergy volume. I don't know if that was sort of behind your question. But relative to where our businesses, if you will, it's reasonably unchanged. What we've talked about historically that about a third of the businesses with nasal polyp patients, about another third, roughly with CF patients without polyps and then the balance with other conditions where people have chronic inflammation in the nose. Before we go to the specialty pharmacy questions, Vic, anything to add?

[Victor Clavelli:]

No, I think that's a nice summary. Peter. Maybe the only thing I'll say is that the key part of the allergy business is that when it drives patients into the office, that's a key opportunity for chronic sinusitis and ultimately nasal polyps to be diagnosed. So, we do see that growth important.

[Peter Miller:]

Just to amplify, Gary, I think, you know that the -- we see as patients get exacerbations that are sort of caused by seasonal allergies and that's -- that obviously creates good patient flow with potential new patients that are appropriate for XHANCE. Relative to the specialty pharmacy network, we feel really good about the network we built. We have a couple of national providers. We have some regional providers, that contributes to the four prescriptions per patient per year that we've been able to generate. We think it's going to be part of our business for now, Gary, in the specialty segment. We don't think it's necessarily going to put any additional pressure on the net revenue per prescription. If anything, as Keith guided, certainly this year, we expect improving average net revenue per prescription per year. And as we look out, if anything, we see it, reasonably consistent with where we are relative to future trends, if anything, maybe having some favorable tailwind in that area.

[Gary Nachman:]

That's great. Okay. Thanks a lot.

[Operator:]

And our next question comes from the line of Georgi Yordanov from Cowen and Company. Your line is open.

[Georgi Yordanov:]

Hey, guys. Thank you so much for taking my questions. Congratulations on all the progress. So, I guess, maybe first, I was hoping if you could talk about those high prescribing physicians. What differentiates them from the rest of your prescribers? Are -- did he just have high volume practices? Is there anything different about what -- for example, their specialty, and for those specific above 15 or month, what are the share of XHANCE script out of their total IMS scripts?

[Peter Miller:]

I'll start, Georgi and I'll pass it to Vic, maybe for a little bit of commentary. Part of the reason, I just continue to be very optimistic about this business is because what is happening in that believer segment. And we obviously do work to understand why people are writing and why people are not writing more, I should say. In that believer segment, when you ask those doctors, why are you writing? They say two things. Number one is they say, I believe in the product efficacy that it is materially different than the efficacy certainly have an intranasal spray and they think it brings significant value for patients and they've seen it in their own patients. The second thing is they say, I find it easy to write and very affordable for patients. And in fact, we do have very good market access coverage, commercial coverage approaching 80%. And if anything, we think it has potential to improve from that point over the next six to 12 months. But the second thing is that they know that it's affordable. And I think we've said this previously, but 80% of the patients nationally receive XHANCE prescription with no out-of-pocket cost. And these physicians know that. So we have good -- we have good efficacy we know that. We have good access. We have good affordability. Our challenge -- not challenged, but our opportunity, it's a great opportunity to grow this business is get that next group of what we call dabblers to understand that the product really does work exceptionally well in certain patients. And it also is -- it has -- it's affordable and it's accessible. So, Vic, I don't know if you want to add anything.

[Victor Clavelli:]

I mean, attitudinally, these early adopters are these believers are in fact, just that a classic early adopter group. And we see an opportunity to leverage them to begin to influence other peers in the community that frankly just aren't as quick at adopting new technologies.

[Peter Miller:]

I will say, Georgi, too, that they are everywhere. They're not specific to a certain geography. They're not specific to a certain prescribing type. They are in ENT. They are in allergy. Someone or even in primary care. And literally they are all over the United States, which again gives us confidence of the ability to grow the business The share, by the way, as we said, to get into this group, you have to have greater than a 20% share. Some of these doctors, by the way, have very high shares, good bit higher than 20%.

[Georgi Yordanov:]

Got it. No, this is actually incredibly helpful. Thank you. And then, I'm not sure if you are going to comment on this. But given the improved profitability and the recovery and pickup and prescriptions we're seeing, do you believe that the current cash in hand would be sufficient to get you to profitability to breakeven?

[Peter Miller:]

Keith, I'll let you take that.

[Keith Goldan:]

Yeah. Georgi, as we stated in the Q, the only guidance that we've given on cash is that, that the cash on hand is sufficient to get us 12 months out. We ended the year with $144 million, ended the quarter $116 million. So we feel pretty good about the cash position. 1Q has always been traditionally, if you look back over 2019 and 2020, our highest cash burn quarter. So, as we continue to grow XHANCE throughout the quarter, we have a very high margin product in the mid-80s in terms of gross profit contribution. So, that gross profit contribution will continue to offset the cash burn. So, we're excited just to focus, as Peter made in his remarks, on the growth of XHANCE this year and the completion of our CS trials.

[Georgi Yordanov:]

Thank you so much.

[Operator:]

And our next question comes from the line of David Steinberg from Jefferies. Your line is open.

[Ed Chung:]

Hi, guys. It's actually Ed Chung on for Dave. A couple of questions here. Let's see, you talked about potential for improved -- the -- your ability to get into physician offices to make office calls. Can you update us on where that is with you and also with kaléo who I believe you said, was having -- was not making as many of those calls? And when that timing might come before they can actually get into the office to see the doctors?

[Peter Miller:]

Again, Vic, maybe I'll start and you can chime in with color commentary. Thanks for the question, Ed, and appreciate you joining us morning. Obviously, predicting access is going to be hard. So, what we're relying on here are surveys that are being done by IQVIA and our own reps in terms of trying to understand what the future environment could look like relative to access. This is an estimate Ed, but we still are not in a lot of offices currently. So, again, what gives us real encouragement about our businesses, we're growing the business really pretty significantly against significant challenges of both patient volume and market -- new prescription volume, TRx volume -- TRx volume being down substantially and access to offices being challenged. And right now, in many parts of the country, we're unable to access 40% to 50% of doctors in any territory. So, our view of why is that going to change. There's been some survey work done by IQVIA. It's very encouraging in some ways in our categories that in the fourth quarter substantial number of physicians did not want to have a face-to-face interactions with our -- any sales representatives, that's improved substantially in the latest survey work that was done in March. We're prepared for certain physicians still not allowing access, but I think in 2Q of this year, we expect to see continued improvement. I was with a physician group the other night and take this as an N of one in one market that has two big groups, by the way, roughly a hundred doctors across the two groups, not allowing access said that in June, their expectation is to open up access to territory managers. Vic, anything to add there, we talk about kaléo.

[Victor Clavelli:]

Yeah. I would say that the physicians basically are telling us they see the availability of vaccines and the spreading of the vaccines as an opportunity for them to normalize the flow of pharmaceutical companies back into their offices somewhat. We also continue to invest in non-personal promotion solutions so that we find and continue to strengthen our capabilities to reach them in other channels as well. So our confidence there is growing.

[Peter Miller:]

On kaléo -- and Vic, you can jump in here. But kaléo has actually done a nice job across -- in the current environment. So, probably on the last call, we were talking about 4Q, but kaléo is out like many of the pharmaceutical companies, kaléo, by the way, was very typical of the majority of the pharmaceutical companies in terms of getting back out active in face-to-face detailing. And they're now reasonably, I think, in line, Vic is fair to say with the industry, and they're now back out making substantial number of face-to-face calls. As you know -- through the ending of the first quarter, into the second quarter, we really have not yet seen significant impact yet. But again, we remain hopeful as they -- as access improves, and they're able to get out the more physicians that they can bring real benefit. And again, Vic, if you have anything add.

[Victor Clavelli:]

We've had great collaboration between their team and our team, and we do see impact from physicians where they are able to make those calls. So, we're really confident.

[Ed Chung:]

Thanks for that. And also just on the average selling prices again. Obviously, if you look at last year, the ASPs were dampened by the extension of your zero copay with the pandemic going on. So in the rest of this year, should the pattern look perhaps a little more like what we saw in 2019, on a sequential basis?

[Peter Miller:]

We think that's right, Ed. Sorry, Keith.

[Keith Goldan:]

No, I was going to say the same thing. Yeah. We expect -- the guidance we have out there is that we expect for the full year to be north where we ended up last year, the 185. As you noted that was impacted negatively or adversely by the assist program that we ran, which was a pandemic response program that we put out there for patients to bridge them until they could get surgery. Would that program not being repeated this year, we would expect the cadence to be similar to 2019, as you said, and we're optimistic for the average net revenue prescript prospects for this year.

[Ed Chung:]

Thanks. Thanks so much. Appreciate the color.

[Operator:]

And our next question comes from the line of Brandon Folkes from Cantor Fitzgerald. Your line is open.

[Brandon Folkes:]

Hi. Thanks for taking my question. So, maybe just on the guidance. Can you help us think about achieving that guidance how much is going to be driven by script growth versus sort of this net price per script? And then staying on net price per script, can you just help us contextualize maybe the inventory that was in the channel at the end of 1Q versus year-end, and if it's had any impact on the net price the script during the quarter? And then secondly, maybe just a clarification on an early question, your cash runway extends 12 months out, does that get you through both while readout? Thank you.

[Peter Miller:]

Keith, will you start? I can chime in.

[Keith Goldan:]

So, I can tell you Brandon, with respect to our average net revenue per script, as I said in my comments, it's -- the numerator in that equation is the net revenue for the period, which is driven by our gross sales, which is ex-factory sales adjusted for what we expect to realize and the whole gross to net sausage-making. So, absolutely. If we see a destocking in the channel, which we saw in Q1, which we always expect to see in Q1, that does adversely affect our average net revenue prescription, because you have a lower numerator, as the channel equalizes. Just to go back, the reason that we see, and would expect to continue to see destocking in the first quarter of every year is because there is a buy-in both from the wholesalers now the traditional big three, as well as our PPN ahead of an expected price increase, which typically comes in the beginning of the year. So, we typically -- the cadence, and I don't think this is unique to Optinose by any stretch, but we typically see stocking occur in December, and then destocking occur over the first quarter. And we -- and that negatively impacts first quarter results, but it's -- on a full year basis, it's 12 months in, 12 months out, because we see the destock in January, or in Q1 stocking in the fourth quarter. So, equalizes on a full year basis. So, definitely adversely impacts the average net revenue prescript in that first quarter. And it's one of the factors that leads us to guiding the average net revenue per prescription will be lower in the fourth quarter than it typically is in the -- I'm sorry -- in the first quarter and typically is in the fourth quarter. With respect to growth, I'll start and turn it over to Peter. But the growth that we see this year is, that we expect to see us. I would say it's primarily driven by prescription -- by unit growth. While we do expect to see growth in the average net revenue per prescription, we certainly expect to see the period-over-period, year-over-year growth in units, meaning in TRx is for the full year.

[Peter Miller:]

Yeah. I mean, I just would add, the things that we've sort of talked about previously, Brandon, is that we think the average net revenue per prescription is going to be more like 2019 than it was in 2020. So, we were 185 last year, we were closer to 200 in -- we were at 185 last year, and then about 200 the year prior. So, you can do the math, obviously if the potential benefit on price and the balance we do think is prescription growth. And we feel really good about growth prospects. We had good growth against the first quarter of last year, which was a non-pandemic year. We actually even grew new prescriptions year-over-year. You'll recall what happened to us in 2Q and 3Q, we had significant impact on our new prescriptions in 2Q because of no patient volumes in physician offices. So, when you think about a year-over-year impact for the balance of the year, we are going to be up against a very soft base from a pandemic standpoint. As a reminder, 70% in 2020 versus 2019, fully in a pandemic year -- majority of a pandemic year against a base that was unaffected by the pandemic. So, we feel very good about growth prospects and that supports our $80 million revenue for.

[Keith Goldan:]

Brandon, with respect to your question around cash, the guidance we put in the -- in our Q, isn't so much guidance, it's basically compliance with going concern bases that the auditors need to provide a clean review, which they did this period. So, that's the -- 12 months is the minimum, right? We said the same thing last period. At our March call, when we report our year-end results, we reported that the company had cash to meet its ongoing obligations commercially with respect to debt and R&D. For at least 12 months, we said the same thing this period. So, I would rely less on guidance than anything else. We had said that we expect -- I believe we said we expect the completion reporting of data for the second trial in the first half of next year. So, hopefully that answers your question.

[Operator:]

And your next question comes from the line of Daniel Busby from RBC Capital Markets. Your line is open.

[Daniel Busby:]

Good morning, everyone. My first question is on the chronic sinusitis trials, it was only a couple of months ago that you guided to a top line readout for the first trial by the end of 2021. Now that data is expected in the first quarter of 2022. But what's your overall level of confidence that you'll be able to deliver data within the new timelines? And also, was there any particular impetus to conduct the interim analysis? Second, as we look out over the rest of the year, do you expect normal seasonality to come back and play a role at all on demand for XHANCE?

[Peter Miller:]

Ramy, you take the first couple.

[Ramy Mahmoud:]

Sure. So, the primary reason for moving a few weeks out on the expected completion of enrollment has been the impact of the pandemic. And as we noted earlier, it's primarily the impact in European and Canadian sites. There's a number of countries in Europe, which I'm sure you're aware, were particularly impacted during the sort of months -- during the earlier part of this year that in ways that we couldn't really have predicted even just a couple of months ago. They either had a prolonged effect or they had delayed vaccine uptake or other factors locally that affected the ability of trial sites to entice patients to come in, or even to be permitted to have patients coming in. And that was different for different countries. And it turned out that some of the centers in some of the countries where we were particularly expecting and had previously seen excellent enrollment were especially impacted. So, that has slowed things down a little bit. But as I noted earlier in my comments, we have continued to enroll throughout this time. And we just have pretty high confidence based on the track record so far and the number of patients that remain to be enrolled that we'll be able to complete in the window that we're currently projecting.

[Peter Miller:]

Interim analysis, Ramy.

[Ramy Mahmoud:]

Yeah. The interim analysis, I don't know if you can recall this Daniel, but the interim analysis was preplanned. So, it's not something that we engaged in because of some new finding or new events that occurred in the trial. So, it was a planned analysis to evaluate variant. In part that's because the assumptions we had to make for variants were based on limited prior data. So this just reinforces our comfort level that we've made the right assumptions about this -- the sample size that needed to be in the trial. So, this shouldn't be interpreted as something that's a reaction to some events occurring during conduct of the trial.

[Peter Miller:]

And Dan, regarding seasonality, I think we said this on the last call. But relative to our ability, as it relates to our guidance of $80 million of revenue from a market environment standpoint, we did expect there to be an impact on the 2Q allergy season pandemic related. We did not expect normalization, if you will, in 2Q on either patient volume or access to physicians. We do think in the back half of the year that we expect reasonable normalization is what we are currently thinking. And that's obviously somewhat of a crystal ball. But looking at the current trends in the market environment and vaccination rates and all the rest, we think that we'll get back to reasonably a normalized market in the back half of the year.

[Daniel Busby:]

Great. That's helpful color. If I could ask one quick follow-up. Could you just provide your latest thinking around business development? And is that something you'll want to have chronic sinusitis data in hand for before pursuing an earnest?

[Peter Miller:]

I will say Dan, we're not going to wait for the data to begin conversations with potential partners. We think the potential value of a primary care deployment with the CS indication is substantial. And we've done significant work on primary care physicians. And arguably XHANCE is wonderful addition to their armamentarium with the chronic sinusitis patient. Right now, the primary care physician, pretty much after a patient fails an intranasal spray, which is what they put every patient on. And in fact, in chronic sinusitis, 80% of patients who do not get relief -- in chronic sinusitis do not get relief from an INS. The only real option those primary care docs have today is to refer to an allergist to an ENT. And with this expert consensus that's emerging, the experts in ENT and allergy are recommending, or suggesting that before going to surgery, or before going to biologics, that XHANCE be considered in the paradigm. That's something that really fits directly into a primary care physician in terms of what they're doing. So, as a result, we have very -- we're very excited about the opportunity in primary care for XHANCE. And we think the right way to do it is via partnering. And as a result of that, we are -- we're not going to wait for data to have discussions with folks to begin to educate them on the opportunity.

[Daniel Busby:]

Great. Thanks, Peter.

[Ramy Mahmoud:]

Thanks, Dan.

[Peter Miller:]

Thanks, Dan.

[Operator:]

Your next question comes from the line of David Amsellem from Piper Sandler. Your line is open.

[David Amsellem:]

Hi. Thanks. So, maybe I'll ask a variation of the business development question/topic. I guess the question here -- a couple of questions. One is, how big of a priority is it for you to add another asset where you could leverage your ENT/allergist sales presence? So, that's number one. And then number two is, you do have some general practitioner presence. I know you talked about partnering around the CS indication. But do you think about also a product where there's an adjacency into primary care? And then lastly, just on life cycle management for XHANCE, how should we think about line extensions to the product, for instance, and maybe combining the corticosteroid with an anti-histamine, like an azelastine, for instance? I mean, is that something that you would contemplate down the road just wanted to get your latest thought process there? Thanks.

[Peter Miller:]

Yeah, I'll start and Ramy and Vic and others can jump in. But relative to a prioritization of getting another asset in to leverage our ENT and allergy presence, it's not an immediate priority, David. I mean, right now, I think we're crystal clear that our priorities are on growing the XHANCE business and also getting -- completing our CS trial. So, it's not an immediate priority, but I have said historically and I still feel this way that we have to, at a point in time, get greater leverage than we have as a company, that it just doesn't really make sense even if you have a sizeable XHANCE business in the ENT allergy segment to not find ways to get greater leverage, across both the headquarters infrastructure that we build, but especially the call point infrastructure. Because I'm very proud of our sales team, what they've accomplished, and the relationships that we've developed. So, it's not a near term priority, but it is something that we absolutely believe certainly in the next 12 months, becomes a much higher priority. Relative to your question on primary care, I want to -- I know, you know this David. But I want to remind you that the real opportunity in primary care is to get access to the 7 million patients being treated by roughly 50,000 primary care providers. And as a reminder, that's more than double the number of patients that are being treated in ENT allergy. So, the opportunity is very substantial. And in that market, as I described a minute ago, there aren't good choices and there's really not -- there's really no competition for these chronic rhinosinusitis patients from a co-promoting, if you will. So, it really is a substantial opportunity. And we think the right way to maximize that is through partnering. Are we in primary care some officer's today? Yes, we are. Will we continue to expand in some primary care offices, we will. But we think from an efficiency standpoint, the right thing to do is to find one of the folks that are in primary care and there still are several with significant presence. There was great cross-match, we know that already with a physician with companies that are already in the space relative to patients who have chronic rhinosinusitis. So, we think the right way to maximize the business is through partnering in primary care. Having -- although, having said that we will look to expand in some smaller instances, if you will, in some adjacencies. Relative to life cycle, Ramy, maybe I'll let you talk about opportunities within the exhalation delivery system device, but our focus there, David, is largely on looking at -- things that we can in-license for the most part. But I'll let Ramy sort of describe potential -- your thoughts on life cycle with an exhalation delivery.

[Ramy Mahmoud:]

Yeah. Thanks for the question, David. So, you mentioned in the last year and other things, but just backing up a little bit, when the time is right, and as Peter said, our focus right now is on growing XHANCE revenue and completing the chronic sinusitis trials. When the time is right, the kind of products that we'll be looking for are products which are meaningfully differentiated, and useful to changing standard of care in the physician audience that we're currently calling on. And we're going to be open-minded about what kind of product that is. So, it could conceivably be a product in an exhalation delivery system or other nasal delivery, or it could be a product that has nothing to do with nasal delivery or treatment of diseases of the nose, but which is still relevant to the physician audience for calling on. But it's going to need to be something which is sort of clinically very meaningful, and brings real benefit to patients and the healthcare system.

[Peter Miller:]

Okay. I think that's it in terms of questions, operators. So, if there aren't any further questions, we'll conclude the call. I'd like to thank everybody for joining us this morning and we look forward to continue updates throughout the year.

[Operator:]

Thank you, sir. Ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.