U.S. markets closed

Edited Transcript of NEOS earnings conference call or presentation 13-Mar-20 12:30pm GMT

Q4 2019 Neos Therapeutics Inc Earnings Call

GRAND PRAIRIE Mar 26, 2020 (Thomson StreetEvents) -- Edited Transcript of Neos Therapeutics Inc earnings conference call or presentation Friday, March 13, 2020 at 12:30:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Gerald W. McLaughlin

Neos Therapeutics, Inc. - CEO, President & Director

* Richard I. Eisenstadt

Neos Therapeutics, Inc. - CFO, Treasurer & Corporate Secretary

================================================================================

Conference Call Participants

================================================================================

* Jason Nicholas Butler

JMP Securities LLC, Research Division - MD and Senior Research Analyst

* Kenneth Charles Cacciatore

Cowen and Company, LLC, Research Division - MD & Senior Research Analyst

* Louise Alesandra Chen

Cantor Fitzgerald & Co., Research Division - Senior Research Analyst & MD

* Rafay Sardar

BMO Capital Markets U.S. - Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good morning, and welcome to the Neos Therapeutics Fourth Quarter and Full Year 2019 Financial Results Conference Call. Today's call is being recorded. (Operator Instructions)

For introductory and opening remarks, I'm turning the call over to Richard Eisenstadt, CFO of Neos Therapeutics. Please go ahead.

--------------------------------------------------------------------------------

Richard I. Eisenstadt, Neos Therapeutics, Inc. - CFO, Treasurer & Corporate Secretary [2]

--------------------------------------------------------------------------------

Thank you. Good morning, everyone, and welcome to our fourth quarter and full year 2019 financial results conference call. This morning, we issued our financial results and corporate highlights press release, which is available on our website at www.neostx.com. I'm joined on today's call by Jerry McLaughlin, our CEO.

Before we begin, I'd like to read the following regarding forward-looking statements. During this call, we will make statements related to our business that may be considered forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements concerning the commercialization of Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER oral suspension; the financial results of and outlook for our business, including with respect to net revenue per pack, script volumes and market share; the intended benefits of our commercial strategy; our expectations regarding the brand exclusivity for our ADHD products; our patient support program, Neos RxConnect; the capabilities of our technology and our research development activities, including the timing and progress of our product candidates, future expansion of our product pipeline through business development activities; and our current and future financial position.

Forward-looking statements may often be indicated with words such as we expect, we anticipate, upcoming or similar indications of future expectations. These statements reflect our views only as of today and should not be reflected upon as representing our views as of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations, including, but not limited to, the inherent risks associated with development and commercialization of our products and product candidates, that we may not realize the intended benefits of our new commercialization strategy and that the preliminary or early indicators of performance may not reflect the actual results of operations for any period.

For a discussion of material risks and other important factors that could affect our actual results, please refer to those contained in our most recent SEC filings.

I will now turn the call over to Jerry.

--------------------------------------------------------------------------------

Gerald W. McLaughlin, Neos Therapeutics, Inc. - CEO, President & Director [3]

--------------------------------------------------------------------------------

Thank you, Rich, and welcome, everyone.

2019 was transformative for Neos. We entered the year with a new commercial strategy, focused on increasing net revenue per pack and improving patient access to our multi-brand ADHD portfolio, all with the goal of driving the company closer to operating profitability. At the same time we were optimizing our commercial strategy and organization, we were also committed to advancing NT0502, our lead development program, and met our goal of filing an IND as well as commencing a Phase I pilot PK study in 2019.

For our commercial business, I'm so proud of what we were able to achieve and what this means for the future of Neos. First, we improved our net revenue per pack by approximately 28% compared to 2018 and reduced sales and marketing expenses by $16 million compared to 2018, which were key drivers in our ability to realize a more than $33 million improvement in our operating loss in 2019 compared to 2018.

Second, we were able to build an entirely new best-in-class patient support program, Neos RxConnect. And by the end of the year, we had approximately 500 pharmacies in the network, and as of today, I'm pleased to report we have now reached 750 pharmacies.

Third, despite a smaller sales force and significantly lower sales and marketing expenses, we were able to successfully increase net sales of our products in 2019 by 29% compared to 2018.

And finally, we were able to hold total prescriptions for our ADHD products in 2019 constant with 2018. This is a tremendous achievement considering our smaller sales force and decision to abandon unprofitable programs and contracts that drove a meaningful portion of our 2018 prescription.

These accomplishments have set a strong financial foundation for Neos as we entered 2020. We continue to believe and are now seeing evidence that Neos RxConnect is and can be a significant driver for our business. This best-in-class Neos-sponsored patient support program is designed to create greater predictability and the lowest possible co-pay for commercially insured patients regardless of their individual insurance plan.

Neos RxConnect was created in early 2019 following in-depth research and feedback from health care professionals, otherwise known as HCPs, about their frustrations in prescribing what they believe to be the most appropriate medications for their patients.

Too often, medications are not available for patients in the pharmacy or the co-pay is widely variable and unpredictable, resulting in patient complaints and callbacks to their HCP, which leads to frustration as well as an additional work and hassle for the HCP and their office staff. For these reasons, we created Neos RxConnect and then rapidly scaled it up throughout the year.

We believe Neos RxConnect truly differentiates both Neos and our ADHD brands from the competition and presents a high barrier for others to replicate. Most importantly, we believe this program offers tremendous value and convenience to our customers. We are committed to continuing to invest in this program and recently added an internal regional account manager team that is dedicated to supporting our efforts to expand and increase adoption of Neos RxConnect by working with both pharmacists and with our sales -- field sales team.

As I mentioned at the end of 2019, there were approximately 500 pharmacies in the network, including H-E-B, a regional grocery and pharmacy chain in key areas across Texas with an unsurpassed reputation for customer service and loyalty and more than 270 stores that have a pharmacy. H-E-B became active within the Neos RxConnect network in mid-December, and the early results from this partnership are promising.

In January 2020, Neos ADHD prescriptions grew 4.2% nationwide over December 2019. However, in the state of Texas, Neos prescriptions in January more than doubled our national growth percentage, increasing 10.2% over December 2019.

More recently, we finalized the partnership with another regional pharmacy chain that has just increased the total number of pharmacies in the Neos RxConnect network by 50% this week through the addition of these 250 pharmacies that are spread across key markets across the Midwestern region in the United States. In fact, the pharmacies went live just this week, and we held the launch meeting with our sales force yesterday.

Finally, we are in various stages of discussions with additional regional chains that align with our sales force footprint and expect to continue to expand Neos RxConnect throughout 2020. These early results from our H-E-B relationship and the addition of an interest from additional regional chains bolstered our belief that Neos RxConnect can be an engine of growth for our business.

As many of you know, we have deployed a specialty sales force of approximately 75 territory specialists that are operating with enhanced targeting tools and resources with a focus on accounts where we believe we can continue to increase the breadth and depth of prescribing.

We use net revenue per pack as a key commercial performance metric and a measure of the overall quality of the prescription volume we generate. For Adzenys XR-ODT, net revenue per pack for the fourth quarter of 2019 was $128, a 32% increase over the same quarter in 2018. And for Cotempla XR-ODT, net revenue per pack was $126, a 33% increase over the same quarter 1 year ago. This continued growth reflects the significant strides we made in 2019 to shift our business towards operational profitability, as we saw net revenue per pack increase by approximately 28% from $95 in 2018 to $120 in 2019.

Turning now to our development pipeline. We believe that NT0502, our lead development candidate, is a tremendous asset with the potential to address a high unmet need for the treatment of chronic sialorrhea, a condition where more than 1/3 of the patients with neurological conditions such as Parkinson's disease, cerebral palsy, ALS and mental retardation exhibit excessive drooling due to an inability to sufficiently swallow saliva. Approximately 1.4 million patients in the United States experience this condition on an annual basis, and physicians report that they reserve treatment for only the most severe patients due to treatment-limiting side effects and complex dosing regimen associated with currently available treatments. This results in too many patients being left to suffer with the challenges associated with this condition both medically and socially.

NT0502 offers the promise of a new treatment option to many of these millions of patients and their caregivers with the potential for both an improved tolerability profile and dosing regimen. In our Phase I pilot study evaluating the pharmacokinetic profile of multiple formulations of NT0502 in 30 healthy adult volunteers, we met all of the study objectives. And the NT0502 formulations we tested successfully demonstrated the key product attributes that give us the confidence to advance NT0502 into further clinical development. We plan to develop NT0502 as an orally administered formulation that is likely to be dosed only once or twice daily.

The next step for this program is to initiate a Phase I clinical trial in the second half of 2020. The Phase I study will enroll normal healthy volunteers. This multi-part study will include single ascending and multiple ascending dose cohorts and allow us to compare oral bioavailability and plasma concentrations to the parent compound.

In addition, we also continue to seek opportunities where we can leverage our existing commercial model with additional product opportunities as we are confident that Neos RxConnect and our advanced analytics platform has applicability well beyond our ADHD franchise. These opportunities would complement our existing portfolio with a focus on CNS as we believe there is a large opportunity to address symptoms associated with neurological disorders that exacerbate overall disease burden.

Before my closing remarks, I wanted to take a moment to discuss the ongoing coronavirus or COVID-19 threat. We are, like everyone, actively monitoring what is obviously a very fluid situation. We'll be examining all aspects of our business from supply chain to our manufacturing plant to our field sales force to understand and plan for as best as possible for a further deterioration of the situation.

At this time, we believe, based upon an audit of our suppliers as well as lessors that we have a reliable supply chain. From an inventory standpoint, we believe that we have, on average, approximately 4 months on hand with additional inventory that is located in wholesalers and in the retail chain. We are seeking to further build our inventory levels to help protect against future disruption.

With respect to our field-based sales force, the health and safety of our employees, our customers and their patients is of highest concern. We are instructing our sales representatives to monitor, understand and respect the policies of our customers and local government and health authorities. Ultimately, in some geographies, this may result in restrictions to customer access for our representatives for some period of time.

In conclusion, before I turn it over to Rich, I want to touch on our vision here at Neos. With a focus on patients, we want to ensure that our current products as well as future treatments are readily accessible to not only the patients that may benefit from them, but also health care professionals seeking to improve the lives of their patients. We are off to a great start with our ADHD business in 2020, and NT0502 is poised to advance into the next stage of clinical development.

Thank you for your time and interest today, and we look forward to updating you on our progress soon. Turn it over to Rich.

--------------------------------------------------------------------------------

Richard I. Eisenstadt, Neos Therapeutics, Inc. - CFO, Treasurer & Corporate Secretary [4]

--------------------------------------------------------------------------------

Thank you, Jerry. As of December 31, 2019, we held $24.9 million in cash and cash equivalents and short-term investments. We had no draw on our $25 million AR credit line as of December 31, 2019.

Total product revenues were $64.6 million for the year ended December 31, 2019, up from $50 million for 2018 and $27.1 million for 2017. Total product revenues for the 3 months ended December 31, 2019, were $16.8 million compared to $15.4 million for the same period in 2018.

Total product revenues for our ADHD portfolio for fiscal year 2019 was $57.7 million compared to $45.6 million for fiscal year 2018. Total ADHD portfolio product revenues were $14.9 million for the 3 months ended December 31, 2019, compared to $14.2 million in ADHD product revenue in the same period in 2018.

Full year net product revenues for our generic Tussionex were $7 million as compared to fiscal year 2018 product revenues of $4.4 million. Net product revenue continued to increase, reaching $1.9 million in the fourth quarter of 2019 as compared to $1.4 million in the same period in 2018, a 40% increase.

Gross profit for the year ended December 31, 2019, was $39.5 million compared to $23.1 million for the same period in 2018. For the 3 months ended December 31, 2019, gross profit was $9.7 million compared to $7.6 million for the same period in 2018.

Gross margin as a percentage of net product sales was 57% in the 3 months ended December 31, 2019, as compared to 50% in the 3 months ended December 31, 2018.

R&D expenses for the fiscal year ended December 31, 2019, were $8.6 million compared to $8.5 million for the year ended December 31, 2018. R&D expenses for the 3 months ended December 31, 2019, were $1.8 million compared to $2.4 million for the same period in 2018.

Selling and marketing expenses for the year ended December 31, 2019, were $28.1 million compared to $44.1 million for fiscal year 2018. Selling and marketing expenses were $6.7 million for the 3 months ended December 31, 2019, compared to $9.1 million for the same period in 2018. The reduction is primarily attributed to the smaller sales force we deployed in January 2019.

G&A expenses were $13.2 million for the year ended December 31, 2019, as compared to $13.9 million in the year ended December 31, 2018. G&A expenses for the 3 months ended December 31, 2019, were $2.9 million compared to $3.3 million for the same period in 2018.

Loss from operations was $1.7 million for the 3 months ended December 31, 2019, an improvement of $5.5 million compared to $7.2 million operating loss reported for the same period last year. For the full year of 2019, we brought down operating loss by $33.1 million to $10.4 million versus $43.5 million for 2018.

For the 2019 fiscal year, our net loss was $16.9 million or $0.34 per share compared to $51.7 million or $1.60 per share for 2018. Net loss for the 3 months ended December 31, 2019, was $3.5 million or $0.07 per share compared to $9.3 million or $0.23 per share for the same period in 2018.

With that, we'd like to now turn to the Q&A portion of the call. Operator?

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) The first question comes from Louise Chen from Cantor.

--------------------------------------------------------------------------------

Louise Alesandra Chen, Cantor Fitzgerald & Co., Research Division - Senior Research Analyst & MD [2]

--------------------------------------------------------------------------------

I had a few questions. So first one here is, how do we think about the net revenue per pack throughout the remainder of 2020? And I know you didn't give sales guidance and -- but I was just curious how we should think about the progression into 2020 from 2019? And then when should we expect the SAD/MAD Phase I data for NT0502? And basically, how did you choose these doses that you're going to explore going forward, and what are those, if you're willing to disclose?

--------------------------------------------------------------------------------

Gerald W. McLaughlin, Neos Therapeutics, Inc. - CEO, President & Director [3]

--------------------------------------------------------------------------------

Louise, I'll take #1 and #3, and I'll -- net revenue per pack and then Rich can comment on revenue, and then I can handle the 502 question. Our net revenue per pack, as we've discussed in the past, that was a major initiative for us heading into 2019. And we're really focused on driving increase on the quality of our prescriptions, right, and trying to remove and get out of the programs and contracts that were creating negative revenue. And you saw the substantial increase year-over-year in net revenue per pack. As we go forward, we could see some incremental increases in net revenue per pack, but that is not the primary focus. We believe like we've achieved the lion's share of that. As we move forward through 2020, it's about getting back to prescription growth at these much higher net revenue per pack. So hopefully, that addresses your question there, and then Rich can talk about revenue.

--------------------------------------------------------------------------------

Richard I. Eisenstadt, Neos Therapeutics, Inc. - CFO, Treasurer & Corporate Secretary [4]

--------------------------------------------------------------------------------

Yes. So I think taking that forward, Louise, we haven't provided guidance for 2020. But most of our growth last year, 2019 versus 2018, was due to the significant growth in our net revenue per pack, which we don't expect to repeat that this coming year, it will be, as Jerry said, more incremental. We will return to or expect we'll return to prescription growth, where last year, it was pretty flat year-over-year. So we expect that, that will be more of a contributor to growth. We did grow our revenues by over 29% in 2019. I don't think it's realistic to expect to continue to see that repeat performance since it was driven so much by our pricing changes.

--------------------------------------------------------------------------------

Gerald W. McLaughlin, Neos Therapeutics, Inc. - CEO, President & Director [5]

--------------------------------------------------------------------------------

Okay. And Louise, your question about NT0502. We would expect the SAD/MAD results in the first half of 2021. We're confident based upon the modeling work and the pilot PK results that we can head down a path. We're not ready to discuss final dosing. That, as time goes on, we'll give more clarity on dosing. But we're very confident that we have at least a twice-a-day and potentially a once-a-day formulation. And -- but the ultimate decision may actually be driven by the market and what the market desires.

--------------------------------------------------------------------------------

Operator [6]

--------------------------------------------------------------------------------

The next question comes from Ken Cacciatore from Cowen and Company.

--------------------------------------------------------------------------------

Kenneth Charles Cacciatore, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [7]

--------------------------------------------------------------------------------

Just a few questions. Just wondering, what's the percentage of prescriptions now that are going through Neos Connect? And looking for you to just talk about, is it driving more profitability per prescription? Or is it just a smoother product experience, a smoother experience for both the clinician and the caregiver? Can you just talk about anecdotally and maybe quantitatively the difference? And where do we think we're going to end the year in terms of potential pharmacies?

And then second question is, obviously, the sales force could probably use another product. So wondering from a co-promotion standpoint, are we close to putting another product in the bag for your sales force? It just seems we're right on the tipping point of getting a lot of leverage. So just wondering there.

Then also on corona demand. Obviously, folks like you are probably right at the tip of the spear in terms of these closures of schools. Just wondering if we're going to see a little bit of corona demand-driven issues as we work through these next few months?

--------------------------------------------------------------------------------

Gerald W. McLaughlin, Neos Therapeutics, Inc. - CEO, President & Director [8]

--------------------------------------------------------------------------------

All right, Ken. Thank you for your questions, and I'll handle the RxConnect question, then the BD question on product opportunities and then coronavirus. With Neos RxConnect, we continue to grow a percent of our business that's being funneled through Neos RxConnect. We're now above 30%. And with the addition of a new pharmacy chain this week, it's Meijer in the Midwest, we decided in that 250 more pharmacies, they just went live yesterday on the neosrxconnect.com. So we expect to see that number increase. We don't -- we're not giving a guidance or have a final prediction. I will tell you, though, we are in active discussions with multiple additional regional chains that would give us coverage over our target geographies, and those are in various stages of discussions, some more advanced than others. But we're confident that we'll be able to add -- continue to add throughout 2020 to the network. And in my prepared remarks, you heard, we're very excited about the early results with H-E-B. The growth just in the first month in Texas, both through the network and outside the network, just overall volume in Texas grew more than double the nation. So we're very excited about it. We think it's a key strategic driver.

Now as far as the economics, in some cases, we actually have better economics; in some cases, we have slightly worse economics. So in the end, it's pretty much a wash. But really, what this is, it's to your point about this creates and facilitates a much easier transaction for both the health care professional, including their staff, and the patient with the confidence that the product is going to be there and they're going to be able to get it. The claim is going to be adjudicated correctly, and they're going to have a predictable and affordable co-pay that's never going to be more than $35 even during high-deductible season, which we're living through right now. And I can tell you, the reports we get back, it's the most unbelievable that during high deductible that they're able to only pay $35 for the prescriptions. We hear time and time again that generics, during the high-deductible season, can be $100 to $150 or even $200 per prescription. So we think this will continue to be a driver, it's going to continue to get larger, and we'll keep you up-to-date as we add additional regional chains.

Now with regard to business development, part of our strategy, our commercial strategy in building the infrastructure, building Neos RxConnect, building an advanced analytics platform is to build the commercial engine where we can readily add additional products. So we're actively looking for product opportunities to fit into "into our bag." And while we call on primarily pediatricians and psyches, we may be willing to go a little afield to that because once again we believe the big value driver and the competitive advantage that we have is through Neos RxConnect. So those discussions are ongoing, Ken. It is a goal of ours, the stated goal. And so some are in various stages. As you know, these can move fast or slow, and we'll continue to keep you updated on that.

With regard to coronavirus, we think we're in really good shape here in our plant with the supply we have on hand and with our materials. We conducted a very intense audit, as most companies have done, to understand if there were any vulnerabilities, and we don't see any right now.

Now with regard to our sales force, sure, there may be some disruption. And we're advising our sales force that in areas of the country with local governments or even if it's state, if they issue guidance, mitigation strategies to avoid contact, we will oblige those. It's the right thing to do right now. As far as predicting any interruption to our business, that's pretty unclear. What I can let you know is, this week, we just -- with the weekly data that came out today, we had our highest week in prescriptions since mid-February 2019. And during that time in '19, we were still unwinding some of the unfavorable contracts that we still had some poor -- negative revenue-generating prescriptions in the system. So we're really confident in most recent performance as we move along here in 2020. But I can only speculate, and really, we don't really have a good handle if there will be an impact at all due to coronavirus.

--------------------------------------------------------------------------------

Operator [9]

--------------------------------------------------------------------------------

The next question comes from Jason Butler from JMP Securities.

--------------------------------------------------------------------------------

Jason Nicholas Butler, JMP Securities LLC, Research Division - MD and Senior Research Analyst [10]

--------------------------------------------------------------------------------

Just in terms of field force size, any thoughts on potential either increases or additional decreases that you could make this year? And then just broadly, how you think about investing in the field force size versus continuing to build the RxConnect network?

--------------------------------------------------------------------------------

Gerald W. McLaughlin, Neos Therapeutics, Inc. - CEO, President & Director [11]

--------------------------------------------------------------------------------

Yes, Jason, the 2 are inextricably linked, right? So we constantly examine. We have approximately 75 territory specialists. We constantly evaluate opportunities to tinker with size, structure, up a couple, down a couple, depending upon business opportunity. That's been the focus of ours, and we'll continue to strategically look at our sales force and where and how they're deployed. And why I say they're inextricably linked, we've seen such a good early response with H-E-B in Texas and now as we add Meijer in Midwest, those additions kind of can help shape how we view our business opportunity. So we'll continue to look at that both with the existing partnerships we have and as we add additional partnerships with regional chains going forward. So it's something we've talked about since we made the first initial change, and we'll continue to examine this going forward.

--------------------------------------------------------------------------------

Operator [12]

--------------------------------------------------------------------------------

The next question comes from Gary Nachman with BMO Capital Markets.

--------------------------------------------------------------------------------

Rafay Sardar, BMO Capital Markets U.S. - Analyst [13]

--------------------------------------------------------------------------------

It's Rafay on for Gary. Can you comment on some of the insights that you've gotten from your performance analytics platform and how the sales force is leveraging that data? And then second, what percentage of commercial lives are currently covered? Or are there any changes in coverage starting in 2020? And lastly, how should we be thinking about operating expenses for 2020 relative to 2019?

--------------------------------------------------------------------------------

Gerald W. McLaughlin, Neos Therapeutics, Inc. - CEO, President & Director [14]

--------------------------------------------------------------------------------

Yes, so I'll handle that. So I'll handle the insights and adopters on the analytics and then any changes to coverage and talk about coverage. So the insights from analytics, what we're able to do is give our territory specialists ability to segment their physician database. And what it does is it allows them to quickly follow up on physicians who will show propensity to adopt, it shows quick follow-up on physicians who have ample headroom. So it's making us much more efficient with our -- where we deploy our -- the fixed resource of our sales representatives' time. So making the choice of where to spend the business -- spend the time with which account to drive the business. So this is done -- the representatives get this on a daily basis, weekly basis. They have access to our head of sales operation to educate them on how and where to target. There's a real focus now on increasing our number of our adopters, which is having a meaningful impact on our business, we believe. And as we look at the data, there's significant headroom. It's about being focused and really keep an eye on understanding how the data can drive your business going forward.

Now as far as reimbursement coverage, this Neos RxConnect basically is coverage to 100% of commercially insured patients. Regardless of your plan, a physician can prescribe our product and a patient, regardless of coverage, will pay no more than $35. We believe we have sufficient coverage. Each calendar year, there are always some changes. And we had a modest change in, I believe, 1 or 2 plans that had, really we think, a de minimis effect on our overall business. So going forward, though, it's really -- we focus on for the commercially insured patients. We provide coverage for all of them.

--------------------------------------------------------------------------------

Richard I. Eisenstadt, Neos Therapeutics, Inc. - CFO, Treasurer & Corporate Secretary [15]

--------------------------------------------------------------------------------

Regarding expense guidance. So we're expecting our gross margins to continue to increase. We believe that in 2020 that will be in the mid to upper 60s. It could hit 70, remains to be seen, but mid- to upper 60s, we're fairly comfortable with. It does move up and down quarter-to-quarter depending on our utilization in the factory as well as -- it does trend, of course, according to our net revenue per pack.

For operating expenses, we expect that overall, they'll stay relatively flat year-over-year. So R&D, we expect it's going to continue in the $8 million to $10 million range, sales and marketing expenses in the mid to upper 20s and G&A in the mid-teens. I do want to remind you that approximately $6 million to $7 million of these costs are noncash expenses.

--------------------------------------------------------------------------------

Gerald W. McLaughlin, Neos Therapeutics, Inc. - CEO, President & Director [16]

--------------------------------------------------------------------------------

And one last comment on how we use our analytics, I think it's a telling signal. Despite reducing our sales and marketing expense by 36%, including an approximately 40% reduction in sales force, when you look at the fourth quarter of 2019 versus the fourth quarter of 2018, we only had a 1.8% drop in the total number of prescribers, and we still have close to 11,000 prescribers in the fourth quarter of 2019. And it really points back to these analytics helping our territory specialists, helping the regional sales managers really build a business plan around where and how to target and with what frequency.

--------------------------------------------------------------------------------

Operator [17]

--------------------------------------------------------------------------------

And I'm showing no further questions in the queue at this time. Ladies and gentlemen, thank you for participating in today's conference. This does conclude your program, and you may now disconnect. Everyone, have a great day.