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Edited Transcript of OSMT.OQ earnings conference call or presentation 10-Nov-20 9:30pm GMT

·29 min read

Q3 2020 Osmotica Pharmaceuticals PLC Earnings Call Nov 11, 2020 (Thomson StreetEvents) -- Edited Transcript of Osmotica Pharmaceuticals PLC earnings conference call or presentation Tuesday, November 10, 2020 at 9:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Andrew J. Einhorn Osmotica Pharmaceuticals plc - CFO * Brian A. Markison Osmotica Pharmaceuticals plc - Chairman, President & CEO * James D. Schaub Osmotica Pharmaceuticals plc - Executive VP & COO ================================================================================ Conference Call Participants ================================================================================ * Ami Fadia SVB Leerink LLC, Research Division - MD of Biopharma & Generics and Senior Analyst * David Michael Steinberg Jefferies LLC, Research Division - Specialty Pharma Analyst & Equity Analyst * Gregory Daniel Fraser Truist Securities, Inc., Research Division - Research Analyst * Randall S. Stanicky RBC Capital Markets, Research Division - MD of Global Equity Research & Lead Analyst * Lisa Wilson ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Ladies and gentlemen, thank you for standing by, and welcome to the Osmotica Pharmaceuticals' Third Quarter 2020 Business Update Call. (Operator Instructions) Please be advised that today's conference may be recorded. (Operator Instructions) I would now like to hand the conference over to your speaker today, Ms. Lisa Wilson, Investor Relations for Osmotica. Please go ahead, ma'am. -------------------------------------------------------------------------------- Lisa Wilson, [2] -------------------------------------------------------------------------------- Thank you, operator. Welcome to Osmotica Pharmaceuticals' Third Quarter 2020 Business Update Call. This is Lisa Wilson, Investor Relations for Osmotica. With me on today's call are Osmotica's Chief Executive Officer, Brian Markison; Chief Operating Officer, JD Schaub; and Chief Financial Officer, Andrew Einhorn. This afternoon, the company issued a press release detailing financial results for the 3 months ended September 30, 2020. This press release and a webcast of this call can be accessed through the Investors section of the Osmotica website at osmotica.com. Before we get started, I would like to remind everyone that any statements made on today's conference call that express a belief, expectation, projection, forecast, anticipation or intent regarding future events and the company's future performance may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act. These forward-looking statements are based on information available to Osmotica's management as of today and involve risks and uncertainties, including those noted in this afternoon's press release and our filings with the SEC. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. Osmotica specifically disclaims any intent or obligation to update these forward-looking statements, except as required by law. During this call, we refer to non-GAAP measures such as adjusted EBITDA. For a reconciliation of adjusted EBITDA to net income or loss, please see the tables at the end of our press release. The archived webcast of this call will be available for 30 days on our website, osmotica.com. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on November 10, 2020. Since then, Osmotica may have made announcements related to the topics discussed, so please reference the company's most recent press releases and SEC filings. And with that, I'll turn the call over to Osmotica's CEO, Brian Markison. -------------------------------------------------------------------------------- Brian A. Markison, Osmotica Pharmaceuticals plc - Chairman, President & CEO [3] -------------------------------------------------------------------------------- Thanks, Lisa, and thank you for joining our call today. The third quarter for Osmotica has been exciting. We received early FDA approval for Upneeq, finalized our partnership with Santen and started to commercialize Upneeq after Labor Day. Along the way, we've also been engaged with the FDA on the review of the arbaclofen NDA, which has picked up considerably over the past few months. We are truly on our way to realizing the strategy that we set out at the IPO to become a branded growth company. On our last earnings call, we described our early experience program with Upneeq, where we targeted 650 leading eye care practices with our team of 65 sales representatives. Early physician and patient responses to the program and, more importantly, the product have exceeded our expectations. In fact, over the first 9 weeks, many of the physicians that have been sampled have already begun to write prescriptions. No matter the specialty in eye care, Upneeq has been embraced by those we have called on, with many of our customers trying it on themselves actually for the first time. Likewise, patient feedback has been terrific, with 85% of patients surveyed likely to continue treatment after going through their initial supply from the early experience program. In a little over 2 months, we have gained a great deal of insight into this first-of-a-kind treatment for ptosis or droopy eyelid. We have a good measure of sales force effectiveness and the additional tactics that need to be rolled out in order to drive growth. In fact, our announcement in the press release about the Irish Takeover Rule 2.4 is all about clearing the runway for Upneeq and possibly arbaclofen. I'll now turn the call over to Andy Einhorn, who will discuss the company's financial results. Andy will be followed by JD Schaub, our Chief Operating Officer, who will share additional insights into the early commercialization of Upneeq. Andy? -------------------------------------------------------------------------------- Andrew J. Einhorn, Osmotica Pharmaceuticals plc - CFO [4] -------------------------------------------------------------------------------- Thank you, Brian. Total revenues for the 3 months ended September 30 were $57.2 million compared to $65.5 million for the 3 months ended September 30, 2019, primarily due to a decrease in net product sales, offset by higher licensing and contract revenue. Net product sales decreased by $32.8 million to $31.2 million for the 3 months ended September 30, 2020, as compared to $64 million for the 3 months ended September 30, 2019. This decrease reflects continued price and volume erosion on our existing product portfolio stemming from additional generic competition. Licensing and contract revenue increased $25.5 million, reflecting the receipt of milestone payments under the license agreement with Santen Pharmaceutical. Selling, general and administrative expenses decreased $1.3 million during the 3 months ended September 30, 2020, to $23.5 million compared to $24.8 million in the 3 months ended September 30, 2019. This decrease reflects sales force reductions in the first quarter of 2020, offset by higher costs related to the launch of Upneeq and costs associated with the Santen license transaction. Research and development expenses decreased by $4.6 million in the 3 months ended September 30, 2020, to $3.7 million as compared to $8.3 million in the 3 months ended September 30, 2019. The decrease primarily reflects the completion of clinical studies related to arbaclofen ER and NDA filing fees for Upneeq, which were incurred in the third quarter of 2019. During the third quarter of 2020, we recognized intangible asset impairment charges of $19.5 million, reflecting write-down of product rights as compared to impairment charges of $128.1 million for the third quarter of 2019. Our net loss for the third quarter of 2020 was $8.6 million compared to a net loss of $112.7 million in the third quarter of 2019. Adjusted EBITDA for the third quarter of 2020 was $26.1 million compared to adjusted EBITDA of $22.9 million for the third quarter of 2019. As of September 30, we had cash and cash equivalents of $126.1 million and borrowing capacity under our revolving credit facility of $50 million. As of September 30, 2020, we also had $221.4 million aggregate principal amount borrowed under our term loans following the prepayment of $50 million of term loans during the quarter. I will now turn the call over to JD. -------------------------------------------------------------------------------- James D. Schaub, Osmotica Pharmaceuticals plc - Executive VP & COO [5] -------------------------------------------------------------------------------- Thanks, Andy. As Brian stated upfront, this has been a truly exciting time for our organization with the launch of Upneeq and the potential for FDA approval of arbaclofen before year-end, further accelerating our transition to a specialty branded pharmaceutical company. Today, I'll update you on some early highlights from our controlled rollout of Upneeq and share additional details on the continuing expansion of those efforts. In early September, we launched Upneeq through our new operating subsidiary, RVL Pharmaceuticals, supported largely by samples and a dedicated 65-person sales team. The first phase of our controlled launch was designed to provide seamless trial and generate meaningful real-world insights to inform and further shape the expanded rollout. Initially, we launched the Uncovering Ptosis, or UP, early experience program targeting approximately 650 eye care practitioners throughout the country. Approximately 9 weeks later, we have quickly expanded the number of participating ECPs to over 2,500, which still represents less than 5% of the total ECP target audience. The core of this early experience has been an aggressive sampling effort, providing an opportunity for more than 10,000 patients to trial Upneeq through a combination of samples and/or 14-day UP early experience kits in these offices. By all accounts, we have seen a tremendous promotional response, and the feedback from patients and clinicians has been overwhelmingly positive. The product works, and we are just starting to scratch the surface. Importantly, our access strategy has mitigated many of the traditional prescriber challenges with new product launches, notably payer coverage and availability, as evidenced by more than 1,100 ECPs having already moved from trial to prescribing of the product. Further, our pharmacy has also given us the unique ability to capture feedback at the point of sale. Specifically, 65% of prescriptions submitted and filled thus far have been for 90 days, a strong indication of patient intent to use and physician confidence in the efficacy and safety. This early feedback and data validates what we have always believed is an outsized commercial opportunity. In a short time since launch, we have generated significant momentum within just a small fraction of both the prescriber and potential patient population. We remain focused on reaching an increased number of targets from our existing sales footprint, about 6,500 in total, while continuing to establish Upneeq as a part of our ECP partners' daily protocols and routines. Moving forward, we are preparing for an expanded launch, increasing our corresponding investments in sales, marketing and medical to further accelerate the growth of this unique asset. Notably, we expect to expand our sales team from 65 to about 100 by the end of the first quarter 2021, allowing us to broaden our reach to over 15,000 ECP targets. Additionally, we recently welcomed the new Head of Marketing, [Sanjay Maliakel], who joins with a wealth of eye care experience. As we look ahead, we see a drug that has an almost immediate positive effect on patients and is promotionally sensitive. With this foundation, we will be layering in a meaningful marketing and medical spend, starting to create consumer awareness and further elevating awareness and education within the targeted ECP community, continuing to expand our target audiences and beginning to put in place our loyalty program. We look forward to updating you on our progress as we move further through the early launch phase. With that, I'd like to turn the call back to Brian. -------------------------------------------------------------------------------- Brian A. Markison, Osmotica Pharmaceuticals plc - Chairman, President & CEO [6] -------------------------------------------------------------------------------- Thanks, JD. And that concludes the prepared portion of our remarks. And what I'd like to do now is turn the call back to the operator so we can field questions. Operator? ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) And our first question comes from Randall Stanicky with RBC Capital Markets. -------------------------------------------------------------------------------- Randall S. Stanicky, RBC Capital Markets, Research Division - MD of Global Equity Research & Lead Analyst [2] -------------------------------------------------------------------------------- Brian, I may have missed this. But just looking at the press release and the commentary around strategic review process, can you just comment on that to the extent that you can? And what sparked the timing, if that's related to Irish takeover law, maybe just expand and help us understand the process on that? And then I have a couple of fundamental follow-ups. -------------------------------------------------------------------------------- Brian A. Markison, Osmotica Pharmaceuticals plc - Chairman, President & CEO [3] -------------------------------------------------------------------------------- Yes. Thanks, Randall. And well, number one, under the Irish -- we are an Irish-domiciled company. So under the Irish Takeover Rules, we have to be fairly specific in this type of disclosure. And what really sparked all of this is we've seen through a fairly short time with Upneeq on the market that we believe this drug is a winner. And as you know, we're a fairly diversified company right now. And we really want to focus on, as I've said earlier, clearing the runway for investing in Upneeq and growing that brand, which we think has huge upside for us and shareholders. And then should arbaclofen get approved as well by the end of the year, we're very bullish on that product. And we just want to make sure that we're letting folks know that we are willing to consider a lot of options in our portfolio in order to drive the best outcome for Upneeq and arbaclofen. -------------------------------------------------------------------------------- Randall S. Stanicky, RBC Capital Markets, Research Division - MD of Global Equity Research & Lead Analyst [4] -------------------------------------------------------------------------------- I mean, you've talked about being -- having a generic base that generates cash flow. You've talked about you transitioning to a specialty company, using that cash flow to invest in the growth of specialty over time. And at some point, generic -- that generic business dilutes that specialty growth, and you're kind of at that inflection point right now. Is that part of the thinking in terms of splitting the business? And then the other part of that question, I mean, in terms of Irish law, just to spur this disclosure, do you need to be certain --a certain way along in the process? Or does this just give you more flexibility to pursue possible strategic changes? -------------------------------------------------------------------------------- Brian A. Markison, Osmotica Pharmaceuticals plc - Chairman, President & CEO [5] -------------------------------------------------------------------------------- We are at the infancy of the process. We really, quite frankly, are kicking that off with this release. So this is really ultimately for flexibility, as you stated. And also with our generic business, we have a lot of pride in it and we continue to do so. And we clearly are going to be reliant upon the manufacturing facility for arbaclofen and for another pipeline product that we have, which is fairly far along. But at the same time, if we can monetize different portions of the company to free up investing in Upneeq, we're wide open to that. -------------------------------------------------------------------------------- Randall S. Stanicky, RBC Capital Markets, Research Division - MD of Global Equity Research & Lead Analyst [6] -------------------------------------------------------------------------------- Understood. And then just one question on Upneeq. It's early in the launch, I understand. But do you have the sense as to how it's being used yet? Is it -- do you use daily, intermittently? Any feedback that you've received from physicians? I think it's probably too early to get a sense of the script refill. But anything that you could give us a sense from that perspective in terms of how sticky you think use will be over time? -------------------------------------------------------------------------------- Brian A. Markison, Osmotica Pharmaceuticals plc - Chairman, President & CEO [7] -------------------------------------------------------------------------------- Yes. So Randall, great question. And we know exactly how it's being used right now, which fuels our confidence. But I'll start it out, and JD will add more detail. But the population that's getting our drug right now is exactly the population base from our clinical trials, which is roughly a median age of 65. So it's a little older than we would expect as we get further out in time. It's the more severely ptotic patient, not the mild to moderate. But it's not surprising because those are the patients that were really sitting there in eye care right now easily identified. So I think, JD, with that, why don't we -- what more would you add? -------------------------------------------------------------------------------- James D. Schaub, Osmotica Pharmaceuticals plc - Executive VP & COO [8] -------------------------------------------------------------------------------- Yes. I think, Randall, the only thing I'd add to Brian's comments, and you've touched on it, it's too early for insights around refills. But I think one of the comments that we did make, which I think is important here, is 2/3 of prescriptions early are for 90 days. And I think the reason that's important is, number one, 90 days is really a commitment to use the product on behalf of the patient. And so when you ask about how are patients using it, what are we seeing, what is the stickiness, I think that speaks to the underlying trends that we're excited about upfront. Patients are using this every day, and they're committed to using it based upon what in reality is a chance to use it and see it take effect and know what that effect is going to be each and every day within the first 5 to 15 minutes of trialing the drop. And so that's all very encouraging through 8, 9 weeks here. -------------------------------------------------------------------------------- Operator [9] -------------------------------------------------------------------------------- And our next question comes from David Steinberg with Jefferies. -------------------------------------------------------------------------------- David Michael Steinberg, Jefferies LLC, Research Division - Specialty Pharma Analyst & Equity Analyst [10] -------------------------------------------------------------------------------- So just a part -- I know it's really early in the launch, but just to parse through the types of patients more, are you -- it's largely being prescribed to those older patients who would be considered for surgery, who have the more severe ptosis. Or I know that you've -- hopeful that over time that you appeal to a more broader group of patients. Is there any evidence that, that -- some of the scripts are going towards sort of that younger (inaudible) is that something that would be phased probably much, much (inaudible)? So you also indicated you're going to -- you're increasing your sales reps by 35 in the first quarter, and you're going to increase your medical spend. Could you give us a general sense what type of increases in spending you're going to see? And just sort of a housekeeping issue as the third question, you managed gross (inaudible). -------------------------------------------------------------------------------- Brian A. Markison, Osmotica Pharmaceuticals plc - Chairman, President & CEO [11] -------------------------------------------------------------------------------- David, we lost you on the back end of that question. Could you give us the last part of it, please? All right. Well, I think, while we're waiting for David to get back, why don't we -- JD, let's answer the beginning of his question. And then we can see if he can reconnect or get on to a cleaner line. -------------------------------------------------------------------------------- James D. Schaub, Osmotica Pharmaceuticals plc - Executive VP & COO [12] -------------------------------------------------------------------------------- Yes. And David, if you do, feel free to expand, I think, all of the questions were a little bit in and out. So we want to make sure we capture and answer. But I think the first one was around patient types and a little bit more of what we're seeing. So maybe expanding a little bit upon, look, certainly, the clinical trial patient profile, but it's in real world. And so they're making a choice to go on therapy here. I think it's skewing female, not entirely unexpected. And I think while the bolus is what I would consider that patient profile that reflects what we saw in the clinical study, maybe more moderate to severe, potential surgery or doesn't want to go through with surgery, the reality is, we're actually seeing a lot of different use overall. And while it's not the same as the upfront bolus, it does give us that confidence here that we are working with a drug that has untapped potential and, as we go, the opportunity to build out all of those segments and really extract and optimize what we're doing. I think, the other piece is the investments themselves, and I think Brian is going to add a little bit more depth to this, but there hasn't been a lot of patient-focused awareness upfront. And that certainly is one of those levers that I think we're keen on beginning to roll out and even accelerate as we move through next year to bring a more educated consumer across the spectrum of age group and demographic into these offices. -------------------------------------------------------------------------------- Brian A. Markison, Osmotica Pharmaceuticals plc - Chairman, President & CEO [13] -------------------------------------------------------------------------------- All right. So let's see. David, do we have you back? So let's see, in the spirit of keeping this going, with the second question, in terms of the increase in our spend basically for 2021 behind Upneeq, I think the addition of our sales force that JD mentioned, if we're looking at roughly -- in the total scheme of things, around a 30% increase to the selling effort and the footprint, I think our marketing expenditure year-over-year will double at a minimum, depending upon a number of early experiments we plan from field in the early goings of next year and the end of this year around promotional responsiveness, particularly our digital footprint and direct-to-consumer. And then I think on the R&D side, our expenditure base will remain relatively even with this year. But we are shifting internally most of our available and fungible resources to Upneeq. So we will have a fairly dedicated Upneeq medical affairs plan and budget, which will include a number of investigator-sponsored studies because the outreach, particularly among the aesthetic community, has been pretty expansive. So I'll stop there and see if David is back. If not, operator, we can always come back to him. -------------------------------------------------------------------------------- Operator [14] -------------------------------------------------------------------------------- (Operator Instructions) Okay. Our next -- here's David. -------------------------------------------------------------------------------- David Michael Steinberg, Jefferies LLC, Research Division - Specialty Pharma Analyst & Equity Analyst [15] -------------------------------------------------------------------------------- Sorry about that. My signal went dead. Yes, I just -- I was just -- I don't think you answered the last question about gross margin. I think you indicated there's further erosion of generic Concerta and VERT. You've done a nice job managing gross margin. But where do you see things bottoming out in terms of the profile? -------------------------------------------------------------------------------- Brian A. Markison, Osmotica Pharmaceuticals plc - Chairman, President & CEO [16] -------------------------------------------------------------------------------- Yes. We would like to think that we've seen the lion's share of the erosion of the base business, David. And so yes, we've taken a number of steps to try to reduce costs, cost of goods, and some of that you're seeing reflected in the quarter pan out. As we shift -- as the sales mix shifts and Upneeq becomes more prominent, we note that the Upneeq gross margin is at a higher rate than some of the existing base business lines that are encompassing most of the gross margin today. So we would expect as Upneeq sales begin to take off, some gross margin improvement there. -------------------------------------------------------------------------------- Operator [17] -------------------------------------------------------------------------------- And our next question comes from Ami Fadia with Leerink. -------------------------------------------------------------------------------- Ami Fadia, SVB Leerink LLC, Research Division - MD of Biopharma & Generics and Senior Analyst [18] -------------------------------------------------------------------------------- Firstly, just with regards to the announcement under sort of the Irish law. Can you help me think about why the announcement was primarily around Upneeq? And why not with regards to maybe exploring a divestiture of the generics business or some of your legacy products? So how do you think about kind of why you picked Upneeq as the one? Because it is still in kind of that early launch phase. Secondly, can you talk about how many samples have been distributed in the market for Upneeq? And can you talk about the mix of -- can you give us a sense of the total volume of prescriptions that you've seen so far and where they have started to come? And then lastly, just with regards to the expansion in your sales and marketing efforts. Can you give us more color around the shift or where you're adding that effort in terms of the type of physicians you might be focusing on? -------------------------------------------------------------------------------- Brian A. Markison, Osmotica Pharmaceuticals plc - Chairman, President & CEO [19] -------------------------------------------------------------------------------- Okay. Thanks, Ami, and I'll take the beginning of it and turn it to JD for the second half. And we have some fairly, I think, good information for you. But with regard to the Irish Takeover Law, I want to be very, very clear that we are basically exploring all available options available to the company in order to maximize the assets. So for example, should arbaclofen get approved, we would consider any range of partnership, divestiture, co-promote with arbaclofen. We're quite open to that. Should someone want to acquire our generics business, we would be open to that. Should someone want to acquire the whole company, naturally, we're publicly traded, so that's pretty much a no-brainer. But what we're really seeing today is a tremendous upside with Upneeq. And we were going to face that issue as well should arbaclofen get approved. And quite frankly, given the erosion in the base business, we don't have the bandwidth to maximize both of those assets at the same time. So we need to look at refinancing our capital structure to also give us some more runway and create nondilutive revenue to fuel growth. So this is really completing our transformation into a growth story, and we've got a great -- had a great run off the base business. And now it's time to really expand. So JD, over to you. -------------------------------------------------------------------------------- James D. Schaub, Osmotica Pharmaceuticals plc - Executive VP & COO [20] -------------------------------------------------------------------------------- Yes. And Ami, I've jotted down a couple of notes, so I'm going to try to hit these sequentially in terms of some insights. I think number one, you asked about sampling. And I think the way we looked at it was our approach, and we've talked about this before, but first time Upneeq has been introduced outside of a clinical setting, and we were going to be measured and delivered. And I think what that meant was the early experience program would start with a core group of about 650 physicians. And we would use free trial as a preview and a means of really generating not just awareness but comfort with the product from a physician standpoint and also give patients an opportunity to use the product consistently each and every day in a seamless and straightforward manner. I think what we saw coming out of that was a tremendous amount of receptivity, and what we're really talking about here is building a market. There's not a lot of good analogues in terms of where these patients are. But we know that they're everywhere across eye care, optometry, ophthalmology, within the oculoplastic setting, and then I think, looking forward obviously, into some adjacent and additional channel opportunities. So we've taken that early experience. And we've quickly expanded to where through the end of October, we had added samples and early experience kits to 2,500 ECPs in total, just over 2,500 eye care practices throughout the country, where we've kind of talked about it as a function of 330 days. And I think it's enough product thus far to be trialed in over 10,000 patients. So it's quite a bit of product. But again, I think this is rooted in really developing not just a sense of awareness within some core ECP offices upfront, but also that patient feedback and I think what has ultimately given us a lot of confidence in accelerating the expansion from both the sales, marketing and medical perspective this quickly in the launch. And then I think your last question was touching on what are some additional data points. So again, early and I don't think the visibility and anchoring to things which are really just data points and not really trends at this point. But through September, and we launched right around Labor Day, coming out of the Labor Day holiday, we had about 345 practices that had also prescribed Upneeq. By the end of October, that number had grown to over 1,000. And I think similarly, overall prescriptions during those same 2 time periods submitted went from 637 to over 2,400. So about 4x growth in prescription volume over that 4-week period, what amounts to about 8 weeks in the launch. So obviously, some really encouraging trends or data early on. And I think, look, that transitions to your last question about some of the mix and where we're headed with this. Look, number one, most of the marketing spend that we're going to be ramping up is not incremental to much of a baseline. This is really new, developing the ECP community, the traditional HCP medical marketing, office-based resources. And importantly, education, keeping this top of mind in the surround sound when our reps aren't in front of them each and every day, the peer-to-peer education and the tweaks and adjustments that we've made through 8 or 9 weeks with the feedback from these offices to give them additional tools and tactics to help them identify these patients. Remember, we're building a market. We barely scratched the surface in terms of the number of ECPs that are out there and who have product today, and we've got a lot to do. And I think we're excited about what that looks like moving forward. On the medical side, clearly, it's additional data. I think it's additional horsepower and bandwidth from a personnel perspective to help expand upon the promotional efforts and the peer-to-peer messaging and education. And then consumer awareness, I think we're going to be -- we're wrapping up some market research and testing and going to be launching the first consumer campaign digitally as we turn into January, and then also starting to pilot some DTC tactics at a micro geographic level and using that as the baseline to continue to build and expand on the consumer side of things. -------------------------------------------------------------------------------- Ami Fadia, SVB Leerink LLC, Research Division - MD of Biopharma & Generics and Senior Analyst [21] -------------------------------------------------------------------------------- That's very helpful. If I could just maybe just get one clarification question. So have all the prescriptions come from practices where you gave out samples? Or were there any practices that are outside of that, that also prescribed? Just curious. -------------------------------------------------------------------------------- James D. Schaub, Osmotica Pharmaceuticals plc - Executive VP & COO [22] -------------------------------------------------------------------------------- Yes. It's a great question. So I think early on, it was driven by those practices that we had gone to. I think as we've moved in this -- in particular, over the last several weeks, there's, no doubt, organic tailwinds here. And I think the white space, maybe just to put it in a traditional term, the number of prescribers that have yet to be sampled or have called looking for samples and information, continues to increase. And I think these are all really strong indicators, given what was really a controlled launch with reps and samples and a targeted group of physicians that kind of have us sitting here today, 8, 9 weeks in, ready to expand the footprint and really start to open things up as we turn towards '21. -------------------------------------------------------------------------------- Operator [23] -------------------------------------------------------------------------------- Our next question comes from Greg Fraser with Truist Securities. -------------------------------------------------------------------------------- Gregory Daniel Fraser, Truist Securities, Inc., Research Division - Research Analyst [24] -------------------------------------------------------------------------------- Following up on the planned initiatives to drive Upneeq, you mentioned the sales force expansion, increased marketing spend, more focus on the medical side. Will the planned investments that you're wanting to make in 2021 depend on monetizing some of the noncore assets or not? And are there initiatives that -- for Upneeq that you would like to fund in 2021, but it would be difficult to fund with your current cap structure? -------------------------------------------------------------------------------- Brian A. Markison, Osmotica Pharmaceuticals plc - Chairman, President & CEO [25] -------------------------------------------------------------------------------- Yes. I think right now, we're not really looking at this process driving our ability to invest. I think at a minimum, our loan is due at the end of '22. So we'll be looking at options again to restructure that piece of capital. And so I think they're not really dependent upon the other. We plan to invest no matter how you look at it because that's the single best thing we can do for this company and for the shareholders. So I'm pretty comfortable with that. JD? -------------------------------------------------------------------------------- James D. Schaub, Osmotica Pharmaceuticals plc - Executive VP & COO [26] -------------------------------------------------------------------------------- Yes. I would say the only thing I would add, Greg, is, I think always -- you can always spend more. But I think what we're focused on is, look, we have to spend more. We're seeing the things that give you the confidence and conviction in investing more and ramping those spends. And then we'll continue to be very thoughtful about where we put the next dollar beyond that. But it's likely things like expanding reach and/or consumer marketing campaigns. But that's going to be rooted in seeing the same data points and trends that we've seen thus far. -------------------------------------------------------------------------------- Gregory Daniel Fraser, Truist Securities, Inc., Research Division - Research Analyst [27] -------------------------------------------------------------------------------- Got it. That's very helpful. And then just a question on arbaclofen. Based on how the review has progressed so far, how would you characterize your confidence in a positive outcome? -------------------------------------------------------------------------------- Brian A. Markison, Osmotica Pharmaceuticals plc - Chairman, President & CEO [28] -------------------------------------------------------------------------------- Well, look, I'm confident in the product and the outcome. But -- I'm supposed to be, and I think what I've told everyone on The Street that let's wait for it to happen before we count it. I think what I can really say is right now, we're engaged with the FDA in a fairly rigorous review. They're being extremely thorough. We're getting some excellent questions from them. And they're diving deep into the database, diving deep into the statistics behind everything, heavy on CMC. And we feel very good with the answers to all of the information requests that have come our way. So I think confidence is building, but I want to be cautiously optimistic for the sake of our investors. I think it's a great product. It's got a real place in the armamentarium of neurology and MS. But I'm hoping the goal date, December 29, is a nice Christmas present. But we'll see. -------------------------------------------------------------------------------- Operator [29] -------------------------------------------------------------------------------- And there are no further questions in the queue. I'd like to turn the call back to Brian Markison for any closing remarks. -------------------------------------------------------------------------------- Brian A. Markison, Osmotica Pharmaceuticals plc - Chairman, President & CEO [30] -------------------------------------------------------------------------------- Okay. Operator, thank you. And thank you all for joining our call today. We welcome the opportunity to update you as we move into the future. I think we've got some great things in store for us, and we will be in touch. Thank you. -------------------------------------------------------------------------------- Operator [31] -------------------------------------------------------------------------------- Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.