electroCore, Inc. (ECOR) 2019 Q1 法說會逐字稿

Greetings, and welcome to the electroCore First Quarter 2019 Earnings Conference Call.

(Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Hans Vitzthum of LifeSci Advisors.

Please go ahead, sir.

Thank you, operator, and thank you all for participating in today's call.

Joining me are Frank Amato, Chief Executive Officer; Brian Posner, Chief Financial Officer; and Tony Fiorino, Chief Medical Officer.

Earlier today, electroCore released results for the quarter ended March 31, 2019.

A copy of the press release is available on the company's website.

Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements.

All forward-looking statements including, without limitation, our examination of operating trends and our future financial expectations, are based upon the company's current estimates and various assumptions.

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements.

Accordingly, you should not place undue reliance on these statements.

For a list and description of the risks and uncertainties associated with the company's business, please see the company's filings with the Securities and Exchange Commission.

ElectroCore disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise.

This conference call contains time-sensitive material -- or information that is accurate only as of the live broadcast today, May 14, 2019.

And with that, I'll now turn the call over to Frank.

Thanks, Hans.

Hello, everyone, and thanks for joining us today.

As you know, in 2018, we took a number of key steps to build out our commercial infrastructure to support the launch of gammaCore and to position the company for growth in 2019.

Our quarter-over-quarter growth in total prescriptions, refill prescriptions and prescribing physicians demonstrated that demand for our therapy was strong throughout 2018, and that the business model of delivering our therapy and monthly prescriptions is robust.

Today, I'm pleased to report that the first quarter of 2019 has continued that trend.

We have sustained momentum among patients, physicians and payers.

During the first quarter, we hit key milestones across all the leading indicators of our business, including total prescriptions, with March coming in with our best monthly total to date.

This increase in prescriptions written is the result of writing by existing prescribers as well as newly prescribing physicians.

At the end of 2018, we reported that we had reached over 1,800 physicians who had written at least 1 prescription.

By the end of Q1, we have seen prescriptions from 2,170 physicians cumulatively since the launch of the product.

332 new physicians prescribed gammaCore for the first time in Q1, which speaks to the comfort that physicians had in prescribing a therapy that is safe and has neither systemic side effects nor drug interactions.

During the quarter, we expanded our free goods program, Partners for Coverage or PFC, which was initiated in Q4.

Under this program, our specialty pharmacy partner, Asembia, dispenses a gammaCore or 1 month of therapy to patients who qualify.

Simultaneously, this initial dispensing of the product, Asembia also submits a refill prescription with the patient's authorization to their insurance company to initiate the reimbursement process.

This submission remains in place until the insurance company makes a final adjudication, a process which may take several months.

As a result of the expansion of this program, we believe that the better metric to measure our performance is not prescriptions written, but instead, prescriptions dispensed.

It is the dispensed metric that we have been using as the basis of our implied demand revenue.

For historical consistency however, Q1 total prescriptions were approximately 6,100 versus approximately 5,800 in Q4.

In each quarter, approximately 3,000 prescriptions were dispensed.

But in each calendar month this year, we have seen an accelerating increase in this metric, and the trailing 3 months, which includes February through April dispensed prescriptions increased to just over 3,500.

Shifting now from the free goods program to the progress we've made in gaining reimbursement.

Throughout the first quarter, we began to see the anticipated increase in reimbursed prescriptions being processed through both CVS Caremark and the Federal Supply Schedule or FSS.

In order to actualize the revenue potential of the FSS contract within the military channel, we spend and continue to spend a considerable amount of our effort working through distribution logistics to bring each hospital and military treatment facility online.

Each of the targeted 33 individual military treatment facilities and 80 Veterans Administration Centers require an understanding of how its local distribution process works.

To that end, our commercial team brought 20 military facilities online that purchased product during the first quarter.

Similarly, regarding patients covered by the 3 large PBM networks, CVS Caremark, Express Scripts and OptumRx, more than 5,000 prescriptions have been filed -- filled under the Partners for Care program.

The prior voucher program was through patient self-pay.

The majority of these prescriptions await approval of the required prior authorization and represent potential reimbursement.

We are starting to see the logjam break with a better than 250% increase from Q4 to Q1 in reimbursed prescriptions seen through the CVS Caremark agreement.

We are still in the early days of the implementation of the CVS Caremark agreement, so the increases are over a small but now growing base, and we are encouraged by the trend.

Importantly, the April number showed a continuation of this growth.

With this in mind, in the first quarter 2019, we were able to realize GAAP revenue of approximately $410,000, about 11% growth over the fourth quarter.

We also dispensed in the U.S. an additional $1.6 million worth of gammaCore prescriptions through the ongoing promotional programs, which include both our Partners for Coverage program and co-pay assistance.

In total, the potential demand product sales value of gammaCore prescriptions dispensed during the first quarter of 2019 were similar to what we reported for the fourth quarter of 2018, or approximately $2 million.

As more of these promotional prescriptions get reimbursed, we expect to see it reflected in GAAP revenue, and will continue the revenue ramp that we are anticipating this year.

Next, I'll focus on payer update.

Before discussing specific payers, let's review the payer landscape and the channels available to electroCore source revenue.

It is worth highlighting that gammaCore is a microelectronics device refilled like a drug, and therefore can be reimbursed in either the medical or the pharmaceutical benefit pathway.

The first channel available to us is the PBMs, who manage drug benefit for reimbursement under the pharmacy benefit pathway.

The second is direct contracting with managed care organizations that will likely reimburse us as a medical device.

As a result, the reimbursement pathways can differ from payer to payer.

For example, PBMs like CVS Caremark reimburse gammaCore within the pharmacy benefit pathway like a drug.

Other payers like Highmark, the third largest Blue Cross Blue Shield plan in the United States, reimburses gammaCore as a medical device or in the medical benefit pathway.

That said, despite which category a payer chooses to place us in, we are indifferent, since gammaCore can be reimbursed either way.

A third channel of business is the Federal government or through the Federal Supply Schedule, which, for us, went into effect in mid-January.

The Veterans Administration segment is currently treating gammaCore as a medical device, distributing it through its prosthetics procurement departments; whereas within the active duty segment, the military treatment facilities, we are being distributed through Cardinal Health, which came online in Q2.

The fourth channel of potential revenue is the single payer government health care systems in Europe.

As indicated previously, we are focused nearly exclusively in the U.K. and Germany, as those 2 markets are the largest and most influential within the EU.

Each channel requires demonstration of a therapy's cost-effectiveness before the government will consider payment for the [offering].

In the PBM channel, our agreement with CVS Caremark went into effect in January of this year.

gammaCore is currently a nonpreferred branded product requiring a co-pay, currently covered through our co-pay assistance, that the prescriptions be written by a neurologist and the patient has failed at least 3 other prescribed medications.

To date, over 1,600 CVS Caremark patients have been prescribed gammaCore.

Nearly 1,100 prior authorization requests have been sent to prescribing physicians, for which, 800 responses have been received and returned.

Because the paperwork is not always filled in correctly, we are working closely with neurologists to hone their ability to provide the required information to CVS Caremark accurately.

As a result, Asembia now has 300 approvals in hand, with a substantial number in the queue.

It is this type of learning process at the practice level that informs our expectation for back-end loading of this year's revenues.

As we seek to evolve our relationship with CVS Caremark, we recently submitted an enhanced proposal to modify our current agreement and to enhance access to gammaCore for patients.

Discussions are ongoing, and we'll report on our progress over the coming quarters.

As we rolled out gammaCore within the VA and DoD, our focus has been on logistics, given that gammaCore has to be loaded into the distribution system of each hospital and treatment facility individually.

During the first quarter, we had orders for more than 20 facilities nationwide.

In England, it was recently announced that we were awarded a National Health Service innovation technology award.

That is gammaCore was selected as 1 of 8 innovative technologies that the National Health Service will pay for while a broader reimbursement review takes place, which should complete at the end of this year.

Although the award is focused solely on cluster headache, the budget under this award is GBP 965,000 or approximately $1.25 million over the next year.

All of the channels that are now opening to electroCore give us confidence in our future revenue prospects, but we also understand that the slope of the ramp will be dictated in part by the post contracting implementation process.

The only opportunities in hand we are looking to add a large number of players by continuing the contracting and/or medical policy change process, which is often required.

One such example is Express Scripts, which has repeatedly indicated its desire to enter into an agreement with us for a significant number of their managed lives.

As we have explained previously, logistical challenges have impeded this effort.

First Databank, the third-party compedia organization, had placed our gammaCore codes in a medical device compendium, to which Express Scripts is a pharmacy benefit manager, if not, a subscriber.

However, earlier this year, the National Council for Pharmaceutical Drug Pricing, or NCPDP, unanimously established a dosing standard for gammaCore that effectively universalizes our codes for inclusion in all pharmacopeia.

Express Scripts and First Databank have recently agreed on a solution that we believe opens the door, not only for us, but for other therapeutic devices as well.

First Databank is essentially building a third database, which will include all the codes for our product and similar cutting-edge technologies.

Express Scripts has indicated a willingness to subscribe to this new database.

We believe this arrangement will enable us to move forward and finalize a contract for gammaCore.

In the first quarter, we also launched the second stage of our social media and consumer marketing efforts to help drive patient demand.

We rolled out the program in 6 test markets.

I'm pleased to report that we have seen an immediate and a substantial increase in patients looking to find a gammaCore-trained neurologist through our web portal.

From the baseline of fewer than 50 searches per week prior to March 1, that number has risen to more than 600 searches per week, further emphasizing the high dissatisfaction rate among cluster headache and migraine patients.

With that, I'd like to turn the call over to our new Chief Medical Officer, Tony Fiorino.

Tony is an accomplished executive who brings a broad array of drug development and leadership experience to electroCore, and spent a decade as a health care analyst and portfolio manager before moving to industry.

He's been on board for about 2 months, and has been deeply immersed in both clinical development and medical affairs since joining the company.

We welcome Tony to the team, and look forward to working closely with him to continue building electroCore.

Thank you, Frank.

I'm excited to be part of the electroCore team, which has already accomplished so much in bringing gammaCore to market in migraine and cluster.

Although I am still on this deep part of the learning curve regarding the vast amount of underlying science supporting noninvasive VNS, I'm beginning to build out a strategic vision for where we can take gammaCore both within headache and beyond and how we get there.

What attracted me to electroCore and what I see is so compelling about noninvasive VNS is its multimodal mechanism of action with a direct and broad impact on CNS function coupled with local and systemic anti-inflammatory effects in the context of an exceptional safety profile.

Last week, our collaborators present the data at American Academy of Neurology from our cluster headache registry and from a functional MRI mechanism of action study.

I had the opportunity to meet in Philadelphia with some of our investigators, and I found their enthusiasm for gammacore in headache to be quite palpable.

These are clinicians who have participated in our studies and who used the device in their practices, so they have seen firsthand its benefits in their patients.

I will note here that there will be additional oral and poster presentations at the upcoming European Headache Federation and American Headache Society meetings.

Today, I would like to provide an update on our clinical programs and share some thoughts on areas of future interest.

Our current and near-term company-sponsored clinical trials are all in migraine, and I will provide some details on those shortly.

Beyond these sponsored studies, there are a number of investigator-initiated trials getting underway that are testing new hypotheses and could lead us into significant new directions.

As you know electroCore has a long history of supporting innovative clinical and preclinical research in collaboration with academic investigators interested in neuromodulation, I view these clinical studies as an important avenue to assess the feasibility of and to obtain proof-of-concept for noninvasive VNS in indications that we view as exploratory or high risk.

These investigator-initiated trials can help us direct resources into future sponsor trials designed to prove safety and efficacy in new indications.

Since we do not have the resources or bandwidth to study the entire array of diseases in which noninvasive VNS might show benefit, by supporting high-quality investigator-initiated trials, we can identify promising areas for future clinical development without assuming the early developmental and resource risk associated with those studies.

Moving to our sponsored clinical studies in migraine.

PREMIUM II is our second migraine prevention study, a randomized, double-blind, sham-controlled multicenter trial targeting a migraine population more skewed towards chronic migraine that was the PREMIUM I study.

PREMIUM II is enrolling briskly with most sites now active, and the remaining sites expected to come online over the coming weeks.

I'm pleased that the study is well over 20% enrolled at this point.

And currently, we expect to complete enrollment in the first half of next year.

The real study is a multicenter randomized, open label controlled trial of real-world gammaCore use.

Meaning, the device is being used for both migraine prophylaxis and acute treatment.

I think this is a particularly interesting study because it uses the paradigm of a single therapy for both prophylaxis and acute treatment, which is how we believe gammaCore might best benefit migraine patients.

Also matches how patients with cluster headache can use gammaCore since both acute use in episodic cluster and prevention of cluster are on-label indications.

We are in the process of securing Ethics Committee approval on a country-by-country basis and expect to be able to begin enrolling subjects by the end of the second quarter.

The next study on the docket is the ATOM trial, a randomized, double-blind, sham-controlled study of gammaCore in adolescent migraine.

Migraine is highly prevalent in adolescence, and the efficacy of triptans and other treatments in this age group is variable with far fewer data than in adult migraine.

We believe adolescent migraine is an area in which we can distinguish gammaCore and that its safety profile will prove attractive for prescribers, patients and their parents.

We have received central IRB approval of the protocol and are planning to launch the study in the second half of this year.

Turning to investigator-initiated trial.

The first I will mention is also in headache.

The gap PTH study in patients with posttraumatic brain injury headache.

Over 30% patients who suffer traumatic brain injury report having headaches that can be severe and they continue long after the injury.

This population may represent an ideal patient group in which to use noninvasive VNS because the genesis of their headaches appears to involve post injury inflammatory processes that lead to sensitization.

We are supporting a randomized, sham-controlled treatment and prevention study that is expected to enroll 60 subjects with University of Texas Southwestern.

This study should begin enrolling in the second half as well.

Continuing in neurology, a pair of investigator-initiated stroke studies are on the docket in Europe, one of which has begun enrolling subjects and the second is expected to launch in the second half.

These studies follow up directly on a large body of preclinical work suggesting that VNS can impact a variety of post growth factors, including neuronal excitability, neuroinflammation and blood-brain barrier permeability.

In fact, last month, our collaborators from Mass General Hospital published preclinical results in the journal Stroke, showing that noninvasive VNS significantly reduced aneurysm rupture rates and grade, improved survival and reduced expression of inflammatory mediators in a mouse model subarachnoid hemorrhage.

And certainly we have the track record for pharmaceutical inventions in strokes, but what intrigues me about noninvasive VNS is that the therapeutic intervention is not necessarily dependent upon the vasculature in order to reach its site of infarction, which, of course, is a challenge faced by drugs administered after a stroke has occurred.

And there are clinical data suggesting VNS has benefit from post stroke rehabilitation.

This is a good example of an indication in which there are promising preclinical data, but high clinical risk.

Accordingly, any future consideration we might give to pursuing clinical development of stroke will be fully informed by the data generated by these investigator-initiated trials.

Moving out of neurology, as we know, there's a broad range of data suggesting systemic anti-inflammatory effects of vagus nerve stimulation, including investigator-initiated trials that we supported in Sjogren's syndrome published last year in neuromodulation and in rheumatoid arthritis presented this past February at the Brain Stimulation Conference.

There's cumulating support for VNS having benefits in rheumatoid arthritis patients, so this is an area of active interest for the company.

We mentioned on last quarter's call the launch of the Genius-RA study, an investigator-initiated trial in rheumatoid arthritis patients who have had inadequate response to biologic.

Three of the 4 sites in that study are now active and enrollment is underway.

We have begun to find for future clinical development in rheumatoid arthritis, starting with taking a close look at the best target population for nVNS.

Our planning will, of course, be informed by the data that arise from the open label Genius-RA study.

Through the course of the year, we may see results from other investigator-initiated trials in several other areas, including pain, neurology and inflammatory disease, although the timing and venue of presentation and publication are controlled by the investigators, not the company.

So stay tuned for further updates, as there is a lot cooking.

With that, I will turn the call back to Frank.

Thank you, Tony.

And again, welcome to the team.

Now I'd like to turn the call over to our new Chief Financial Officer, Brian Posner, to run through the numbers for the quarter.

Brian comes to us with a broad background of finance, having most recently served as the CFO for Cellectar Biosciences.

Like Tony, Brian has a wealth of public market experience, spanning 6 companies in the health care field over the last 3 decades.

Many of you may have interacted with Brian in the past.

But for those of you who have not had the pleasure of knowing him from prior positions, I speak from several months of closely working with him at this point, and I can truly say he's a wonderful addition to our team.

Take it away, Brian.

Thank you, Frank.

It is a great company, and I'm excited to be part of electroCore.

Thanks to you and the Board for the opportunity.

Last quarter, we provided some commentary about our anticipated revenue ramp from quarter-to-quarter this year.

Frank spoke to this a bit earlier in his remarks around the evolution of our payer contracts in various channels of revenue.

Due largely to the timing of new coverage decision on the part of CVS Caremark, the Federal Supply Schedule and others that commence reimbursement in the first quarter 2019 as well as continued growth in unique prescribers and the ongoing conversion of promotional scripts to be reimbursed, we continue to anticipate that revenue for 2019 will be back-end weighted.

Specific to the second quarter, for example, we have already seen a growth in the number of product requisitions from the VA and DoD facilities in April, that was almost as much as all of the first quarter.

Of course, the growth is over a very small base, but it speaks to the multiple factors that are all converging on a growing opportunity.

Now to the numbers.

For the quarter ended March 31, 2019, electroCore reported net sales of $410,000, an increase of approximately $42,000 from $368,000 in the fourth quarter of 2018, reflecting increased sales of gammaCore Sapphire.

As Frank noted earlier, the majority of gammaCore prescriptions during the quarter, 94.5% to be specific, were dispensed under promotional program.

As a result, we're proud to report that we've delivered an additional $1.6 million of product sales value of gammaCore therapy to patients through our promotional program.

Our co-pay assistance program is where we assist patients who had attained commercial coverage with up to $250 of their co-pay at the time gammaCore was dispensed.

We continue to believe these programs are accomplishing our objectives of providing patient therapy at no charge, demonstrating the benefit that gammaCore therapies and physicians writing prescriptions and promoting U.S. commercial payer coverage and coverage discussion as a result of patient and physician demand.

Total operating expenses for the first quarter of 2019 were $14.5 million as compared to $9.1 million for the first quarter 2018.

The increase in operating expense was driven primarily by sales and marketing expenses as well as an increase in stock-based compensation.

Operating loss for the first quarter of 2019 was $14.2 million as compared to an operating loss of $9.1 million in the first quarter of 2018.

Cash, cash equivalents and marketable securities at March 31, 2019, totaled $52.4 million as compared to $68.6 million at December 31, 2018.

The net cash burn of $16.2 million for the quarter ended March 31, 2019, included working capital uses of cash due to a $1.6 million increase in inventory and approximately $2.1 million of payments related to 2018 accrued compensation.

As a company, we are always reviewing ways to husband our resources and deploy our capital as efficiently as possible.

And as the new leader of the financial management team, I'll be making a full assessment of our inflows and outflows to identify potential additional efficiencies.

And now I'll turn the call back over to Frank.

Thanks, Brian.

We are pleased with our performance during the first quarter.

The steps that we undertook last year are yielding positive results and our leading indicators in the form of covered lives, unique prescribing physicians and total prescriptions and refill prescriptions are strong.

We entered 2019 with significant momentum across both our commercialization and research and development initiatives, and we look forward to providing future updates on our progress.

And with that, operator, please open the call up for questions.

(Operator Instructions) Our first question comes from the line of Josh Schimmer with Evercore ISI.

I have a few.

First, can you remind us the difference between the pharma reimbursement pathway and the device reimbursement pathway in terms of what it means for payments, revenues, rebates and timing to electroCore?

Sure.

The pharmacy benefit pathway typically requires a rebate back to a PBM.

And the medical reimbursement pathway is one that requires typically a payer to change their medical policy, in our case, for vagus nerve stimulation.

Most of the payers have a medical policy in place indicating that vagus nerve stimulation should only be used for refractory epilepsy because it usually a $30,000 implant that requires major surgery.

Once we change the medical policy, like in the case of Highmark, then patients can get access to the therapy through usually a prior auth with a neurologist or at least that's the case with Highmark at this current time.

As far as the reimbursement goes for some of the plans who reimburse in the medical benefit pathway, a patient may have to expend their medical deductible before the payer will begin to share in the cost of the therapy.

On the pharmacy benefit side, which typically with a PBM, as I mentioned earlier, there's usually a co-pay that's required.

In the case of CVS Caremark, it's in the $65 to $75 range, depending upon who the patient is.

And in that case, we try to assist the patient with our co-pay assistance.

What is the typical deductible under the devices reimbursement pathway?

The deductible is whatever the patient's medical deductible is for whatever plan that they've signed up for with their payer.

In the case of most of the CVS Highmark patients, it will be around 50%, of which, we'll cover $250 in the therapy.

So if you take up a $575 treatment, we cover most of the cost of the therapy, the patient has to come out of pocket somewhere around $45.

And what do you expect the ultimate split now is going to be between covered lives under pharma versus device reimbursement?

That's a very good question.

We think that the medical plans or the insurance plans will start to come on with medical benefit reimbursement, and those will be largely Blue Cross Blue Shield plans, which have a predominant number of plans across the United States.

And then right now we're looking to enhance our CVS Caremark agreement, which will be for about 30 or so million lives and Express Scripts when that comes online will be for about 35 million.

So I think the split will be 50-50 about a year from now to answer your question directly, Josh.

About half of the patients will be in the medical benefit pathway through the Blue Cross Blue Shield plans and the other half will come through the PBMs as we negotiate those contracts.

Got it and will the creation of the new package for the First Databank coding impact any of the other payers beyond Express Scripts?

And if so, how will that act?

It very well may.

So Express Scripts probably manages somewhere around 70 million lives with the recent addition of Cigna.

And in those 70 million lives, about half are managed in a formulary that is used uniformly across those 35 million lives.

The other 35 million lives out there are ones where we would have to take a rebate agreement that we negotiated with Express Scripts and pull that through to the plan.

Those plans may decide want to contract with us directly for additional rebate or better terms, or they may just take the Express Scripts agreement as it stands today.

And in that case, that First Databank opportunity would allow us to then pull that through to some of those plans as well.

Great.

And then last question, I have to ask because a few investors have expressed dismay over JP initiating a stock selling plan at the time that the stock is so far below the IPO price.

So perhaps you can address why it was felt this is a prudent timing considering the poor optics, and why we shouldn't take that as the lack of confidence in the outlook for the company at the current valuation?

Sure.

So JP can speak for himself as to what his thinking is, but I know that much like most senior executive in any publicly traded company, employees and senior folks put 10b5 plans in place that go in place long before the stock is sold.

And in JP's case, I'm pretty sure that his stock was sold through his 10b5 plan, and that was something that was put into effect during an open window back in the latter part of last year.

So I think the selling is just a function of a 10b5 plan.

JP has been investing in the company here as one of the founders for the past 13 years, and I think he's probably selling a very small portion of what he owns in the company.

Yes, and Josh, this is JP.

I would just add.

Frank is exactly right.

There was a 10b5-1 plan that was written and implemented back last year.

I have not had a window open to me to change it.

That is the fundamental, and I've told investors who've called me and asked me that I've spoken to them directly about it.

It's not something that I am legally allowed to change until a window opens.

I do intend to make changes to it when the window opens, but I can't do it until then.

Our next question comes from the line of Dave Turkaly with JMP Securities.

I just want to ask -- to start a quick follow-up on that medical pharma benefit.

So under either scenario, you're still billing it or intend to bill it as a monthly prescription.

I think you said it when is the medical -- you're covering some of that monthly costs, but there's -- today, as you look at those 2 options, they're both still sort of a monthly prescription-based model.

That is absolutely correct, David.

They are both -- we're still maintaining our business model, which is to reimburse our therapy monthly.

In the case of a medical benefit, the co-pays are often higher, can be up to 50%, as I mentioned earlier, whereas with most of the PBMs, or the pharmacy benefit pathway, those co-pays are lower, typically 15% to 20%.

Now the company pays a rebate for those typically.

So net-net, back to the company, it could be the same profit margin because between the co-pay assistance and the rebate on the pharmacy benefit side, the company could still net about the same revenue there as you would on the medical benefit side, where there is no rebate, but the co-pays could be much higher around 50%.

So I hope that's clear and that's kind of how we are navigating to the market on either end.

I appreciate that.

You mentioned that the refill has doubled.

I had a number some like 2,000 last quarter, but I don't even know -- I'm not sure if that's exactly correct.

But can you comment what was the actual number of refills?

Are you giving that number?

We had been giving the number up to this point, but we were speaking to the fact that about 35% of our prescriptions are being refilled in the Partners for Coverage program.

So we believe that, that program will begin to mimic broader reimbursement coverage across the United States.

Between our co-pay assistance and the rebate we give the payers, we see that opportunity to be fairly commensurate with the program as it exists today.

And then overall, we've had growth in our refills quarter-over-quarter that's been in the 300% range is what we are communicating back in the fourth quarter.

Got it.

Then it sounds like you're making some progress with Express Scripts.

I think you've commented that there are a big percentage, maybe 30%, 35% of the scripts that you have seen today.

Is that still the case?

Are they still sort of the biggest in terms of the number of scripts that you're seeing?

They're very large across the U.S. market.

They, much like most of the PBMs out there, of the 5,000 prescriptions I referenced earlier during the call, that are currently been prescribed through the 3 PBMs.

ESI is about the largest of the 3, and the 3 carve up the United States almost equally, OptumRx having United as their largest payer, and then ESI working across a number of payers, including Cigna.

And then lastly, CVS Caremark having merged recently with Aetna, all cover somewhere in the 60 million to 80 million number of lives range.

But ESI seems to be one of the plans that, for whatever reason, represents somewhere in the 30% to 35% of the prescriptions that are written for our product.

Our next question comes from the line of Sean Lavin with BTIG.

It's Marie Thibault on for Sean Lavin tonight.

I wanted to dig a little more on the time line that we can kind of expect for the Express Scripts, the work they're doing with First Databank.

About how long might it take to build that sort of third package?

And is this a Q2, Q3 kind of time frame?

Or are we thinking much longer than that?

So we have been in constant discussions with Express Scripts, as you know, Marie, for quite some time.

But really in the first quarter here is when the NCPDP came back and universalized our codes that they've kind of was despair to get the conversations going with Express Scripts and First Databank from my understanding.

They decided that a digital therapy module would be the workaround so that Express Scripts didn't have to buy the database, where they house all the medical device codes, which is called Prizm database.

And building of that database, testing it and then making it available to their various different customers, not just Express Scripts, it would take about 6 months, and we were told that back in the first quarter.

So my anticipation is that there could be an opportunity for us to ink some type of agreement in the third quarter of this year at its earliest.

Okay.

Great.

That's very helpful.

And then maybe a quick question for the new Chief Medical Officer, Tony.

I'd love to hear about the conversation.

Any progress you are making with some of the medical policy plans out there, the Blue Cross Blue Shields of the world, anything to report there?

Yes.

I'll let Tony speak for himself.

But he's not been the one kind of spearheading a lot of those discussions.

Those discussions have been actually, up to this point, happening with our previous Chief Medical Officer, Peter Staats, who, as you may recall from our press release, has opted to stay on as a senior adviser to the executive team here.

So Tony is the Chief Medical Officer, and has been working largely on our behalf with large payers as he has for the past couple of years here as well as the VA, DoD and CMS for coding for our product as we think about bringing it into the Medicare segment for future opportunities.

So I'll stop there, and want to see if Tony has anything to add.

What I will add is that my sense of how these conversations have gone, as I talked with both Peter and our Head of Market Access is, there is increasing receptivity to the dataset.

We met with payers with more data published in the literature expanded label where the presentations are quite well received.

Great.

Just one last one, if I may.

I wanted to ask about the step-up in total prescriptions written.

Nice to see a sequential step-up, but I was curious why it wouldn't be maybe a little bit higher given we didn't see a large step-up in the number of physicians actually prescribing?

Sure.

Yes.

I think that's a very insightful question, Marie, and thanks for the question.

In the first quarter, I attempted to lay out in the call here that we've been working feverishly at a lot of the logistics required to make sure that your product is available in the various different segments into our channels that we have been operating in.

For example, our sales representatives have been working closely with neurologists around making sure the prior auths required to get patients through the CVS Caremark agreement that we have right now is one where we're having to chase down between the specialty pharmacy that sends the prior auth back to the doctor's office and get to the staff to make sure that they're aware that something was ought to fax back to them or something needs to be filled out more in detail.

That also holds true for Highmark, which came on board toward the end of February for us.

So a little more than halfway through the quarter.

We've been working through the process that they're requiring in order to get access to gammaCore, which is, again, paperwork related.

And then lastly, we've spent a lot of time after our Federal Supply Schedule agreement came online in the middle of January, ensuring that we -- that every one of the centers out there in the VA hospitals and also the active duty military treatment facilities understand how to access getting gammaCore.

In the VA centers, we're sending gammaCore right to the actual hospitals themselves.

For the active duty military treatment facilities, we end up having to work through Cardinal Health as a wholesaler.

So it's just -- it's been a logistical bug for us that as our folks focused on making sure the different channels, understand how to access our product opposed to being in front of the physicians driving total prescriptions.

So although the growth wasn't what we had hoped it would be, it's not surprising to me considering all the other logistics that we're working through to make sure that this unique product, this innovative therapy is available for patients who need it.

(Operator Instructions) Our next question comes from the line of Ahu Demir with NOBLE Capital Markets.

My first question is in the last earnings call you mentioned additional PBM, do we expect anything to publish in the second quarter in the near term?

Beyond the 3 large -- first of all, I would thank you for the question and good to hear your voice.

Likewise, Francis.

We do have other PBMs that we are interacting with.

We were down in Florida just last week, meeting with a large PBM that covers a significant part of the Medicare and Medicaid segment, they have significant interest in what we're doing, in our technology.

We presented our clinical data to their Chief Medical Officer last week.

We were waiting to hear back from them on how they would prefer to reimburse for the therapy.

We would imagine, as a PBM, they would do it in the pharmacy benefit pathway.

And if that's the case, then it's possible we could have an additional PBM contract by the end of the second quarter.

Beyond that, most of the other opportunities are with changing medical policies through either a PBM like, Prime Therapeutics, which is owned by about 1/3 of the Blue Cross Blue Shield plans down in Texas or in direct communications and interactions by our account management team, who are themselves meeting with multiple dozens of plans across the United States on a monthly basis.

But to answer your question directly, there could be an opportunity for an additional PBM to come online by the end of the second quarter.

I think it would be the one in Florida that would be [met].

Okay.

My next question will be on do you have any anecdotal usage from physicians or patients for prevention of migraine.

I'm really excited to hear about the PREMIUM II data, but I was just curious if you do have any anecdotal usage of the prevention of migraine?

As you know, prevention of migraine is off label for our therapy.

The business model, where patient has access up to 30 doses a day for 31 days of therapy, it's quite possible that if a physician decides to prescribe our product for the prevention of migraine much like they would be able to prescribe it today on label for the prevention of cluster headache and also recommend it for the acute use of cluster headache and/or migraine, the physician has the opportunity to do that.

We have not heard a lot of feedback from the medical community that physicians are using it ubiquitously in that regard.

I'll look and -- we'll look to the opportunity to speak to some of those customers, as the American Headache Society comes up and some of the other opportunities to see some of these doctors.

But I do not have a lot of anecdotal experience coming back from the field on, on and off label use.

I would just add, nor do I. Most of my conversations with our prescribing neurologists are really not drilled down into whether using it acute versus preventive, but their overall experience with the product for their patients.

My next question would be just shortly on the RA study.

Do we expect data in 2019?

End of 2019?

Or do we -- or is it going to be later like 2020 time line?

So it's an open label study.

It is an IIT, so we don't control the data per se.

The investigator controls the data, but I would anticipate that we will see some data from that study, not before Q4 would be the earliest that we would see it, but hopefully, we will see some data in 2019.

Ladies and gentlemen, we have reached the end of the question-and-answer session.

And I would like to turn the call back to Frank Amato, Chief Executive Officer, for closing remarks.

Okay.

Thanks again for joining our call this afternoon, everyone.

We look forward to providing our next quarterly update in August.

Thank you, and thanks for your time today.

This concludes today's conference.

You may disconnect your lines at this time.

Thank you for your participation.