Global Blood Therapeutics Inc (GBT) 2020 Q3 法說會逐字稿

Greetings, and welcome to the Global Blood Therapeutics Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the call over to Steven Immergut. Please go ahead.

Thank you, and welcome to GBT's conference call to discuss the company's financial results for the third quarter 2020 and to provide a business update. I'm Steven Immergut, Head of Communications and Investor Relations. Joining me on the call are Dr. Ted Love, our President and CEO, who will provide an update on progress in the third quarter; Jeff Farrow, our Chief Financial Officer, who will provide an overview of our financial results; and David Johnson, or DJ, our Chief Commercial Officer, who will give an update on the Oxbryta launch. Ted will then close with an update on our research activities and other long-term growth initiatives.

Earlier this afternoon, we issued a press release announcing GBT's business progress and financial results for the third quarter ended September 30, 2020. Yesterday, we issued a press release announcing 9 data presentations at the upcoming ASH Annual Meeting. In addition, we announced that in conjunction with ASH, on December 7, we will be holding our Analyst and Investor Day.

Before we begin, I would like to remind you that certain statements we make on this call that are not historical facts may be forward-looking statements that are subject to risks and uncertainties. Information concerning factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements are contained in our SEC filings, including, but not limited to, our most recent quarterly report on Form 10-Q as well as in today's press release. Copies of our SEC filings and press releases can be obtained from the Investors page of our company website at gbt.com. The forward-looking statements made on this call are only as of the time they are made, and you should not place undue reliance on such statements. Future events or simply the passage of time may cause our beliefs to change, and we disclaim any obligation to update any forward-looking statements other than as required by law.

With that, I will turn the call over to Ted.

Thank you, Steven, and good afternoon, everyone. 2020 continues to be a year of remarkable progress for GBT despite headwinds from the global pandemic. We are pleased that more and more sickle cell patients are benefiting from treatment with our first-in-class disease-modifying therapy Oxbryta, which we believe will become a foundational standard of care in this devastating disease.

In addition, in the third quarter, we saw continued strong performance in the U.S. launch, building on momentum from the first half of the year. I'm proud that the GBT team has been able to accomplish this strong performance, and I want to acknowledge the resilience and determination of all of our employees as we continue to deliver on our mission for patients.

As we saw in the second quarter, COVID-19 is indeed impacting sickle cell patients. The CDC identified sickle cell as one of a few medical conditions associated with increased risk of severe illness and death from COVID-19. This risk drives added caution for sickle cell patients and hinders their ability to access health care. In fact, the average quarterly number of sickle cell patient engagement with health care providers decreased from 1.1 visits before the pandemic to 0.8 visits in the third quarter, which was also a sequential decrease from Q2.

GBT is continuing to work hard to address the obstacles faced by the sickle cell community and ensure that patients can access Oxbryta. We are doing this through broad patient and professional education program, extensive patient advocacy engagement, increased digital communications in social media and the ongoing tireless efforts of our teams in the field. Everyone at GBT shares a deep passion and commitment for serving the SCD community, and I'm pleased to say that we are making excellent progress.

Regarding the Oxbryta launch, we continue to advance on 3 key factors that give us confidence in our positioning and growth potential. Number one, there was continued strong overall demand for Oxbryta in the third quarter across a broad range of patients. We reported more than 1,000 new prescriptions, up slightly from the second quarter despite the increase in COVID-19 cases in the third quarter and in line with our commentary on our last quarterly call.

Number two, our field teams continue to engage health care providers with virtual tools and have restarted in-person engagement in many geographies. As a result, we added more first-time Oxbryta prescribers in the quarter, and our cumulative virtual and in-person activity is beginning to approach prepandemic levels.

And finally, number three, I'm happy to report that we achieved our goal of securing broad patient, broad payer coverage, a full quarter ahead of our goal. By the end of Q3, 90% of people with health insurance in the U.S. now have coverage for Oxbryta compared to 53% at the end of the second quarter. And while we've reached this important milestone, we will continue to focus on optimizing payer coverage and ensuring patients have access to Oxbryta.

As such, we are also pleased that the majority of new prescriptions continue to become enrollments in GBT Source, our high-touch patients of our support program that is customized to each patient's needs. Overall, we're very happy with our launch progress to date. Even in the midst of a global pandemic, our results have far exceeded analysts' projections at the beginning of the year without adjustment for the COVID-19 pandemic. Of course, we will get through this pandemic, and longer term, we will emerge even stronger as we continue our efforts to expand the number of lives we can improve with Oxbryta.

With that, I will turn the call over to Jeff to update on our third quarter results.

Thank you, Ted. GBT delivered strong results in the third quarter, and we've continued to maintain a healthy balance sheet. Despite the ongoing impact of COVID-19, total net revenue from the sales of Oxbryta was $36.9 million for the third quarter of 2020 and $82.5 million through the first 9 months of 2020. Third quarter revenues were driven by underlying patient demand as well as good payer coverage and reflected our progress with new prescriptions, including more new patient scripts in the second half of the third quarter.

The third quarter results compares to $31.5 million in the second quarter and represents a $4.8 million or 17% sequential increase. I would remind you that the second quarter included a tailwind from new prescriptions that originated in the first quarter but were not dispensed and thus, not recorded as revenue until the second quarter. We did not have the same tailwind in the third quarter because we have reduced the time from enrollment to dispensing medication. As you think about modeling revenue based on our new patient prescriptions, it is important to note that while this is the best indicator of demand and the initial trajectory of the launch, the translation into revenue can be delayed or impacted by multiple factors.

I'll now walk you through some of those dynamics, which continue to be consistent with analogs for our launch. First, as with all novel medicines, there is a lag between an Oxbryta prescription entering GBT Source and when it is dispensed to the patient. And inevitably, along the way, some prescriptions will be abandoned by the patient and never filled. We estimate that together, these factors of time lag and abandonment impact up to about 25% of new prescriptions. Around 15% to 20% of this is related to abandonment, and the balance represents the lag time factor of prescriptions working their way through the payer and physician office processes.

For example, as prescriptions in the third quarter were more weighted to the second half of the quarter, a portion of these prescriptions may not be filled until the fourth quarter. It also means that of the dispensed new prescriptions, the majority drove only 1 to 2 bottles in the quarter.

Next, I'll highlight adherence, which is how patients are taking Oxbryta over time as prescribed. For various reasons, over time, some patients discontinue therapies. In a launch year, analogs suggest annual adherence will be in the range of 60% to 80%. We are currently well within that range. As we have said previously, it is very early in the launch to be making any long-term estimates of adherence as this could change over time.

Our gross-to-net adjustment was 13% in the third quarter. The adjustment each quarter will be driven by patient insurance coverage, prescriptions filled by 340B pharmacies, the Medicare Part D coverage gap and patient co-pay assistance. As previously stated, we anticipate that over time, our gross to net would stabilize at around 25% to 30% once we reach our expected payer mix.

Over the last 2 quarters, we have seen more Medicaid patients that were eligible for dual coverage with Medicare as well as a patient preference to go to GBT Source. As a result, we now anticipate we will likely be at the lower end of that range at steady state.

Cost of sales for the third quarter was $513,000. Cost of sales was low as the majority of the manufacturing costs related to Oxbryta sales were incurred prior to FDA approval and thus, were recorded as R&D expense. We expect the cost of Oxbryta sales as a percentage of revenues will increase in future periods as fully expensed product manufactured prior to FDA approval is utilized. It's important to point out that we believe that we have enough commercial supply of Oxbryta to sustain estimated patient needs until late 2021.

R&D expenses for the third quarter of 2020 were $40.2 million compared with $39.1 million for the same period in 2019. The increase in R&D expenses in 2020 was primarily due to an increase in external costs related to our inclacumab program and preclinical research activities related to our collaboration with Syros Pharmaceuticals. This was partially offset by a decrease in manufacturing costs for Oxbryta. Following the FDA approval of Oxbryta, we now capitalize manufacturing to inventory.

Sales, general and administrative costs for the third quarter 2020 were $54.5 million compared with $29.7 million for the same period in 2019. The increase in SG&A expenses was primarily due to increased employee-related costs, including noncash stock compensation and other professional and consulting services associated with the build-out of our commercial operations and launch of Oxbryta. Our increased patient and HCP education and promotion efforts are also reflected in the SG&A expenses in 2020.

Net loss for the third quarter was $59.9 million compared to $64.5 million for the same period in 2019. Basic and diluted net loss per share for Q3 was $0.97 per share compared with $1.07 per share for the same period in 2019.

We ended the third quarter with a strong balance sheet and with cash, cash equivalents and marketable securities of $535.2 million compared with $574.2 million at June 30, 2020. We continue to believe that our existing cash and investments, along with access to the additional $75 million under our term loan facility, have the potential to provide the necessary runway for us to achieve positive cash flow while enabling ongoing advancement of clinical development programs and other earlier-stage product candidates. We remain confident that we are operating from a position of strength.

And with that, I will now turn the call over to DJ.

Thank you, Jeff. Good afternoon, everyone. I'm quite pleased with our progress on the Oxbryta launch in the third quarter as we continue to effectively manage through a dynamic environment created by COVID-19. I want to thank our team for the passion and dedication they bring every day to make this possible.

I will provide an update around the 3 key metrics that, combined with net revenues, will give you further insights into our progress. These metrics are: new prescriptions for Oxbryta, which informs underlying patient demand; the number of health care providers prescribing Oxbryta, which captures the progress we are making in adoption; and payer coverage, which speaks to the access environment for Oxbryta.

First, new prescriptions. There were more than 1,000 new prescriptions for Oxbryta during the quarter. This result is in line with our expectation that new prescriptions in Q2 were going to be a good proxy for Q3. We are pleased with this result for several reasons.

In terms of the macro environment, it was another challenging quarter that began during a surge in COVID-19 cases around the country. This created a headwind as sickle cell patients had lower levels of engagement with the health care system than before the pandemic. That said, we were encouraged that new prescriptions began to improve in August as new COVID-19 cases moderated, which continued in September. Both months included some weekly prescription results that were approaching prepandemic levels.

Similarly, we saw some regional successes in top SCD states such as New York, New Jersey and California, where physicians have been able to consistently see patients in person. As we consider the outlook for Q4, we are balancing the positives with the ongoing uncertainty going into the winter as new COVID-19 cases rise across many parts of the United States as well as the impact of the holiday.

Given these dynamics, we believe it is prudent to anticipate that new prescriptions in the fourth quarter will likely be consistent with Q2 and Q3. As use of Oxbryta grows, we have expanded our review of patient charts, claims and lab data to include over 1,500 patients. And the results continue to confirm that almost half of the patients started therapy with a baseline hemoglobin greater than 8 grams per deciliter, and nearly half experienced 3 or more VOCs in the prior year. The results demonstrate that Oxbryta is being prescribed to a broad range of patients, which we believe is a positive indication of its growth potential as adoption expands.

We are also pleased that a majority of new prescriptions continue to become enrollments in GBT Source, signaling the effectiveness of our patient support program. In Q3, the time from prescription enrollment to a patient receiving medication was around 2 weeks, which is consistent with Q2 and in line with best practices for orphan therapies.

Now I'll turn to the second metric, health care provider penetration. Similar to the prescription trends, the ability to engage with our customers in Q3 was influenced by the rate of new COVID-19 cases. Our sales team, medical science liaisons and access navigators have been actively educating customers throughout the pandemic. While most physician offices were open to virtual meetings in Q3, in-person visits started to grow, accounting for about 1/3 of our engagements by the end of the quarter. We expect the mix of in-person meetings with HCPs to further improve over time, though it will be variable depending on COVID-19.

I'm proud to say that by the end of the quarter, the total daily volume of our sales interactions with HCPs returned to prepandemic levels. From launch through September, our therapeutic specialists reached approximately 91% of our highest decile physicians and overall reached 70% of the approximately 6,000 health care providers we are targeting in the United States. Our team engaged our highest decile targets an average of 8x and had nearly 50,800 total customer interactions since launch.

Our HCP engagements and marketing and education efforts are driving increased awareness and interest in Oxbryta. Our latest market research conducted around the end of the quarter confirms the broad awareness of Oxbryta by specialists at more than 90%. And of those HCPs who are aware of Oxbryta, more than 90% say they have a plan or have prescribed it. Our research also demonstrates that 96% of prescribers are extremely satisfied or satisfied with Oxbryta's potential ability to improve long-term outcomes of sickle cell disease.

Our launch efforts have contributed to achieving approximately 1,150 unique health care providers who have written a prescription for Oxbryta from launch through the end of Q3, including about 225 new prescribers in Q3. This demonstrates continued interest in demand for Oxbryta.

When we look at the breakout of writers, we are encouraged that a range of health care providers are prescribing Oxbryta. Around 40% of the prescriptions are being written by nonspecialists such as primary care physicians, nurse practitioners and physician assistants. These HCPs typically take more time to adopt new therapies as compared to specialists, and we believe their early adoption is a positive trend for the long-term trajectory of the launch. And we are pleased to continue to see that the overall prescriber base is writing multiple prescriptions, averaging over 3 per prescribers since launch, which we believe is a good indication of the experience and overall satisfaction with Oxbryta.

Contributing to the increased penetration, we are building momentum with our broader marketing and educational activities. Our full branded message platforms for HCPs and patients launched in the third quarter and were featured in our promotional efforts at key sickle cell disease medical and community meetings. We have also elevated our digital presence, which has led to increased engagement with the SCD community, including via social media.

Turning to payer coverage. As Ted highlighted, at the end of the third quarter, we achieved our goal of broad coverage and did so ahead of schedule. As of the end of the quarter, we have achieved access for 90% of covered lives in the United States versus 53% at the end of the second quarter. This coverage includes published decisions or verified patient adjudication. The coverage breaks out as 87% of commercial lives, nearly 100% of Medicaid lives and 86% of Medicare lives having access to Oxbryta.

Notably, we have secured fee-for-service Medicaid coverage in 44 states, including all 17 priority states, where approximately 85% of the SCD patients live. This has had a positive impact on our managed Medicaid coverage, which improved significantly during the third quarter. One notable win in this segment is the L.A. Care plan in Los Angeles, which now covers Oxbryta with prior authorization to label for 2 million lives under their plan.

In summary, we executed well in the third quarter, recording new prescriptions in line with our expectations as well as achieving our goal of broad payer coverage a quarter ahead of schedule. We continue to have a lot of work to do, but we remain pleased with the overall success of the Oxbryta launch.

I will now turn the call back over to Ted to provide an update on our clinical development activities and pipeline.

Thanks, DJ. Our R&D and medical teams are focused on building a strong foundation for GBT's leadership in sickle cell disease as well as supporting the long-term adoption of Oxbryta as cornerstone therapy. An important element is the development of data that reinforces Oxbryta's strong clinical profile.

Last week, we had 2 Oxbryta presentations at the Annual Scientific Conference on Sickle Cell and Thalassemia in Europe. One included real-world evidence of Oxbryta's impact on sickle cell disease patients. The second described an impressive Oxbryta response in an acutely ill COVID-19-infected SCD patient.

We're also very excited to have 9 abstracts accepted at the American Society of Hematology Annual Meeting next month, including our 72-week analysis from the HOPE Study that support the sustained benefits of Oxbryta. This includes an abstract, which utilizes a validated outcomes [tool] known as the Clinical Global Impression of Change, or CGI, that measures a patient's change in overall health status.

We will also have several real-world evidence abstracts, including a large 1,275-patient study. In that study, Oxbryta improved hemoglobin, reduced blood transfusion and demonstrated a trend toward reduced VOCs. We believe this additional real-world evidence will give health care providers added confidence in the real-world benefit of Oxbryta for the patients they serve.

We will also share new research from our pipeline. This includes data supporting the best-in-class potential for inclacumab, our novel fully human monoclonal P-selectin inhibitor, which we are evaluating for the potential to reduce VOCs. We remain on track to initiate a pivotal clinical study on inclacumab in the first half of 2021.

We will also present, for the first time, data on our next-generation hemoglobin S polymerization inhibitor, GBT021601, also known as 601. This unique molecule with new intellectual property that we designed as a potential innovative advance over Oxbryta. We are very excited about the potential of 601 to raise the bar even further above the excellent results we are seeing with Oxbryta. The preclinical data with 601 demonstrates that it normalized hemoglobin by reducing hemolysis and significantly improved red cell health -- red blood cell half life and organ function in SCD transgenic mice.

601 and inclacumab, in addition to Oxbryta, are key elements of our strategy to become the leader in sickle cell disease by building on our knowledge and experience to create innovations that deliver additional benefits for patients.

Looking to 2021 and beyond, GBT remains committed to helping millions of people around the world affected by sickle cell disease. As an important step, we formed an exclusive agreement with a distributing partner to cover 6 Middle Eastern countries. There are more than 100,000 people, aged 12 and older, in this region who are living with sickle cell disease. In Europe, we are on track to submit, by mid-2021, a marketing authorization application for Oxbryta to treat hemolytic anemia in SCD patients 12 and older, which includes approximately 52,000 patients.

We also remain on track to submit, by mid-2021, an NDA seeking to expand our FDA label for Oxbryta to include children as young as 4. If approved, this would expand Oxbryta's potential to treat an additional 17,000 patients in the U.S. Finally, I'm also pleased that we are making progress on our ongoing clinical trials. After a COVID-related pause, our clinical development activities are accelerating.

In closing, I want to thank our employees for their excellent work and passion they bring every day. Together, we are impacting the lives of many sickle cell patients by delivering a critical new treatment option in Oxbryta and advancing potential new innovative therapies in the future. Our team is driven by our goal to make SCD a well-managed chronic disease and to profoundly impact the disparities in health care these patients face.

With that, I'd like to open the call for questions. Operator?

(Operator Instructions) Our first question comes from Alethia Young with Cantor.

I guess I just wanted to kind of understand in a little bit more detail how to think about kind of the read-through to the fourth quarter? I guess if you say scripts are flat, are you kind of implying that sales will be flat in the fourth quarter? And the reason I ask is because I'm just trying to figure out, was it kind of the refills that were driving kind of a modest growth from second quarter to third quarter? So I just wanted to how to think about fourth quarter in light of that.

Sure. Thanks, Alethia. This is Ted. Jeff, do you want to take that?

Sure. Yes. Alethia, I would generally think about sales as we're not going to be flat, but it will be increasing incrementally. We will see some benefit from those sales that came in, in the second half where we didn't ship a bottle in -- to get a full benefit in the third quarter and will come through in the fourth quarter. There is a couple of other things that we're mindful of, is the holidays that typically put some pressure on new Rxs, particularly the last half of December. You can see a reduction there. So that's something we're mindful of. We just don't have a lot of history yet to make any predictions there.

And then the other aspect I would say is we had a slight increase in inventory holds in the third quarter. It was approximately 5 days more than what we typically see. Usually, it's around 16 days of inventory. We saw it go up to 21. This was primarily due to, frankly, the great outcome on the Medicaid side, where we essentially have 100% coverage now, but some of the states require brick-and-mortar holding of inventory. So we have some of that impact there that will have to be worked out through the quarter as well. But we certainly don't expect a downward revenue or flat revenue for next quarter.

Our next question comes from Jim Birchenough with Wells Fargo.

Yes. I just wanted to follow-up on revenues versus new patient starts because I think there seems to be a bit of a disconnect when people look at 3,000 patients that have come into the system through the end of 2Q, up to 4,000, but only 17% growth in revenues. And so you said 1 to 2 bottles per patient, and it reflected the timing and more back half weighting of new patient starts that could come through in 4Q. But what would you expect to be -- could you say -- could you be more specific on that 1 to -- between 1 to 2 bottles? What was it in 2Q? And what would you expect to be the run rate? If patients are refilling every 30 days, you'd expect it to be closer to 3. But could you just give us some context for the 1 to 2 bottles and what -- maybe more specificity in what you saw in 2Q?

Yes. Sure, Jim. One of the benefits we got -- I alluded to in the prepared remarks was, in Q2, we did get a benefit from the fact that it was taking us longer to fill scripts. And so we had a big bolus that came through in the first quarter, 1,650 new Rxs, but it was taking us about 30 days to fill those scripts. So that came through -- a portion of those came through in the second quarter. So that's why we saw greater revenue growth in the first -- from the first quarter to the second quarter.

And when we refer to the bottles that were 1 to 2 in this quarter, it's strictly related to the new Rxs. So those are patients that are starting in that particular quarter. Some of them might start in the middle of the quarter. Some of them might start at the end of the quarter. So we wouldn't get the full benefit of that full quarter's worth. But I don't know, DJ, if you want to add anything further.

Yes. Jim, I know you know this, but just to be abundantly clear, the 4,000 or so approximately enrollments or new patient prescriptions we have launched to date, that's really the top of the funnel, right? So that doesn't represent patients on therapy. So just to be clear there.

And as Jeff said in the opening comments, you do have to take into account the timing, the -- in process but also the discontinuations and the adherence as well. So that's part of the reason why that 1,000 doesn't translate directly into revenues as well.

Our next question comes from Yatin Suneja with Guggenheim Partners.

A question on the abandonment rate. When you talk about the -- or when you discuss the abandonment rate, do you mean patient abandoning the refill or they just never pick the first script so they are never Oxbryta patient? And then I have a follow-up.

Yatin, that's a good question for DJ.

Yatin, so abandonment rate, I kind of break it down into 2 buckets, right? There is what happens before the patients start therapy and what happens after the patients start therapy. So before patients start therapy and they've got a new prescription coming into our hub, there's a certain amount of abandonment right there even before the patient ever gets that first bottle. And that's what Jeff talked about, that 20% to 25%, where part of that is going to be patients that are pending as we work through the payer process, and 15% to 20% of that could be this abandonment.

And those patients are patients that sometimes we get through the payer process, and then the patient just simply doesn't pick up the script. In other words, they don't set up the shipment. They have something else come up in their life that either delays or prevents them from really starting therapy at that time. Sometimes, it's a cancellation as well. They simply let us know through our hub that, hey, they're not ready yet or they're moving or whatever it is.

So that can be a whole series of reasons why patients don't start their therapy even though they've been prescribed. And that's been true in all the chronic therapies and all the specialty areas I've worked in throughout my career.

Then after the patient -- those patients that do make it through that, get their bottle shipped, that first bottle, then you're looking at what we call adherence. And that generally has 2 components. That has the persistency, which is how long someone stays on therapy. And that has compliance, which is how many pills are they taking on a daily basis. And that makes up that number that Jeff spoke about through the analogs that you look at over time once they get that bottle. So that's how I divide it up: what happens before they get that first bottle and then that adherence piece after they get that first bottle.

And our next question comes from Ritu Baral with Cowen.

This is Lyla on for Ritu. Just really quickly maybe on gross to net. I know that you're continuing to guide to about 25% as the launch matures. Given that it's 13% in this quarter, how are you envisioning the gross to net in the near-term quarters, maybe for Q4 and then maybe into Q1 of next year?

Lyla, it's Jeff. We expect it to increase incrementally quarter-over-quarter until we get to the steady state. One of the things that's keeping it relatively low is the pandemic and the lack of access to the institutions, pharmacies, which benefit from the 340B 23.1% discount. Since the patients aren't going in to see their physicians, they're not getting scripts and going down and filling that.

So that is -- it's pushing some people to the hub, which is a good thing, but it's also reducing the gross to net. We do expect that to change as the pandemic subsides, and they get more active. And then also, if -- as more of the Medicaid patients come on as part of the mix, that will also drive it up. So we see that continuing to increase probably into the middle of next year.

And our next question comes from Paul Choi with Goldman Sachs.

With regard to the 72-week VOC data abstract that you have here at ASH, can you maybe just comment on any initial physician reaction to that and then your commercial plans for potentially integrating that data and the results from that -- from the 72-week results into your commercialization for Oxbryta?

Okay. Thanks, Paul. This is Ted. Yes, I think the data are really consistent with what we've seen all along. As you'll recall, Paul, in the New England Journal article, we did see the curve separating. We've pretty much always seen that. So these data are really consistent with the hypothesis that if you stop the polymerization over time, essentially all of the complications of sickle cell disease should be impacted. So we're not surprised by it. It's obviously great to see it in the real-world data with such a large N of patients.

And the other thing about it, it's actually pretty early because these patients have not really been followed that long, obviously. The 1,275 have been on drug for, obviously, less than a year. So it's encouraging but not surprising.

And our next question comes from Matthew Harrison with Morgan Stanley.

This is Connor on for Matthew. Can you just comment on what you guys are seeing with durability for existing patients and then -- and if that changed materially during the quarter -- quarter-over-quarter?

So when you say durability, you're talking about staying on therapy?

Yes, correct.

Okay. Okay. So DJ, you may want to take that?

Yes, absolutely. So as I was saying earlier with the previous question, once a patient gets that first bottle, then we start to look at adherence very closely. And of course, this is where our patient support hub comes into play. And we have the benefit of having invested in that upfront to help with these types of things and all the educational efforts we're doing. But nonetheless, despite our best efforts, there's always going to be a certain percent of patients that drop off over time.

Our patients -- the good news is when you break out adherence into persistency and compliance, the compliance piece, how many pills they take on a daily basis and therefore how many bottles might they get over time, has been high. If you're in the 70% to 80% range there, that's really good for chronic therapy. And we're certainly at the higher end of that range in terms of refills happening on time, that 30-day window, suggesting they're taking the pills in the quantity as prescribed. So we feel really good about the compliance piece.

The persistency is still pretty early. I mean there's going to be some drop-offs in therapy over time. We're well within the analogs that we look at in the industry. And I think Jeff might have mentioned 60% to 80% is pretty common adherence numbers for analogs in this space, and we're well within that window. So we feel good about that, but we're going to have to look at it over time and do everything we can. And that's always been the name of the game in chronic therapies, is to do everything you can to support patients long term so they get the full benefit and the outcome. So we're investing, as you would expect, in supporting patients that way.

Our next question comes from Mark Breidenbach with Oppenheimer.

This is Kalpit on for Mark. I wanted to circle back on the quarterly numbers for Oxbryta. Obviously, you pointed to a lot of variables that affect the top line number. But can you comment on the proportion of patients that are receiving free or subsidized drugs on a quarter-to-quarter basis? And has that changed over time?

So we've never really broken that out, but what we have said is that the free drug has actually been less than we had predicted in the beginning. And that's really been a reflection of how well DJ's team has been able to get reimbursement. So we've never really had a huge free drug, but we've never broken that number out. I don't know if, DJ, you want to add anything to that.

Sure. Just maybe one comment. So Ted, you're right. I mean getting the broad coverage early, the 90% coverage in the third quarter would suggest that we just haven't had to use the free drug program as much as you might expect. So the majority of our patients -- and we've always said that, hey, you're going to have a little bit more in the first year. You'll probably settle down over time to 10% or less of your patients will be on long-term drug assistance. And those are generally patients without insurance. And so I think we'll pretty quickly be able to get in that range. We're a little bit above that right now but not substantially. So we've been pleased with the coverage throughout the whole launch.

The other piece just to keep in mind as you think about kind of how many bottles and translating enrollments to patient starts to revenues and those types of things because there is also a phasing component. So as patients get their first bottle and then you start looking at the adherence pieces, the other piece to look at is phasing. When do they get that prescription? When does it happen in the quarter? And because just not -- all those enrollments and new starts aren't going to have 3 bottles in any given quarter. It's going to be spaced out over time. So you do need to keep that in account as well.

Our next question comes from Matthew Holt with JPMorgan.

So if I take the 3Q number and back out the new patients based on your prepared remarks, I get to just north of 1,200 patients that could be on Oxbryta prior to Q3 and filled 3 scripts, which seems to be a positive with your estimates of adherence. So I guess my question is, what am I missing here? And are you able to say how many patients are on treatment as of the end of Q3?

Yes. Sorry, I had my mute on. Matthew, this is DJ. So yes, we haven't broken out on -- patients on therapy. What we've really focused on is driving demand at this time, and that's always going to be the top of the funnel. So the new enrollments, getting prescriptions written for patients and into the hub is what we're very focused on as a team and then, of course, supporting the patient for great long-term adherence and outcomes over time.

But what we have tried to do is give a little bit of guidance on the elements that you need to be thinking about to get from the top of the funnel to the bottom of the funnel. And so those are the pieces, right? Before that first bottle is shipped, you have a certain amount of dropouts and kind of pending patients, and we talked about those percentages. And then after the patient gets the first bottle, you've got to look at persistency and compliance and then the phasing piece as well.

And those should get you to, I think, a good estimate of where we've been consistently being. And we're certainly proud of getting incremental of 1,000 new scripts in this environment given the headwinds. And I think we're being prudent about Q4 thoughts there as well. But there's no doubt we have a lot of work to do, but we're very confident that the patients are doing well that are on the therapy, and it's just a matter of getting more and more enrollments into the hub over time as the pandemic subsides.

Our next question comes from Andreas Argyrides with Wedbush Securities.

Back -- I mean focusing on the Oxbryta trends at the moment. Curious, there was a previous guidance during the pandemic that favored Oxbryta scripts. To what extent has COVID been an impact? And what other dynamics do you see that might be a play that really haven't been addressed?

So thanks for the question. This is Ted. So as I tried to point out in the script, one of the biggest headwinds for us is the patients are not interacting with health care providers. And obviously, if there's no interaction, then there's no opportunity. And that drop in interaction includes telemedicine. So there's literally not the interaction going on, and that's clearly, clearly related to COVID. And we've been seeing those interaction numbers go down.

We're doing everything that we possibly can to move that up, but as you know, we can't directly interact with patients as a company. So there's a limited amount that we can do, but we are trying to approach that through physician education, patient education. And of course, Oxbryta is a drug that can be prescribed through telemedicine, but obviously, there has to be a patient and health care interaction for the drug to be prescribed.

Our next question comes from Jason Gerberry with Bank of America.

So I just wanted to press a little bit on -- in terms of your managed care situation and policies. Are you seeing implementation of any stopping rules for patients who don't need any preset hemoglobin targets? To the extent that you do have policies that are -- do you implement stopping rules? Can you give us a rough sense of what the proportion of plans that have these are and what that typically looks like?

Jason, we do not see utilization of stopping rules broadly in the sickle cell disease market. What is common, and isn't specific to sickle cell disease but rather something I've seen on most specialty drugs and certainly orphan drugs, is a kind of a certification or a prior authorization at the 6-month or 1-year point where a payer will check in with the health care provider and say, "Hey, is the patient still on the therapy? Are you still monitoring the patient on the therapy and seeing if they're -- are you getting the results? Are they being compliant?" So they'll basically do a simple prior auth just to make sure the physician, and by extension the patients, still want to be on the therapy.

In other words, if the payer is going to pay for a chronic therapy long term, they want to make sure the patient is going to have successful outcome and that they're going to get the results that they want. So they will check in at usually the 6-month or the 1-year point.

We have had no issues with those patients that have made it to that recertification. We've had absolutely no problem getting a patient maintaining therapy and getting through those kind of questions. So that has not been any kind of issue for us from a payer perspective. In fact, once we get a patient started on therapy and get it paid for upfront, it's gone very smoothly from that perspective with the payers.

And our next question comes from the line of Ben Burnett with Stifel.

I was wondering if maybe you could just talk about some of the dynamics that underscore persistence. You mentioned, DJ and Jeff, that I think you guys are trending with the sort of 60% to 80% of refill rate. But I guess are you learning anything about why patients don't pursue a refill?

Yes. Ben, it's interesting. It's multifactorial, as you can imagine. The good news is we have a hub that can follow up with patients, and we have access navigators that work very closely with the offices to make sure all those services and support are provided. And we've learned -- we're coming up with new tactics. We're rolling out some new starter kits, for example, in the near future that will have additional compliance and support materials based on what we've learned.

Sometimes it's -- and right now, in particular, as Ted said in his prepared comments, our patients are having a bit of more of a challenge maybe than other patients at accessing the health care system due to the pandemic. We've noticed a couple of metrics that are down still. The visits to health care providers has dropped from 1 a quarter on average to 0.8 on average for sickle cell patients. The admissions to hospitals is another criteria you look at. And sickle cell admissions are down 30% in the hospital, suggesting that even when they're having a severe crisis that requires hospitalization, they're still not accessing the system because of fear of the pandemic.

So those are some of the dynamics we're dealing with, and those might suggest that those are some things that might impact a patient's ability or desire to follow up with their physician or the nurse educators that we have around persistency messaging during this time. So there's other tactics and other things that we're going to deploy to make sure that we are supporting patients, but those are some of the dynamics we're dealing with.

And then our patients are somewhat disproportionately impacted by the fact that people are financially hurting and -- with the economy and the job losses and whatnot during the pandemic. So all of those things we're trying to work with the patients to reduce co-pays, for example, and things like that.

Our next question comes from the line of Raju Prasad with William Blair.

This is Sami on for Raj. I was wondering if you could provide some color on the payer mix and how it's changed since Q2 and how you expect it to change further if the pandemic persists.

DJ, you want to take that?

Sure. Yes, we've always expected there to -- at steady state for the payer mix to settle out to about 65% government and about 35% commercial. And the government side, we thought, would be about 50% Medicaid and about 25% -- excuse me, 15% Medicare. What we've seen in these early quarters of launch is that it's been a little bit more heavily weighted towards Medicare than we may have expected, and that's because some of our patients have qualified for both programs. They've been dual eligibles and have gotten into the Medicare program due to disability.

And that's good for them because it gives them much more services and health care services. So we like when that happens. It also happens that they don't have the additional mandatory discount. So that's one of the reasons our gross to net has been lower because we've had a few more Medicare patients come in, in early days. But everything else seems to be on track and is -- we've -- now that we have broad coverage, I think we'll get to that steady state quicker than we expected, and we'll be able to comment on that in the coming quarters.

Our next question comes from the line of Elemer Piros with ROTH Capital Partners.

What I'd like to ask is you mentioned as things get better vis-à-vis the pandemic, it appears that before things get better, it might get worse just by looking at the daily incidence of new cases identified. So my question is whether you factored that into your projection into the fourth quarter, maybe near term, that you would still be able to grow. And maybe a Part B to this question, to what extent do you see an impact from ADAKVEO, which in terms of revenue numbers, is roughly the same this quarter than Oxbryta? But Oxbryta was about 50% higher in the second quarter, which could have been due to some pent-up demand from the first quarter, obviously.

Thanks for the question. This is Ted. I'll make some high-level comments, and then DJ will probably want to fill in some details. So our operating thesis really is that COVID never goes away. Obviously, we know that's not the case, but we don't want to run the company at risk waiting on COVID to go away. So all of our operational plans are really just assuming that COVID doesn't go anywhere, and as you said, could even get worse. We have no control over that.

So we're really trying to do everything that we can do to educate physicians, and also to the extent that we can, do education for sickle cell patients and families to make them really try to go ahead and have interactions with health care providers and to be receptive to starting disease-modifying therapy telephonically if they're not comfortable going in. So we really are operating with a view that the pandemic is here to stay for a long time, and we're really trying to operate with that thesis. DJ, feel free.

Yes. And so we've built that into our thinking for Q4 and the guidance, that the pandemic will still be here in Q4, and we've kind of built that into our thinking. Regarding ADAKVEO, we don't have any insight in their patients on ADAKVEO and whatnot. I think most importantly, it's consistent with what we're seeing as well, right? We saw better enrollments and uptake near the second half of the quarter in Q3 as COVID started to subside and as we got better and better about operating in this environment and physicians did as well. It looks like Novartis had a better quarter than they previously had on ADAKVEO.

Now of course, new patients get the double dose, right? They get the 2 vials for that loading dose upfront, which I'm sure is helpful on the revenue side as well. But we're excited that maybe patients are, just like we saw in our enrollments, more willing to access the health care system in the sickle cell community. And maybe both of our data is showing that that's starting to happen. So we think that overall is a good sign for our patients.

Yes. I'll just add. I don't -- I personally don't think that the products are very competitive. They actually have completely different indication statements. And as we said on our call previously, we see patients getting both drugs because they actually do have different indication statements. So I don't think that our challenges are really ADAKVEO. I think our challenge really is getting physicians and patients, health care providers and patients to interact so that prescriptions can be written.

Our next question comes from the line of John Newman with Canaccord Genuity.

I just wondered if you've seen any change versus the second quarter in terms of the baseline hemoglobin level where patients start on Oxbryta. I know that you had the data at ASH, as you mentioned, from the patient work that you did. But just curious if that's about the same, if it's changed a little bit.

Thanks, John. So we do not collect that data. The hub is really designed to be very physician and very patient-friendly and to be supporting of them and not really asking a lot of information about their hemoglobin, et cetera. The data that we've obtained on hemoglobin has really been from the chart audits. And what we saw is that there's already been very broad use around hemoglobin. I couldn't imagine that would reverse. In fact, what you would predict is that, that would broaden out and continue to get broader. So I can't imagine that number would go down. And as we said, we predicted that we' get about 1,000 prescriptions, and we did. And that was really based on our experience about what we were seeing with prescription [habit].

And we now have a question, and it's once again from the line of Jim Birchenough with Wells Fargo.

So on the first quarter results, you talked about a peak to trough decline of 70% at the end of the first quarter as we headed into the pandemic. Could you give us a sense of that dynamic in the third quarter? Because it sounds like you had a lot of headwinds at the beginning of the quarter, and then things got close to pre-COVID levels in the back half. So what was that delta within the quarter?

Yes, Jim. Yes. I think what we said after Q1 was at 60%, not 70% decline. It was that moment in time when all the offices shut down for about 2.5 weeks there, and we saw a dramatic decrease in volume for just a couple of weeks. And then what we saw as Q2 went on is that we had a recovery, right? And it went back up to about a 40% decline from prepandemic or Q1 levels, and then it kind of leveled out there.

And then we've seen variability, and that's what kind of happened in Q3. We leveled out at about that 40% decline from peak, but we had ups and downs. And there's a lot of variability and even geographically as the pandemic has kind of waxed and waned.

The good news is we did see a trend towards higher enrollments in the second half of Q3 than the first half as offices started to open up. It definitely correlated with our sales force getting back into offices, our patients getting back into offices and kind of the pandemic being kind of under control for a period of time there.

Now Q4, the pandemic does seem to be going up again. So we suspect continued variability. Definitely, we're going to have some strong weeks of enrollments, but also there's going to be geographically impacted by COVID lower weeks as well. So yes, that's kind of where we've -- it's been more of a steady state than kind of that decrease that we saw after that recovery in Q2.

Our next question comes from the line of Joon Lee with Truist.

This is Miguel on the line for Joon. So the [2 636-S] abstract regarding prescription pattern shows that 15% of patients on Oxbryta require a decrease in dosing from 1,500 to 1,000 milligrams and that this is due to adverse events. So my question is, how does this impact your plan to test dosages above 1,500 milligrams in your dose optimization study? And if I may follow up, was there anything consistent in terms of genetics or characteristics among those 4 patients that could help explain the AEs?

So what I would say is that -- this is Ted. The evidence that the GI side effects become super common at higher doses is not really there. There was a slight increase in GI side effects when you move from the 900 to the 1,500, but you're still talking about 20% to 30% of patients that have it, about 70% to 80% of patients that have nothing.

And I think the abstract that you're referring to from Texas -- from a physician in Texas, who we actually know very well, and we've talked to her about this. She does say that sometimes older patients appear to be more prone to have GI tolerability issues, and -- but she's been extremely successful at managing it just by reducing the dose and then reescalating after a period. And in a couple of cases, I think she actually held the dose for a day or 2, restarted at a lower dose and went up.

And that, quite frankly, is one of the things that we're going to have to teach more and more physicians to be good at and not just discontinue the drug and also educate patients that this is something that's transient, that's manageable. But this is the kind of stuff you learn in launch that you need to be better at, and we will get better at it. We always do. But these are the kinds of things that physicians who've put many patients on the drug have become very, very good at managing this. Physicians that may use it for the first time don't have experience, and they need more support and education.

Our next question comes from the line of Danielle Brill with Raymond James.

I was just hoping to get some more color on your guidance or intake forms in the fourth quarter. So I know it's hard to gauge what's going to happen with COVID and the holidays, but I was hoping maybe you could provide some more color on how intake forms track in October, particularly relative to what you saw in August and September.

Well, I think DJ did point out -- this is Ted. I think DJ did point out that we were actually starting to do even better as our team was able to have more and more interactions with physicians. But I am personally concerned that COVID getting worse is going to potentially present even more challenges for us. So I think we want to be very careful and very thoughtful about recognizing there's a lot that's out of our control right now. We wish we could drive more patient and physician interactions, more health care professional interactions, but it's just very hard is people are extremely concerned about their life and getting infected with COVID.

Yes. Danielle, we are -- just like I said in the prepared comments, we ended the quarter stronger than we started the quarter and in some of the weeks even had enrollment forms at the end of Q3 that approached prepandemic levels. It's variable. It's not every week. It's -- but some weeks do. And I would say that kind of trend continued into October.

Dr. Love, I would like to turn the floor back to the management for closing comments. Thank you.

I'd like to thank everyone for joining our call today. As you've heard, the launch of Oxbryta continues to be impacted by COVID-19. We are encouraged that we were able to deliver growth in new prescriptions and new prescribers as well in the quarter. We continue to focus on effectively managing through this time and positioning GBT for the long future. We hope you'll all continue to stay healthy and stay safe. Please join us virtually at our Analyst and Investor Day on December 7, and please feel free to reach out if you have additional questions. Thank you.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.