Intra-Cellular Therapies Inc (ITCI) 2020 Q1 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Intra-Cellular Therapies' first quarter ended March 31, 2020, financial results conference call.

As a reminder, today's conference call is being recorded. (Operator Instructions). I'd now like to turn the conference over to your host, Dr. Juan Sanchez, Vice President, Corporate Communications and Investor Relations. Please go ahead.

Thank you, operator. Good morning, and thank you all for joining us for today's conference call. Our earnings press release providing a corporate update and details of the company's financial results for the first quarter ended March 31, 2020, crossed the wire a short time ago and is available on our website at intracellulartherapies.com.

Joining me on the call today are Dr. Sharon Mates, Chairman and Chief Executive Officer; Dr. Andrew Satlin, Executive Vice President and Chief Medical Officer; Mark Neumann, Executive Vice President and Chief Commercial Officer; Larry Hineline, Senior Vice President and Chief Financial Officer; and Michael Halstead, Executive Vice President and General Counsel.

As a reminder, during today's call, we will be making certain forward-looking statements. These statements may include statements regarding, among other things, the efficacy, safety and intended utilization of the company's product development candidates, our clinical and nonclinical plans, our plans to present and report additional data, the anticipated conduct and results of ongoing and future clinical trials, plans regarding regulatory filings, future research and development, our plans and expectations regarding the commercialization of CAPLYTA, potential impact of the COVID-19 pandemic on our business, and possible uses of existing cash and investment resources.

These forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our periodic filings made with the Securities and Exchange Commission, including our quarterly and annual reports. You're cautioned not to place undue reliance on these forward-looking statements, and the company disclaims any obligation to update such statements.

I will now turn the call over to Sharon.

Thanks Juan. Good morning everyone and thank you for joining us on today's call. We hope that all of you are safe and healthy during this unprecedented time as our nation and the world confronts the ongoing COVID-19 pandemic. It's hard to imagine that since the last time we gathered for the reporting of our year-end results so many changes would have occurred. Yet we know for certain one thing hasn’t changed, there still remains a high unmet medical need for new treatment options for schizophrenia and other serious mental illnesses. We, at Intra-Cellular Therapies, remain steadfast in our scientific and clinical efforts to meet that need for patients.

These are extraordinary times that require adaptability. COVID-19 has created near-term disruption in our healthcare system and in our industry. Despite these disruptions, we've adapted and successfully executed on the launch of CAPLYTA, in this COVID-19 environment.

I will summarize the steps we've taken to achieve this. And then I will provide an update on our clinical development programs and summarize our financials. Following my remarks, I will ask Mark Neumann, our Chief Commercial Officer, to provide further details on our commercial activities; and Andrew Satlin, our Chief Medical Officer, to provide an update of our clinical development programs. Larry Hineline, our CFO, will then provide details of our Q1 financials.

As a reminder, CAPLYTA is an oral medication taken once a day that does not require titration. So a patient can start and stay on the therapeutic dose. The CAPLYTA label reflects a compelling clinical profile, having demonstrated efficacy and changes in weight, fasting glucose, total cholesterol, triglycerides and extrapyramidal symptoms including akathisia that are similar to placebo in our short-term trials.

In our long-term safety study, patients on CAPLYTA had an average weight loss of 3.2 kilos at day 350. Based on this profile, and our commercial efforts, we believe CAPLYTA will become a leading treatment choice for adult patients with schizophrenia.

In these unprecedented times we prioritize the health and well-being of patients, healthcare providers and our employees, and still successfully launched CAPLYTA. I am very proud of the ability of our team to rapidly adapt to this fluid environment. We successfully pivoted from an in-person launch meeting to a highly interactive, wholly virtual, national launch meeting followed by the initiation of remote promotional activities. The promotion of CAPLYTA began the week of March 30, with approximately 240 neuroscience specialists actively engaging and educating healthcare providers. They are supported with a wide array of tools and resources, including remote product presentation and digital outreach programs; as well as LYTAlink, our comprehensive patient access and reimbursement program.

In addition to our promotional launch activities, we are very encouraged with the progress made in our discussions with payers regarding market access and reimbursement. We are particularly pleased with the coverage determination outcomes within the Medicare Part D plans, which represent our largest payer channel.

To date, we have achieved formulary coverage for 90% of covered lives under Medicare Part D plans, including unrestricted coverage in 2020 by CVS SilverScript, one of the largest Medicare Part D insurers.

We remain on target with our other channel coverage goals and continue to expect broad access for CAPLYTA across payer channels to be fully established by year end. Mark will provide further details on our market access progress in his remarks.

Manufacturing and supply chains are wholly operational and we have substantial product supply in the United States to support expected demand.

I would now like to provide a brief update on our clinical development program. Last year, we presented robust positive results from the global Phase III study in bipolar depression. We have completed patient enrollment in Study '402, our Phase III study evaluating lumateperone as adjunctive therapy in bipolar depression and anticipate reporting top-line results from this study in mid-2020.

With regard to our 214 development program, clinical conduct in our Phase I/II clinical trial of ITI-214; our phosphodiesterase 1, with PDE1 inhibitor, in patients with chronic systolic heart failure; has been completed. This study evaluates the hemodynamic profile and safety of single ascending doses of ITI-214. We anticipate reporting top-line results from this trial later this quarter. Andy will provide further details on this trial and other preclinical development programs for ITI-214.

We ended the first quarter of 2020 with $450 million in cash and investments. We are in a position of financial strength and look forward to continuing our mission to develop and commercialize novel drugs to improve the lives of patients with neuropsychiatric disorders.

I will now turn the call over to Mark, to provide further details on our launch and commercial activities. Mark?

Thanks, Sharon. And Good morning, everyone. We launched CAPLYTA just a few weeks ago. And I am happy to provide an update on our progress to date. I could not be more proud of our team's execution against the backdrop of the market dynamics created by COVID-19. This environment required the team to be agile and creative, while making significant adjustments to our original launch plan. Our sales force rapidly pivoted to a 100% virtual environment for their training, selling activities, and distribution of samples. In addition, our peer-to-peer medical education program was converted from in-person speaker, training and programs to a virtual platform.

Additionally, to supplement our virtual sales force and medical education activities, we have significantly expanded our nonpersonal tactics, including health care provider and consumer digital advertising, to drive additional awareness of CAPLYTA amongst our target audience.

Following a highly effective and successful virtual national launch meeting, our neuroscience specialist team began actively engaging with prescribers on March 30 and educating them about CAPLYTA. Our team is focusing on the approximately 23,000 healthcare providers who account for 80% of the branded antipsychotic, schizophrenia prescriptions.

In the early weeks of our launch, we are encouraged by the positive feedback we are receiving on the CAPLYTA profile, the quality of the interactions we are having with health care providers. The large number of participants we've attracted to our virtual expert panel medical education programs. The substantial progress we have made in our market access activities, as reflected by the timing and quality of coverage, determination outcomes across all channels, and in particular by Medicare Part D insurers, and the positive feedback we are hearing from some health care providers regarding patient response from those already started on CAPLYTA. Based on its clinical profile and initial market reception, we continue to believe that CAPLYTA will become a leading choice for health care providers treating adult patients with schizophrenia.

I'd now like to take a few minutes to further elaborate on Sharon's remarks about our substantial progress in our market access activities. Payers across all channels, including Medicare Part D, Medicaid and commercial plans, have been actively reviewing CAPLYTA as part of their formulary review activities and coverage determinations. The timing of these coverage determinations has been consistent with or ahead of our expectations.

In particular, the Medicare Part D plans, which represent our largest payer channel, have finalized the vast majority of their coverage determinations for CAPLYTA, and I'm pleased to report that we have now achieved formulary coverage for 90% of covered lives under Medicare Part D plans.

Medicaid coverage determinations are progressing according to plan, with many expected to be decided during the second quarter and completing in Q3. Some commercial plans have already made their coverage decisions, while others will do so throughout the course of 2020. Overall, we continue to expect broad access for CAPLYTA across payer channels to be fully established by year end.

We have also successfully launched LYTAlink in support of patient access and affordability. The program offerings are comprehensive and consist of coverage and reimbursement services out of pocket co-pay support for commercially insured patients, medication compliance communications and patient assistance relief, specifically for qualifying patients without insurance.

And finally, while the COVID-19 pandemic has created unique challenges for new product commercialization, we are pleased with the trajectory of prescription growth in the early days of our launch. Based on our market research with early adopters, the initial patient experience with CAPLYTA has been positive and in line with the documented clinical efficacy and safety profile.

As sales force operations normalize throughout the year, we expect that prescription performance will further accelerate and we foresee no long-term impact on the potential of CAPLYTA.

In summary, we are very excited to be offering this important new medicine to patients and are proud of the successful execution of our initial commercial launch and the array of activities we have developed to support CAPLYTA during the COVID-19 pandemic. We look forward to providing future updates.

Thank you. And I would now like to hand the call over to Andy to discuss our clinical development programs. Andy.

Thanks, Mark. And Good morning, everyone. I join Sharon, Mark and the rest of the team in our collective enthusiasm about CAPLYTA now being available to patients. I also want to congratulate Mark and his team for the remarkable job they have done, getting the word out about CAPLYTA in the current environment.

The pandemic has not changed the need for ongoing treatment of patients with schizophrenia. These patients still discontinue treatment or seek treatment changes as a result of side effects such as weight gain, metabolic disturbances and movement disorders. CAPLYTA provides physicians and their patients an important new treatment option for this serious disorder.

We continue to make progress in the development of lumateperone for the treatment of bipolar depression. To remind you; last year, we presented robust safety and efficacy results from Study '404 a Phase III trial of lumateperone in patients with a depressive episode associated with either Bipolar 1 or Bipolar 2 disorder.

In addition, we anticipate top-line results midyear from Study '402. This global study includes approximately 520 patients with depressive episodes associated with either Bipolar 1 or Bipolar 2 disorder, who were randomized 1 to 1 to 1 to receive lumateperone 42 milligrams, 28 milligrams, or a placebo once daily for 6 weeks, while being maintained on lithium or valproate as mood stabilizers. To remind you, the primary endpoint is changed from baseline on the MADRS total score at week 6.

As part of our bipolar depression program, we commenced U.S. patient enrollment in Q1, in Study '403 a Phase III global study evaluating lumateperone as monotherapy in the treatment of depression in patients with Bipolar 1 or Bipolar 2 disorder. While patient enrollment in the U.S. has been impacted by COVID-19, ex-U. S. country regulatory review processes and other preparatory activities continue to progress. Assuming patient enrollment rates return to our projected levels within our expected timelines, we continue to anticipate reporting top-line results by the second half of 2021.

In our phosphodiesterase 1 inhibitor program, we have completed clinical conduct in our Phase I/II trial of ITI-214 in patients with chronic systolic heart failure. This study evaluates the hemodynamic profile and safety of single ascending doses of ITI-214. We anticipate reporting top-line results from this trial later this quarter.

Our phosphodiesterase 1 or PDE1 inhibitor program provides opportunities to pursue innovative treatments for multiple diseases. In preclinical studies, our scientists have shown that PDE1 inhibitors can inhibit the recruitment of immune cells such as microglia and macrophages to size of inflammation.

In a paper published last year, we elucidated the details of the intra-cellular signaling pathway by which PDE1 inhibition reduces inflammation via regulation of microglia movement. Ongoing preclinical studies are testing whether our PDE1 inhibitors, when given alone or in combination with approved drugs act by controlling macrophage function and are effective in various disease models, including models of hyper immune responding or cytokine storm and solid tumor proliferation.

We are also continuing necessary activities to advance our other development programs, while ensuring safety and well-being of patients and others involved. These programs include our lumateperone clinical program in major depressive disorder. Our lumateperone long-acting injectable program. Our ITI-214 program in Parkinson's disease, and the initiation of early stage clinical studies for ITI-333, our novel oral modulator of new opioid and serotonin receptors in the treatment of opioid and other substance use disorders, pain and mood disorders.

I will now turn the call over to Larry, who will review the financial results. Larry?

Thanks, Andy. I will be reviewing our financial results for the quarter ending March 31, 2020, and provide an overview of our expectations for the use of our cash and investments.

We recorded net products sales of CAPLYTA for the first quarter of 2020 of approximately $882,000. No net product sales were reported in the same period of 2019. Research and development, R&D expenses for the first quarter of 2020 were $16 million, compared to $25 million for the first quarter of 2019.

The $9 million decrease is primarily due to lower clinical and nonclinical related costs for lumateperone, lower manufacturing costs, and is partially offset by increases of non-lumateperone related projects and labor costs in the first quarter of 2020.

Sales, general and administrative, SG&A expenses were $34.1 million for the first quarter of 2020 compared to $11.7 million for the same period in 2019, the increase of $22.4 million is due to an increase of $15.6 million for selling related costs and an increase of $6.8 million for general and administrative costs.

The increase in selling related costs are due primarily to hiring a sales force, resulting in an increase in labor of approximately $9.9 million and commercialization costs of $5.8 million. The increase in general and administrative costs is due primarily to an increase in professional fees, labor related expenses and information technology expenses.

Cash, cash equivalents, restricted cash and investment securities totaled $450.4 million at March 31, 2020 compared to $224 million at December 31, 2019.

On January 10, 2020, we completed a $295 million public offering, resulting in net proceeds to the company of approximately $277 million from the sale of 10 million shares of our common stock.

This concludes our prepared remarks. Operator, could you please open the line for questions?

[Operator Instruction] And our first question comes from Charles Duncan with Cantor Fitzgerald.

Congratulations on the recent progress as well as the coverage determination. Appreciate you taking our questions; did have 1 commercial one and 1 pipeline one. With regard to the commercial question, I wanted to ask you, in terms of the engagement thus far. Mark did a pretty good job characterizing that. But I'm wondering if you've gotten any specific feedback with the payer and prescriber engagement regarding the differentiation of CAPLYTA, and then the targeting of certain patients for its use. So were do you think it'll be best early prescription?

Hi, Charles. Good morning, and thank you for your questions and glad to hear your voice and I hope everybody who is asking questions, and everyone on the call has remained and continues to remain safe and healthy during this time. I will ask Mark to start with the answer on engagement thus far. And frankly, I think that probably both of his questions are really directed to you, Mark. So would you like to answer?

Yes, sure, Sharon. And Good morning, Charles. Thanks for the question. What I would say is, the feedback that we have gotten early on in the launch, both from payers as well as prescribers is very consistent with the market research that we had conducted prior to the launch, which is to say that the safety and tolerability profile for CAPLYTA is a very differentiating feature. And in addition, we've also been pleased to hear a lot of positive feedback on the single 42 milligram dose, where patients can be started on the effective dose and maintained on that same dose. And that feedback in the market research that we've done with early prescribers of CAPLYTA has been very consistent. So we're pleased to see that it's playing out in the marketplace, similar to what we would have expected based on the market research we had done prior to the launch.

In terms of the types of patients, it is still very early on in the process, we are hearing different patient types that physicians are considering CAPLYTA for. And again, I would just characterize that as being very consistent with where we thought the patient types would come from, as we did our market research before the launch. So I hope that answers your question. I know, you had one additional question, Charles, on the pipeline.

And just to -- wait, just to add to that. I think it's really the target population is any adult patient that's not adequately treated and for whom the physician is considering a switch. So it's quite broad.

And we've heard that psych is particularly well suited for a telemedicine world. Is that consistent with what you're seeing these early days?

Yes, Charles, I think across -- we've been monitoring that, I'm sure, in many of the same kinds of surveys and all that, that you all are looking at. And we have seen a shift from in-person patient visits to telemedicine across the different therapeutic areas, and psychiatry is no outlier on that. So I think that is being effectively deployed during this pandemic time. And believe that patients, who require these types of visits, are being effectively treated, it seems, through telemedicine channels as they would, if they were doing in patient -- in person visits.

And if I could just ask the pipeline question quickly because I've been getting investor questions on this. Regarding the bipolar indication and supporting a supplemental NDA, I'm assuming that the primary strategy is to use the results from '401 and '404 in addition to the '402 data that you anticipate coming up here soon as the basis of filing. And that '403 is a nice to have, but not a need to have for moving forward. Certainly, it depends on the results of '402. But is that still consistent with your thinking?

I'll start. This is Sharon and then I'll ask Andy to chime in. Yes. If '402 is positive, then of course, '402 will be used in the application. The -- as you know, we have a 3 pronged strategy -- we have a very broad strategy as to our filing. But what you said is correct, but Andy, do you want to add anything?

Thanks for the question. You're right, there hasn't been a change, overall, in our strategy. So we are planning to speak to FDA with regard to the possibility of a filing based on a single study or single study with supportive data. And we'll also be awaiting the results of the '402. And those are the different prongs of our strategy at this point.

So actually 3 prongs, appreciate you taking the questions and the added color. Congrats on the recent progress.

Our next question comes from Jessica Fye with JPMorgan.

(technical difficulty) and if not, do you plan to wait until after you get the results from '402 to have that discussion?

So Jessica, we didn't hear you. We just heard the very end of what you were saying. So I think…

Have you met with the FDA already to discuss the possibility of filing based on the positive results from Study '404? And if not, do you plan to wait until after you get the results from '402, to have that discussion?

Andy, do you want to answer that or you want me to?

Yes, no, that's fine. Jessica, it's Andy. So we have not yet had these discussions with FDA. But the timing is not dependent on our having the results of '402.

And just as a follow-up question, was curious if you could elaborate on whether you think the lack of need for titration could be helpful in the current environment, where patients are maybe trying to minimize their interactions?

Andy is shaking his head, yes, I see him, but I can't hear. (inaudible) Andy, why don't you go ahead and then Mark, if you want to answer after?

Well, I think the lack of a need for titration is definitely an advantage. And we've already heard that from psychiatrists who were there, out treating patients and both before and now after the launch as well. So I think anything that does facilitate the ability to use this both safely and effectively, is going to be an advantage in any environment, including this one. I don't know, Mark, have you heard anything more about that?

Yes. No, we've actually heard comments very similar to what Andy just described that in this environment, having a single-dose and being able to start at the effective dose is being viewed as a positive. But I think, across the board, whether we're in this type of environment or not, as Andy said, we do view it very much as a benefit for patients.

Our next question comes from Bo Chen with Evercore ISI.

We'd like to focus on the adjunct trial. First question is, based on the pandemic situation, should we expect that the patient follow up will mostly be through teleconference or phone interview? And if so, how would that add any variability in the primary endpoint assessment? And also related to this trial is, what shall we expect on the placebo effect?

Andy, do you want to take that, but I give you the overall statement, and that is that so far we haven't been very -- it hasn't been affected very much at all. But for the '402 study, we've been very fortunate there, but for the particulars about what you're asking, I'll ask Andy to give you the update.

So Sharon is absolutely right, we've really seen very little impact to this point on the conduct, or our expectations for completing Study '402. So as you know, we completed the clinical portion in the U.S. So the remaining clinical portion of the study is in Europe. We did allow for some flexibility, based on the FDA guidelines, in case there was a need to do that in order to be able to complete the trial with good data integrity as well as good patient safety.

But as Sharon says, what we've seen so far, is very little need to use that flexibility. So the vast majority of visits are still being done as they were before. We don't anticipate any issue with that. And we are on track, as we've said before, to complete this trial and be able to provide top-line results by mid-year. And with regard to placebo effect, we don't think that there's any -- again, we're -- most of the trial is complete, we don't think that there's any impact of the current environment, or any changes that may occur from here to the end of the study that would have any impact on that.

Just for the second part of the question. We're not trying to compare, or get any estimate of the impact from the pandemic, but also in -- but just in general, was the placebo effect, we should expect, compared to the 2 finished monotherapy trials?

So we had a very high placebo response in Study '401, which therefore was not a successful trial and the placebo response was managed quite well in Study '404, which was positive. We think that the there are a number of aspects of Study '402 including the global distribution of the study that are in favor of having a well controlled placebo response. We have no reason to have any additional concern about that. So -- and in other respects, we're adequately powered in Study '402 for a range of outcomes and to be able to detect the clinically meaningful results. So we don't think that there's -- we're not concerned about an issue there.

Our next question comes from Sumant Kulkarni with Canaccord.

The first one is on the bipolar depression trial and then I have a follow up. So on bipolar depression, is it fair to assume that you will wait until you have the results of the global adjunct therapy trial before you put it in a request to speak with the agency on a part 2 and sNDA filing? And do you have any specific expectations on when that meeting might occur?

No. As I mentioned before, the 2 are not dependent on each other, we are still planning to meet with FDA, again, to discuss the potential for filing under a different -- number of different scenarios, but in particular with a single positive trial and supportive data. And that -- we're moving ahead with that.

And then a question on the commercial front for Mark. It's a bit of a big picture question. So do you think this environment levels the playing field more for a relatively small company and might we see any fundamental long-term changes in the classic therapeutic sales and marketing model, especially in the neuropsychiatric space that lends itself relatively well to telemedicine?

Yes, thanks Sumant for the question. Yes, the -- as Sharon mentioned, the -- this environment has caused a lot of changes in the healthcare industry as well as in our own industry. We successfully converted many of our selling activities and our medical education activities over to virtual platforms. And in some ways, on the medical education side, we're actually able to attract even a larger audience for these programs, because they are being done virtually, than we would have in a more traditional environment.

We've also had the opportunity to really expand in a variety of areas and a variety of tactics, the nonpersonal types of promotion through digital means that we may not have done in our original plan. I do think, Sumant, too that when companies are faced with this type of a challenge, it is important to be able to be nimble and adapt and be creative and innovative. And I think that will carry through, even beyond this pandemic situation. As the country begins to reopen, as things begin to return to normal, I'm sure there's going to be approaches that we creatively took during the pandemic that will continue, even when we get back to more normal types of operating procedures.

Our next question comes from Marc Goodman with SVB Leerink.

Mark, can you talk about just schizophrenia patients in general, in this environment. Are we seeing as many starts virtually as you expected? I mean, just trying to get a sense for how much this environment has really impacted what your expectations were kind of going in? And if you think about, like all doc programs, that you were expecting to do, in person, for instance and now they're virtual, is the participation level the same? Is it significantly worse, better just trying to get a sense for the reaching out and how much you're touching the doctors as well? And give us a sense of whether the patients that are starting on CAPLYTA by these switches or these new patients, and maybe just a little more color, if it's possible on what's happening behind the scenes.

Thanks Marc for the question, and I'll try to answer it the best I can. What I would say across all the questions that you asked is. We are in very early days of the launch. We have been out there for about a month now. We don't have a lot of data yet, coming back in, on the types of patients that we're seeing. We are getting some anecdotal information in the market research that we are doing with those prescribers, who have had the opportunity to prescribe CAPLYTA.

And as Sharon mentioned before, we do believe that really any physician and any patient looking to switch is an opportunity for them to be considering CAPLYTA. And so, we're seeing, across the board, different types of patients being tried on CAPLYTA. As it relates to the programs and our interactions with physicians, as I mentioned before in the last question, I think, one of the silver linings in this situation is, we are actually attracting a larger audience to these virtual programs than we would have expected, if these were being done in person, in cities around the country.

So, our reach from a medical education perspective has been even better than if we were in more of a traditional environment. And as far as the overall schizophrenia patient/physician interaction, I think, what we've read has been consistent with what we've heard, is that overall there are fewer inpatient -- in-person patient visits. That's being offset to some degree by the increase in tele-psychiatry. But I think across the board, across different categories, including the anti-psychotic category, there are fewer new to brand prescriptions in the early going here.

We would expect that as the country begins to reopen, as our operations, including our sales force operations normalize, we would expect to see an acceleration in those prescriptions. And as I mentioned, in my prepared remarks, we don't see any negative impact on the long-term potential of CAPLYTA.

Are there plans to do DTC on the television?

We are we are looking at that and we're considering that as part of our marketing mix.

Our next question comes from Brian Abrahams with RBC Capital Markets.

I guess -- first off, I'm curious how providers have been virtually monitoring for side effects for patients on existing antipsychotics to potentially find patients eligible to switch to CAPLYTA and what's been the perception, their perception overall of the potential efficacy profile? And then I had a quick follow up.

Mark, do you want to take that? I think we addressed this in part before, but (inaudible) we'll expand.

Yes, let me start with the second part of the question first, the feedback that we've received again, with the market research that we've done with the early adopters is, it is still very early on in the process, but they are satisfied with the efficacy that they are seeing in the patients that they've been able to try this on. And again, that would be consistent with what we would have expected from the marketing research. And as far as monitoring of the side effects, again, there's a variety of ways in this environment that patients are being seen by their physician. Some continue to do in-office visits, while others have switched to telemedicine. We haven't gotten a lot of feedback on that, other than to say that the telemedicine, the tele-psychiatry, has been working very effectively and providers can monitor any side effects that the patients are having that might require a switch. It seems, as effectively through tele-psychiatry as they could, with in-person visits. But again, this is all anecdotal. And for us, they are early on in the launch. So we hope, over the next couple of months, certainly, to have a lot more useful data that we could share with you. But that's what we're hearing at this point.

Maybe you could actually just clarify the latter part of my question. I know, you guys have talked about positive feedback from physicians, who have experienced with the CAPLYTA. I guess, I was wondering if you're seeing what the overall perception among physicians; who maybe, had not used the agent yet, out there? I know, there's been some back and forth and literature out there. Is there a perception that there may be efficacy -- any efficacy tradeoffs for some of the improved safety profile? Are there any skeptical physicians out there that take additional education around the robustness of the data to prescribe the agent?

No, I would remind you that -- this is Sharon, and I'll start, and I'll turn it over to Mark and to Andy. But I would remind you that our approval was based on the efficacy and safety seen with CAPLYTA in 2 positive studies. And the FDA has deemed this an effective product. And that is what the FDA remarks on products that they approve in this area. And our side effect profile again, as demonstrated in the label, has been a very favorable side effect profile. So the short answer to your question is; no, we're not seeing anything like what you have suggested.

And Mark, do you want to comment more or Andy, do you want to comment more?

I would just reinforce what you said, and say that it's certainly in our market research before the launch. And nothing has changed that view since the launch. And the feedback that we've been getting from our sales representatives, when we ask them, receptivity to the message. And that is, all of the antipsychotics are generally considered to be efficacious and similar. So and it just depends, there is patient-to-patient variability. And there's been nothing that we've heard back from our sales representatives that would indicate that physicians have any kind of concern about the efficacy of CAPLYTA. As I mentioned, they are very much seeing the differentiated safety and tolerability profile and seem to have really been pleased with this single dose, where they can start at the effective dose and maintain the patient on that same dose.

One quick follow-up, any expected inventory build or other staggered buying patterns just to be aware of as we model the quarterly cadence of the launch throughout 2020?

Mark, if you want…

So Sharon, I'll take that one. Yes, I wouldn't expect anything out of the ordinary. You've seen our first quarter results, which is largely the initial stocking of the wholesalers. The supply chain in our industry has become very efficient. And product flows, very effectively, from manufacturer to wholesaler and then out to pharmacies, where most pharmacies, certainly within 24 hours, can get product, whenever they have patients who come into the pharmacy and need to be filled. So the answer to your question, no, I wouldn't expect anything unusual.

Our next question comes from Andrew Tsai with Jefferies.

So first question is just on the prescribing dynamic so far. Can you speak to just how much sampling is going on? And what percentage of scripts coming in are being blocked by payers? Maybe speak to that dynamic a little bit? And then the second part of my question is really just what, in terms of a long-term drivers, longer term drivers for a second half 2020 or even 2021, what do you think it'll take for scripts to inflect just a little bit more? What more needs to be done on your end? Is it DTC ads? Is it more marketing? Is it more calling? If you can just speak to the drivers a little bit, that'd be very helpful.

So that was a lot of questions. And I'm not sure any of us captured all of them. I would just start by saying we don't expect payers to block scripts. However again, we're very early in the launch. So I think right now, we're not commenting on that. And then for the other questions, since -- I would turn, I think over to Mark for the answers.

Yes. And so maybe just a follow on Sharon's comment about the payers. As we both mentioned in our prepared remarks, we are very pleased with the progress that we're making with the payers and the coverage determination outcomes. And we highlighted Medicare Part D, where we have 90% of the covered lives now have access on formulary to CAPLYTA. And the other channels, we expect, it's going very much according to plan as we expected it would. In addition, what I would say, where there are prior authorizations in place, we have an industry leading reimbursements support program that can be utilized by physicians and their staff to help navigate that process. But as Sharon said, it is -- it's very early on in our launch, it's too early to tell any kind of patterns or have any kind of useful data associated with that. But we have been pleased with the progress that we're making on the access side. From a sampling perspective, I guess what I would say there is, in this environment, it has caused us to adapt and be creative in how we get samples to physicians so they can provide them to patients. And I would just say that regardless of whether the physician continues to practice in their office, where they're participating from their home remotely in telemedicine and regardless of whether patients are coming in, in person, or patients are taking advantage of the tele-psychiatry, we have procedures in place that allow us to get samples to the physician and for them to be able to distribute that to the patients. So we have innovated our way through that process.

I think that the last part of your question was, as we proceed through the year, what more will it take? I think with any new product launch, it is a matter of raising awareness, communicating an effective message, and providing the kind of programs, where physicians can be appropriately educated on CAPLYTA as to what the benefits are and the types of patients that they may want to consider CAPLYTA in. And I would just say we have a full marketing mix, where right now in the pandemic environment, as I mentioned, we are in a virtual environment for our sales force, a virtual environment for our medical education. As the company, as the country begins to reopen, and as our field force begins to normalize once again, I think the interactions with physicians will return to normal levels. And I think that will contribute to, what we believe to be, will be an acceleration, a further acceleration of the prescription performance. So I hope that answers your question. If there if there was a part that we didn't answer, just let us know.

Operator, I think we have time for one more question.

I'm not showing any further questions in the queue.

Great, terrific, and more perfect. Well, okay, then I would just thank everyone for participating today on our call, and we look forward to updating you. And we hope that during these challenging times, everybody remains safe, remains healthy and that we return -- that our country returns to a new normal as soon as possible. So thanks, everybody. Operator, you can now disconnect.

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