OptiNose Inc (OPTN) 2018 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Optinose Q1 2018 Earnings Conference Call. (Operator Instructions) I would now like to turn the call over to Jonathan Neely, VP Investor Relations. Please go ahead.

Good morning, and thank you for joining us today as we review Optinose's first quarter 2018 performance and our plans for 2018. I'm joined today by our CEO, Peter Miller; Ramy Mahmoud, our President and Chief Operating Officer; Keith Goldan, our CFO; and Tom Gibbs, our Chief Commercial Officer. The slides that will be presented on this call can be viewed on our website, optinose.com, in the Investors section. Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements. All statements that are not historical facts are hereby identified as forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated by such statements. Additional information regarding these factors is discussed under the cautionary note on forward-looking statements section of the earnings release that we issued this morning, as well as under the risk factor section of Optinose's 2017 annual report on Form 10-K and Form 10-Qs that are filed with the SEC and available at their website, sec.gov, and on our website at optinose.com. You are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements during this conference call speak only as of the original date of this call, or any earlier date indicated in such statements, and we undertake no obligation to update or revise any of these statements. We will now make prepared remarks, and then we will move to a question-and-answer session. With that, I will now turn the call over to Peter Miller. Peter?

Thanks Jonathan, and good morning, everybody. 2018 is another important year for Optinose with the launch of XHANCE and the planned initiation of a clinical program to expand our label with an additional indication to further increase the potential of the product. Right now, it's still very early in the XHANCE launch and at this point we would like to say we're pleased but not satisfied as we have high aspirations for the potential of XHANCE in the market.

As I will detail in a few minutes, we are especially encouraged by physician interest in the product, and by some questionnaire feedback we have received from several hundred patients prior to the first refill of XHANCE. Our payer work is on track, and we continue to remain very focused on not only making sure that we achieve what is necessary at the national level but also working through the details, the pick and shovel work as I call it, at the level of downstream plans with a focus on understanding what is required by physicians and patients.

Starting on Slide 3. I would like to begin by highlighting some of our recent key accomplishments. Over the past several months, we have stressed the importance of achieving high brand awareness and sufficient market access during the launch period. I am pleased to report that we have eclipsed our awareness objective of 85% among all ENTs and allergists, achieving 87% based on our recent quantitative market research, and have made great progress on market access. Nationally, we believe that approximately 74% of commercial lives are in a plan in which XHANCE is covered, based upon third-party syndicated data and internal analysis. Against our early launch phase goal of Tier 3 formulary position for XHANCE that is either unrestricted or only required as a single step edit for 65% of commercial lives, we currently stand at 61%.

Our tech ops team beat our time lines for product supply, which enabled the launch of our innovative trial program called XHANCE Xperience in early March followed by the full retail launch of XHANCE in April. We shipped products into both the mail-order pharmacy we're using for the Xperience program and into the retail channel in the first quarter to support the launch, which are the revenues we are reporting today. As I mentioned, while it is early in our launch, we are very encouraged by the physician interest we are seeing in the product. This is evident in our market research work and I've personally seen it in 8 field rides interacting with over 60 physicians. Maybe most importantly though, physician interest is reflected in actual prescribing, especially in our Xperience program, and I'll go into more detail on that later in the presentation. We also made progress towards our goal of a follow-on indication for XHANCE with submission to FDA of key elements of a trial designed for our chronic sinusitis program, which we plan to discuss at a meeting scheduled to occur in the next few months. Pending the outcome of that meeting, we plan to initiate the program before the end of the year. And finally, we've continued to build the capabilities of our organization with a focus on areas that are critical for a commercial stage company.

I feel terrific about the great people we have brought into our organization and about the vibrancy of our culture as we aspire to build a leading ENT/allergy company.

Turning to Slide 4. In preparation for our launch of XHANCE, we analyzed over 300 product launches between 2010 and 2016 to understand the key factors that drive success. What we found is that successful launches are differentiated from unsuccessful launches by 4 key factors: first, you need an attractive market that has a high degree of unmet need; second, you need an importantly differentiated product, not just different, but different in a way that makes an important difference for patients; third, you need high product awareness among prescribers; and fourth, you need sufficient market access. As I will review in the slides ahead, we believe that with XHANCE, we are entering in a market and have a product that deliver very strongly on the first 2 factors. And as I shared before, we have worked hard over the last several months to meet our goals for the remaining 2 factors, awareness and market access. We're going to talk a little bit more about each of these.

Turn to Slide 5. Data on epidemiology of chronic rhinosinusitis or CRS, the broad category of inflammatory disease for which XHANCE is being developed shows a large population and evidence suggests there is a high unmet need. The condition is believed to affect approximately 30 million adults in the U.S. who generally suffer from moderate to severe symptoms. An estimated 1/3 of the overall CRS population develops nasal polyps. And this is the first indication that we received from the FDA, is for the treatment of nasal polyps in adults. Of the population of 30 million, we estimate that approximately 9.75 million patients are actively receiving treatment by a physician.

In the first wave of our commercial plan, we've entered the ENT and allergy specialty market, where approximately 3.5 million CRS patients are treated, roughly 1.2 million of whom we estimate have nasal polyps. This is a desirable high-density market with these patients being treated by a relatively small audience of only about 15,000 ENT/allergy and primary care physicians. We ultimately plan to reach 14,000 of the physicians in this audience with approximately 120 sales representatives, and the remaining 1,000 physicians through digital and nonpersonal promotion.

So the target market is large and reachable. The disease burden is also high despite currently available treatments and that high burden is recognized. Although this disease doesn't result in mortality, it has a big impact on quality of life. It's not so much about taking years from life as about taking life from your years. Because of the high burden of disease, usually over many years, patients wind up trying a range of alternatives to manage their symptoms. Patients often start with a prescription for an ordinarily topically acting intranasal steroid. Unfortunately, data we gleaned from our market research suggests that 80% of CRS patients are frustrated with the lack of symptom relief they get from traditional steroid nasal sprays. We believe the problem with these treatments is not at the level of the molecular activity of the drug, but that sufficient amount of drug which is topically acting and does not act by systemic absorption has to physically reach the inflamed tissue area to be most helpful.

With delivered -- with delivery via traditional nasal sprays, it has long been recognized to be difficult to get the drug high and deep enough to reach those areas of inflammation in CRS. In fact, our market research suggests that 75% of physicians agree that part of the reason traditional steroid nasal sprays don't work well in this disease, is the inability to get sufficient drug high and deep in the nose. Against the first of the critical success factors for a product launch, we believe it is very clear we are entering a market with high addressable unmet need. So now it's important that we offer something that is perceived as meaningfully different that addresses the unmet need.

Turning to Slide 6. To understand the potential for XHANCE, we did a lot of work to assess physician interest in the product profile.

One of the ways to do this is to determine key factors that are most important in influencing physician prescribing called choice drivers and then to understand preference for a new product versus current therapies on these specific drivers.

Four of the most important choice drivers in CRS with nasal polyps are, improvement in nasal blockage congestion at week 4, elimination of polyps at week 24, improvement in sense of smell and taste and overall patient satisfaction with the treatment. In market research with 200 ENTs and allergists, our research showed that after seeing a product profile specialty physicians perceive XHANCE as differentiated from traditional INS treatments on these 4 choice drivers. Of course, perceived differentiation on key choice drivers is only important if it translates into an intent to prescribe.

So we asked a sample of approximately 700 physicians, a mix of ENT specialists, allergy specialists and primary care doctors who were exposed to the XHANCE product profile, about their interest in prescribing. We found that between 70% and 80% expressed interest in prescribing XHANCE.

As I've now said many times before, this level of interest is among the highest that I have seen in my 30 years of commercializing products and a strong indication that XHANCE delivers on the second key variable of being perceived as an importantly differentiated product.

Turning to Slide 7. Now we're going to focus on the remaining 2 factors that our analysis suggests are linked to the ability to drive a successful launch.

First, I'll report our progress against achieving higher product awareness. At the time of our IPO in October, we frankly set a bold goal to increase our awareness from 28% at that time to 85% during the launch.

I am very pleased to let you know that through some very innovative programs and strong execution by the team, we have achieved that objective.

As we've discussed previously, we kicked off this effort just after the approval of XHANCE when we started a multichannel, digital and nonpersonal marketing program to increase awareness of the brand.

In November, we also fielded our clinical nurse educator program, which reached approximately 5,000 ENT and allergy physicians with over 16,000 presentations delivered. Those efforts raised brand awareness from approximately 28% in August 2017 to 73% by the end of February 2018. What is new and important now is that we have 80 territory managers in place who are targeting approximately, 9,000 physicians. Through May 4, our territory managers have reached 54% of targeted physicians with an average frequency of 3.1.

Collectively, all our efforts have driven aided brand awareness up to 87% at the end of April, among all ENTs and allergists.

Turning to Slide 8. Last, we moved to the fourth critical factor that we believe enables launch success, market access.

Nationally, based upon third-party syndicated data and internal analysis, we believe that approximately 74% of commercial lives are in a plan that covers XHANCE. We believe that this is a good position, because in the current environment, drugs that launch immediately after approval typically face new-to-market restrictions that result in only about 40% of commercial lives having coverage.

Note that our 74% covered number includes all covered lives inclusive of lives that are Tier 3 formulary status with unrestricted access, a single step edit and lives that may require some form of prior authorization.

Turning to Slide 9. Now turning to a bit more detail on how the 74% of lives break out.

While broad coverage is important, we believe it is also important to understand the relative difficulty the different types of coverage create for physicians and patients.

That is why we have set a goal to have insurance coverage for XHANCE in categories that we subjectively define as sufficiently low hassle that they do not impair product adoption for approximately [65]% of commercial lives during the launch -- during the retail lunch. Because at the end of the day, after you know you have insurance coverage of the product, which is the first hurdle, what matters next is how hard is it for a patient or a doctor to get or write a prescription through the insurance process.

We previously defined low-hassle market access as Tier 3 formulary status, unrestricted or with a single step edit.

As I mentioned earlier, we reached 61% on that measure. And critical to that level of coverage we have achieved so far is the fact that 2 of the 3 largest PBMs in the United States now cover XHANCE in Tier 3 either unrestricted or with a single step.

We expect that this coverage will increase as we contract with additional accounts in 2018.

Given the importance of market access to the success of XHANCE, we remain maniacally focused on the experience of patients and doctors who want to start using the product.

Therefore, the first weeks of -- in the first weeks of launch, we have worked hard to refine our understanding of market access and what constitutes low-hassle coverage from the perspective of patients and physicians. For example, while some prior authorizations used by payers to control drug use are extensive and extremely burdensome, others are proving to be significantly less of a hassle for a physician in some step edits. For instance, a prior authorization that only requires a physician to check a box to confirm prior use of an intranasal steroid is very different than a multipage prior authorization form, such as those required for some biologic products. Some of the pick and shovel work that I described at the start of the presentation is enabling our sales team to provide key information at a granular level to the physician and their office staff, such as exactly what may be required in singles -- in a step edit for prior authorization. In addition to the 61% of lives in a Tier 3 single step or better position, our data suggests an additional 4% of lives have a Tier 3 formulary status with a prior authorization that only requires prior use of a steroid nasal spray, a level of coverage we also view as comparatively low hassle. As I hope you can tell, we are investing a great deal of energy in understanding the market access landscape, especially at the physician and patient level. As stated, our key focus is on hassle factor and against this objective, we are evaluating every potential contract and plan to remain agile and to make necessary adjustments in terms of what we believe is best for building our business.

Looking forward, our goal is to build our market access so that by the end of the year, approximately 75% of commercially insured patients have reasonably low-hassle coverage of XHANCE.

Turning to Slide 10. As discussed on our last call on March 5, we officially launched XHANCE Xperience, an innovative launch program designed to accelerate early trial and adoption of XHANCE. Xperience offers physicians and their patients an opportunity to gain initial experience with XHANCE by offering the first 2 months at no cost to the patient, lowering payer barriers compared to ordinary retail prescribing and by giving physicians early clinical feedback from their own patients. The Xperience program is intended to facilitate trial and adoption in ways that we believe are superior to traditional sampling programs. We believe Xperience has potential to produce a higher ROI, better drive prescribing behaviors, generate real-time prescribing and payer coverage data and provide rapid real-world data about the patient experience on XHANCE.

We expect almost all prescriptions in the first few months of launch to be processed through the Xperience program. As I noted, in the Xperience program, enrolled patients can receive up to 2 prescription fills of XHANCE at no cost to them: in other words, with a $0 co-pay. A mail-order pharmacy coordinates fulfillment, shipping product directly to each Xperience patient. If a patient has insurance coverage, the claim is normally adjudicated. But we cover their co-pay, such that the patient's out-of-pocket cost is 0. If the patient is not covered, we will also make the product available to the patient at no cost to them. To us, this is effectively a sample.

Near the end of the first month of therapy, patients are offered the opportunity to receive a second month's supply at no cost to them, if they are willing to respond to a brief survey about their experience.

This provides information about the patient's perspective on the new treatment, which we can evaluate in aggregate and which can be provided at the patient level back to the prescribing physician.

Obviously, this launch program will have a negative influence on our gross to net discounts in the second and possibly the third quarter, and will reduce retail demand during the program period. However, we believe it represents a highly effective vehicle to accelerate adoption and an excellent substitute for much of the traditional volume of launch sampling. As stated earlier, we also believe it will more effectively facilitate product adoption by both the physician and the patient.

Turning to Slide 11. Now I'd like to share the progress of our Xperience program to date with data through May 4. It's important to note that these results do not include prescriptions generated through the retail channel. Through May 4, more than 1,300 unique physicians have written 1 or more prescriptions through the Xperience program. That represents 29% with whom our territory managers have completed at least 1 call.

That is an encouraging rate of adoption given where we are in the launch time line.

In addition, we are very pleased to see that the average number of calls required to convert a physician to an XHANCE trialist has been approximately 2.

From a patient perspective, as of May 4, approximately 5,200 units have been dispensed through the Xperience program.

Note that we previously reported the number of prescriptions that have been written by physicians, but at this point in the launch, we will now report the number of dispensed units of XHANCE. As a reminder, prescriptions through the XHANCE Xperience program are not currently tracked in the national audit data from vendors including [Acuvia] and [Cynthia -- Symphony].

Importantly, please remember that we expect almost all prescriptions to be filled through our mail-order pharmacy partner during the first few months of launch. Turning to Slide 12. Before I finish my comments on the progress of our XHANCE launch to date, I think it is important to provide an update on how patients are doing on our product, as improving lives for patients is what motivates many of us in our work and is what we believe will ultimately drive the success of the product.

On this front, we are very encouraged, though not very surprised having seen the results of our clinical research, that the large majority of patients that have participated in our survey report positively on their use of XHANCE.

As I detailed earlier in the presentation, as part of our Xperience program, patients are provided the opportunity to get a second month of XHANCE with a 0 out-of-pocket cost if they answer a short questionnaire on their experience with the product. The results from 321 patients who have completed the survey are detailed on Slide 12, with 87% of patients saying they're satisfied, 80% experience symptom improvement after just a few weeks, 81% preferring XHANCE over their prior therapy, 89% saying they would recommended XHANCE to a friend, and 94% stating the product could be used without difficulty. Given the symptomatic nature of this disease and the fact that patients can personally feel improvement, and therefore directly understand the benefit of the product, we believe the Xperience program has the potential to drive ongoing use.

Now to Slide 13. To summarize, we believe we are on track against each of the 4 key factors that we identified as necessary for launch success. However, to achieve our aspirations, we know we need continued outstanding execution. I'd now like to introduce Keith Goldan, our CFO, who will provide comments on our first quarter results and perspectives on the rest of the year. Keith?

Thank you, Peter and thank everybody for joining today. As we reported earlier, Optinose recognized $865,000 of revenue in the first quarter. It is important to point out that a large majority of the revenue recognized in the first quarter was related to inventory shipped in late March to wholesalers in order to support the retail availability in pharmacies beginning in early April. This revenue is associated with stock in the channel and not with prescription demand.

If you've followed pharmaceutical product launches in the recent past it is worth noting that GAAP accounting rules changed beginning January 1, 2018.

Following the principles of ASC 606, we are now required to recognize revenue at the time of shipment of product.

To do so, we estimate the average selling price or ASP for XHANCE with specific assumptions per unit sold into the retail channel as well as unit sold through the Xperience program.

As Peter discussed, the Xperience program is a limited time program that is part of our launch strategy. By design, the Xperience program is intended to encourage early trial and adoption of XHANCE by lowering early barriers to trial, and we expect almost all of the early prescriptions to be filled through this program and not through the retail channel. Patients in the program are eligible to receive 2 months of treatment at no cost to them, and we support that by paying the patient's co-pay when their insurance covers XHANCE or by providing the product free if their insurer does not cover XHANCE at the time of fill.

The result is that the ASP for units sold through the Xperience program is significantly less than the ASP for the retail channel. While we are not providing formal revenue guidance I would like to share some perspectives regarding second quarter and full year results for XHANCE.

As planned, the Xperience program is expected to be the primary source of demand for XHANCE in the second quarter. While there will be modest levels of prescriptions and shipments into retail, we are focused on the Xperience program, as we believe it will accelerate product uptake and acquisition of product experience that drives future demand.

Because of this plan, we expect our ASP and gross margin percentages in the second quarter to be significantly less than they were in the first quarter. Because of these circumstances, I caution against straight-line approaches that use total prescriptions and total revenues from the first quarter along with total prescriptions from the second quarter to estimate second quarter revenues. Finally, it is important to note that we are working to maximize patient retention following the Xperience program. However, the unique low-hassle conditions within the program are not representative of the normal experience for doctors or for patients. We expect some inevitable attrition as patients move out of the Xperience program and are required to exercise -- exit out of their prescription drug coverage and incur out-of-pocket costs, but we are just reaching the time frame where we can start to observe that rate. I'll now turn the call back over to Peter for his closing remarks. Peter?

Thank you, Keith. Turn to Slide 15. As described previously in addition to the launch of XHANCE, in the medium term, we believe significant additional value could be created by adding a supplemental indication for the treatment of chronic sinusitis or CS. Against this objective our development team is also continuing to make progress. Because this is a drug indication which has never previously been achieved in the U.S., we have worked extensively with external experts to better understand key research issues such as how to best define the study population, and how to best measure endpoints. Our news today is that we plan to discuss key elements of our proposed trial design with FDA and have already submitted our proposed design elements and related questions to FDA in support of a meeting planned for the next few months. The trials for a CS indication are expected to require co-primary endpoints including an objective measure of inflammation and a subjective measure of symptom relief.

We have already begun the process of selecting our CRO and study locations. Assuming interactions with the FDA go as planned, we expect to enroll the first patients in our CS pivotal trial program in the fourth quarter of 2018.

Turning to Slide 16. In conclusion, we continue to believe that 2018 is a very important year for Optinose. We've worked hard to put ourselves in a position to achieve a successful launch and are now focused on superior execution. We understand that the best-laid plans do not survive first contact, and we are closely monitoring our progress and are fully prepared to be nimble in adapting, where appropriate, to our evolving market circumstances. We've achieved our goal of 85% [aid] to brand awareness among the universe of ENT and allergy physicians who are critical to our wave 1 target audience. We've also made great progress towards our initial market access goals. We remain focused on increasing market access at a level that does not create unacceptable physician hassle to 75% of more commercial lives by the end of 2018. We are making progress according to the plan towards our objective of initiating the fourth quarter -- in fourth quarter, a pivotal clinical program with XHANCE in pursuit of a future chronic sinusitis indication. And finally, we believe our efforts to strengthen our balance sheet in 2017 will be a benefit in 2018. We ended the first quarter with approximately $210 million in cash as of March 31 and as a result, can now focus our energy on executing our business strategy in 2018. Thank you all. Now I'd like to open it up for Q&A.

(Operator Instructions) Our first question is from David Amsellem with Piper Jaffray.

So just a couple. So first, regarding the XHANCE Xperience program, and thanks for the color on demand in the second quarter, but I just wanted to get a sense of how you're thinking about the second half of the year regarding the actual recognition or a ramp in paid revenue generating prescriptions? And I guess the question is, is should we be at all concerned that with the heavy sampling and promotional or demand stimulation programs that you could see some softness in demand as you're transitioning to paid or fully paid prescriptions? I just want to better understand that dynamic. And then secondly, regarding the payer landscape, regarding unrestricted versus step edited. Can you just talk about the split between unrestricted and the single step among that 61% you cited?

Yes, David, this is Peter. I'll take the first one. Thanks for the question. And David, I think you know, the Xperience program is just not a sample program. I want to begin there. It's a -- when we say heavy sampling it's heavy on the Xperience program. We frankly have scaled back some of our sampling. Because we just believe the Xperience program for all the reasons we outlined in the presentation -- driving physician and patient behavior, it's an actual script, it gets filled. Plus we get great data --is just very different. I know you know that, but I just wanted to begin there. Relative to the transition period, there's 2 things going on that I know you know about, which is the first is, you have Xperience program patients transitioning into full revenue patients. So that's something that, obviously, you will see drop-off. We're absolutely counting on a level of drop-off as patients move -- by the way, not just because of their having to pay. You just normally have drop-off on a prescription, as you know, on chronic meds. So we have a factor that we've built into that. That's offset, frankly, by as you drive -- you understand the physician model. And you can probably tell by our data by the way, we have 1,300 physicians. We've got about 5,200 units dispensed. We hope to see significant incremental scripts being written by each of the docs that we're already calling on. So that's a positive offset if you will, if you follow my logic. So it's a -- it's things that we're sort of thinking about. Having said all that, because this Xperience program really is something that we have not seen anybody do before, we're going to be figuring it out as we, sort of, go along as well. But we -- the thing I remain really bullish on, David, is the physician prescribing and the number of physicians that have prescribed. 1,300 physicians have written, almost 30% of the docs that we detailed, and we get scripts written after only 2. Now we have lowered barriers to make it easier but as I told you, I've been on all these calls interacting with all these docs. We really have significant interest on the physician side, and that's what we're trying to generate right now, and we believe that's what's going to carry us through the back half. Relative to the second question, we're not disclosing that at this point, David. I will tell you, we have a pretty substantial number that are unrestricted, though, at this point. Tom, if you want to add color.

Thanks for the question, David, and obviously, a very important one. As you may suspect, we're following 263 plans at the local level. At this point in time, we're really collapsing the unrestricted and step edits into one group. But I can tell you if you look at the national formularies of 2 of the largest PBMs, they have it as unrestricted.

And just to be clear, Peter and Tom, the -- when you stay step edit, I mean, it's a relatively innocuous one, where it's sort of a check the box exercise. Not something where a patient prospectively has to step through another course of a conventional intranasal steroid, is that right?

Yes. So as you know, David, the -- part of the reason we're comfortable, this is a -- if the patient has used an intranasal spray previously, that's the requirement here. The reason we're comfortable is that in our data, 95% of our target audience has previously tried an intranasal spray. For the patients that the pharmacist or our specialty pharmacy, frankly, can see in their database, they do a lookback, if they can see use of an intranasal spray previously, they're done. The patient doesn't know anything. The doctor doesn't know anything. If the pharmacist can't see a prescription previously, it is a call to the physician office is what's required. And the physician or typically the staff has to answer a simple question of has this patient previously used a spray.

Our next question is from Gary Nachman with BMO Capital Markets.

This is Nicole on for Gary. Within the clinical Xperience program, roughly what percentage of the 5,200 scripts dispensed were profitable versus given away?

So Nicole, this is Keith. We're not disclosing at this point the -- your question is really as to the coverage of the 5,200. We're not disclosing what percentage of those were covered versus noncovered.

I want to just correct, too, it's not a clinical program. It is a full retail program. I don't think you necessarily meant it that way, but this is a -- this is not a clinical program. This is just it's being distributed through a direct mail pharmacy, but it's being written as a script.

Okay, got it. And just one quick follow-up on the specialty pharmacy. It's only 1 right now. How much volume can it handle? And at what point would you start to expect to add a new specialty pharmacy?

I'm actually going down there this week and Tom was down there last week, because we obviously have good demand that's going through the channel. Tom and I both met with the CEO of the -- and they feel very good about our commitment to meet the next several months of demand. We certainly will be evaluating adding additional direct mail pharmacies to our channel. We think this is a very interesting channel, as a way to distribute our product. So we had our sales team in this week, actually, talking about that. So it's certainly part of our plans across the back half of the year to add -- to potentially add as our volume potentially really picks up, some additional direct mail order pharmacies. But as of now, we feel very good about our partner who is doing the distribution currently, and they are certainly capable. They're telling us they're capable to handle the demand over the next few months. And by the way, as you can imagine, we're forecasting continued growth in the business.

Our next question is from Randall Stanicky with RBC Capital Markets.

I have a couple. Peter, I know you're focused on the specialty side, awareness at 87% is high. And you're not focused on the primary care side. But do you have a sense of how primary care is thinking about XHANCE right now?

We do in the markets we're in, Randall. We do have some primary care docs in the target universe that we're calling on. Of the 8,000 or 9,000 that we're initially targeting, Tom but approximate how many?

2,000.

About 2,000 are primary care physicians. And we have a substantial number of primary care docs that are -- that have written prescriptions. We have several that have -- moving to what we call sort of more of an adopter versus a trialist. So I can't talk about it broadly, Randall, but I can talk about it in -- where we're detailing docs, we're seeing good reaction from the primary care docs we're able to get in and talk to.

And when you think about -- you talked about 300 analogs that you've looked at, and I know you talked about the parameters as to what works and what hasn't historically.

Is there anything that pops out to you in terms of an analog or an example that you think XHANCE can follow? I mean, it's still early in the launch. Obviously, the Xperience program is a little bit of the differentiator. You guys are targeting a bit of a unique model or of a unique market relative to some of the past launches with unmet need and so on and so forth. But as you think about the launch curves, were there examples that seemed to be more similar to what you expect?

The one that we keep looking at, Randall, that we think is probably the best analog is Linzess. If you look at the patient population, it's reasonably comparable. If you look at the burden or degree of unmet need in the market when that product was launched, we think it's reasonably comparable. We -- there's more competition in that market, obviously, than we face in our market right now. It's a symptomatic disease, which we think is, again, it's chronic, which is, again, comparable. The thing you have to adjust for is they launched a good bit broader in terms of their footprint than we're launching. So that's one we look at but we do -- we, obviously, adjust it and think of the penetration of the GI docs, not necessarily the broader primary care population. They were a good bit broader as you know.

Okay, got it. And then finally Keith, can you -- looks like you spent $30 million in the quarter, if I'm not mistaken. Is that a good OpEx run rate? How do we think about the cadence for the year?

So the guidance that we're giving, Randall, is that for the full year, we expect total OpEx including sales, marketing, general administrative and R&D to fall in the range of $119 to $125 million.

Obviously, we would expect R&D expenses in the second half to begin to grow as we prepare for the initiation of our pivotal program in chronic sinusitis.

Okay, and that would imply then just looking at the spend this quarter that SG&A might moderate a little bit?

Yes. It would imply that.

Our next question is from David Steinberg with Jefferies.

Couple of questions. So, obviously, XHANCE is a device and devices need to be -- patients need to be trained on devices. And your device, the exhalation is a little bit different than some of the inhalation devices. Just curious, any color from physicians or patients or patients completing the survey, has it been fairly easy for the patients to learn how to use the device or any issues that cropped up. And then secondly, polyps aren't really seasonal but there is some interplay with the allergy season. Can you just remind us what sort of seasonality there might be, if any, with your product throughout the course of the year?

Yes. So the first one, David, on how our physicians and then patients -- finding the device in terms of the use of the device.

I've been out on all these calls, as I described David, and the first introduction to the doc, it's new right? You're blowing, you're not sniffing. I will say though, you get through it pretty quickly in the doc understanding it. Our territory managers have gotten terrific at demonstrating the device because, by the way, it's not hard to demonstrate as I think you've probably seen me do dozens of times now. So once you get a doc to see it demoed, we have devices that we actually give the docs and the staff that they can try for themselves.

And I think they realize, wow, this is pretty intuitive. We then -- we have great patient support materials. If you go to XHANCE.com, which is obviously our website, front and center is a video, I think it's about 3 minutes, right Tom? that a patient can look and see a professionally done -- frankly, really done -- well-done video on the device. All that's resulted in the data that we have that says 94% of patients -- and we now have 321 patients who've filled out this questionnaire. We ask them the question, how do you find the device in terms of use? 94% do not have difficulty using the device. So we feel -- it's something that we paid a lot of attention to frankly, in the training of the territory managers. And then on the rides I've been on and evident in our data by the way, is that the territory managers are doing a terrific job on that level. So we're not taking it lightly but it's just not -- it's not that hard. Relative to seasonality, there's less seasonality in this business, David, than what you'd expect. They're -- Ramy you can comment on it a little bit more. But you do see some exacerbation because of either allergies in the air or some other trigger factor. But for the most part, it's a reasonably nonseasonal -- not seasonal business, it's -- people use the product all year round. Ramy, I don't know if you have anything to add.

I think it's fair to say that we believe that patients who have this underlying disease may be more prone to allergic or infectious exacerbation, and that may have some seasonality. But I don't think we believe there's a good prior analog to draw from to determine whether or not we really will experience seasonality in this business. So it's a little bit of an unknown right now.

You look at the data, though, on the current INS as we shared with is that you tend to get it reasonably balanced through the year in the -- in the current scripts, prescriptions that are written for the broader disease chronic rhinosinusitis, not the allergic rhinosinusitis.

Right, okay. And then just a quick follow-up, one big-picture question and one housekeeping item. So on the housekeeping item, on the OpEx guidance of $119 million to $125 million, does that include any stock-based comp or any noncash items? And then sort of bigger picture, you've been doing a little bit of math this morning. Any thoughts on perhaps what over time your peak sales might be of this product in the United States?

Sure, David. This is Keith. Thanks for your questions. With respect to the OpEx guidance and in answer to your question, yes, it is GAAP guidance, so it is inclusive of stock-based comp and other noncash items.

On the second one, David, we talk to you guys a lot, and I feel very good about where we are in the road. But we just started down the road, and I just see a lot of road ahead of us. And so therefore, it's -- in our view, it's premature to start thinking about where this thing can go. We're just so maniacally focused on doing the things that are necessary in the near term to have a successful launch. But having said that, I'm very encouraged by, especially, the physician reaction, the patient data that we have on people who've handled the survey. And as I've told you guys many times, it's why we're so maniacally focused on the payer stuff. We've just got to make sure we make it as easy as possible for physicians to write and patients to fill, and that's where our focus is and we'll continue to be on it.

And I'm showing no further questions. I would now like to turn the call back to Peter Miller for any further remarks.

Well, we appreciate everybody joining us on the call, and we look forward to our next call. Thank you very much.

Ladies and gentlemen, thank you for participating in today's conference. You may now disconnect. Everyone, have a great day.