OptiNose Inc (OPTN) 2018 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the OptiNose Fourth Quarter 2018 Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Mr. Jonathan Neely, Vice President of Investor Relations. Sir, you may begin.

Good morning, and thank you for joining us today as we review OptiNose's fourth quarter 2018 performance and our plans for 2019. I'm joined today by our CEO, Peter Miller; our President and Chief Operating Officer, Ramy Mahmoud; our CFO, Keith Goldan; and our Chief Commercial Officer, Tom Gibbs. 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 are 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 Factors section of OptiNose's most recent annual report on Form 10-K that is 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 statement, 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. We appreciate you joining us this morning. We continue to feel very good about our progress, especially the recent strong trends we are seeing in the launch of XHANCE.

Starting on Slide 3. I'd like to begin by highlighting our key priorities. Our primary focus remains on continuing to drive XHANCE prescription growth. In the fourth quarter, we saw a significant increase in prescriptions. That growth has continued in the first part of 2019. I will review these results in a few minutes.

Our second key priority is to stand up the clinical trial program necessary to pursue a first-in-class indication for the treatment of chronic sinusitis in the United States. Currently, we are aware of no drug in the United States or the world, which has succeeded in receiving this indication. We view this development program as an important long-term value driver because we believe it will enable us significantly expand the potential audience for the product. In the fourth quarter, we enrolled the first patient in the first of 2 expected trials.

Finally, with approximately $200 million of cash available at the end of 2018, the strength of our balance sheet enables us to focus our 2019 efforts on the execution of our commercialization and development plans for XHANCE.

Turning to Slide 5. Before reviewing fourth quarter results, I would like to take a few moments to highlight the key levers that we believe will help us to continue to drive strong XHANCE growth in 2019 and support continued growth in the longer term.

Based on our recent results, we feel confident we are implementing the right core strategy to drive continued physician adoption of XHANCE. Utilizing enhanced messaging to communicate the efficacy of our product, our market research shows that we have been succeeding in strengthening physician perception of the effectiveness of the product. The continued positive feedback we are receiving from physicians, who are reporting improvement in their own patients, suggest that both our promotional efforts and expanding personal experience are contributing to this improved perception.

Our quantitative market research also suggest a growing physician appreciation of appropriate patient types and increasing physician understanding of the product consistent with a differentiated product profile. In addition, the combination of broad market access and the patient affordability programs we implemented in September have created an environment where many commercial patients can fill and refill XHANCE for low out-of-pocket costs.

We believe we have an attractive patient access and affordability offering for XHANCE. However, we are finding that our offering is not yet fully appreciated by many target physicians. We view this positively as it provides potential for additional growth as we continue our outreach and educational efforts for target physicians about our access and affordability programs.

Importantly, I'd like to point out, we have implemented our current patient access and affordability programs around September 2018, while growing volume and increasing average net revenue per prescription.

In addition to driving growth by continuing to execute against our core strategy in our current commercial footprint, in April of this year, we expect to expand our sales force and increase our physician target reach by approximately 25%. This is a clear opportunity to directly engage an expanded audience of target physicians and to create a new source of prescription growth for XHANCE with our new territory managers primarily detailing previously uncalled on physicians.

Next, we expect to make our 7-day sample product available to physicians and patients in the second quarter of 2019. The 7-day sample will provide physicians with the opportunity to get patients started right away on XHANCE at the time of an office visit. It will also allow a patient to receive treatment during the time it may take for a prescription to be filled through a variety of available channels, including by mail.

We believe this may help increase initial fill rates and increase patient and physician satisfaction with the process of starting treatment. This offering is obviously different from the current 30-day sample, which has comparably limited distribution and has potential to help drive additional new prescriptions.

We continue to engage with payers with an objective to increase the number of commercial lives that are in a plan that covers XHANCE. This is a driver that has 2 benefits: first, coverage increases the probability that patients who fill their prescription in retail will be able to do so for a reasonable out-of-pocket cost; second, coverage improves our profitability by reducing the dollar amount of co-pay assistance that we provide through our patient access and affordability programs.

Finally -- and this is more of a long-term driver -- I continue to be excited by the potential growth that could result from direct-to-consumer marketing of XHANCE. This chronically suffering patient population is large with high unmet need. The symptoms are such that patients have a good chance of recognizing them and many patients who are not currently being treated, have been previously diagnosed. Given all of this, we believe DTC has the potential to unlock future growth for XHANCE, and we will field test pilots in 2019.

Turning to Slide 6. I am encouraged by fourth quarter prescription volume growth. Total XHANCE prescription volume for the fourth quarter was just over 14,000, representing 50% growth over the third quarter.

Turning to Slide 7. We are also pleased with prescription volume trends continuing into early 2019. In the left panel, you can see total XHANCE prescription volume for January 2019 of approximately 6,300, which represents growth of approximately 38% over December 2018. We don't have results for the full month of February yet. However, in the right panel, you can see the total XHANCE prescription volume for the 4 weeks ending February 22, was nearly 7,200, which represents growth of approximately 39% compared to the previous 4 weeks ended January 25.

Encouragingly, this growth is being driven by not only new prescription growth, but also an acceleration of refills with both areas demonstrating strong double-digit growth.

Slide 8. Before turning the call over to Keith for his review of the financials, I will briefly review some additional commercial updates. On the market access front, nationally based upon third-party syndicated data and internal analysis, we believe that greater than 75% of commercial lives are currently in a plan that covers XHANCE. This includes all commercial lives that may be covered with Tier 3 formulary status.

In 2019, we are focused on increasing this measure of market access. In 2018, we recognized that not all coverage is equal, and we pursued limited hassle coverage, which we defined as Tier 3 formulary status with unrestricted access a single step edit or a simple prior authorization that may require, for example, only a confirmation of prior intranasal steroid use. We estimate that approximately 60% of all commercially insured lives have formulary access that involve limited hassle, and while we will not have a formal goal for this measure in 2019, it will remain an important concept for us as we seek to expand overall coverage for XHANCE.

In addition of the lives covered by commercial plans, we're making progress in creating opportunities for XHANCE to benefit patients covered by Medicare and Medicaid plans. As mentioned earlier, we're working to hire and train new territory managers to start calling on approximately 1,800 previously uncalled ENT and allergy specialist physicians, which is an addition to the approximately 7,600 physicians that we are calling on now.

As mentioned, we view DTC as a key commercial initiative for the company and believe it has potential to drive future XHANCE growth. Therefore, we expect to field DTC pilots, including broadcast television, in 3 markets this year.

In a few moments, I'll update you on our pipeline and provide some closing remarks.

And now, I'll turn the call over to our CFO, Keith Goldan for comments regarding fourth quarter results and perspectives regarding first quarter and full year 2019.

Thanks, Peter, and thank you to everybody who's joined this morning.

Turning to Slide 10. As we reported earlier this morning, OptiNose recognized $3 million of revenue in the fourth quarter of 2018. Based on available XHANCE prescription data purchased from third parties and data from preferred pharmacy network partners, our average net revenue per prescription for the fourth quarter of 2018 was approximately $214, which is favorable compared to the average net revenue per prescription of approximately $202 in the third quarter of 2018. Average net revenue per prescription is calculated by dividing net revenue for the quarter by the estimated number of XHANCE prescriptions dispensed during that quarter.

As a result, this metric is subject to variability. That variability is impacted by factors that do not necessarily reflect the change in the price that is paid for an individual unit of XHANCE, including ordering patterns and inventory levels for our wholesale customers and preferred pharmacy network partners, patient utilization rates of affordability programs, the proportion of patients acquiring XHANCE through an insurance benefit and other factors.

In addition, there is also the potential for third parties providing prescription data to change their estimation methodology and revise historical estimates of prescription volumes. One such change occurred at a third-party, IQVIA, that affected not just XHANCE, but nearly all prescription products dispensed in retail pharmacies.

If you listened to our last call, we referenced third quarter 2018 average net revenue per prescription of $192. When we account for the backward-looking revision and prescription volume estimates for the third quarter from IQVIA, that figure is now $202 for prescription.

With respect to fourth quarter 2018, average net revenue per prescription, the favorability was driven primarily by lower rates of utilization of patient affordability programs than occurred in the third quarter of 2018. We'd anticipated our fourth quarter average net revenue per prescription to be lower than our third quarter average net revenue per prescription due to increased utilization of our patient affordability program. Better-than-expected reimbursement, which reduces the burden on co-pay assistance resulted in improvement.

In the final 3 quarters of 2018, average quarterly net revenue per prescription ranged from a low of $140 in the second quarter to high of $214 in the fourth quarter with an average of $193 for the 3 quarters ended December 31. In a moment, I will review our expectations for the first quarter and full year 2019, but first, I will review our 2018 operating expenses.

Moving to Slide 11. Operating expenses, defined as sales, general and administrative expenses, plus research and development expenses, were $27 million for the fourth quarter and $105.7 million for the full year 2018. For the full year 2018, operating expenses were favorable compared to our guided range of $112 million to $115 million.

Moving to Slide 12. Our initial guidance for 2019 operating expenses includes increased -- increases associated with key commercial and development activities. These include expansion of our sales force and the conduct of chronic sinusitis clinical trials as Peter's described earlier on the call today. For the full year 2019, we expect total operating expenses to be in the range from $135 million to $142 million, of which $10 million to $12 million is expected to be stock-based compensation. Total operating expenses, excluding noncash stock-based compensation, are expected to be in the range of $125 million to $130 million.

Based on data available to date, we expect first quarter 2019 net revenue per prescription to be between $155 to $175. This decrease from the fourth quarter 2018 is a consequence of the reset of many patient insurance deductibles in January. As a result of this annual reset, we expect greater co-pay support to be provided by us under our assistance programs, which are designed to support continued volume growth.

For the remainder of 2019, we believe average net revenue per prescription will improve, and we expect that the full year 2019 average net revenue per prescription will be between $185 and $205. Factors supporting this expected growth include patients meeting their out-of-pocket expense thresholds, expected improvements in insurance coverage and an increase in the proportion of prescription refills.

I'll now turn the call back over to Peter to give a brief pipeline update and closing remarks.

Thank you, Keith. Turning to Slide 14. In addition to launch of XHANCE, we believe significant additional long-term value could be created by the pursuit of a follow-on indication for the treatment of chronic sinusitis, or CS. This is an indication for which we are aware of no previous FDA-approved drugs and a condition with the prevalence estimated to be approximately twice the size of the nasal polyp population that XHANCE has indicated to treat today.

In the fourth quarter of 2018, we announced the start of the first trial necessary to pursue this first-in-class indication. In the first quarter of 2019, our primary focus for the trial is activation of clinical trial sites. In addition, we continue to expect to start a second CS trial in 2019.

Turning to slide 16. In conclusion, we're encouraged by the sustained rate of growth in prescription volume that we are reporting today. We're also pleased that we're making progress towards our other strategic objectives. Based on our progress, I feel stronger than ever that XHANCE has potential to be a successful product that we can build a company around and which can empower us to achieve our long-term goal of creating a leading ENT, allergy and specialty company. I feel exceptionally good about the talented group of colleagues who have joined us at OptiNose, and could not be prouder of the great work we have done and continue to do so together. Thank you.

Now I'd like to open up for Q&A.

(Operator Instructions) Our first question comes from Brandon Folkes with Cantor Fitzgerald.

Congratulations on all the progress. I just want to dig into a few things. As we look out to 2019 versus what you've seen, what do you think is resonating with physicians that is driving XHANCE's growth here? Is it awareness of the XHANCE data? Or is it just increased access? And then with that how should we think about the increased access in 2019? I know you touched it on the call, but are you prioritizing a hassle-free access our just access in general?

Yes. Brandon, thanks for the question. This is Peter, I'll take it and Tom and others can jump in, if you'd like to add additional color. But if you look at the growth we've been experiencing, we all know based on our clinical trial results, we have a product that works. We then as most people are aware from the survey work that we did in the market based on actual use in the market, the product really works.

So I think the acceleration that you're seeing in physicians sort of understanding of the product has to do with 2 things. Number one, our territory managers, in my view, have done a very strong job of educating doctors on the efficacy profile of the product. But in addition to that, as we said in our remarks, doctors are getting their own experience with the patients -- with their own patients, and many of them are reporting to us results that they've just not seen in patients historically with the use of medical therapies. So I think it's those 2 factors that we're going to continue to drive.

So therefore, job one, as we say all time, is making people believe the product really is differentiated, especially from an efficacy perspective and not in my view the data suggests market research, we're achieving that based on the 2 things that I mentioned.

The other key thing, though, Brandon, as you know, is making sure that doctors believe that patients can get it filled at a reasonable cost. And this is where we really believe we got the strategy completely right with the introduction of our patient affordability program in September because that allows our territory managers to tell physicians that if patients fill through the specialty channel that we've created, the maximum out-of-pocket they're going to pay is $50 and most patients will pay $30 with the first prescription being free.

So it really is the combination of both those things. And as I said earlier in the call, we consider it candidly a little bit of good news that not all physicians completely understand our patient affordability program because as we continue to make them aware of it, that can provide continued upside in the business.

Tom, I don't know if you have anything to add.

Yes. Just a couple of other things to add that I think may support what Peter is saying, and thanks for the question, Brandon. I think there's 3 things that really drive physician interest in trying XHANCE. The first is making sure that we're defining the appropriate patient type for XHANCE for the physician to begin using XHANCE. Second is we've really been able to magnify our efficacy message with not just clinical trials, but also videos to show the impact that XHANCE is having for real patients using endoscopy videos. And third is the patient affordability program. So that's really what drives the interest.

And I think, second, what's really driving the conviction of physicians -- and we're seeing more and more prescribers in terms of breadth and depth -- is what they're seeing in their own patients. And it's that conviction and they see it, the efficacy that they're seeing in their own patients, which is what is driving that -- I think what's driving the uptake that we're seeing.

And then your second question was about access. And our focus is to continue to drive what we call hassle-free access. We always try to go in to get a single step or better, and if we can't get the single step, a very, very simple prior authorization.

Maybe 1 follow-up, if I may. Next month, in April, you're bringing on the territory managers and internalizing the contract sales force. Should we expect any selling disruption whilst you do this? Or will it be a seamless transition?

Tom, I'll let you answer that.

Thanks, Brandon. I think you bring up a very important question and that's something that we've been very thoughtful about. We want to minimize disruption wherever and whenever as possible. And I would say that we should not expect any disruption in April because these physicians that we are adding are going to be, what we call, XHANCE-naive patients, they have not -- or XHANCE-naive physicians, they have not been called on before. So based upon that we're really not disrupting any relationships at the territory level for our sales team.

Our next question comes from David Amsellem with Piper Jaffray.

So just a couple. So first, on the ASPs, I wanted to drill down on the range that you provided. Is it, one, safe to say that you'll be at the lower end of the range in 1Q, just because of the seasonal factors that are prevalent in the industry like annual deductible resets? But then secondly, as we get later into the year, you mentioned that there was lower-than-expected utilization of patient affordability programs in the fourth quarter.

So I'm wondering, if given the color that you provided qualitatively, if that ASP range, particularly in 2Q through 4Q may be somewhat conservative? And help us understand what your thinking is there, in other words the step down from the $214 to going to -- back to lower 2s and even below that. So just help us understand that.

And then just lastly, quickly on the cash position, can you just help us understand your runway and the extent to which you may look to access capital down the road?

Sure, David. Thanks for the question. This is Keith. I'll take your second question first and then I'll comment on the average net revenue per prescription. So from a cash perspective, we ended the year with 2 -- about $200 million on the balance sheet, and we did -- although we didn't include it in our prepared remarks, we did include a statement in the 10-K that we filed earlier this morning that we expect that cash to last us into the fourth quarter of 2020. I did want to point out that, that does not contemplate the additional $25 million that may be available to us from Athyrium.

Moving to your first question, you referenced ASPs and it's a little nuance, but we're -- when we report the price per prescription, we talk about that in terms of average net revenue per prescription, which I described as taking the net revenue for the period -- the quarter, in this case -- and then dividing by the number of prescriptions dispensed during that quarter. So I'd bring that up because ASP is a more, I'll say, internal in-depth calculation that contemplates a lot of other factors. And we don't disclose the ASP publicly.

But for the average net revenue per prescription, just to reground everybody, we gave guidance of a range of $155 to $175 average net revenue per prescription in the first quarter and then expanded that to $185 to $205 average net revenue per prescription for the full year.

So with respect to your question about conservatism, David, those are the ranges that we expect. This is our first Q1 on the market. So I will say that we did expect the negative impact of the annual co-pay insurance deductible resets. I don't think that's unique to OptiNose or to XHANCE. That's commonly seen throughout the industry, so that was fully expected.

But as those deductible thresholds are met, and as we increase coverage throughout the year and average -- and as the proportionality of refills to total prescriptions increases, we do expect that to continue to rise through 2019 -- I'm sorry, yes, 2019 -- to achieve that full year range of $185 to $205 average net revenue per prescription.

David, the thing I would add just on the -- helping better understand the first quarter because of our patient affordability program, we, obviously, where a lot of brands see potential volume decrease and price decrease because of co-pay resets because our affordability program, we obviously saw significant volume increase through this time frame. And -- so therefore, the effect on the average revenue per script was a little bit more pronounced than maybe you would have expected. But the key point that Keith emphasized: we feel very confident about the ranges that we're talking about for full year.

Okay. And, if I may, just making a follow-up, regarding persistence rates, and I don't know if you have specific quantitative metrics here, but if you don't maybe talk about qualitatively, what you're seeing in terms of patient churn? And do you have sort of average portion of patients who are -- and I know it's kind of early -- but who are consistently remaining on therapy? Just help us understand how you're thinking about persistence, not just in '18, but as we move more into 2019?

Yes. And David, I'll start with sort of what you alluded to, but we'd like to remind people that because we really started a new patient affordability program in September, we sort of believe the right time to really looking -- start thinking about persistence and refill, it's really on that time frame where we had the 0, $30, $50 program in place. So we sort of say the starting point to really understand it is September.

And as we've said on prior calls, what we really believe it's going to take a full year data to really understand use of the product because as we've said many times, based on our understanding of the market, patients will sort of cycle in and out of products and the category based on relief they're getting from the symptom standpoint. They'll use the product, symptoms will get better, symptoms will return, but still they'll titrate down a little bit, but potentially go off the product, but then they'll return when their symptoms come back. And we know patients are highly symptomatic 6 months of the year minimally.

So I'm giving you all background information that's probably I know you understand, David, but that sort of sets the table. So it candidly is still a little bit too early to be able to predict what it's going to be for the full year. I will tell you based on the data that we're seeing, we're feeling really good about refill.

And as I said in my prepared remarks, we saw a nice acceleration of refill in the first part of this year, and we obviously can't predict that, that's going to continue to happen. But I go back to based on how well patients are doing on the product, when they actually use it, we continue to feel that refill rate should be strong on this product.

And our next question comes from Gary Nachman with BMO Capital Markets.

Nice progress. In terms of recent acceleration of prescriptions, where specifically is most of that additional penetration coming from, polyps versus non-polyps, pre- or post-surgery, ENT or allergy? And it sounds like you're pretty comfortable with where the patient assistance program is right now. Do you plan on making any changes to that at all this year in terms of the max co-pays? And is that same plan still what's factored in your net revenue guidance for the year?

Gary, I'll take the second one and then I'll let Tom take the first one. But relative to our patient affordability program, we really believe we have it right. It's generating the -- as I said earlier, job one is to make sure physicians believe in efficacy, but second is to make sure that it's reasonably easy and affordable for patients to fill, and we just believe we got the program right. So for the near term -- near term defined as -- we don't have a necessarily an end date to our patient affordability program right now. So for right now, we're very confident. It's driving volume, and as I said in my prepared remarks, we feel really pretty good about the average net revenue per prescription that we generated in the back half of the year with that program in place.

So we believe we're going to get some nice tailwind, by the way, on average revenue per prescription, as Keith said in his remarks, based on continued increase in coverage that we expect to achieve this year, along with more of our volume shift going into refill. And we obviously make more money on refill because the first prescription being free and versus patients paying $30 or $50 for the second script.

So I'll let Tom answer the first one.

Thanks for the question, Gary. I think it's an important one to understand. First and foremost, before I go into how the product is used by indication, I do want to just reemphasize the fact that our sales team and all promotional efforts are focused on promoting XHANCE within nasal polyps, but however, physicians will prescribe the product as they see fit. The data that I'll cite is from the monthly IQVIA NDTI audit survey data, which asks physicians when they prescribe a product, how are -- what indication they're prescribing it for.

So if you look at the chronic sinusitis umbrella, about 60% to 65% of the prescriptions -- I'm sorry, 60% to 65% of the prescriptions that physicians state they're writing are within that chronic sinusitis umbrella, about half is under nasal polyps and about half falls within the chronic sinusitis umbrella. And the other 35% to 40% is all other, which would include indications such as allergic rhinitis.

Gary, I would say too -- and Tom, you may want to add some color -- that the really encouraging thing about our business right now is we're seeing growth everywhere. We're seeing it across virtually -- every single region of our country, our region business development team -- feel exceptionally good about that team, and we're seeing growth across the country. We're seeing growth across virtually every territory manager at this point in time. We're seeing growth both in ENT and in allergy. So it's -- that's why I made the statement of our confidence in the strategy being right. So it's very encouraging where the growth is coming from.

Yes. The other thing I was going to add, Gary, which I think is important, is looking at sort of contribution by indication, and if you remember back in the second quarter when we were launching, we would say that ENT and allergists represent an equal proportion. We're seeing accelerated growth within ENT. Specialty right now about 51% of our prescriptions are written by ENTs and about 33% for allergists and that's really important and good progress because that's really how the distribution of our target audiences as well. So we've made really good progress with ENTs and I like that because they're durable prescriptions.

Okay. What about the last point on just pre- or post-surgery and, maybe how you guys you think are stacking up versus some of the competitors like the stents that are out there?

Well, I mean, I'll say relative to that question, Gary, as we view ourselves as completely not competitive with the implants. And the reason for that is, those products are used in conjunction with an intranasal spray. So many doctors tell us who are using an implant, they say, actually we're using you guys with the implant. So we believe we are the best option relative to topical treatment using application via something administered through the nose. So as I've said many times, we do not view ourselves as competitive with the stents, but I'll make the same -- by the implants, SINUVA.

I'll make the same comment, by the way, relative to biologics. If you look at how those products are studied, if you talk to physicians how they intend to use those products, they intend to use it with, in conjunction with, an intranasal spray. So there, again, we view it -- us as absolutely complementary. And by the way, some of the attention that nasal polyps are getting from the development by these other products, we view as a positive because it's just increasing awareness among the population of nasal polyps.

Okay. And last really quick one. Just -- when do you expect that we could see the chronic sinusitis data from the first Phase III?

Gary, this is Keith. We're early -- it's early days in terms of enrollment. So we expect to be able to give better guidance on that once we get further into enrollment in the first trial and initiate the second trial later this year.

And our next question comes from Randall Stanicky with RBC Capital Markets.

And sticking with the theme of growth, if we look at Slide 7, you're close to 40% month-over-month. If we look at back of the envelope, on your average net price of call it $195 for the year, in order to hit consensus it's roughly 15% monthly -- month-over-month. Now, obviously, it's not going to be a linear trajectory.

But as you think about upcoming seasonality, sales force expansion and other initiatives, how do you think about that progression over the next, call it, several months just to set the stage for that? And then I have one follow-up.

Well, I'll first talk about sales force expansion, Randall, because that really could be an accelerator for growth. Especially in the back half of the year, you know what it's like getting someone new in territory, it takes some time for those territory managers to really be productive. But based on new territories we're starting now, we started a few territories, it's been a sort of a bellwether, if you will, an indication of how we can get territories going. We're feeling pretty good we'll be able to get those territories up and really contributing in the back half of the year. So that's truly potentially -- well, we said in the call -- 25% pretty much new targets from the standpoint of potential to generate new growth.

So that's -- relative to seasonality, Randall, we have not lived through a full season, so it's really hard for us to completely comment on it. But we do know looking at the category data -- and Tom, jump in -- that the season, by the way, really has not started yet.

So if you look at category growth of intranasal sprays, it's reasonably flat -- right, Tom? -- across January, February. So the growth trends that you are seeing to date year-to-date are not due to seasonality. As we head into March, April, May, that is the height of the season, so I think, there is potential for some real nice tailwind there. As you know from last year, July, August -- starting in sort of middle of June, July, August tends to be the trough, if you will, from a seasonality standpoint.

One of the things that we're feeling a little bit differently this year versus last year is we are getting a higher proportion of our business in refill. And that potentially becomes a way that you can sort of weather a downturn in seasonality where you're not relying on new scripts being written by patients being present in the office.

Tom, I don't know if you have anything to add.

This is Keith. Just one point to highlight a comment that Peter made. In the December '18 to January '19, TRx growth of 38% that we reported on the Slide 7 that you referenced, Randall, in that same period, the INS market increased 5%; and in the 4 weeks ended February 22, '19 compared to the 4 weeks ended January 25, '19, we reported 39% growth. In that same period, the INS class actually decreased 1%. So as Peter said, the growth that we're seeing we feel is not linked to seasonality.

Got it. And Peter, it's fair to say that you guys are investing into that for traffic volume pickup in the next couple of months via DTC and other factors to try to capture some new patients. Is that fair?

I would say, it's not really fair, Randall. I mean, we do have a social media program going on right now from a targeted direct to patient; but I want to make sure I'm clear on the direct-to-consumer program that I'm describing, that will be a pilot this year. So you guys, who know us, know that we like to learn before we jump fully into anything.

So we have 3 markets that we'll start doing DTC in. We pair those markets, so we can understand the incremental value of DTC. And that's -- so what we're doing this year will not have broad impact on prescriptions this year. However, if we learn what we hope to learn, which is it could be a real accelerator for growth, it could have a real impact in 2020.

Got it. And I have one completely unrelated question that I was hoping to get to ask you. As you step back and look at the launch, I assume the priorities, #1, through 11 are going to be getting this launch right. But at what point do you step back and say, okay, it's time to start thinking about leveraging the platform bringing in -- licensing in a second product as you look to build out the company?

I'll say, we're already thinking about it, Randall. I mean, as you said earlier about it, I agree completely with your point that jobs 1 through 10 are making sure XHANCE is successful, and we know that, we understand that, that's primarily -- that's the huge focus of our company.

But relative to bringing stuff in, it's absolutely things that we're working on, and we obviously aren't going to comment too much on it; but we have the benefit of Ramy Mahmoud and his team. I think we have an exceptional team of not only developing products, but understanding market opportunity in different spaces, and I'll just say that we're in the midst of evaluation of a number of things.

As you also are aware, we did do a deal of out-licensing. Now that's not directly related to your question relative to leveraging the ENT, allergy infrastructure, but we were successful in an out-licensing of areas that we've said we're going to defocus in terms of use of capital and use of our resources via the deal with Inexia.

We're very excited about that, by the way, because that's -- they're a great partner, Medicxi, which is helping fund that transaction along with Inexia. So we're excited about that, it's not going to be focus of our -- of the company, but it is a way to create some additional value.

And our next question comes from David Steinberg with Jefferies.

Couple of questions. The first one is, does your ASPs for the year include any annual price increases? And do you have any information on -- are patients actually using the full script for a month or maybe are they not using it twice a day and therefore, is the script actually lasting longer than the 30 days, do you have any information on that?

Keith, I'll let you take the first one. I'll take the second one.

Yes. David, I appreciate your question on annual price increases, but we don't -- as a practice, we don't comment on our expectation of any price increases.

Your second question, David, relative to patient usage, this is mostly anecdotal, David, that just based on our interactions with patients, as I said earlier, in answering one of the other questions, the way patients have historically used products in this category is they tend to treat more heavily, if you will, when they're symptomatic. And for a variety of reasons, cost being one of them and the second one being just the -- having to take a product every day.

So nothing's really changed in our view that we're probably going to have the same kind of treatment, and I'll let Ramy potentially jump in if you have other comments, Ramy. But we don't really have any data relative to our product being more or less, frankly, than the category at this point.

So Ramy, I don't know if you have other comments.

Nothing there.

But we'll certainly get -- we'll continue to get that data, David. But as I said earlier, the one thing I do really feel good about right now is the acceleration in our refills, which obviously is an indicator of people using it with a reasonable frequency.

Right. And then a couple more. You may have gone through it, but obviously, every week, we can see the IQVIA data, but the bulk of the scripts go through the specialty pharmacy. Could you remind us what percent of the scripts go through specialty pharmacy? And is that ratio of retail to specialty change? And do you expect it to change throughout the year further?

And then finally, I think Randall was asking a question about sort of monthly sequential growth in consensus. So if you work through the math, you've been growing the first two months, I think, almost 30% or more. If you work through the math, you get to consensus I think every month scripts grew sequentially 10% to 15%, you can get there. I'm assuming you think the allergy season will be pretty strong.

So even if there is a lull this summer, it sounds like you think you can at least get to consensus on these -- based on what we're seeing so far this year in month-to-month growth, albeit from a low base and then track it throughout the year. Is that a correct assumption?

So this is Keith, David. We're not going to comment if that's a correct assumption or not, but I'll give you some anecdotal thoughts that perhaps will help you with your modeling. The -- we're -- as Peter remarked and I commented, we're excited by the sustained growth that we're seeing.

This summer with respect to your question on seasonality, we expect similar to last year that there may be a -- you called it a lull that maybe due to the foot traffic, docs are on vacation, patients are on vacation. But I will say that in a business that is in the early phases of launch that is driven by new-to-brand prescriptions, that requires a physician-patient interaction, a physical interaction, to get that initial prescription.

As the business matures and begins to move -- the proportionately of the business begins to move more to refills, I think it's reasonable to expect that the lull, as you called it, would decrease over time as the brand matures and that proportionality move towards refills and less reliant upon the new-to-brand prescriptions. Your...

Got a question on year.

Yes, a question on the year, I mean, yes, we're not going to comment specifically on TRx or on revenue guidance, we're not going to give that at this time. Although we will say or I'll emphasize that we expect to see the increased growth in our average net revenue per prescription as the year progresses.

And then on...

You asked about the proportionality of our business also. So -- and this is, I think, your question was with your respect to what's captured in IQVIA versus what we see through our -- through the preferred pharmacy network partners.

I think the best way to answer that question, David, is that the direction of the growth that we're seeing is consistent in the 2 channels. It's impossible to really bifurcate one versus the other because in the IQVIA data that you're purchasing, you are actually seeing some of the preferred pharmacy network partner data reflected in the IQVIA purchase. So they are picking up, IQVIA is picking up some data from some of the preferred pharmacy network partners, although not all.

So the exercise that we go through, again, bifurcates that, pulls the number out of IQVIA for the pharmacies that are reporting and then we obviously have perfect data with respect to what our pharmacy partners are dispensing.

So I think, again, the best way answer the question is directionally the growth of the -- or the direction that you see in the IQVIA scripts has generally, historically, been indicative of the direction of the -- what we're seeing through our pharmacy partners.

The only thing I would add is that it's -- the split which you asked about it's high-40s in terms of currently, in terms of the percent of business that's represented by IQVIA of the total business, and it's candidly hard for us to predict what that -- whether that proportionality is going to remain or not. So it's something that's hard for us to comment on.

I'm not showing any further questions at this time. I would now like to turn the call back over to Peter Miller for closing remarks.

Well, I'd just like to thank everybody for joining us for the call, and we look forward to hopefully you joining us on our 1Q call. Thank you very much.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program, and you may all disconnect. Everyone, have a wonderful day.