OptiNose Inc (OPTN) 2021 Q1 法說會逐字稿

Good day, and thank you for standing by. Welcome to the OptiNose quarter 1 2021 earnings call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

Now I'd like to hand the conference over to your speaker today, Jonathan Neely, Vice President Investor Relations. Please go ahead.

Good morning, and thank you for joining us today as we review OptiNose's first quarter 2021 performance and our plans for the remainder of the year. I am joined today by our CEO, Peter Miller; our President and Chief Operating Officer, Ramy Mahmoud; our Chief Commercial Officer, Victor Clavelli; and our CFO, Keith Goldan. The slides that we 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 and forward-looking statements is discussed under cautionary note on Forward-Looking Statements section of the earnings release that we issued today as well as under the Risk Factors section and elsewhere of OptiNose's most recent Form 10-K and Form 10-Q 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 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. Starting on Slide 3. We'll go into more detail in a moment, but I'd like to highlight 4 key takeaways from today's presentation.

First, our Q1 2021 financial performance was aligned with our company guidance. This is an important year for our company, and getting off to a good start enables continued strong focus on our 2 core objectives: driving XHANCE revenue and completing the chronic sinusitis pivotal trials, which we believe can create significant additional value for the company.

Second, new prescriptions of XHANCE achieved another all-time high in the first quarter, despite continuation of pandemic-related market challenges with new prescriptions increasing 16% over first quarter 2020. Notably, this growth is against a quarter a year ago, which was not significantly impacted by the pandemic and in an environment where market new prescriptions decreased 30% versus the prior year.

Third, we believe there are multiple opportunities that will continue to support revenue growth in 2021. Market environment is one factor I will discuss now, and we will discuss additional factors on the next slide. The pandemic both reduced the number of diagnostic visits by patients to physician offices and limited the ability of sales representatives to meet in-person with physicians. These market conditions have improved somewhat since the depth of the pandemic, but are still lagging pre-pandemic norms.

Looking forward as the pandemic environment eases, we expect both our territory manager access to health care offices and patient volumes into those offices to improve throughout 2021. We expect these 2 factors will provide strong support for continued growth in XHANCE prescriptions in 2021. In addition, we believe there's opportunity to get more benefit from our partnership with kaléo as the pandemic environment improves access for their representatives as well.

Fourth, we expect to complete enrollment in our first pivotal clinical trial, evaluating XHANCE, for the treatment of patients with chronic sinusitis in third quarter of 2021 with corresponding top line results in first quarter 2022. This is a change to prior guidance of top line results by the end of 2021 and as a result of pandemic-related issues, including temporary research site closures and decreased patient flows in locations outside the United States that have continued beyond the first month of this year. We are very enthusiastic about the opportunities for growth that successful chronic sinusitis trials would create. XHANCE could be the first drug ever approved and promoted for treatment of the 30 million U.S. patients who suffer from chronic sinusitis. We believe this data could increase product differentiation, create a multifold expansion of the target patient population, be a basis for new partnerships, improve ex U.S. opportunities and drive significant additional value for the company.

Turning to Slide 4. As I just mentioned, we believe our expectations for growth in 2021 is supported by multiple factors. In addition to, and perhaps more important for long-term prospects and improving market conditions, we believe there is an increasing recognition by thought leaders in the specialty societies that XHANCE plays a distinct and important role in treatment of patients with chronic rhinosinusitis with nasal polyps. We believe a stepped care paradigm is emerging for treatment of this disease, much as we have seen in other disease areas where there are multiple different types of therapeutic options, such as asthma, hypertension and pain. Importantly, based on activity from relevant specialty societies, such as the American Rhinology Society and American College of Allergy, Asthma and Immunology, it appears that XHANCE is increasingly perceived by experts as offering an option distinct from standard nasal sprays, surgery or biologics.

We believe that a framework customized to individual patient needs, but based on a stepwise logic of escalating patient care is needed from over-the-counter nasal sprays to XHANCE, to surgery, to XHANCE again after surgery and finally to biologics will support broad adoption of XHANCE as a standard of appropriate medical management of the disease. This paradigm is supported in multiple ways, and we have already begun to discuss with physicians today.

One of which is a published analysis of our pivotal trial data from Dr. Brent Senior, Chief of Rhinology at the University of North Carolina, Chapel Hill and others, reporting the benefits of XHANCE for patients who previously tried standard nasal steroid sprays. We think that this kind of expert specialty recognition of the distinct role of XHANCE is an important validation of the value of the product, reflecting growing appreciation for its importance and supporting broader adoption by clarifying the role it can play in the treatment armamentarium.

Turning to Slide 6. We had strong performance in first quarter 2021, and I will briefly touch on the year-over-year growth highlights on this slide and the next. In first quarter 2021, there were approximately 25,900 new prescriptions for XHANCE, a 16% increase compared to first quarter 2020, and the highest number of new quarterly prescriptions for XHANCE since launch. As mentioned, this volume growth was achieved against a market that declined 30% over the same period. The total number of XHANCE prescriptions in the first quarter of 2021 was approximately 72,600. This represents 30% growth over the first quarter of 2020 in a market environment which declined 23% over the same period.

Turning to Slide 7. XHANCE market share increased from 3.4% in first quarter of 2020 to 5.4% in first quarter of 2021. We're encouraged by this growth, but also excited about the headroom for future growth as more physicians incorporate XHANCE as a part of their customary practice. While XHANCE's 5% of the intranasal steroid spray prescriptions written by the 18,000 physicians on our target audience, there is a growing segment of believer physicians for whom XHANCE exceeds 20% of INS prescriptions written. The share penetration achieved in this group continues to signal the potential for growing a substantial business in the ENT and allergy audience based on the current nasal polyp indication alone.

Breadth and depth of physician prescribing, as measured by the total number of physicians who have patients filling XHANCE prescriptions, increased from first quarter of 2020 to first quarter 2021 as well. Regarding breadth in first quarter of 2021, approximately 6,920 physicians had a patient fill at least one prescription of XHANCE, an increase of 9% compared to first quarter of 2020. Regarding depth, the number of physicians who had more than 15 XHANCE prescriptions filled by their patients in a quarter has grown even faster, with that number increasing by 44% from first quarter 2020 to first quarter of 2021, with nearly 1,300 physicians now in this segment. During the last year, increased depth drove more of our growth than increased breadth. As business conditions improve, we believe the opportunity for growth in both depth and breadth will return, and we have focused promotional efforts against this objective.

In a few moments, I'll provide some closing remarks, but I will first turn the call over to our CFO, Keith Goldan, for comments regarding first quarter of 2021 results and perspectives regarding our corporate guidance. Keith?

Thank you, Peter, and thanks, everybody, for joining us this morning. As we reported, OptiNose recognized $12 million of total revenue in the first quarter of 2021, consisting of $11 million of XHANCE net revenue and $1 million of licensing revenue from a onetime milestone payment we received under our license agreement with Currax Pharmaceuticals.

As noted on prior calls, one of the metrics that we track is XHANCE average net revenue per prescription, which is calculated by dividing net revenue for the quarter by the estimated number of XHANCE prescriptions dispensed during the quarter. We continue to believe this is a useful metric to evaluate the net revenues generated per prescription. However, we remind you that this metric is subject to variability that does not necessarily reflect a change in the price that is paid for an individual unit of XHANCE.

Based on available prescription data purchased from third parties and also on data we receive directly from our preferred pharmacy network, XHANCE average net revenue per prescription for the first quarter of 2021 was $151. This was favorable to our guidance of $120 to $140 for the first quarter and an increase compared to $126 in the first quarter of last year.

Moving to Slide 10. Our first quarter 2021 financial performance was in line with our prior expectations, and as a result, our guidance for the full year and the remainder of 2021 is unchanged.

First, we expect XHANCE net revenue to exceed $80 million for the full year 2021. Second, with respect to XHANCE net revenue per prescription, we expect to see substantial improvement over the remaining 3 quarters of 2021 as well as an increase in full year 2021 compared to the full year 2020 results of $185. As discussed in our last earnings call, we had a pandemic response patient assistance program in 2020 that we do not expect to repeat in 2021, which we expect to contribute to this increase.

Finally, for the full year of 2021, we continue to expect total operating expenses to be in the range from $137 million to $142 million, of which approximately $10 million is stock-based compensation. Total operating expenses, excluding stock-based compensation, are therefore expected to be in the range from $127 million to $132 million.

I will now turn the call over to Ramy to discuss our development programs.

Thank you, Keith, and turning to Slide 12. Regarding our pivotal CS trial, today we announced that we recently completed an interim analysis to assess the variance in one of the 2 co-primary endpoints in our first trial, 3205. The analysis was intended to assess whether the variance assumption in our priori sample size calculations were consistent with the actual variance observed in the trial.

The analysis was performed on blinded, interim data on approximately half the number of patients that we project to enroll ultimately in 3205, and to assess the variance in the primary symptom endpoint. The result of this interim analysis was that the observed variance was lower than the variance that was assumed when we estimated sample size and power during the design of the study.

As a result, we've determined not to make any alteration in the sample size of that trial on the basis of this interim analysis. In the coming few months, we may elect to conduct a separate interim analysis of the other co-primary endpoint, which is change in average of percentage of pacified volume, which our CT scan endpoint, which has changed from baseline to week 24. The COVID-19 pandemic environment, particularly at European and Canadian trial centers, has continued to influence the rate of enrollment beyond the first month of this year.

And that has created difficult to predict patient recruitment rates. We continued to enroll patients throughout this period and were encouraged by recent improvements in enrollment rates at affected centers. However, we now expect to complete enrollment in the first pivotal CS trial in the third quarter, with top-line results, therefore, in the first quarter of 2022. We continue to expect results from the second ongoing trial in the first half of 2022.

Moving to Slide 13. Regarding OPN-019, our product candidate with potential utility for treatment or prevention of COVID-19 and for helping prepare for future pandemics, in March, we announced our plan to conduct a Phase I study to evaluate the ability of OPN-019 to reduce viral burden in the nose, with initial results available within a few weeks of the start of trial enrollment. Regulatory approval to initiate this study is still pending. We continue to expect results, provided we get that approval within the second quarter of 2021.

As previously noted, despite the excitement that we and others have for the potential value of OPN-019, we are aware of the need to maintain a sharp organizational focus on growing XHANCE and on completing our CS trial. Therefore, we are actively seeking grants, partnerships and/or other sources of capital to support further development of this product without detracting from that primary focus.

I'd now like to turn the call back over to Peter for closing remarks. Peter?

Thanks, Ramy. Turning to Slide 15. Before moving to Q&A, I'll take a moment to reiterate that we are optimistic that 2021 has the potential to bring a substantial improvement in the business environment, and that this improvement, buoyed by multiple other factors specific to our business and plans, will continue to support strong future growth for XHANCE. We are laser focused right now on 2 clear objectives, revenue growth for XHANCE and completion of our pivotal trials in chronic sinusitis. I look forward to providing updates on our progress throughout 2021. Thank you.

And now I'd like to open the call up for Q&A.

(Operator Instructions) Our first question comes from the line of David Amsellem from Piper Sandler.

David, we can't hear you if you happen to be on mute. Let's go to the next question, operator.

And our next question comes from the line of Gary Nachman from BMO Capital Markets.

I apologize if you covered this, just jumping around on different calls. Have you made any changes to the patient assistance program? Is that something you would consider modifying into the allergy season? And maybe just comment, how much of XHANCE use is allergy versus chronic sinusitis in polyp versus non-polyp patients? Just give us an update there.

And then, just one other one. Any modifications to the specialty pharmacy network? Will that continue to grow, and could that potentially put pressure on the net revenue per Rx? I know that's one of the factors that goes into it.

Maybe I'll start. And Vic, you can add a few comments, and then Keith, possibly as well. Gary, we did make changes to our patient assistance program at the start of the year and it frankly was less about the allergy season and more about an opportunity we thought we had to improve average net revenue per prescription for uncovered patients moving the first prescription. So commercially eligible, but not covered by an insurance plan, by their insurance plan. Moving the payment from zero, which it was previously to $25. And that has 2 important -- and those, by the way, are not profitable prescriptions for us. And the reason we've done that is so that we can go to physicians and say, "We have a robust program ensuring that the majority of patients are going to get the product at a very affordable price."

We did a lot of work with physicians and found that moving to $25 was acceptable, and we've not seen a significant impact on physician prescribing, but it does 2 things. Number one is we $25 that we collect on those first scripts. The second is some patients don't fill at the $25, and that's actually a good thing for us because those are not profitable prescriptions. And that change has the possibility that Keith referenced of contributing to improvement in our average net revenue per prescription versus prior years.

Specific to your question on allergy season, so we haven't done anything, Gary, specifically in patient assistance to try to capture allergy volume. I don't know if that was sort of behind your question, but relative to where our business is, if you will, it's reasonably unchanged from what we've talked about historically that about 1/3 of the business is with nasal polyp patients, about another 1/3 roughly with CS patients without polyps, and then the balance with other conditions where people have chronic inflammation in the nose. Before we go to the specialty pharmacy question, Vic, do you have anything to add?

No, I think that's a nice summary, Peter. Maybe the only thing I'll say is that the key part of the allergy business is that when it drives patients into the office, that's a key opportunity for chronic sinusitis and ultimately nasal polyps to be diagnosed. So we do see that growth to be important.

Just to amplify that, Gary, I think you know that the CS patients get exacerbations that are sort of caused by seasonal allergies. And that obviously creates good patient flow with potential new patients that are appropriate for XHANCE. Relative to the specialty pharmacy network, we feel really good about the network we built. We have a couple of national providers. We have some regional providers. That contributes to the 4 prescriptions per patient per year that we've been able to generate.

We think it's going to be part of our business for now, Gary, in the specialty segment. We don't think it's necessarily going to put any significant additional pressure on the net revenue per prescription. If anything, as Keith guided, certainly this year we expect improving average net revenue per prescription per year. And as we look out, if anything, we see it reasonably consistent with where we are relative to future trends. If anything, maybe having some favorable tailwind in that area.

And our next question comes from the line of Georgi Yordanov from Cowen and Company.

Congratulations on all the progress. So I guess maybe first I was hoping if you could talk about those high prescribing physicians. What differentiates them from the rest of your prescribers? Do they just have high-volume practices? Is there anything different about what, for example, their specialty? And for those specific above 15 per month, what is the share of XHANCE scripts out of their total INS scripts?

I'll start, Georgi, and I'll pass it to Vic, maybe for a little bit of commentary. Part of the reason I just continue to be very optimistic about this business is because what is happening in that believer segment. And we obviously do work to understand why people are writing and why people are not writing more, I should say. In that believer segment, when you ask those doctors, "why are you writing?" They say 2 things. Number one is they say, I believe in the product efficacy. That it is materially different than the efficacy, certainly, of an intranasal spray. And they think it brings significant value for patients, and they've seen it in their own patients. The second thing is they say, "I find it easy to write and very affordable for patients." And in fact, we do have very good market access coverage, commercial coverage approaching 80%.

And if anything, we think it has potential to improve from that point over the next 6 to 12 months. But the second thing is that they know that it's affordable. These physicians know that. So we have good efficacy, we know that. We have good access. We have good affordability. Our challenge, and not challenge, but our opportunity, it's a great opportunity to grow this business, is get that next group of what we call dabblers to understand that the product really does work exceptionally well in certain patients. And it also is affordable and it's accessible. So Vic, I don't know if you want to add anything.

I mean attitudinally, these early adopters, these believers are in fact just that, a classic early adopter group. And we see an opportunity to leverage them to begin to influence other peers in the community that frankly just aren't as quick at adopting new technologies.

I will say, Georgi, too, that they are everywhere. They're not specific to a certain geography. They're not specific to a certain prescribing type. They are in ENT, they're an allergy. Some of them are even in primary care. And literally, they are all over the United States, which, again, gives us confidence of the ability to grow the business. The share, by the way, as we said, to get into this group you have to have greater than a 20% share. Some of these doctors, by the way, have very high shares. A good bit higher than 20%.

Got it. No, this is actually incredibly helpful. And then I'm not sure if you're willing to comment on this, but given the improved profitability and the recovery in pickup and prescriptions we're saying, do you believe that the current cash in hand would be sufficient to get you to profitability, to breakeven?

Keith, I'll let you take that.

Yes. Georgi, as we stated in the Q, the only guidance that we've given on cash is that the cash on hand is sufficient to get us 12 months out. We ended the year with $144 million, ended the quarter with $116 million. So we feel pretty good about the cash position. 1Q has always been traditionally, if you look back over '19 and '20, our highest cash burn quarter. So as we continue to grow XHANCE throughout the quarter, we have a very high margin product, in the mid-80s in terms of gross profit contribution. So that gross profit contribution will continue to offset the cash burn. So we're excited just to focus, as Peter made in his remarks, on the growth of XHANCE this year and the completion of our CS trials.

Our next question comes from the line of David Steinberg from Jefferies.

It's actually Ed Chung on for Dave. A couple of questions here. Let's see, you talked about potential for your ability to get into physician offices to make office calls. Can you update us on where that is with you and also with kaléo, who I believe you said was not making as many of those calls and when that timing might come before they can actually get into the office to see the doctors?

Again, Vic, maybe I'll start and you can chime in with color commentary. Thanks for the question, Ed, and appreciate you joining us this morning. Obviously, predicting access is going to be hard. So what we're relying on here are surveys that are being done by IQVIA and our own reps in terms of trying to understand what the future environment could look like relative to access. This is an estimate, Ed, but we still are not in a lot of offices currently.

So again, what gives us real encouragement about our business is we're growing the business really pretty significantly against significant challenges of both patient volume and market -- new prescription volume and TRx volume being down substantially and access to offices being challenged. And right now, in many parts of the country, we're unable to access 40% to 50% of doctors in any territory.

So our view of why is that going to change, there's been some survey work done by IQVIA and it's very encouraging in some ways in our categories that in the fourth quarter, a substantial number of physicians did not want to have face-to-face interactions with our -- with any sales representatives, that's improved substantially in the latest survey work that was done in March.

We're prepared for certain physicians still not allowing access, but I think in 2Q of this year, we expect to see continued improvement. I was with a physician group the other night and take this as an N of 1 in one market that is 2 big groups, by the way, roughly 100 doctors across the 2 groups, not allowing access said that in June, their expectation is to open up access to territory managers.

Vic, anything to add there before we talk about kaléo?

Yes. I would say that the physicians basically are telling us they see the availability of vaccines and the spreading of the vaccines as an opportunity for them to normalize the flow of pharmaceutical companies back into their offices somewhat. We also continue to invest in nonpersonal promotion solutions so that we find and continue to strengthen our capabilities to reach them in other channels as well. So our confidence there is growing.

On kaléo, and Vic, you can jump in here, but kaléo has actually done a nice job across -- in the current environment. So probably on the last call, we were talking about 4Q, but kaléo was out like many of the pharmaceutical companies. Kaléo, by the way, was very typical of the majority of the pharmaceutical companies in terms of getting back out, active and face-to-face detailing. And they're now reasonably, I think in line, I think it's fair to say with the industry. And they're now back out making substantial number of face-to-face calls as -- through the ending of the first quarter into the second quarter.

We really have not yet seen significant impact yet. But again, we remain hopeful as access improves and they're able to get out the more physicians that they can bring real benefit. And again, Vic, I don't know if you have anything to add.

We've had great collaboration between their team and our team, and we do see impact with physicians, where they are able to make those calls. So we're really confident.

And then also just on the average selling prices again. Obviously, if you look at last year, the ASPs were dampened by the extension of your zero Co-Pay with the pandemic going on. So in the rest of this year, should the pattern look perhaps a little more like what we saw in 2019 on a sequential basis?

We think that's right, Ed. Sorry, Keith.

No, no. I was going to say the same thing. Yes. We expect -- the guidance we have out there is that we expect for the full year to be north of where we ended up last year, the $185. As you noted, that was impacted negatively adversely by the assist program that we ran, which was a pandemic response program that we put out there for patients to bridge them until they could get surgery. With that program not being repeated this year, we would expect the cadence to be similar to '19, as you said, and we're optimistic for the average net revenue prescript prospects for this year.

And our next question comes from the line of Brandon Folkes from Cantor Fitzgerald.

So maybe just on the guidance, can you help us think about between -- in achieving that guidance, how much is going to be driven by script growth versus sort of this net price per script? And then staying on net price per script, can you just help us contextualize maybe the inventory that was in the channel at the end of 1Q versus year-end and if this had any impact on the net price per script during the quarter?

And then secondly, maybe just a clarification on the early question. Your cash runway extends 12 months out, does that get you through both [trial] readout?

Keith, I'll let you start and I can chime in.

Yes. So I can tell you, Brandon, with respect to our average net revenue per script, as I said in my comments, the numerator in that equation is the net revenue for the period, which is driven by our gross sales, which is ex-factory sales adjusted for what we expect to realize, the whole gross to net sausage-making. So absolutely if we see a destocking in the channel, which we saw in Q1, which we always expect to see in Q1, that does adversely affect our average net revenue per prescription, because you have a lower numerator as the channel equalizes.

Just to go back, the reason that we see and would expect to continue to see destocking in the first quarter of every year is because there is a buy-in both from the wholesalers, the traditional big 3, as well as our PPNs ahead of an expected price increase, which typically comes in the beginning of the year.

So we typically, the cadence -- and I don't think this is unique to OptiNose by any stretch, but we typically see stocking occur in December and then a destocking occur over the first quarter. And that negatively impacts first quarter results, but on a full year basis, it's 12 months in 12 months out. Because we see the destocking January or in Q1, stocking in the fourth quarter. So equalizes on a full year basis.

So it definitely adversely impacts the average net revenue per script in that first quarter. And it's one of the factors that leads us to guiding the average net revenue per prescription will be lower in the fourth quarter than it typically is in the -- I'm sorry, in the first quarter than it typically is in the fourth quarter.

With respect to growth, I'll start and turn it over to Peter. But the growth that we expect to see this year is, we expect to see -- I would say is primarily driven by unit growth. While we do expect to see growth in the average net revenue per prescription, we certainly expect to see the period-over-period, year-over-year growth in units, meaning in TRxs for the full year.

Yes. And I just would add, the things that we've talked about previously, Brandon, is that we think the average net revenue per prescription is going to be more like '19 than it was in '20. So we were $185 last year, we were closer to $200 in -- yes, we were $185 last year and then about $200 the year prior.

$198.

So you can do the math, obviously, of the potential benefit on price and the balance we do think is prescription growth. And we feel really good about growth prospects. We had good growth against the first quarter of last year, which was a non-pandemic year. We actually even grew new prescriptions year-over-year. You'll recall what happened to us in 2Q and 3Q. We had significant impact on our new prescriptions in 2Q because of no patient volumes in physician offices.

So when you think about a year-over-year impact, for the balance of the year, we're going to be up against a very soft base from a pandemic standpoint. As a reminder, [new prescription was] 70% in '20 versus '19, fully in a pandemic year. Majority of a pandemic year against a base that was unaffected by the pandemic. So we feel very good about growth prospects. And that supports our $80 million revenue floor.

And Brandon, with respect to your question around cash, the guidance we put in our Q isn't so much guidance. It's basically compliance with [going] concern bases that the auditors need to provide a clean review, which they did this period. So 12 months is the minimum, right? We said the same thing last period at our March call when we reported our year-end results. We reported that the company had cash to meet its ongoing obligations commercially with respect to debt and R&D for at least 12 months. We said the same thing this period.

So I would rely less on guidance than anything else. We had said that we expect -- I believe we said we expect the completion reporting of data for the second trial in the first half of next year. So hopefully, that answers your question.

And your next question comes from the line of Daniel Busby from RBC Capital Markets.

My first question is on the chronic sinusitis trials. It was only a couple months ago that you guided to a top line readout for the first trial by the end of 2021 now that data's expected in the first quarter of 2022, but what's your overall level of confidence that you'll be able to deliver data within the new time lines? And also was there any particular impetus to conduct the interim analysis? Second, as we look out over the rest of the year, do you expect normal seasonality to come back and play a role at all in demand for XHANCE?

Ramy, why don’t you take the first couple.

Sure. So the primary reason for moving a few weeks out on the expected completion of enrollment has been the impact of the pandemic. And as we noted earlier, it's primarily the impact in European and Canadian sites. There's a number of countries in Europe, which I'm sure you're aware, were particularly impacted during the sort of month -- during the earlier part of this year that -- in ways that we couldn't really have predicted even just a couple of months ago, they either had a prolonged effect where they had delayed vaccine uptake or other factors locally that affected the ability of trial sites to entice patients to come in or even to be permitted to have patients coming in.

And that was different for different countries, and it turned out that some of the centers in some of the countries where we were particularly expecting and had previously seen excellent enrollment were especially impacted. So that has slowed things down a little bit. But as I noted earlier in my comments, we have continued to enroll throughout this time. And we just have pretty high confidence based on the track record so far and the number of patients that remain to be enrolled that we'll be able to complete in the window that we're currently projecting.

Interim analysis, Ramy.

Yes. The interim analysis, I don't know if you can recall this, Daniel, but the interim analysis was preplanned. So it's not something that we engaged in because of some new finding or new events that occurred in the trial. So it was a planned analysis to evaluate variants, in part that's because the assumptions that we had to make for variants were based on limited prior data. So this just reinforces our comfort level that we've made the right assumptions about the sample size that needed to be in the trial. So this shouldn't be interpreted as something that's a reaction to some event occurring during conduct of the trial.

And Dan, regarding seasonality, I think we said this on the last call, but relative to our ability as it relates to our guidance of $80 million of revenue, from a market environment standpoint, we did expect there to be an impact on the 2Q allergy season pandemic related. We did not expect normalization, if you will, in 2Q on either patient volume or access to physicians. We do think in the back half of the year that -- we expect reasonable normalization is what we are currently thinking. And that's obviously somewhat of a crystal ball, but looking at the current trends in the market environment and vaccination rates and all the rest, we think that we'll get back to reasonably a normalized market in the back half of the year.

Great. That's helpful color. And if I could ask one quick follow-up. Could you just provide your latest thinking around business development and is that something you'll want to have chronic sinusitis data in hand for before pursuing in earnest?

I will say, Dan, we're not going to wait for the data to begin conversations with potential partners. We think the potential value of a primary care deployment with a CS indication is substantial, and we've done significant work on primary care physicians and arguably XHANCE is a wonderful addition to their armamentarium with the chronic sinusitis patient. Right now, the primary care physician, pretty much after a patient fails an intranasal spray, which is what they put every patient on, and in fact, in chronic sinusitis, 80% of patients do not get relief -- in chronic sinusitis do not get relief from an INS.

The only real option those primary care docs have today is to refer to an allergist, to an ENT. And with this expert consensus that's emerging, the experts in ENT and allergy are recommending, are suggesting that before going to surgery or before going to biologics that XHANCE be considered in the paradigm. That's something that really fits directly into a primary care physician in terms of what they're doing.

So as a result, we're very excited about the opportunity in primary care for XHANCE. And we think the right way to do it is via partnering. And as a result of that, we're not going to wait for data to have discussions with folks to begin to educate them on the opportunity.

Your next question comes from the line of David Amsellem from Piper Sandler.

So maybe I'll ask a variation of the business development question/topic. I guess the question here, well, it's a couple of questions. One is, how big of a priority is it for you to add another asset where you could leverage your ENT/allergist sales presence? So that's number one.

And then number two is, you do have some general practitioner presence. I know you talked about partnering around the CS indication, but do you think about also a product where there's an adjacency into primary care?

And then lastly, just on life cycle management for XHANCE, how should we think about line extensions to the product, for instance, maybe combining the corticosteroid with an antihistamine like an azelastine, for instance? I mean is that something that you would contemplate down the road? Just wanted to get your latest thought process there.

Yes. I'll start and Ramy and Vic and others can jump in, but relative to prioritization of getting another asset in to leverage our ENT and allergy presence, it's not an immediate priority, David. I mean right now, I think we're crystal clear that our priorities are on growing the XHANCE business and also getting -- completing our CS trial. So it's not an immediate priority, but I have said historically and I still feel this way that we have to, at a point in time, get greater leverage than we have as a company, that it just doesn't really make sense, even if you have a sizeable XHANCE business in the ENT allergy segment to not find ways to get greater leverage across both the headquarters' infrastructure that we built, but especially the call point infrastructure because I'm very proud of our sales team, what they've accomplished and the relationships that we've developed.

So it's not a near-term priority, but it is something that we absolutely believe in, certainly in the next 12 months becomes a much higher priority. Relative to your question on primary care, I know you know this, David, but I want to remind you that the real opportunity in primary care is to get access to the 7 million patients being treated by roughly 50,000 primary care providers. And as a reminder, that's more than double the number of patients that are being treated in ENT allergy. So the opportunity is very substantial and in that market, as I described a minute ago, there aren't good choices and there's really no competition for these chronic rhinosinusitis patients from a co-promoting if you will. So it really is a substantial opportunity, and we think the right way to maximize that is through partnering.

Are we in primary care some offices today? Yes, we are. Will we continue to expand in some primary care offices? We will. But we think from an efficiency standpoint, the right thing to do is to find one of the folks that are in primary care and there still are several with significant presence. There is great cross-match, we know that already, with companies that are already in the space relative to patients who have chronic rhinosinusitis. So we think the right way to maximize the business is through partnering in primary care. Although having said that, we will look to expand in some smaller instances, if you will, in some adjacencies.

Relative to life cycle, Ramy, maybe I'll let you talk about opportunities within the Exhalation Delivery System device. But our focus there, David, is largely on looking at things that we can in-license for the most part. But I'll let Ramy sort of describe the potential -- your thoughts on life cycle with an exhalation delivery.

Yes. Thanks for the question, David. So you mentioned azelastine and other things, just backing up a little bit, when the time is right, and as Peter said, our focus right now is on growing XHANCE revenue and on completing the chronic sinusitis trials. But when the time is right, the kind of products that we'll be looking for are products which are meaningfully differentiated and useful to changing standard of care in the physician audience that we're currently calling on.

And we're going to be open-minded about what kind of product that is. So it could conceivably be a product in an Exhalation Delivery System or other nasal delivery, or it could be a product that has nothing to do with nasal delivery or treatment of diseases of the nose, but which is still relevant to the physician audience we're calling on. But it's going to need to be something which is sort of clinically very meaningful and brings real benefit to patients and the healthcare system.

Okay. I think that's it in terms of questions, operator. So if there aren't any further questions, we'll conclude the call. I'd like to thank everybody for joining us this morning and we look forward to continued updates throughout the year.

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