Aquestive Therapeutics, Inc. (AQST) Q2 2020 Earnings Report, Transcript and Summary

Good morning and welcome to the Aquestive Therapeutics Second Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. As a reminder, this call will be recorded. I would now like to introduce your host for today's conference, Ms. Stephanie Carrington, Westwicke, Investor Relations. You may begin.

Thank you, Operator. Good morning, and welcome to today's call to review Aquestive Therapeutics' results for the first quarter of 2020 and business highlights. On today's call I am joined by Keith Kendall, President and Chief Executive Officer, and John Maxwell, Chief Financial Officer, who are going to provide an overview of the recent business developments and performance in the second quarter. Additional members of our leadership team will be available for Q&A. In total, we expect today's call to last approximately 60 minutes. As a reminder, the company's remarks today correspond with the earnings release that was issued after market close yesterday. In addition, the recording of today's call will be made available on Aquestive Therapeutics' website within the Investors section shortly following the conclusion of this call. To remind you, the Aquestive team will be discussing some non-GAAP financial measures this morning as part of its review of second quarter 2020 results. A description of these measures along with a reconciliation to GAAP can be found in the earnings release we issued yesterday, which is posted in the Investor Relations section of Aquestive Therapeutics website. During the call, the company will be making forward-looking statements. We remind you of the company's Safe Harbor language as outlined in yesterday's release, as well as the risks and uncertainties affecting the company as described in the Risk Factors section included in the company's annual report on Form 10-K filed with the SEC on March 11, 2020, and in our quarterly reports on Form 10-Q. As with any pharmaceutical company with product candidates under development and products being commercialized, there are significant risks and uncertainties with respect to the company's business and the development, regulatory approval and commercialization of our products and other matters related to operations. The impact of the ongoing COVID-19 pandemic is highly uncertain and cannot be predicted with certainty or clarity. Given these uncertainties, you should not place undue reliance on these forward-looking statements which speak only as of the date made. Actual results may differ materially from these statements. All forward-looking statements attributed to Aquestive Therapeutics or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement and the cautionary statements contained in the earnings release issued yesterday. The company assumes no obligation to update its forward-looking statements after the date of this conference call whether as a result of new information, future events or otherwise, except as required under applicable law. With that, I'll turn over the line to Keith.

Thank you, Stephanie. And thank you to everyone on the call for joining us this morning. In our remarks today, John and I will provide an update on our business for the second quarter. And as always, we will be joined by additional members of the Aquestive leadership team during the Q&A session afterward. Our key priorities as a company always start with the safety of our colleagues, the people we do business with, and the patients and caregivers who interact with our products. During this extraordinary period, as leaders and managers of our business, we have a responsibility to ensure that, to the best of our ability, while taking all steps to keep people safe, we continued to advance the important work of the company. We've carefully managed our business to be sure that our colleagues are safe and healthy, that all key elements of our business continue, including continuing to access the market for Sympazan, progressing key R&D initiatives, supporting the various FP&A review processes we are involved in and continuing product manufacturing. The company's manufacturing facility continues to produce needed chronic use medicines for patients, including the company's proprietary product, Sympazan, and the company's licensee products such as Suboxone. Our sales team has continued to access prescribers, the majority of the time virtually, and where possible face to face. And therefore, Sympazan has continued to be prescribed to these patients during this period. We continue to make significant progress as it relates to the key areas of focus for our company. First, Aquestive is continuing to market Sympazan to the same prescriber base that are potential prescribers of our product candidate, Libervant. Sympazan continued to make progress in the second quarter in all the measurement areas we view as important. Next, in late June, we filed the Investigational New Drug application for AQST-108. This therapeutic candidate is a first of its kind oral sublingual film formulation, delivering systemic epinephrine using Aquestive's proprietary PharmFilm technology in development for the treatment of anaphylaxis. Our IND has been accepted by the FDA and we expect to initiate the first PK clinical trials in the third quarter of this year. We believe AQST-108, if approved, will be the first orally-administered epinephrine-based rescue medication for this patient population. Next, Aquestive continues to work with the FDA in seeking approval of Libervant. We have been providing information responding to their information requests and working with the agency on inspections of our manufacturing and clinical sites. In our view, there have been no surprises in their questions or during the inspections to date. Aquestive's lead licensee product, Suboxone, continues to perform as expected. In addition, Indivior just received approval for Suboxone in the EU and we understand that it will be launching Suboxone in that region in the coming months. We anticipate that the EU launch will partially offset the eroding volume of Suboxone in the United States. Finally, the Aquestive team has launched a process for a potential monetization of the anticipated royalties associated with Sunovion's KYNMOBI, a sublingual apomorphine product that received FDA approval in May. In addition to triggering the approval milestones payment, once launched, we will be entitled to royalties on worldwide net sales of KYNMOBI. Now, let's discuss in more detail each of these key areas of focus for the company. First, we remain focused on building our CNS franchise. We are advancing the commercialization of Sympazan, whose prescribers substantially overlap with potential prescribers of Libervant. Our aim is to raise the profile of our PharmFilm technology as a commercial precursor and complementary product in support of the Libervant opportunity. Sympazan continues to prove the build out of our capabilities and processes in preparation for the commercial launch of Libervant if approved by the FDA for US market access. All of our commercialization efforts relating to Sympazan provide an opportunity for direct conversations with healthcare practitioners, patients, caregivers, payers, advocacy groups and others about the value of our PharmFilm technology. The acceptance of Sympazan by those groups is an important building block, providing a meaningful value proposition for caregivers of patients suffering from LGS, helping to drive Sympazan to expected profitability in 2021, as well as positioning Libervant for a stronger launch, if approved for market access. Despite the restrictions on face to face visits with prescribers as a result of the COVID-19 crisis, Sympazan continued to grow in all the key measures we view as important at this stage. We continue to focus on prescription growth and further market penetration. Shipment volumes sequentially quarter-over-quarter have grown 3% and by 116% over the same period last year. Q2 represented the highest shipment volume quarter for Sympazan since its launch. The prescribing base also continues to grow. 15% since the end of Q1, with over 78% of those prescribers writing multiple scripts. We now have a penetration of 22% in our focused group of prescribers. We continue to ramp up payer acceptance and currently have over 70% of commercial lives covered and 81% coverage of state Medicaid regions. The actual Q2 claims paid rate for commercial patients was 77%. And for Medicaid, it was 85%. We believe our position with the payers also will help us on a launch of Libervant. The COVID-19 pandemic has created face to face access challenges with health care providers since mid-March for our field-based sales team. Virtually, all of our target prescribers for Sympazan have eliminated live access to their clinics at some point in time. The Sympazan team has rapidly adopted digital tools and continues to engage with healthcare providers and their staff remotely on a frequent basis. While states are in different phases of reopening at this time, we expect to continue to have some opportunities for face to face visits with healthcare providers, but we'll also continue to have virtual interactions with them as well. During the pandemic, we have, to the best of our ability, ensured that our sales team is safe and compliant with local regulations, but have also worked hard to maintain the sales team's connections with the prescriber and patient community that needs Sympazan. We believe that our continued prescriptions growth and net revenue demonstrates that we've been able to continue to connect with prescribers even virtually and grow this product through a difficult time. Sympazan is strategically accomplishing what was intended when we developed and launched the product last year. The work we do to continue to build the market penetration for Sympazan will be an important foundation for a successful launch of Libervant. As we have said before, we anticipate that Libervant, if approved for US marketing access, would represent a potential $300 million net revenue stream for the company at its peak. We believe this base of commercial infrastructure, payer relationships, and sales teams well positioned with key prescribers, combined with a complementary product in our sales bag, would put Aquestive in a position to launch Libervant quickly and successfully if we are granted US marketing approval, even in a restricted access environment. Now, let's turn to AQST-108. As expected, we filed the IND for AQST-108 with the FDA in late June of this year. As confirmed by the FDA at the pre IND meeting in February, this program will be reviewed by the FDA under the 505(b)(2) regulatory approval pathway. Based on our interactions with the agency to date, we expect that the development program will be comprised of at least two PK clinical trials. On July 23 of this year, we received confirmation from the FDA that it completed its safety review of the IND and concluded that we could proceed with our planned clinical trials. We expect that the first of the PK clinical trials will commence before the end of the current quarter. This first trial will be a crossover study designed to compare the pharmacokinetics and pharmacodynamics of epinephrine administered as sublingual film to that of epinephrine administered as an injection. As we do with all of our development efforts, once we have additional information from the first trial, we will meet with the FDA and confirm our path forward, which would include a pivotal PK trial possibly in 2021. We plan to provide updates on our program over the second half of 2020 as additional information develops. Next, as we previously communicated, the NDA filing for Libervant was accepted in January of this year and assigned a PDUFA goal date of September 27, 2020. We have not seen an impact from the ongoing COVID-19 pandemic in terms of our interaction with the FDA regarding the approval of Libervant and have no indication that, at this point, there is any reason to believe that we are not on track for a September 27, 2020 decision as scheduled. Given the approval and the orphan exclusivity decisions will be made by different groups within the FDA, we cannot be sure that we will receive feedback for both decisions simultaneously. There is a possibility that the orphan exclusivity decision may not be received until some short period of time following the PDUFA goal date, if approved on that day. We have been engaged with the agency providing information, responding to their information requests, as well as their ongoing inspections of our manufacturing and clinical sites. The information requests received over the past few months are in line with our expectations and we have been able to respond completely and in a timely manner to all information requests received to date. From our perspective, there have been no surprises in the information requests or in the inspections to date. We are seeking to demonstrate to the FDA that Libervant will, if approved, for US marketing access represent a major contribution to patient care within the meaning of the FDA regulations and guidance as compared to currently available device driven based treatment operations. Libervant would also expand patient choice as the first orally delivered diazepam-based product available to manage seizure clusters. We believe we can demonstrate to the FDA why Libervant as an orally delivered product has one or more of the attributes required by the FDA to be considered a major contribution for patient care. While the dialogue continues with the FDA for approval of Libervant and access to the market, we cannot assure the FDA's position on this and we do not participate that we will have a clarity on the decision until at least the scheduled PDUFA goal date. Recognizing that the orphan drug question is an element of risk and we cannot assure what the FDA's position will be, we will continue to be thoughtful and prudent about our spending choices, and are appropriately managing our pre-launch spend on Libervant and marketing expenses for Sympazan prior to having any clarity on the approval of Libervant. Subject to the FDA approval, we are committed to launching Libervant and we have the foundational commercial capabilities to do that. Finally, as I mentioned a few moments ago, we have launched our process for the potential monetization of KYNMOBI royalties. In that, we are in the middle of this process, we understandably will not comment further here on any specifics. We will provide an update at such time as we make complete any transaction and, of course, we'll provide an update at the time of our third quarter earnings. We look forward to updating you at the time of the release of our third quarter financial results as we advance these initiatives throughout 2020. With that, I'd like to turn the floor over to my colleague, John Maxwell, who'll provide specifics of our financial performance and outlook. John?

Thank you, Keith. Good morning, everyone. As you know, we filed our 10-Q and issued our earnings release yesterday afternoon. As we typically do, we will tackle most of the discussion related to the second quarter of 2020 results in our Q&A. And in my comments, I will highlight some of the points that are important in order for you to understand our full-year 2020 financial guidance and our progress towards it. In terms of our capital horizon, we have worked diligently to manage our current cash position before considering any potential non-dilutive capital from a possible KYNMOBI monetization. This was done by focusing our investments and spending on our key initiatives. Our second quarter 2020 revenue included $12 million of revenue tied to the approval of KYNMOBI in May. Breaking the KYNMOBI revenue down into its pieces, $4 million of this revenue is for the approval milestone and will be collected as expected by the fourth quarter. The remaining $8 million of non-cash revenue recognizes minimum royalties under the license agreement, which will be paid in future periods. For these minimum royalties, our performance obligations have been met and current accounting rules require that the revenue be recognized at this point. This minimum royalty revenue does not impact cash flow in the 2020 year. Suboxone production was over 43 million doses in the second quarter of 2020, comparable to the first quarter and down year-over-year as a result of generic erosion. We expect that Suboxone in the US market, combined with non-US markets, including the EU, which recently approved, will continue to be a meaningful part of our revenue base, while our proprietary business continues to grow. While the non-US revenue from Suboxone manufacturing is expected to rise over a period of time, our revenue in the US from Suboxone manufacturing continues to decline, reflecting the erosion from generic competition. And you can see this in the year-over-year comparisons. We would expect to continue to see this year-over-year decline in manufacturing at least through 2020. Despite the limitations that came about from the COVID-19 pandemic shutdowns across the US, Sympazan net reported revenue for the second quarter 2020 increased by 59% year-over-year to $1.2 million. On a sequential quarterly basis, compared to the first quarter of 2020, Sympazan revenues grew by 5%. Subject to further limitations that may result from the COVID-19 pandemic, we expect that Sympazan net revenue will continue to grow throughout 2020 as our prescription volume grows. We are affirming our previously provided revenue guidance of $35 million to $45 million. This guidance factors in continued erosion of Suboxone, additional growth in Sympazan despite the COVID-19 limitations, a $4 million milestone payment for KYNMOBI that was recognized in the second quarter of 2020 and is expected to be collected in the fourth quarter, codevelopment fees and modest license fees and royalties. We did not include the recognition of the KYNMOBI minimum royalties in our guidance given that they are non-cash, one-time revenue, and our guidance excludes any revenue related to Libervant and will not be included until after the product is approved, which at this time cannot be assured. Our non-GAAP adjusted gross margin in the second quarter of 2020 was 87% and in excess of 70% before the KYNMOBI license and royalty revenue. As our revenue base shifts towards our proprietary products, starting with Sympazan and away from Suboxone, and before we consider the impact of additional license fees and royalties that we recognized in the second quarter, we expect our adjusted gross margin will exceed 70% on the full year as we have previously guided. As outlined in the earnings release issued yesterday, our second quarter 2020 non-GAAP adjusted EBITDA was $2.9 million, due in part from the favorable revenue impact from KYNMOBI's approval described a few minutes ago. While this quarter's EBITDA has been impacted by KYNMOBI revenue, $8 million of this is non-cash and was not included in our EBITDA guidance. Excluding this non-cash impact, we continue to expect our performance to be within our previous guidance range on the year of $45 million to $50 million of loss. The second quarter non-GAAP adjusted EBITDA reflects lower sequential expenses from the first quarter of 2020 to the second quarter, as well as lower year-over-year expenses. We expect to continue to prudently manage our level of spending as we progress through 2020 in order that we have the expected capital that we need for our key priorities that we have outlined in our comments. As part of our prudent cost management efforts, we are focused on being as efficient as possible across the organization. We will continue to manage our variable cost structure at the plant to match volumes of production. We will focus on the efficiency of Libervant investments in pre-launch marketing until we have clarity on approval. We will continue driving Sympazan towards anticipated profitability in 2021. And we will continue to manage our support costs to be in line with our focus on our key initiatives. Cash used for operations in the second quarter was approximately $10 million, down from nearly $14 million in the first quarter and down from the prior-year second quarter of $17 million. This improved cash flow reflected the capital management steps we've taken, while still making investments in our most critical priorities. Our $25 million cash position at the end of the quarter, independent of potential KYNMOBI royalty monetization, is expected to provide the capital necessary to get into early 2021. The second quarter cash flow performance remains on track with our full year's expectations, and therefore, we have reaffirmed our earlier cash burn guidance. With our current cash resources, prudent management of our spend and access to the capital markets, including any potential monetization of KYNMOBI royalties, we believe that we are positioned to continue to extend our capital runway. In summary, our reaffirmed guidance for 2020 reflects continued cash flow from our licensee and proprietary products revenue base, careful focus of our investments into the most value-driven aspects of our future, Libervant and epinephrine, and continued focus on capital conservation, so that cash is extended as far as possible. We are especially pleased with our ability to continue to perform to date given the COVID-19 pandemic and its impact on the economy at large. Operator, we will now open the line for questions.

[Operator Instructions]. And our first question comes from the line of Gary Nachman with BMO Capital Markets. Your line is open.

Hey, good morning. It's Rafay on for Gary. I just wanted to touch on KYNMOBI. Wanted to confirm whether your thinking around the timing of a potential transaction has changed at all since your last update. And what kind of interest are you getting from potential buyers? Are you still confident in $50 million to $100 million of gross proceeds?

Rafay, so we are – at this time because of the fact that we're in the middle of our process, we're really not going to provide any additional comments on the monetization. We will update you once we're concluded on the process.

And then, for Libervant, have you had any labeling discussions with the FDA? And I'm curious whether those discussions provide you with any additional visibility on the potential to receive ODE?

Sure. Dan, you want to take that question?

This is Dan Barber. As you know, as part of the NDA submission, we did file our PI, which is the key labeling component. And we fully expect to receive comments from the FDA in the coming weeks. And as you know, labeling discussions typically happen about four weeks before PDUFA dates. We remain on schedule, and we look forward to the comments.

And then, for AQST-108, could you just remind us of the data that you've generated thus far? To what extent does that inform your level of confidence on potential success with the upcoming crossover trial? How many patients will you be enrolling in that trial and when would you expect to see data?

As we shared with you before – first, we remain excited about this program. As we shared with you before, we have done a previous proof of concept study in humans. And our formulation will be back in the clinic in the coming weeks. The study design is, it's a four period study and it also has 24 healthy volunteers in the study. And we would expect to have data from that later in the year. In terms of confidence, our proof of concept study did show very good results. And so, we have a high level of confidence that the upcoming study will have robust results that will help us with our interactions with the FDA.

And our next question from the line of Randall Stanicky with RBC Capital Markets.

This is [indiscernible] on for Randall Stanicky. My first question is on Libervant. Given the PDUFA is next month, can you update us on the discussions you're having with FDA on the back and forth and anything on what they've been asking for from the information requests? That'd be helpful. Thanks.

Dan, go ahead.

Sure. As Keith has shared with you over the last few calls, we have had an ongoing and proactive relationship with the FDA on this filing. They have asked the typical series of questions that any filing would receive from CMC to safety questions. We've been able to respond to all of them with what we believe are complete and thorough answers. And we do continue to discuss with them all of the elements of our NDA, including the orphan drug component.

And then, my next question on Libervant, assuming approval, how quickly do you think you can get to scale and how will the reps be split between Libervant and Sympazan? And how much of your target prescribers can you get with your sales force? And lastly, how will a virtual detailing play into this? Thank you.

That's a great question. Well, we're very happy with how we were able to adapt virtually over the last three or four months, given the COVID travel and social distancing restrictions and the limit on face to face meetings at doctor's offices and clinics. We've built this commercial footprint for this moment. And if it's approved as expected, we'll launch Libervant almost immediately with the group that we have. And we will then scale that group up to be probably three or four times the size of the current sales force over the last month of this year and the first couple of months of 2021. We think that the acceptance by prescribers, we think that the acceptance and the excitement in the advocacy community and the patient community is going to be very helpful to us. So, we look forward to capitalizing on the work we've done so far to position ourselves in the marketplace to allow us to launch Libervant very quickly and we think successfully because of that. I think the fact that we've been able to do Sympazan on a virtual basis since March bodes well for our ability to get prescribers to pay attention to Libervant, even if in some cases in some states we still don't have a face to face access.

And my last question is, R&D was down meaningfully in the quarter, although not surprising. How should we be thinking about normalized spend, including SG&A ex-Libervant heading through the second half of the year? Thanks.

Evan, good question. So, the R&D timing – the R&D spend really is a reflection of the timing of project spend when things are occurring quarter to quarter. It will move around. We're going to continue to invest in our key priorities as we've talked about. Obviously, Libervant is coming to a conclusion from a clinical R&D perspective, but AQST-108 is beginning to increase. So, you'll see that shift. But from a dollars perspective, we don't guide quarter to quarter, but, overall, I think the trend lines that you've seen are probably – we will continue to see in the future. Otherwise across our business, whether it's in SG&A or in other categories, like the plant, we're going to make sure that we're rationalizing our spending, focusing on our top priorities, matching our volume of production and that sort of thing throughout the business.

And our next question comes from the line of Liana Moussatos with Wedbush.

Hi. This is Shveta for Liana. Thank you for taking my question. Can you go over some of the main reasons for Sympazan sales growth?

Sure. Look, I think that we had – prior to COVID, I think we had done a good job of penetrating the core prescriber group that we were targeting. In the absence of face to face meetings, I think that those relationships played a very important part in our folks being able to continue to connect with those prescribers and those clinics. I think, as we continue to grow our penetration in that core prescriber group, I think we also grow our saturation in those practices who have written for Sympazan at least once and we're getting multiple scripts from multiple patients in those locations. I think those are the things that have played an important part. I think we took some price support action for people who were affected by COVID economically to be sure they could still have access to the product. I think that probably helped a bit for some of the families a bit challenged economically by the COVID crisis. But I think you've got a good product with a good value proposition in a very difficult market and the relationships that our sales people had built showed to be strong and resilient during this period of time.

Our next question comes from the line of Jason Butler with JMP Securities.

Keith, you mentioned that there's two different groups, the orphan drug piece and the regular PDUFA review piece. I just wanted to clarify. Are you getting questions from and interacting with both of those groups or is it just with the PDUFA group now and then it will be the orphan drug group at some later time point?

Dan, you want to answer that?

As we progress through the discussions with the FDA, we have had a variety of conversations, as you can imagine. For a couple of reasons, we are not overly sharing what groups those are with. I would continue to point out to you that, in terms of the competitive landscape, we do believe that we have advantages over the other competitive products, including the fact that nasal sprays in general will have issues with seasonal allergies. And we think that's a key component of advantage for us as we go forward into the marketplace.

And then, just a couple on the commercial side. Can you maybe talk a little bit more detail about any learnings that you have in terms of reimbursement access that you secured for Sympazan and how that will read through to your strategy for Libervant? And then, I know you touched on this a little bit, but just in terms of – assuming Libervant approval, what kind of scale or magnitude of commercial build-out beyond what you have today would you expect?

Sure. Ken, do you want to respond to that?

Happy to. From a reimbursement learnings, I think we reaffirmed that when you come to market, while you're negotiating your contracts, you have to have a very robust support system that allows to buy down copays on the commercial side and facilitate movement quickly through any edits or prior authorizations. As Keith mentioned – and actually probably one of the most important metrics is how many of your prescriptions actually come out the door. And if you look at our Medicaid scripts, that's over 81%. And if you look at our commercial lives, it's over 70%. Those are both very good numbers. And I think we can replicate that with Libervant. Right now we're calling on around 4,500 key physicians that manage some of the most severely affected epilepsy patients and they are going to be the highest consumers of rescue medicines. We're doing that with Sympazan. So, we'll expand that slightly, probably in the range of 6,000 to 7000 physicians, and we'll adjust our footprint accordingly. But I think we'll be able to scale very quickly to cover those additional physicians and we're already very well entrenched in some of the most important physicians that will be writing Libervant.

Our next question comes from the line of Thomas Flaten with Lake Street Capital Markets.

Can you describe a little bit some of the efforts you've undertaken from either an unbranded commercial perspective or from a med ed perspective to kind of lay the groundwork for a potential Libervant approval?

Sure. Ken, do you want to respond to that?

Sure. One of the most important things that you do leading up to the launch of a product are start to move your clinical literature into the public domain. So, we've just recently had an unmet needs article published that talks about what's currently – the current state of affairs in the management of breakthrough seizures and seizure emergencies. Three very prominent physicians authored that. It's getting a lot of visibility and it starts to shape the needs that you'll play into. The second paper that we have in late stage review with epilepsy outlines our long-term safety study, which clearly focuses on the safety of the brand. But it's going to give an awful lot of insight in the efficacy in a real world situation. the feasibility of placing. If you look at our placement rates, when you see that paper, you're going to see virtually everyone has success in placing our script on first attempt. And then, probably, the key safety metric, 1,100 uses in that study with no negative interactions in the mouse and no biting, which I know is going to be a question and it's something that I've been asked a few times. So, those are two of the most important things. We're heavily engaged with advocacy right now, building relationships, talking to their constituents, and that's going to create a very nice forum to announce the introduction of a new important medicine. And we're building out all of our materials. So, we come out of the gate quick. That'll complement those and – and actually, starting to train our sales team.

And I just wanted to reconcile. Ken, you had mentioned you would go from something around 4,500 docs to somewhere upwards of 7,000. And maybe I misheard it. Keith, in an earlier response, you said that you might scale three to four times the current commercial footprint. I'm having a little trouble reconciling that. But perhaps I misheard those numbers. I just want to make sure I understood from an actual rep perspective, how much bigger do you think you'll get over the six to nine months out post-launch?

Yeah, we're still working through the actual size. Keith, do you want me to take that or do you want to…?

Go right ahead, Ken.

We're working through the final size and structure. Those are the approximate numbers. One of the things that you'll see us do is dial up the frequency. So, the current rate ratio that you look at, Sympazan to our current footprint, is going to be slightly different when you get to Libervant. It's a little bit of a different sell. So, we would look for a higher frequency, which will mean we'll need a few more representatives for the increased number of docs.

And then, just one final one for John. John, have you made any decisions about tapping into additional debt capacity in the event that KYNMOBI gets delayed? Or you have some challenges with getting Libervant on to the market or how should we think about them?

Yeah. So, our debt capacity, as you know, we have a $100 million facility, $30 million of reopeners. There are two reopeners. $10 million upon Libervant filing, which we've completed, but we did not access, and $20 million would be upon Libervant approval. So, upon Libervant approval, we'll make that decision. It is part of our tool chest of capital options, but at this time, we don't have any plans to take that debt down.

[Operator Instructions]. Our next question comes from the line of Ram Selvaraju with HC Wainwright.

Hi. This is Blair Cohen on for Ram. Just a couple questions for me. I'm just curious. For the PK trial that you have coming up for 108, have you incorporated any elements of the trial designed to accommodate for the COVID environment, the difficulties you may encounter with enrollment?

Dan, you want to take that?

Sure. Yes. COVID-19 obviously is not only affected us, but everyone in our industry. So, we have chosen a site for this particular study that we feel is at low risk of disruption from COVID-19. So, we believe – we have high confidence that our study will start on time and complete on time.

And then, as far as face to face interaction with your sales force, can you give us an idea of how much you're doing face to face versus virtually and how you expect that to change in the ongoing months and with the potential launch of Libervant? Thank you.

Sure. Ken, do you want to take that?

Sure, Keith. If you look at the start of this pandemic, exiting March, into April, we went to about 95% virtual, as did most all of the industry. And as you moved into May, you saw a slight softening in that number, but still pretty dominant in terms of virtual. As we went into June, you saw a reversion back, so about 60/40, and in some of the key states maybe even 50/50 as some of the states moved into phase two. And then, as you moved into now July, you're seeing it flat at around that number. We've got the tools in place now to work very effectively in a virtual environment. So, we're, I think, managing through that pretty well. The biggest challenge in all of this are actually the offices and their ability to adapt to a virtual environment. Some have done a lot better than others. And the ones that have effectively developed that skill, it's very easy to communicate with and it'll remain a core piece of our reach into those offices. And for those that look to be struggling, we'll be looking to really ramp up face to face as they allow it.

Thank you. And I'm not showing any further questions. I'll turn the call back over to Keith Kendall for closing remarks.

Sure. Okay. Thank you, everyone, for joining us today. We appreciate your time. We will continue as always to update you as our business progresses. We look forward to providing a further update when we do our third quarter earnings later on this year. So, thank you all for joining us this morning and have a great rest of the day.

Ladies and gentlemen, this does conclude the program. You may now disconnect.