Supernus Pharmaceuticals, Inc. (SUPN) Q2 2018 Earnings Report, Transcript and Summary

Welcome to the Adamas Pharmaceuticals' Second Quarter 2018 Financial Results and Corporate Update Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn over the call to your host, Ashleigh Barreto, Director of Investor Relations and Corporate Communications at Adamas. Please go ahead.

Thank you, Operator, and good afternoon, everyone. Before we begin, I'd like to remind everyone that this call will contain forward-looking statements, which are subject to risks and uncertainties. Any statements regarding future events, results or expectations are forward-looking statements. Please note that these forward-looking statements reflect our opinions only as of the date of this call. We undertake no obligation to revise or update these forward-looking statements in light of new information or future events. Information concerning factors that could cause actual results to differ materially from those contained in or implied by such forward-looking statements are discussed in greater detail in our Form 10-Q filed with SEC today. I would now like to turn the call over to Dr. Greg Went, our Founder, Chairman and Chief Executive Officer. Greg?

Thank you, Ashleigh, and good afternoon, everyone. Thank you for joining us today. I am joined today by Alf Merriweather, our Chief Financial Officer; Richard King, our Chief Operating Officer; and Dr. Rajiv Patni, our Chief Medical Officer. At Adamas, we are defining a new paradigm for treating central nervous system disorders based upon timing drugs to fit the patterns of the underlying biological pathways that control how people feel, function and live. We call our approach time-dependent biology. GOCOVRI is our strongest proof point to date, and underscores how discoveries inform our understandings, both of our products as well as the diseases we aim to treat. In Parkinson's disease, we learned that certain biological timing patterns, including circadian rhythms, play a huge role in patient lives. The cruel irony for Parkinson's disease patients is that the levodopa they rely upon to treat their disease during the day results in dyskinesia, which in turn limits the use of levodopa. Alternating episodes of OFF in dyskinesia starts first thing in the morning, and continue unpredictably throughout the waking day depending on the timing and level of levodopa being taken. And at night, when levodopa tapers down and is not taken, patients with Parkinson's disease also have disturbed sleep due to the disease. GOCOVRI presents an opportunity to redefine the Parkinson's disease treatment experience. GOCOVRI is the first and only drug approved by the FDA for the treatment of dyskinesia and Parkinson's patients taking levodopa-based therapy with or without concomitant dopaminergic medications, and the first drug that improves both OFF and dyskinesia. By focusing on increasing functional ON time by reducing both dyskinesia and OFF, GOCOVRI represents a paradigm shift. GOCOVRI enables physicians to treat their patients' underlying disease with levodopa more effectively by reducing both time spent OFF and bring dyskinetic without having to decrease or fractionate levodopa. Rajiv will speak to this later on the call today. We are pleased with the progress of the GOCOVRI launch to date. In these early days, we are highly focused on educating the Parkinson's disease community about the impact of dyskinesia on patients, the time-dependency of Parkinson's disease and the promise of GOCOVRI. With that, I would like to turn the call over to the team to walk through our progress this quarter, starting with Alf on the financials. Alf?

Thanks, Greg, and thank you for joining our Q2 2018 conference call. In our second quarter of full commercialization, we recorded $7.6 million in product sales from the sale of GOCOVRI. This was recorded on the sell-in method, with revenue recognized typically upon delivery to our specialty pharmacy. For the quarter, the total number of paid prescriptions dispensed to patients was approximately 3,430. This number does not include drug provided at no charge to the patient through Quick Start and other patient assistance programs. This compares to approximately 1,600 scrips dispensed last quarter. Also, as of June 30, the total number of prescribers has increased to approximately 970 from 550 at March 31. While early in the launch, we are pleased with the level of revenue and total prescriptions attained in the quarter, and we remain comfortable with our framework for market penetration for the year. We are very encouraged by the overall number of prescribers. And for patients on drug, fulfillment, persistence and compliance are high. Our primary focus over the second half of the year is to deepen the level of prescribing by physicians. Richard will describe this focus in more detail. We're not commenting on the specifics of gross to net adjustments, other than to say the gross to net was reduced from the first quarter, in which the Part D doughnut hole had a significant impact. We believe that our previously said range of expectations for gross to net continues to be an appropriate long-term framework, in that our near-term experience may be better than that range. Research and development expenses were $9.8 million during the second quarter of 2018, reflecting the initiation of the Phase III trial for ADS-5101 in multiple sclerosis walking and preparations to our pivotal study for ADS-41 for epilepsy that we expect to start in 2019. Research and development expenses for the first half were $17 million. With respect to selling, general, administrative, or SG&A expenses, these were $27.7 million for the second quarter of 2018 and $54.1 million for the first half of 2018. Interest expense was $5.1 million for the quarter and $9.9 million for the first half of 2018. This reflects interest accrued based on an estimated effective interest rate, not the nominal coupon rate or royalty rate, reflected in our royalty-backed debt agreement. With regard to our overall operating results, net loss for the quarter was $34 million or $1.26 per share and $69 million or $2.61 per share for the first half. Cash used in operations for the quarter was $32.6 million and $57.4 million for the first half of 2018. Cash and investments as of June 30 were $256.3 million, positioning us well to execute on all key programs discussed on this call. With that, I will pass the call over to Richard for a review of our GOCOVRI commercial efforts.

Thank you, Alf. So this quarter, just the second quarter in the launch of GOCOVRI, we continue to educate physicians about GOCOVRI's benefits for the Parkinson’s disease patients with dyskinesia. We had over 3,400 filled and reimbursed prescriptions in the quarter. And since making GOCOVRI available, nearly 1,000 unique prescribers have written for the medicine. We are pleased with the reception we have seen, both by physicians and patients, to GOCOVRI's unique profile being dosed at bedtime to provide high concentrations of amantadine upon waking prior to the Parkinson's disease patients taking their first dose of levodopa. Looking towards future quarters, there remains significant additional work for us to do to fully realize GOCOVRI's potential to support this population in need. As Alf mentioned, while we are pleased with total prescriptions and the number of prescribers, we are still early in the adoption cycle for GOCOVRI, and want to see more depth of writing from our prescribers. Physicians appear to be taking a thoughtful approach to GOCOVRI, we think largely based on their unsatisfactory historic experience with immediate-release amantadine in dyskinesia patients. We believe their prior experience is not consistent with the very powerful clinical data for GOCOVRI that we present to them. These data, let me remind you, demonstrate that GOCOVRI reduces both dyskinesia and OFF in people with Parkinson's disease dyskinesia; that GOCOVRI results in an increase of functional time by 4 hours a day; and that reductions in dyskinesia and OFF resulting from GOCOVRI have been sustained for over 2 years without having to reduce or fractionate the levodopa dose. In sum, there are a lot of physicians who like what they see and are initiating trials with GOCOVRI. In addition, we are seeing very good persistence and compliance with therapy once a patient is on GOCOVRI, reinforcing to the physician and to the patient the value of the medication over time. However, it's taking a somewhat longer than we would like for physicians to hear back from these patients, with whom they are trying GOCOVRI. As a result, we are focused on deepening physicians' exposure to GOCOVRI to allow them to complete their trial period as quickly as possible, and ensuring timely feedback from patients or peers regarding their experiences with the product. To this end, some of the tools that we are using to accelerate this trial period and feedback include the use of peer-to-peer speaker programs, where physicians can hear the clinical data that supports GOCOVRI's indication from a peer; and also ask for those peers about their experiences with GOCOVRI; the development of key opinion leader videos, identifying their own experience with GOCOVRI that can be shared with their peers; and also the development of tools to accelerate patient feedback to their prescribing physician about their individual experiences taking GOCOVRI. I am thrilled with the comments we continue to hear back from our field team and directly from physicians and patients. For instance, we recently heard from a physician regarding a patient, who was nearly wheelchair-bound due to dyskinesia. He started her on GOCOVRI and noticed she was almost unrecognizable on the next visit when she walked into his office with a smile on her face. He reported being stunned with the results from GOCOVRI treatment. And another physician with 2 patients on GOCOVRI saw similar results, which caused him to pause and reflect on how GOCOVRI is different from his experience with immediate release amantadine. One of those 2 patients who started on GOCOVRI 4 years after having deep brain stimulation because of continuing severe challenges with dyskinesia, and the doctor was amazed at his results of the patient's follow-up. These stories are not isolated events, and we are hearing it from patients and physicians from around the country. This positive reinforcement to the prescriber of the effects of a product is key to seeing continued and expanded usage by physicians over time. We've also begun initiating disease education programs directed towards patients and their care partners. Just yesterday, we announced the launch of our unbranded social media campaign titled, Dyskinesia Is A Jerk. Surprisingly, despite significant negative impacts on daily life, the uncontrolled jerking or twisting movements of Parkinson's disease dyskinesia are often not recognized or discussed by those affected, partly we think because patients are aware that the primary treatment option that was used before GOCOVRI's approval was to reduce the dose of the levodopa that they are taking, a drug which patients associate reducing their OFF episodes. The Dyskinesia Is A Jerk campaign aims to increase awareness and educate the community about recognizing dyskinesia through new online resources, and encourages conversations between people with Parkinson's disease, their care partners and their physicians. We are very excited to launch this campaign, and believe that raising awareness to dyskinesia will have a positive impact on this patient population in need. A couple of quick comments regarding payers. We continue to see strong support from payers regarding GOCOVRI prescription reimbursement. The significant majority of submitted prescriptions to GOCOVRI on board are being reimbursed in a short period of time. Our recovery onboard program continues to support quick access through our Quick Start program, although we are seeing the need for this program slow down as we progress further from the launch. With that, I'll pass the call over to Rajiv.

Thanks, Richard, and good afternoon. I would like to follow up on Greg's earlier comments. One of the primary goals, in the treatment of patients with Parkinson's disease, is to achieve as much normal functioning as possible. The GOCOVRI Phase III data we presented at the Pan American Parkinson’s Disease and Movement Disorders Congress illustrate how GOCOVRI may help in this regard. For the first time, we introduced the terms, episode and transition. Let's start with the term, episode. Before treatment, patients reported a total of about 8 hours of functional time, that is 8 hours of ON time without troublesome dyskinesia during the waking day. These 8 hours were composed of approximately 4 distinct episodes of functional time, each episode lasting about 2 hours. Let's pause here. That means that the patient was not experiencing 8 hours of continuous functional time, but rather 8 hours of disrupted functional time. And what was the cause of the disruption? As expected in this patient population, the disruption was caused by intervening episodes of dyskinesia or OFF. That brings us to the term, transition. A transition is the number of time points during the waking day that a patient went between OFF dyskinesia or functional time. At baseline, patients experienced 8 transitions, where the functional time was disrupted by dyskinesia and OFF. After 12 weeks of treatment, GOCOVRI-treated patients' first episode of continuous functional time increased from 2.1 hours to 7.3 hours. That's nearly an entire workday free from transitions. And 17% of GOCOVRI-treated patients experienced continuous functional time, no episodes of dyskinesia, no episodes of OFF, no transitions. This is pretty noteworthy, given the baseline demographics of the population. These data provide a new perspective on the Phase III GOCOVRI data, and reinforce the importance of bedtime dosing with 274 milligrams of GOCOVRI. Why? We designed GOCOVRI, so when a patient takes the 274-milligram dose at bedtime, high amantadine concentrations are achieved before awakening, prior to the first levodopa dose and maintained throughout the waking day. Given the occurrence of both dyskinesia and OFF periods in the early morning and throughout the waking day, the GOCOVRI steady-state pharmacokinetic profile makes sense. Let's move on to ADS-5102 amantadine extended-release capsules in walking impairment in patients with multiple sclerosis. As you recall, walking impairment and the associated fatigue are the 2 leading disabilities in the MS patients reports. their occurrence follows a diurnal pattern, driven by circadian rhythms of sleep and immune system regulation. We advanced ADS-5102 into Phase III development based on the data from our successful Phase II study. We enrolled the first patient in our INROADS trial, the Phase III placebo-controlled investigational research study of ADS-5102 in MS walking impairment at the end of the first quarter. There is strong enthusiasm by the investigators and coordinators, as evidenced by our screening and enrollment. We continue to expect this first trial to reach full enrollment in the second half of 2019. As we mentioned before, depending on the results of the first Phase III trial, we could initiate the second Phase III pivotal trial shortly thereafter. And if successful, we look forward to bringing this new indication to market in 2022. With that, I will hand the call back over to Greg.

Thanks, Rajiv, and thank you, Richard and Alf, and also to the entire Adamas team for your efforts this quarter. It's been a very, very productive first half of the year. I continue to be pleased with the progress of the GOCOVRI launch today, and I'm also thrilled with our advancing development pipeline, with ADS-5102 well into its first Phase III study in MS patients with walking impairment as well as ADS-4101 being developed and prepared for pivotal studies in 2019. I look forward to seeing the results of all of our passion and commitment to the patient communities we serve. And with that, I would like to open up the call for questions. Operator?

[Operator Instructions] Our first question is from Josh Schimmer with Evercore ISI.

Since the last update, it looks like the number of prescribers of GOCOVRI have grown by about 75%. The scrips per prescribers have grown by about 20%. So how do you think about those drivers going forward, the ability to sustain kind of 30 new prescribers per week? And I think some of your commentary suggested that maybe the growth in prescriptions per prescriber may be slowing just based on the delay in getting physicians to hear back from patients. So how effective do you think your efforts will be in at least sustaining this pace of growth of prescriptions per prescriber?

Yes. Josh, it's Greg. Thank you very much for the question. I'm going to let Richard handle that one. Richard?

Certainly. So Josh, the number of prescribers, getting to 1,000 prescribers within 6 months, I feel, is a significant success. And you're right, that you could do the -- the math is about 30 or so per week. Inevitably, that's going to slow down. It has to at some stage. But certainly, I don't imagine that's going to stop. It will just slow down gradually over the course of time. In terms of the prescriptions per prescriber, it has increased. But the important thing, as I mentioned on the call, we still see a number of physicians who are in a trial mode for GOCOVRI. We do think that, that largely reflects, that when we present the GOCOVRI data to them, they're surprised by the dramatic affects that GOCOVRI has on dyskinesia and OFF and ON functional time, particularly in comparison to immediate release amantadine. And because of this, they decide that they want to prove to themselves, in their own hands, that the clinical benefits that we describe for GOCOVRI are as strong as our Phase III data illustrates. And for that reason, they trial the product. And the good news is that the feedback from patients is strong and generally complementary of the effects that we see in Phase III. And then as physicians move through that trial period, they become regular and continuous prescribers of GOCOVRI at that stage. It's our challenge to get them through that trial period as quickly as possible. And that's our focus for the second half of the year.

You sound maybe a little frustrated with the time it took for the patients to return. Is -- were you expecting something quicker? Because I think looking at the numbers, you're well ahead of at least the investor and consensus expectations. Did you think this would have been swifter? Or is this generally in line with how you thought this would evolve?

It's generally in line. I think that the -- this community, this neurologic community is a little more cautious than some other communities. And so, in general, we're in line. We're ahead of where I thought we'd be from a prescriber standpoint, which probably reflects the counting on the numbers at the end of the day.

But Josh, I would just repeat one thing I said in my comments, that we're reaffirming the framework that we laid out. We're not changing it. It's -- we still think that's the way to look at the company's financial expectations.

Great. And then last question, maybe you could just discuss the status of reimbursement, characterize the ease of access to GOCOVRI, percent of plans with prior OFFs and as well what you're seeing from IR or sustained IR amantadine versions in terms of their positioning on formularies as well.

So very little on sustained IR. I like that characterization actually. In terms of our position on formularies, we continue to see current plans that have issued now formal guidance on how to process reimbursement for GOCOVRI. That continues to happen. There are still a number of plans that have not published those formal criteria yet. But in the overwhelming majority of cases, we're seeing the vast majority of plans give us good support for reimbursement for GOCOVRI approval for reimbursement. And they're processing the prescription very, very quickly, which is clinging to us.

Our next question is from David Amsellem with Piper Jaffray.

Just a couple. So first, just expanding on the topic of payer access. I think you've talked about in the past what I would call, I guess, a soft step at it, where patients just have to check the box in terms of having been exposed to immediate release amantadine. So are you still seeing that as being the case? And that's number one. And then secondly, I mean, I guess, at the risk of being a Debbie Downer here, I'll ask about OSMOLEX. Do you get the sense in any of your dialogue with payers that, that product is going to emerge on the payer radar? And has there been any sort of evolution in how payers are thinking about it or your thinking about in terms of your efforts to drive and maintain access?

So thank you, David. Yes, in the general sense, the plans that are both -- have formal guidance and the way on which plans without formal guidance are managing GOCOVRI is that there is generally a prior authorization requirement required for patient to be confirmed having dyskinesia to be on dopaminergic therapy and, in some cases, for the physician to confirm that the patient has had some prior exposure to and failed to tolerate or find effective immediate release amantadine. And we're finding that, that is supportable in the overwhelming majority of patients that are presented to payers for reimbursement. On the subject of Osmotica's product, I'm sure, at the end of the day, there'll be a few plans that will offer OSMOLEX ER to their patients. I'm absolutely sure of it. But I also believe, based on contact with the payers, that the majority of them will look at the breadths and depths of the data that we have provided from our Phase III trials. They'll look at the unique pharmacokinetic profile of GOCOVRI. They'll look at the unique indication for GOCOVRI that's been granted by the FDA based on an evidence. And they'll look into the feedback from their patients that have already been treated with GOCOVRI because they hear it, too, as well as the physician population. And they'll contrast that with the evidence for Osmotica's product, which is basically some form of bioequivalent product to IR amantadine without much clinical evidence or any clinical evidence for effect in this population, and without evidence for feedback from patients, and conclude that it's an expensive IR as opposed to an alternative to GOCOVRI. So I'm sure some will move forward, but I think a majority, we'll see what it is.

And if I may just ask a follow-up question. This is about the prescriber audience or the prescriber base. I mean, is it your sense that prescriptions are spread around pretty widely among the prescribers? Or put another way, is there any prescriber concentration that we should be worried about regarding GOCOVRI?

So I'll tell you -- I think I've referenced this before. We talked about 6,500 physicians, and we target them in 3 separate tiers. The primary tier, for us, is the folks who have a high use of carbidopa levodopa, and also who have initiated early prescribing of other products in this space. We see the majority of our prescriptions coming from that group of physicians. That's where we've heavily targeted our efforts. And I think at this rate, we'll continue to see a majority of prescriptions coming from that population.

Our next question is from Tazeen Ahmad with Bank of America.

I wanted to get a little bit more color. You talked at the beginning of 1,000 unique prescribers, about 1,000 unique prescribers. Can you give us a sense of how many touch points or sales force might have had with those prescribers versus physicians who might have already been aware of GOCOVRI before they wrote a scrip?

Tazeen, it's Greg. Thanks for the call. I mean, I'll let Richard handle that one, too.

So the majority of the physicians who we have prescriptions from have been talked to, obviously, by ourselves. So we've talked to -- in Tier 1s, probably, we're close to -- not 100%, but we're not far from 100% contact with Tier 1 physicians. It goes lower as we get to Tier 2 and Tier 3. So there's still calls to be made there. And also, I'll point out as well that we know, in some cases, when we emerged into the marketplace in January, there were some offices that set calls for representatives a year in advance, and they set them in the fall of last year. And we've been able to get into those offices, for example, Tier 1, Tier 2 or Tier 3. So -- but in general, in Tier 1, we've made the first contact. And there's more contact to go and driving to those different offices. I forgot the second part of the question.

It was related -- go ahead. Sorry.

No, go ahead. Sorry. What was the second part of your question?

It was related to that in terms of once you had contacts with a physician in the number of, I don't know, how many data points you have on points of contact with the sales force, but how many of those physicians also have heard of GOCOVRI prior to speaking with your sales force?

Thank you. Good point, yes. And we -- obviously, there's a number of physicians who are heavily involved in our clinical study program. And certainly, if you look at that population of physicians, they're very well represented in our prescribing population as well. They've had experience before the broader population of physicians. And that experience is important, I think, to encouraging the physician population to write in general. So yes, we certainly see our physicians involved in the studies, who were excited about what they saw in the study program, and have also supported the product and usage in patients.

Okay. And then maybe one more question. At the beginning of the launch, you have talked about, and you still continue to speak about, wanting to further educate physicians. I think one of the misperceptions was an understanding of the true difference between amantadine IR and GOCOVRI. But as you're a little bit more mature in the launch now, if you had to identify an area that you feel is particularly misunderstood among physicians you're speaking with, just based on your sales force feedback, what would that be?

Tazeen, it's Greg. Let me take that first, and I'll let Richard and Rajiv chime in. It is then when you pioneer a new area, like time dependency, and you look at what our discoveries are based on, they really are understanding the underlying biology of timing patterns in a disease. And so when I started this way back when, the notion that it was so tied to circadian rhythms, that the dyskinesia wasn't something that just occurred at the end of the day, that the dyskinesia and the OFF were disconnected fundamentally mechanistically, was really the state of the art. And so with the launch of GOCOVRI, it gives us the opportunity, Phase III data in hand from a drug product, which is really represented by giving it at night, so it rises slowly, so it's high prior to taking levodopa. That understanding of disease, mechanism of disease and how it ties into time dependency is a challenge that one has to overcome, along with, to the point you just raised and Richard raised in his comments, the expectation of non-success from IR, which is very well documented in the academic literature and in the claims literature. So it's just a couple of things we need to overcome. I think we're out doing it. We've just launched Dyskinesia Is A Jerk yesterday, which will get at the recognition of those symptoms. The dialogue that in recognizing them and raising them to your physician, maybe they won't lower your levodopa dose, which is -- they live in great fear as their disease progresses, of one thing, their dose being lowering and having more OFF time. So that's a part of the education. It's not purely a drug against another modality. It's actually fundamental. It goes all the way back to the nature of the disease, how it fits into your daily timing patterns, and how matching those patterns up correctly can result in a really substantial clinical benefit. Richard, anything...

Sorry, go ahead.

I have nothing to add. I think that was very well stated. Exactly right.

And also just on price, is that part of the discussion with physicians? I know that you haven't been -- for those who have prescribed the drug, it's not been an issue to get it to patients. But is that viewed as a detractor for physicians initially?

I wouldn't say that. And I think the tractors of physicians initially is just the data set from Phase III. But certainly as physicians deepen their experience with GOCOVRI, talking about on the time dependency aspect of things, how we got to this point, why does GOCOVRI have the profile that it does, is the proof point of the time-dependent biology approach. And I think that is interesting and engaging for the physicians to understand why it is that we designed GOCOVRI the way that we did. The work that we're also doing, as Greg rightly mentioned, on expanding the patient consciousness, that they don't have to give up something to get control of their dyskinesia, is a really important concept. The patient population has been educated over decades. If you've referenced dyskinesia, be prepared to have your levodopa dose reduced and your OFF time increased. GOCOVRI presents an opportunity not to have to do that. And changing that paradigm is an important one.

Our next question is from Ken Cacciatore with Cowen and Company.

Just a couple of questions. First, is it possible to give -- you kind of mentioned and discussed anecdotally all these great feedback from the patients. But can you give us a sense of the persistency figures, we call them refill rates, just so we can understand? We know we're getting good anecdotal feedback, but it would be nice to know what the retention factor would be. So -- and maybe you could speak to it. And if you can't give it now, maybe you all would consider giving it to us in future quarters, so we can kind of analyze it? And then, Alf, it looks like on a pricing perspective, the gross to net discount is de minimis. And I think you mentioned it may change. But can you just talk about just taking the total prescriptions for the quarter? Divided by the revenue, it looks like there's almost no discounting. And then just lastly, maybe a sense of how many patients are not paying, so we can understand just how many prescriptions are being written and you all are covering. Is there a very good amount of folks that, as coverage comes online for them, were going to be positively surprised as we capture payments for those patients?

All right. I'll take the first one, and I'll toss the next 2 to Alf, if you want to get through it. So Ken, it's Greg. Thanks for the call. We have not provided details on persistence and compliance yet, and we'll reevaluate that at the end of the year. It's early days. As you know, those numbers become reliable during the sequences when the launch stabilizes. What I would add is we're very pleased with it. And we had, obviously, our own experience looking at the poor compliance and persistence of amantadine that helped drive us. We had some experience with our open label data. And also a big part of GOCOVRI Onboard was to make that experience as positive for the patients and the physicians as we could in terms of getting their refills. So we will consider that towards the end of the year. But I can say we're very pleased with what we're seeing right now in terms of the durability -- the rate of durability now of GOCOVRI. Alf, on GTN?

Yes. So Ken, first of all, with regard to the current quarter math, there was a little bit of a disconnect between the prescription number that we report is paid prescriptions fulfilled, we actually do think revenue based on our shipments and to our deliveries to the specialty pharma. So that is -- and they do maintain, as we've discussed on previous calls, a fairly small inventory, but some inventory nevertheless. So there is a disconnect in that math to some degree. And with regard to the level, certainly, we're lower than Q1. Q1 is the quarter that, as you know, from many other companies, is significantly impacted by the Part D doughnut hole. And that was no exception for us. We are somewhat lower than that. We're not going to get into the specifics. But we do think that long term, that range that we've given, is still an appropriate way to think about it. We are going to have the doughnut holes going to be part of our life, for sure. And as we go forward, there may well be some level of contracting that has not been material to date. But as we go forward, we'll be rational about thinking about that. And that will perhaps be an impact on future gross to net. But again, we think that framework is the right one long term, and even though we're slightly better than that currently.

And with regard to -- just back to Greg. With patients not paying, Ken, we're not -- as Alf commented in his part of the call, the Quick Start, which was used in the beginning, is being used less and less, as patients become familiar and begin to put multiple patients onboard, and gain more confidence in GOCOVRI Onboard. And the percentage who are being supported by our patient assistance program is also very small.

Our next question is from Tim Lugo with William Blair.

Myles Minter on for Tim Lugo. My question is just about more granularity, about the time lag that you see with patients that aren't following up as quickly as you'd like. How long does it take from going away from the doc with a scrip to potentially seeing them coming back?

So I'll take that one. It's variable. But we know that the standard cycle of a patient seeing a physician is a 3-month cycle. So we would also like to see that accelerated and get feedback to the physician faster than that 3-month cycle.

And so in the patients that are actually rather compliant with their follow-ups, I know you're not commenting on retention rate per se, but can you give us any color as to the prescribing in that cohort, like clinicians more willing to prescribe GOCOVRI in a patient that he's following up regularly as opposed to not?

I don't have any information I can give you on that actually. I haven't looked at that. So I can't tell you.

Okay. That's fine. And then I'm just trying to look forward and modeling sort of outer years. Are we still thinking the neuro trends there is a comp for this launch? I know your products are in completely different stages of adoption. But that product seemed to gain real traction in 3 quarters, 4 quarters out of its launch. And so looking forward into something like 2019, are we expecting to see acceleration like that if you can deliver on your education promise that you're talking about today?

Well, I think you have to be very careful because you're looking at a different product and a different physician population and a different patient population with different educational challenges and hurdles. It's also got a different price associated with it as well. But in terms of the framework we laid out last September, are we going to be able to achieve the type of market penetration on an annualized basis that a neuro product would achieve this year? We feel very confident about where we stand this year. And our expectation is going into years 2, 3 and 4., we will be able to continue that increase towards a significant share. But I would caution you. Keep in mind, there are an awful lot of patients out there with tardive dyskinesia. They are covered in -- primarily in commercial plans. They're treated by psychiatrists. They're being approached by a sales force with a wonderful data set. And the dynamics are going to be different really on multiple grounds, despite the similarity of the term, dyskinesia, in it. And we're watching it very carefully and with great interest.

Our next question is from Irina Koffler with Mizuho.

I wanted to touch base on the Medicare patients. How are they receiving drug now? And do you expect an inflection point when you turn these plans on? Can you talk about the timing of that? That's my first question.

So Irina, it's Richard. I've kind of said this before. Despite the fact that Medicare has not issued formal -- or a plan to issue formal guidance associated with how they will treat their Medicare patients, we are seeing an the overwhelming majority of Medicare patients treated just like the commercial patients. They're getting reimbursement support from their plans, and it's happening quickly.

Okay. And then in terms of the way you recognize revenue, are you going to be switching off of that methodology at any time point? And maybe just talk about what needs to happen for that to happen.

Irina, the short answer is no. We record revenue on the sell-in method. You may be thinking about a prior method called sell-through, which once you have more experience under the old rule, you would transition from sell-through to sell-in. Under the current rules, we have been from, day 1, on the sell-in method, and under the kind of rules we would not expect to change. We will not change. So -- yes. And we take revenue based on deliveries to our specialty pharma, which is a little different from the volume of which of the prescriptions actually filled.

Okay, great. And then just looking at your universe of prescribers that you're targeting, the 6,500, just wanted to understand. Like even amongst the ones that you have, what percent of the 970 are in the trial mode versus repeat users, versus maybe just have written -- or I guess, like -- yes. What percent of them are repeat users versus in trial mode?

We're not commenting on that at this stage. And the goal, as I've mentioned earlier, there is to continue to see increase in the number of physicians to get to a depth of prescription, the depth of trial that gets them into a place where they are prescribing with regularity, not waiting for that patient to come back to give them feedback.

And just according to my calculations, it's about 3.5 patients per doctor at this -- or prescriptions per doctor. Is there a rate that you think it will stabilize out, like 10 per doctor? Or any number you can give us?

I don't have any significant number in mind. I can get it out. But I don't know if anybody else knows...

The answer could be very variable, Irina, from the large movement to sort of centers, where you have rather large concentrations of these patients to more rural neurology offices. So it's going to be variable, and it's really too early to tell exactly what that distribution's going to look like.

Our next question is from Jason Butler with JMP Securities.

I guess, just first question, in terms of the patients that are being treated, like the characteristics for those patients, anything you can say in terms of the similarity to the Phase III program in terms of their duration of symptoms, the severity of dyskinesia, the other adjunct PD meds that they're on? And then are there examples of patients where you're actually seeing other adjunct PD meds being removed once they become more stabilized on GOCOVRI?

So I've got no real data to compare the characteristics of the patient population, their history of disease with Parkinson's disease in the commercial arena to what we knew about the patient population in Phase III. So I've got nothing I can really provide that would give color to that part of the question. I don't know whether Rajiv can...

I would just remind everyone that in the Phase III program, we were very deliberate to have an all-comer dyskinesia population. So our inclusion criteria was not -- were not set up to restrict to a dyskinesia subgroup, but to a broad dyskinesia population. And that is why the labeling we have is the labeling that we have, which is the dyskinesia indications with Parkinson's disease.

And I think, Jason, as we get further in the launch and collect more data, we'll have more to say about that. But to echo Rajiv's point, when you look at the baseline demographics in that study of 65 years old, when you look at the medications that they were taking, and you compare that to the some of the work we published as to what does the average population in a movement disorder center versus a neurology clinic, how they are treated, there's a really fairly excellent overlap. So at this point, I think the use of levodopa concomitant dopamine agonists, MAO-Bs, are probably reflective of the overall population. You asked a very interesting question about how was their treatment adjusted. When you put them on GOCOVRI, stay tuned for the open label safety poster, which will be coming out here shortly. And we continue to watch that with great interest. Because this is the first time really a non-dopaminergic pathway product just come to the market that allows you a lot more flexibility in how you utilize your dopamine. And that might seem like a simple concept to you, but it's actually a pretty significant paradigm shift in how a physician and a patient can think about treating their disease. And so we'll continue to follow up on that.

Okay, great. And then just a second question for me. The docs that are still in the -- we'll call it the trial phase, can you talk about what they're focused on? And acknowledging that the answer is going to vary from across the physician population, and to some degree, all of these will matter. But is the likelihood to respond, magnitude of effect, durability, tolerability, are there specific trigger points that you've seen so far that have turned a, call it, trialing physician into a more ready prescriber?

I think what I'm looking for is, as I mentioned earlier, the -- we present very strong data in our presentation to the physician. The impact on dyskinesia is profound. The impact on OFF is profound. The fact we hit both into one drug is profound. The functional time impact is profound. All of those things, I think, the physician goes, "Wow. That's a very impressive product, but it doesn't jive with my experience with amantadine." And so I think it's that -- overcoming that,"Is this true? I want to know that it's true. I want to see it." And I think that's the feedback from the patient to the physician, which is the important truth moment. It's why we spend some time making sure we gather those feedback points, and that we make sure we get back to the physician as rapidly as possible and why we're going to energize ourselves even more to that end.

Our next question is from Serge Belanger with Needham and Company.

Just a couple of questions for me. First one, a follow-up on the prior question for the -- on the trial process. How lengthy is this trial process? And how many patients does it typically involve? And are those physicians really trying to see whether they're going to achieve the same results as they can with the IR amantadine?

It's a great questions. I don't think there's a magic number. I don't think there's a magic duration. I think it's kind of one of those you know when you see it. And a good experience on the first patient that the physician tries GOCOVRI on can result in, "Okay. I'm convinced. I'll move forward." The third patient that the physician tries GOCOVRI, and is convinced, can have the same effect. So I can't really point to you at a magic period at this stage. The good news, again, is the patient experience on GOCOVRI is generally very positive. As we've talked about in other areas, 50% of the patient population in our Phase III program, the trial GOCOVRI, had disappearance of their dyskinesia. That's a fairly profound effect. And that can feed back pretty quickly to a physician, and that can be sufficiently convincing. So it's not -- I don't have an average. I don't have a normative thing. It's physician-to-physician dependent.

Okay. But it's safe to say that the trial process is more of a monthly process than a weekly trial event?

We're trying to get into a point -- well, no. Again, it depends. We've got physicians who want to start one patient at a time and see what happens, and I've got physicians who will start 4 patients at one time and see what happens. And it's very much, again, physician-dependent in terms of gathering that experience. And we just want to make sure that we accelerate it and we get to a point where that feedback occurs in as quick a fashion as possible. That's our focusing in now.

You've now been in the launch phase for about 7, 8 months with the sales force about 50, 60 reps. Do you still think that's an adequate-sized sales force? And what would an expansion look like to reach the next quartile of high prescribers?

So yes. At this stage, we think we have the appropriate number of salespeople. But we'll always keep an eye on the market, how it evolves, the opportunities that we see in the marketplace. And we'll respond to that with sizing our sales force accordingly. But for now, we certainly think we have the appropriate number at this time.

Our next question is from Ram Selvaraju with H.C. Wainwright.

So a couple of quick ones on GOCOVRI. Firstly, do you think, and this is referring back to the discussion around episode and transition, that there could be new sets of pharmacoeconomic data that could potentially be crafted to support the argument in favor of GOCOVRI from functional independence and the improvement of productivity perspective from the patient's viewpoint? And if so, what might that look like? And what kind of time frame could that potentially emerge? And secondly, and this is really just hypothetical in a sense, have you come across any case of physicians saying that they wanted to try their patients on OSMOLEX before exposing them to GOCOVRI? And if that were the case, what justification or what arguments are such prescribers making for wanting to take such a decision, given that the products clearly do not appear to be interchangeable or directly comparable?

Ram, it's Greg. Thank you for the 2 questions. On the first one, I'll start it and see if Rajiv wants to chime in. We've done a lot of work on the HUOR leading up to developing GOCOVRI. And a product that gives you back 4 hours of your functioning time during the day, in a disease where the -- what's called the disutility of being OFF is a really big and expensive deal, has a very good and strong value proposition. In terms of Dr. Patni's latest analysis with the episodes and transitions, it does present another opportunity to look at that even in a more impactful way. And if you have any thoughts on that, Rajiv?

No additional comment, except thank you for the idea.

Yes. With regards to OSMOLEX, now, of course, OSMOLEX is not available right now. And physicians are making the choice every day right now between immediate release amantadine and GOCOVRI, as we expected. And some of those choices are based upon the patient being on amantadine immediate release in the past. Some are based upon people on being on amantadine immediate release right now and having inadequate response, maybe perhaps similar to what we saw in our open label study when the patients coming on very high doses of amantadine immediate release transitioned to GOCOVRI and had a 35% reduction in their dyskinesia and OFF. And maybe there's a small number that haven't tried amantadine in their patients at all, and would have to think about whether they want to start that or not. So those are -- that's kind of the spectrum of people's experience. And with a more convenient version of the same -- sustaining the release of a drug, which is given in the morning, where the plasma level rises into the afternoon and evening, into a population that has sleep disturbances, I think, over time, they will come to expect that, that will have a comparable result to what you get with amantadine IR. So I think those will be the thought processes that go on when OSMOLEX is available. And our job is to educate clinicians on the time-dependency of the disease. That time administration of GOCOVRI, it's high plasma compensation in the morning. And as Richard said, the very compelling -- surprisingly compelling, as we've learned over the last 7 months, data sets that's come out of it.

Great. Very helpful. And just one quick follow-up on 5102 for walking impairment in the MS context. If you're thinking about the commercial trajectory potential for these candidates, do you think that there is any possible impact to that commercial trajectories of what could potentially transpire with dalfampridine, the timing with which dalfampridine generics might into the market? And I ask this simply because dalfampridine is the only symptomatic treatment out there specifically aimed at solving walking impairment. Not because I want to draw any kind of duress capacity between dalfampridine and 5102, but simply because they're targeting the symptomatic treatments, elements of MS, and it's the walking impairment argument that's being made. I was wondering whether you have any thoughts on that matter, and how closely you're watching the dalfampridine generic situation evolving, if at all.

Well, let me start the question. Thanks, Ram, for the question. Yes, many peers have been watching the dalfampridine situation since 2001, to put a sharp date on it, when it was back -- when it was at Elan, and before it made it to Acorda. And obviously, Acorda did a phenomenal job developing that product, especially in light of its treatment response population, that there's a subpopulation who respond to it very well and a background of patients who don't respond to it at all. So a very novel regulatory strategy brought it to the market, what I consider a very novel and a supportive market access strategy. I've got folks on it. And there are people who are well treated in that today. So Dr. Patni has taken that into account in his trial designs. If you could just touch on briefly how you look at it, and then let Richard finish.

So on the -- ongoing Phase III trial with respect to the steady population, we are enrolling patients who have a history of dalfampridine use. And that's an important point for everyone to understand. So we aim to generate data of ADS-5102 in the overall walking impaired MS population, which includes patients who are, at some point in their past, treated with dalfampridine. That's an important point. The second important point is, as we published in our Phase II trial, and the Phase III trial is essentially a larger and longer study with the same inclusion and exclusion criteria, we are going to look at complementary measures of walking, not just walking speed, which is the amount of time it takes to walk 25 feet, we're also looking at the Timed Up and Go and the 2-minute walk test. So if we are successful in Phase III, we will have a pivotal data set to demonstrate that ADS-5102 has effects on complementary measures of walking, not just walking speed.

And I'll just wrap up then by saying that the effects of dalfampridine are probably present -- the positive effect's at about 30% to 40% of patients. That means that there's 60% to 70% of patients for whom it doesn't have an effect. That's population in need, where I think the -- assuming positive data in Phase III, that 5102 could be a very important addition to their notarium? Do I think that the fact as to whether or not dalfampridine is generic or not at that time in 2022 thereabouts, when we launch this product, is important, given those characteristics? No, I don't because I think there's a population that's in need. And hopefully -- and Dante's providing good support for that, we can go commercialize.

I'm showing no further questions. I would now like to turn the call back to Dr. Greg Went for any further remarks.

So let me thank you all for joining us on this for the last hour of your time on this sunny, sunny afternoon here in California. We really do appreciate your interest listening to our progress, and we look forward to seeing you at upcoming conferences and meetings as we proceed through to our November call. Thanks very much.

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