Halozyme Therapeutics (NASDAQ:HALO) Q2 2020 Earnings Call

0:00 Ladies and gentlemen, welcome to the Antares Pharma Second Quarter 2020 Operating and Financial Results Conference Call. Throughout today's recorded presentation, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. And at that time, please press star 1 on your telephone keypad to join the queue. I would now like to hand the call over to Jack Hoerth, Antares Vice President of Corporate Affairs. Sir, please go ahead.

0:28 Thank you, Katie, and good morning, everyone. Earlier today, we announced our second quarter 2020 financial results and operating achievements. A copy of the press release and slide presentation for today's conference call are available on the investor section of the Ontario's website. Before we begin, I'd like to remind you that some of our statements made during this conference call will contain forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include those related to our future financial and operating results, including our expectations regarding the impact of COVID-19 pandemic and mitigation measures implemented in response to the outbreak on our product supply, demand for our products, new patients and future prescriptions, future revenue, development programs, the global economy, and financial markets in our overall business, operating results and financial condition, our ability to achieve the restated 2020 revenue guidance, Future revenue growth, prescription volumes, and market share for our products and our partner products, new product approvals and launches, FDA actions and other regulatory activities, results of ongoing and future clinical trials, and other product development activities and business development efforts.

1:43 These forward-looking statements are subject to certain risks and uncertainties, and actual results could differ materially. They are identified and described in today's press release, in the accompanying slide presentation, and from time to time in the company's filings with the SEC on Form 10-K and is updated in Antares' recent periodic filings on Form 10-Q and Form 8-K. Antares is providing this information as of the date of today's conference call and does not undertake any obligation to update any forward-looking statements contained in this conference call as a result of new information, future events or circumstances after the date hereof, except as required by law or otherwise. The company cautions investors not to place undue reliance on these forward-looking statements. Joining me on the call today are Bob Apple, President and Chief Executive Officer, and Fred Powell, Executive Vice President and Chief Financial Officer.

2:35 Let's review the agenda for today's call on slide three. Bob will begin with a high-level review of our business, Fred will go through the detailed financials, and then Bob will conclude with closing comments before opening up the lines for your questions. I'll now turn the call over to our CEO, Bob Apple. Bob?

2:53 Thanks, Jack, and good morning to everyone. This morning, we reported another quarter of record financial results and significant operational progress for the company. We achieved a 14% increase in quarterly revenue versus the same period last year and improved overall gross margin across the business as we continue to generate cash from operations despite the impact of the COVID-19 pandemic on patients, physicians, Our employees and communities that we serve. As we manage through daily obstacles to potentially eliminate any disruption to our business and supply chain, we were able to deliver hundreds of thousands of auto-injectors to our partners and patients who rely on our products while advancing our internal pipeline. Furthermore, we continue to support the growth of our business with our development partners as we recently announced the launch of generic Firsteo in parts of York by Teva and the International Distribution Agreement with Lunatus for Ziosted.

3:52 Today's strong results reported for the second quarter speak to the exceptional teamwork demonstrated at Antares during a difficult time in our country's history and were driven in large part by sales growth of our flagship product, Ziosted, as well as year-over-year growth for Teva's generic EpiPen. The highlights of the second quarter saw Ziosted grow 136% versus the same period last year, and 274% over the first six months of 2020, with June recording the highest number of shipments and prescriptions filled to date. In addition, last week Zyestad recorded the highest number of total prescriptions filled in one week, according to Symphony Prescription data. In our alliance business, The combined revenue of device sales and royalties generated from Tevis Generic EpiPen grew 61% in the second quarter and 83% over the first six months of this year as compared to the same periods in 2019.

4:52 We believe this is impressive revenue growth by any standard for both products. Our proprietary products Ziosted and OtrexUp which represents our highest margin business had a 65% increase in the quarter versus the same period last year and doubled over the first six months versus the same period in 2019. Our commercial team has driven impressive growth of Zyvested while maintaining Otrexup as a steady contributor to our business. On slide five, you will see that prescription trends for Zyvested continue their upward slope through the second quarter with June totaling another record month. Since the product launch last year, more than 132,000 prescriptions have been filled through June 30th, and approximately 6,000 different physicians have prescribed Zynostat to more than 20,000 patients.

5:47 Second quarter total prescriptions increased 11% sequentially from the first quarter of this year, despite the limitations our sales force had placed on them when they were unable to physically interact with physicians and their staff, coupled with reduced number of patient visits. We believe our decision at the end of the first quarter to strategically shift to an existing virtual detailing platform early in the pandemic, as well as leveraging our social media presence to connect with our existing and potential customers and healthcare professionals, has led to a positive impact on Zyocet prescription growth and sales. Since early July, most of our sales professionals have been able to resume limited in-person detailing and will continue to work virtually in those offices or regions that don't allow access to the physician's office based on the varying stay-at-home orders, restrictions, and phased openings.

6:40 Since patients may continue to have limited access to physicians, we made a tactical decision last quarter to shift our messaging as it relates to the unique product attributes of Ziosted, which was developed as an easy, once-weekly, subcutaneously administered product designed for at-home use. We have heard from physicians that some testosterone-deficient patients may not be able to or willing to visit their offices for treatment. If a patient has already satisfied the prior authorization requirements from their insurance provider to initiate testosterone therapy, they can be easily switched from a physician-administered therapy to self-administration of Zyvested at home. We will continue to target these physicians with our switch messaging, as well as physicians who are new to the Zyvested story who may be unaware of the virtually painless administration that has been shown to produce steady-state testosterone levels throughout the once-weekly dosing period.

7:36 We believe the benefits of Ziosted will continue to drive demand for an at-home injection option. Recently, we had the opportunity to welcome Pat Shea to the Antares organization as our Senior Vice President of Commercial. Pat joins us with over three decades of sales, marketing, market access, and commercial operations experience. His past commercial leadership roles include the development of strategic marketing plans for products associated with men's health, urology, pain management, and oncology. Pat has a proven track record of leading pharmaceutical commercial organizations, both large and small, and we believe he will be a valuable asset to us as we enter the next phase of growth for Ziosted and our proprietary commercial business. I would also like to take this time to thank Ed Kesick for his leadership during the launch of Ziosted and his contribution in making it the fastest growing branded testosterone product on the market. Ed has chosen to retire after a successful career in the industry and we wish him well in his future endeavors.

8:38 Turning now to slide six and some exciting news from our development partner, Teva. This past July, we announced the first commercialization of our multi-dose pen platform in Europe. Teva launched TeraPyrotide Injection, the generic version of Eli Lilly's European brand product for sale. TeraPeritide is a drug-device combination product used for the treatment of osteoporosis. The product was initially launched in eight European countries, and they recently advised us that this product has also been launched in Denmark, Ireland, Israel, and Canada. TeraPeritide is currently approved in 17 countries in Europe, and Teva has indicated that they expect to launch in other European countries later this year. The European launch represents another milestone achievement in our collaboration with Teva. This is the third successful approval and commercialization of a drug device combination product with our partner and follows the previous launches of the generic epinephrine and generic sumatriptan autoinjectors.

9:38 With respect to the end of filing for their U.S. generic version of Forteo, Teva continues to believe they could receive FDA approval later this year. If approved, the generic Forteo pen will be fully substitutable at the pharmacy, and we believe we'll receive six months of exclusivity. Under our global agreement, we sell the devices to Teva at cost plus margin and receive escalating royalties from high single digit to mid-teen percentages based on net sales by Teva. If approved, we believe the product represents a significant opportunity for both companies. I'd now like to talk about our first international distribution opportunity, which we announced earlier this week. This past Monday, we disclosed an exclusive Distribution Agreement with Lunatus Global Medical Supplies to distribute, support, and promote the sale of Zyastat in Saudi Arabia and United Arab Emirates.

10:32 Lunatus has a proven track record of introducing, building, and maintaining profitable brands in the Arabian Gulf and Middle East regions. We believe the Zyastat product profile will fit nicely into a market which is currently underserved and lacks attractive treatment options for testosterone deficient men. Under the terms of the agreement, we will be responsible for the supply of fully packaged product to Lunatus, and our partner will be responsible for submitting and obtaining regulatory approvals for Zyastat. Once approved by health authorities, Lunatus will also be responsible for all marketing, promotion, and distribution of Zyastat in both countries. We believe this agreement will help lay the groundwork necessary to expand our global footprint for Zyastat. We continue to make good progress on our pipeline despite the new COVID working environment.

11:19 This lateral rescue pen development program with our partner, Dorsia Pharmaceuticals, continues to advance. We are working with Dorsia to develop a rescue pen which would deliver a potentially fast-acting P2Y12 antagonist. Dorsia believes the rescue pen could be self-administered at the onset of symptoms to stop a suspected heart attack and preserve muscle and heart functions. We have initiated the usability and reliability studies with the QuickShot device while partner Adorsia prepares to conduct a clinical bridging study as well as finalizes the phase three study design with the various health authorities. Adorsia has indicated that they expect to initiate their global registration study in the first half of 2021 and we look forward to the start of this exciting trial.

12:05 Adorsia will pay for the development of the rescue pen and will be responsible for obtaining global regulatory approvals for the product. Antares will provide fully assembled and labeled finished product to our partner at cost plus margin, who will then be responsible for global commercialization of the product pending FDA and foreign approval. We will then be entitled to receive escalating royalties up to double digit percentages on global net sales of the commercial product. We believe the potential importance of this product for patients of Dorsey and Antares can be significant. Turning now to our development program advisor, We continue to make good progress on this project for an undisclosed rescue pen. As a reminder, subject to FDA approval, we will supply Pfizer with the fully packaged commercial-ready product at cost plus margin and then receive escalating royalties from mid-single digit to double digit percentages on end sales of the product.

12:58 We anticipate that we will be able to provide estimates on the development timeline once we receive clearance from Pfizer. Shifting now to our own internal pipeline, As previously disclosed, we are in the early stages of developing two new assets in the endocrinology and urology areas. The endocrinology program is a rescue pen that is currently in the preclinical and formulation stage of development. The company had a successful pre-IND meeting with the FDA, which enabled us to identify and agree on a development path forward for a 505 approach for an eventual NDA submission. If formulation development is successful, We anticipate filing our initial IND in 2021. The next potential product candidate is an assay in neurology.

13:47 We are working on a potential weekly formulation of an auto-injector administered product with a target of obtaining pre-IND feedback from the FDA and a first in human clinical study in 2021, which could potentially be followed by an IND filing in the same year. Finally, I would now like to update you on some of the day-to-day changes we are making to the way we operate as a company. In response to the pandemic, most of our executive and administrative functions are still working remotely, and we have limited the number of staff in our facilities to those necessary for essential functions such as development, manufacturing, and supply chain. We have implemented numerous health and safety protocols and are taking precautions to help protect our employees. Antares provides essential medicines to our partners and patients, and we are committed to delivering on this important mission. We are continuing to work closely with our third party manufacturers and distributors in order to manage supply chain activities and mitigate any potential disruptions to our ability to supply products to our customers and or partners during the pandemic.

14:51 As a result of the commendable efforts of the organization to maintain the momentum of our business in these unprecedented times, we are taking this opportunity to reinstate our full year 2020 revenue guidance which we believe will be in the range of $135 to $155 million, which represents a year-over-year growth rate of between 9% and 25%. Given the evolving nature of the pandemic, the company may revisit revenue guidance at some future point in time. We will, however, stay laser-focused on our business and be ready to adapt to any changes to market conditions should they occur. We'd now like to turn the call over to Fred for the financial details of our second quarter in six months ended June 30, 2020.

15:34 Fred? Thanks, Bob. Throughout our business, we had a very strong quarter despite the unusual challenges we're all facing. We recognize record second quarter revenue with $32.4 million and earnings per share of one cent. These excellent results exceeded street revenue expectations of $30.4 million and break even EPS. The second quarter marks the third time in the last four quarters that the company has achieved profitability. In addition, we generated $3.7 million in cash from operations during the quarter, and for the first six months of 2020, cash generated from operations was $9.3 million. This is a tremendous turnaround of over $20.4 million from 2019 when we used $11.2 million in cash during the first six months of that year. So let me begin with a more detailed review of the strong financial results by providing a breakdown of our revenue and operating expenses for the second quarter and first six months of 2020.

16:40 Total revenue was $32.4 million for the three months ended June 30, 2020, representing a 14% increase compared to $28.4 million in 2019. For the six-month period ended June 30, 2020, total revenue was a record $65.5 million, which is a 27% increase from $51.7 million for the comparable period in 2019. Total product sales were $24.7 million for the second quarter, a 20% increase from $20.6 million in the second quarter of 2019. For the six-month period ended June 30, 2020, product sales were $51.8 million A 33% increase from $38.9 million for the comparable period in 2019.

17:29 Sales of our proprietary commercial product, Zylsted and Ultrexa, totaled $14.8 million and $27.4 million for the three and six months ended June 30, 2020, compared to $9 million and $13.8 million in the same periods of 2019. The increase in proprietary product sales for the three- and six-month periods in 2020 over 2019 was attributable to the continued growth of Zalsted. Partner product sales were $9.8 million and $11.6 million for the three months ended June 30, 2020 and 2019, and $24.4 million and $25.2 million for the six months ended June 30, 2020 and 2019. The three- and six-month reduction in partnered sales is primarily due to sales in 2019 of the needle-free devices to fairing.

18:21 During the second half of 2019, we completed the sale of that product to fairing, and we're no longer recognizing sales on needle-free devices. In addition, in 2019, we sold pre-launch quantity of teraparotype pens to Teva. During the three months and six months ended June 3, 2020, we have seen significant growth in our EpiPen devices as sales have increased 64% and 76% from the comparable periods in 2019. Finally, we continue to supply product to AMAG, who recently indicated to investors that they remain focused on maintaining patient access to the Makina product. Licensing and development revenue was $2.7 million and $4.4 million for the three- and six-month periods ended June 30, 2020, compared to $2.2 million and $3.2 million for comparable periods in 2019. The growth in licensing and development revenue for the three- and six-month periods was primarily from Pfizer-RescuPen and the Adorsius-Vladigro pen development programs.

19:25 Royalty revenue was $5 million for the three months ended June 30, 2020, compared to $5.6 million in the same period in 2019. For the six-month period ended June 30, 2020, royalty revenue was $9.3 million compared to $9.6 million for the comparable period in 2019. The decrease in royalty revenue for the three- and six-month periods were primarily attributable to a decline in royalties recognized from AMAG on the net sales of Makina's subcutaneous auto-injector. Gross profit increased 24% to $19.9 million for the quarter ended June 30, 2020 as compared to $16 million in the second quarter of 2019. For the first six months of 2020, gross profit increased 34% to $37.9 million as compared to $28.3 million during the first half of 2019.

20:17 It's important to note that our gross profit as percent of total revenue increased to 61% for the quarter ended June 30, 2020. up from 56% recording the same period in 2019. Again, this is driven by the increase in Zadosted revenue. Operating expenses were $16.9 million for the second quarter of 2020 compared to $17.6 million in a comparable period in 2019, and $36.3 million and $34.9 million during the first six months of 2020 and 2019. The increase for the six months ended June 30, 2020, was primarily attributable to increased headcount as well as increased non-cash incentive compensation expense. For the quarter ended June 30, 2020, net income was $2.2 million, or one cent per share, compared to a net loss of $2.2 million, or a loss of one cent per share for the same period in 2019.

21:15 And for the first six months of 2020, net loss was $200,000, or break-even per share, as compared to a net loss of $7.8 million, or 5 cents per share during the same period last year. Finally, our cash and short-term investments at the end of the second quarter increased to $51.6 million compared to $45.7 million at December 31, 2019. I'll now turn the call back to Bob. Bob?

21:41 Thanks, Fred. In summary, we had a great quarter with exceptional growth of our flagship product, Zyvested, and continued growth of our EpiPen business that drove strong operating and net income, in addition to expanding our product offerings and advancing our internal pipeline. I would like to once again thank personally all of our employees and our stakeholders as we navigate through this unusual period of time. Everyone here at Antares is making an extraordinary effort to maintain this positive momentum of the business. We are focused on driving growth through the commercial success of our proprietary and partner products. We hope all of our employees and stakeholders remain safe and healthy. This concludes my prepared remarks for today. Operator, could you please open the lines up for the question and answer session?

22:29 Thank you, sir. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press star 1 to ask a question. We'll pause for just a moment to allow everyone the opportunity to signal for questions. I think our first question will come from Elliott Wilbur with Raymond James.

22:58 Hey, thanks. Good morning. Busy day. I'm going to apologize in advance if I ask something that you mentioned in your prepared commentary here, but first I guess for Bob. and just thinking about the reinstatement of full-year guidance and the range within that expectation. I want to get your perspective on just sort of three different items and how they may impact your thinking about the range itself. First is with respect to Makina. It looks like that product has stabilized based on AMAG's numbers last couple of quarters. Just wondering kind of how you're thinking about and many more. Thank you. Ability to get back and sort of resume normalcy in terms of detailing trends with respect to in-office physician visits and what that means for Zydested in the back half of the year. Obviously, you've done very well with the asset kind of given the constrained environment, but just thinking about, want to know sort of what you're thinking about

24:31 in terms of You know, how much of an incremental acceleration trajectory is dependent on kind of getting back into the office and in front of physicians. Thanks.

24:44 Thanks, Elliot. Let me focus on the first part of your, I guess the last part of your question, which is around Zyvested. You know, we've been seeing about 25% of our details overall being in person. and that really fluctuates depending on the spikes in COVID and so forth that we're seeing across the country. But otherwise, you know, our sales reps have been able to effectively detail the offices with the virtual platform and I think you've seen that, you know, the result of that in a very difficult time, you know, in the April, May, June timeframe of the pandemic where I think, you know, a lot of patients were actually really concerned about even going to the doctor's offices and we still were able to grow you know our overall prescriptions from quarter to quarter 11% and we saw the growth from the revenue standpoint as well precise that I think what's different this time is that the offices are more prepared for the pandemic so they're now seeing patients on a more regular basis if not as it's not as it was before the pandemic but it's still I think the protocols are in place and patients are coming in to see the doctor so we see that as a positive change over the last month or so for our sales reps. Because importantly for us, it's really about the patients coming in to see the doctors and less about the access that we have to the offices because our reps can effectively detail the doctors via the virtual platform.

26:13 We're able to do virtual lunches. We're able to do virtual detailing. We're able to get samples to the physicians. So all those key tactical items can be done The key for us is for the patients to keep coming in and right now we definitely see a difference from the early part of the pandemic. So I think there's going to be continued growth of Zyestead and our range of our guidance is really, we didn't change it. It's still between 135 and 155. A lot of that originally was meant for the uncertainty around Makena. I think the range now is really around the uncertainty of COVID. You know, depending on what happens in the next few months, I guess, I think gives us the flexibility just to maintain that range across all of our business.

27:09 So I think ZioState is going to continue to grow and we're really excited about the recent trends. We had our all time high just last week on a prescription basis. We're seeing new patients, new patient starts increasing, coming back. to almost pre-COVID levels. But generally, patients are staying on the drug, and we believe that the product will continue to grow. On the epinephrine front, I think if you listened to Teva's call yesterday, epinephrine, they called that a strong driver of growth for them, and it's been a strong driver of growth for us. But clearly, you know, we did, Teva did mention across their generic business, there was a much higher stocking level or purchasing level that was done by patients in Q1.

27:59 It kind of dropped in Q2. We saw that a little bit on Epi, but overall, it was still really nice growth for our company. Going into the back-to-school timeframe and the order flow from them, you know, we were from a device standpoint, we can see pretty far out their demand and it's pretty high. We're doing everything we can to keep up with the demand and so we don't see any issue related to back to school related to our device sales. With related to what they ultimately sell and which affects our royalty, that's a more difficult kind of question to ask because I don't know If the virtual schooling is going to have a significant impact on epinephrine. I think that most parents are still going to refill their epinephrine, their EpiPen scripts because they expire really in 18 months or less. And I think that it's hard for us to predict how COVID is going to impact that biggest quarter for epinephrine products. but overall I'd say the Epi business is extremely strong.

29:17 Teva is doing a great job of making that a successful product for both us and them and right now that's a big part of our guidance for 2020. And then your first question about Makena, I kind of put them in the order of importance. Makena, in our model, we assume that it continues to sell. There's been no indication at this point that AMAG will not be able to continue to provide Makena to patients. They're working with the FDA. But it is a less material part of our business. And so it's really, for us, we're continuing to supply them the auto injectors, the fully packaged product. We continue to get a royalty.

30:04 And it's a nice part of our business, but it's really not a primary part of the growth of our business and our company. You know, they continue to do well with it, and we expect that to continue for the balance of the year. Thank you. Our next question will come from Anthony Patron with Jefferies.

30:32 Thanks, and hope everyone's doing well, staying healthy. A couple on Zyosted and then I'll have one on teraparatide. Just on Zyosted, Bob, can you give us a sense within the growth number, what's coming from actually newly prescribed PRT patients versus kind of the pull-through from IM patients that previously received the two blood draw clearance? And then just on teraparatide, as we look at Lily's numbers, can you give us a level set on what the Canadian and European mixes, and they're trailing 12-month numbers, and I'll have one quick follow-up. Thanks.

31:13 Sure. On Zyastad, as far as our new patient starts, I think it's probably equal that about half of our new patient starts are switches, and then half are new to therapy. And again, we're focusing on both. Both patients are Excellent targets for us as far as new opportunities. The switches have been a little bit easier to get just because we have patients that were doing IM injections in the doctor's offices and I think that a lot of them still are not comfortable going in every two weeks.

31:58 And you also had some business from the old Implantable Testosterone Pellets. Not only is there a difficulty in getting into the office, but there's also a shortage of the pellets just because there's not a whole lot of demand for them. So I think the switches are really what we're focusing on because you don't have to go through the prior authorization process. They don't have to get the blood draws. It's a bit easier for both us and the patients to get Ziosted. On the new patient starts though, they're still coming up. New patients are being introduced to Zyacin on a regular basis. The offices are doing more telehealth, but they still have to go in and get their blood draws. And again, I think the offices have been able to figure out the appropriate protocols, how to treat a patient without them being exposed, hopefully. You know, they go in, they're, you know, socially distanced, they stagger the number of patients in the office at any given time, and that, again, has had a positive impact on the patient flow of new patients on Zyosted.

33:11 So we expect that to continue. You know, as you obviously hear in the news, there's a lot of spikes in a lot of regions, and we're just trying to deal with those as best we can. But overall, the product continues to grow, and it's doing well.

33:26 That's helpful. And then just looking into the Terra Paratide launch, again, what is the branded mix, Canada and Europe? And maybe the follow-up there would be, is there any kind of indication from Teva how they're going to proceed with pricing initially? And maybe just to clear up the timing on the U.S. launch, is that sort of a first half 21 event? Thanks again and congratulations.

33:54 As far as Therapeutics pricing and how Teva is going to introduce their products into this market, that's really a question for Teva. We have no insight into their strategy there. What we're doing is we make sure that we supply them the pens for that product. They then do all the distribution, they do all the marketing, and so we haven't received our first royalty report. So, to be honest, I just don't have any insight as to, you know, insight as to their pricing and the net selling price and things like that. You know, they just launched a few weeks ago, and, you know, we were excited about the launch, and they continue to add countries, and I think that's the most important thing. You know, adding Canada was a surprise for us because...

34:45 and many more. Fratello is an expensive product in the U.S. It's not priced the same way in Europe and in other countries. Obviously, most other products are less expensive in Europe and in Canada, and we don't see any difference in that with Tevis Fratello. But overall, the biggest piece in the market potentially is the U.S., and the only thing I can say about that is we still believe that there's are going to be in approval for that product before the end of this year.

35:44 And the launch plans will really be dictated by Teva and how quickly they can get the product ready for the U.S. after the approval. So unfortunately, I can't give you any specific timing, but overall, we feel pretty good about TeraPeritide and Fruteo. and look forward to that launch in the U.S. as well as the launch in Europe and in Canada.

36:11 Thank you very much, Bob. Thank you. Once again, we are holding for questions. Please press star 1 now if you would like to ask a question. Again, that is star 1 to ask a question. We will pause for just a moment. Thank you. We have a follow-up from Elliott Wilbur with Raymond James.

36:37 Let's put Fred in the hot seat. Specifically on a couple of expense items, you've done a good job of holding spending in line, I guess, sort of at the peak of the pandemic, but obviously would expect numbers to kind of ramp up in the second half of the year. Can you just maybe give us a little bit of directional color on SG&A and R&D trends in as well as a little bit of guidance or at least your perspective on how we should be thinking about operating cash flow trends in the second half of the year. Thanks.

37:12 Sure. Sure. No problem at all. As you know, we have guidance for revenue. We don't give it for EPS. And so what we're looking at right now for the trends are really impacted by COVID. If we continue to see the COVID impacting commercial operations in particular, where we should see relatively flat commercial expenses for the rest of the year. No significant increase or decreases. As Bob said, we're about 25% back in the field. So if we remain at that level, I wouldn't be surprised if we were to take the first six months of this year and then really look to double that to get an approximate amount for the full year. When it comes to the G&A expenses, Again, that's fairly level. We're not looking at any significant increases or decreases.

38:06 We've been very fortunate that we've been having a growing business. We've maintained all of our staff, and we see the businesses being very, very strong and going forward. And so, as I mentioned, if we look at the first half of this year, again, that's a good indicator of what we should be looking at the back half of the year. When it comes to the R&D piece, Again, we may see some increases, but I would suspect that it would be relatively flat. Bob went through the presentation as to our internal pipeline, where we're at with the programs, with the PINDs, and looking at 2021 for clinical trials. And that's really where we would see the uptick in the expenses take place in 2021. And so overall, we're looking at about $36 million for the first half of the year in our total operating expenses.

38:59 I wouldn't be surprised. It's very similar to that, the back half. Maybe a slight increase, but not much of a change overall from first two quarters versus back half. Thank you. Oh, and then you also asked me about the cash question. Sorry about that. And then with cash, I suspect that we will continue to have Cash generated from our operations. We think if we're going to have a, you know, our revenue will continue to, you know, hit the guidance that's out there. Our expenses remain fairly consistent. We generated cash, you know, over $9 million in operating cash in the first half of this year.

39:46 There's no reason why we wouldn't continue to generate operating cash in the back half of this year as well. So I think we're in a good position there financially as we look at our cash and our investments. Thank you. Our next question comes from Anthony Patron with Jefferies.

40:09 Great. Just follow up here on Idorsia, the Phase III. Bob or Fred, just wondering how large that study is intended to be and what sort of uplift you would expect in auto injectors once that gets underway and maybe what that would suggest on the manufacturing front maybe toward the end of this year. Thanks again.

40:40 Thanks, Anthony. As far as, you know, the Adorsia Phase 3, you know, they're still working that out with the health authorities, but it's estimated that, you know, there's probably going to be about 15,000 patients in that study, which is typical for a cardiovascular type of study. And so it's a significant amount of autoinjectors. We're clearly not delivering them all before the end of this year because, you know, Phase 3 is starting in the, you know, first half of next year. but we will be working towards devices for the bridging study as well as the phase three. So those devices are in our forecast or in our guidance because we know we have to deliver them, we know what the volume is that they're requesting at least by the end of the year.

41:31 So there shouldn't be any significant change into our product revenue other than just the growth that we expect So, you know, we think the program is going to, you know, drive some, you know, additional development revenue as well as device revenue, but that, again, that'll all be in our guidance.

41:57 Okay. And then the last one would be on the Rescue Pen 505B pathway and the NDA filing. I guess the right way to think about that is that the actual filing would be The IMD would be a 2021.

42:17 It's a relatively short program. We believe that we can get it done in a timely fashion, but we want to make sure we get the formulation right. We want to get the PK program in front of the FDA, and then we'll be able to give better guidance. But overall, You know, I think it'll be a, you know, a relatively short clinical program with a, you know, a nice potential product that will disclose once we go into the IND. Okay.

42:51 All right. Thanks again. Thank you. Our next question comes from Wally Walker with Hannah Road Capital.

43:01 Good morning, and congratulations on the progress in quarter. The reinstatement of the four-year revenue guidance infers acceleration of the revenue in the second half of the year. Anything you can say to elaborate on what gives you that confidence?

43:18 Again, thanks, Wally, for the question. When we look at the two main drivers of our business being Zyestad and Appy, Zyestad, we're looking at the trends we're seeing. We're seeing a lot of positive trends on The growth of the prescriptions, we're seeing positive trends, obviously, on the net selling price, which always happens. We always do the best in the second half of the year for net selling price because we've gone through co-pay support. We've gone through a lot of the support that we have to give the patients in order to get the drug in the first two quarters. So the net selling price goes up. So Zyastat is a big growth driver for us for the second half of the year. and then the same with Epi.

44:05 Like I mentioned earlier, we have pretty good visibility into the demand from a device standpoint from Teva and so we know what we need to deliver. Barring any issues with COVID, we expect to be able to deliver those. So far we've been fortunate with our manufacturers and our suppliers that it hasn't impacted us tremendously. We obviously have had the same impact as most other companies where there is people coming in and out of the plants with COVID, so you have to deal with that. But overall, the epi business is pretty predictable, and we expect that to be a growth driver. And on top of that, our development programs continue to ramp up.

44:50 The Dorsia and Pfizer. And in some of the TEVA work that we do, we have a lot of development work that's getting done in the second part of the year. So you'll see additional development revenue that's driving the growth of the revenue as well. Great, thanks. Very helpful. Thank you. Once again, we will pause for questions. Please press star 1 now to join the queue. Again, that is star 1 to ask a question. I am currently showing no further questions in the queue at this time. I would now like to turn the call back over to Jack Haworth for closing remarks.

45:35 Thanks, Katie, and thanks again for joining us on today's conference call. If you have any follow-up questions, you can reach me at 609-359-3016. That completes today's call. Thank you, ladies and gentlemen. This concludes today's teleconference. You may now disconnect.