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Intersect ENT Inc  (NASDAQ:XENT)
Q4 2018 Earnings Conference Call
Feb. 25, 2019, 4:30 p.m. ET

Contents:

Prepared Remarks:

Operator

Good day, and welcome to the Intersect ENT Fourth Quarter and Full-Year 2018 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded.

I would now like to turn the conference over to Jeri Hilleman, Chief Financial Officer. Please go ahead.

Jeryl Hilleman -- Chief Financial Officer

Thank you, Allison, and thank you for participating in today's call. Joining me today is Lisa Earnhardt, President and CEO.

Before we begin, I'd like to remind you that we will make forward-looking statements within the meaning of Federal Securities Laws. Actual results and timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, our outlook for financial performance, sales force growth, clinical studies, approval of new products and indications, and procurement of reimbursement codes and coverage, which are based upon our current estimates and assumptions as well as other risks detailed from time to time in the reports we file with the SEC. We disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein.

I'll now turn the call over to Lisa Earnhardt. Lisa?

Lisa Earnhardt -- President and Chief Executive Officer

Good afternoon, and thank you for joining the call this afternoon. 2018 was the year with new challenges but also one in which we demonstrated resilience and adaptability and I couldn't be prouder of the team. We began the year as we remain very excited to be adding SINUVA to our suite of innovative clinically proven therapies for sinusitis sufferers and, importantly, we believe that our considerable progress with market access and field force balance has positioned us to enter 2019 ready to both ramp SINUVA and continue to grow PROPEL.

Highlights of our key 2018 SINUVA accomplishments included positive clinical experience, as well as meaningful advances and product access. On the clinical front, physician and patient feedback continues to be very favorable. As you know, this is the most important aspect of our successful product launch and we're thrilled we're able to meet the needs of patients with chronic polyp disease with a simple office based procedure, a great alternative to the standard of care today either repeat sinus surgery or high dose steroids.

We are pleased that 1,200 patients received SINUVA in 2018. During our targeted launch, close to 500 physicians treated these patients with almost a 100 physicians having placed five or more orders for SINUVA. We are pleased to see this early level of engagement with the selected physicians and our sales force is working to drive continued usage with our initial users, as well as encourage new physicians to adapt SINUVA.

With regard to reimbursement, we're seeing several positive trends including higher-than-anticipated levels of payer coverage and significantly shorten timeframes for prior authorization. Currently, not only are the large national payers providing access to SINUVA but many regional payers as well, adding up to a total enrollment of 200 payers with positive coverage. This translates to SINUVA being available to approximately 245 million lives, representing just over 70% of total commercial covered lives. The vast majority of the remaining payers are silent and we look forward to continuing to grow coverage as product usage ramps.

In addition, while a small portion of our targeted population we are starting to see Medicare coverage of SINUVA now that Medicare submissions are able to use the J3490 Code. In addition to strong progress of coverage, we are also seeing greatly shortened turnaround times from submission to the termination of prior authorization, typically now around two weeks. This timeframe reflects a combination of factors, including physician offices, improving the quality of their submissions, payer familiarity with SINUVA, and a more seizing engagement by our team. We are, of course, very pleased to see this level of turnaround as this enables physicians to manage SINUVA treatment with greater confidence and predictability.

We are also making progress with physicians engaging in buy-and-bill with a 140 doctors having bought SINUVA under buy-and-bill as of year-end. Payment to the physician has also continued to be positive with allowable product reimbursement typically coming through as ASP plus an appropriate margin. We believe that buy-and-bill will continue to be an important element of broader usage of a product and observe that, excluding hospital clinic purchases. One in three units in the fourth quarter were purchased directly by the physician.

Reflecting on customer input, clinical feedback and payer coverage, we anticipate that we will move from a targeted launch for SINUVA to a broader launch over the course of this year. We held our National Sales Meeting a few weeks ago and in addition to great educational content we rolled out a number of initiatives for our sales force to work with physicians on patient outreach and will soon be rolling out a systematic market access training program for physicians' offices through our expanded field reimbursement team. We expect these initiatives to be impactful in expanding engagement and patient enrollment and that we will start to see a positive inflection in SINUVA treatment in the coming months from these efforts today.

Moving to PROPEL. Revenue grew 10%, driven primarily by expanded usage of Contour among both current and new physicians. In the fourth quarter, Contour sales comprised 31% of total PROPEL sales, up from 26% at the end of 2017. We also added significantly to the PROPEL focused sales bandwidth, adding 28 sales consultants and contract reps into the field during the year. Overall, we expanded our sales force by about 25% with the majority of growth in the last four months of 2018. As our new reps gain experience in their territories, we do expect that bandwidth to help us achieve higher levels of PROPEL growth.

And I would be remiss if I only spoke about product feedback regarding SINUVA. We continue to greatly appreciate what patients tell us about the PROPEL experience as well. One such patient had two disappointing surgery, but in her third she was treated with PROPEL. This patient was so compelled about her experience with PROPEL that she spoke to us at our recent National Sales Meeting and told us, "Well, with my recovery, I thought it is difference almost immediately. I actually could breath. My nose felt so open, which is something I haven't felt in a years." Overall, our view of our business remains consistent with our outlook at the start of the year and we are therefore reiterating our Q1 and full year guidance.

Let me now turn the call over to Jeri to take you through our financial results and outlook, and I will conclude the call with the discussion of our pipeline endowers and milestones.

Jeryl Hilleman -- Chief Financial Officer

Thank you, Lisa. Our fourth quarter and full year revenue were in line with the guidance we set last summer without PROPEL and SINUVA in their target. Lisa reviewed the progress we made with SINUVA infrastructure and product usage and our gross to net revenue remains on plan as well with the net price of about $1,000 recognized from the selling price of $12.75. PROPEL ASP was just over $800 with sales distributed about 80% in hospitals, 18% in ASCs and a couple percent from in-office us in line with historic patterns.

Moving to gross margin. We achieved a gross margin in the fourth quarter of 81%, reflecting efficiency gains made throughout the year. We plan to continue to improve efficiencies, particularly with SINUVA, but also to continue to invest in scalable manufacturing infrastructure. We, therefore, expect our 2019 gross margins to land between 80% to 81% throughout the year.

During 2018, OpEx grew 13% to $111 million as we expanded headcount by 20% to about 40 employees. The majority of this headcount growth was in sales and manufacturing in support of SINUVA. For 2019, our OpEx outlook is in the range of $135 million to $137 million, an increase of about 20% compared to last year. About $15 million of this increase is related to annualization of SINUVA initiatives and the 2018 headcount growth. The remaining $10 million to $12 million increase is planned to cover the ASCEND drug-coated balloon program as well as further headcount growth, primarily in sales, reimbursement and R&D. Our 2019 R&D spending will rise to approximately $26 million from $19 million in 2018, a step-up of about 37% with R&D continuing to account for about 20% of our total OpEx spending.

The growth in R&D expenses attributable to the ASCEND program as well as to investment in additional pipeline development.

SG&A spending will rise to approximately $110 million from $92 million in 2018, mainly driven by additional investment in sales, marketing and reimbursement.

Finally, I'd like to touch on cash. We ended the year with $101 million in cash and investments, essentially even with $102 million at the start of 2018. We do expect to use some cash this year, but we continue to have a very strong balance sheet to support operations.

I'll now turn the call back to you, Lisa.

Lisa Earnhardt -- President and Chief Executive Officer

Thanks, Jeri. We continue to invest in advancing our pipeline and believe we are and will continue to be the leader in evidence-based innovation in the ENT specialty, providing physicians with solutions to overcome critical challenges and improve the quality of life for patients. To that end, we have few updates for you today, including the top line view of the ENCORE Study, an update on the ASCEND trial and discussion of the new PROPEL delivery system.

First, we have now completed the ENCORE Study. ENCORE was a small 50-patient open label study designed to evaluate the safety of repeat use of SINUVA. The primary aim of this study was to generate data in order to support revision of the FDA approved labeling, which currently states that repeat use hasn't been studied. Patients participating in this study received an initial SINUVA treatment and then at day 90 they were allowed to receive a second treatment with SINUVA implant if they met the protocol required criteria for repeat placement.

Patients will then track to assess the incidence of adverse events and implant-related adverse events through day 365. We are pleased, though not surprised, to convey that the study findings show that no series adverse events related to the implants during the measurement period. We do plan to submit this data to the FDA to seek modification of the labeling and will present study findings in a future scientific conference publication or both.

Regarding the ASCEND trial, we commenced study enrollment in December and expect to complete enrollment by the end of Q3 with top line results by the end of the year. ASCEND is a clinical study designed to assess safety and efficacy of our drug-coated balloon technology compared with a plain sinus balloon. This study is a 70-patient randomized blinded trial that will assess sinus patency rates and other endoscopic outcomes at multiple time points.

Finally, we have been working on ways to further enhance our PROPEL product. Many customers have indicated they would prefer of modifying delivery system when placing PROPEL in the ethmoid sinus. We are therefore moving forward with the new straight delivery system for that product and expect to file the PMA supplement in the second quarter. If approved, we expect to have this system available to customers early next year. Our strategy is to make this delivery system available separately for nominal fee with the main commercial objective being to reinforce and expand PROPEL usage. We believe this delivery system will be well received by our customers.

To sum up our 2019 milestones, we anticipate delivering on a number of achievements this year. For Q1, we have just announced the preliminary ENCORE results. For Q2, we expect to file the PMA supplement for the straight delivery system and await the CMS J-Code preliminary decision in early May. Regarding the latter, we did submit a renewed application in January as planned and with the CPT codes replacement of a medicine clearly (ph) alluding implant (ph) now officially deleted we retain our optimism about securing a specific J-Code for SINUVA. For Q3, we expect to complete ASCEND Study enrollment and by year end we plan to report top line results from ASCEND.

In addition to these milestones, of course, we've reported on quarterly progress of the SINUVA ramp and PROPEL growth. We are excited to have these opportunities to build stakeholder value and I join the full Intersect ENT team in saying thank you for your support and engagement.

We'll now remain on the line to address your questions. So, Allison, would you go ahead and please open up the lines.

Questions and Answers:

Operator

Certainly, and thank you. We will now begin the question-and-answer session. (Operator Instructions) And our first question will come from Robbie Marcus of J.P. Morgan. Please go ahead.

Allen Gong -- J.P. Morgan -- Analyst

Hi. This is actually Allen on for Robbie. I guess, I just had a quick question on your guidance. When it comes to the mix of PROPEL and SINUVA, it looks like the strength in this quarter is really driven by a better-than-expected recovery of PROPEL. So as you look forward, when you kind of break apart your guidance, can you give, like, any specific color on, like how we should think about the SINUVA ramp and the obvious implication is how should we also look at the continued stabilization of the base business?

Jeryl Hilleman -- Chief Financial Officer

Yeah. Hi, Allen. Good question. And as we think about our guidance going forward, we have indicated that we do expect to lean into SINUVA more now that we have through the National Sales Meeting and so forth, so we would expect revenue to continue to build as we go through the year and also with PROPEL as we get the hiring that we did in the latter part of the year really in the field and up to speed that we would see the benefit of that, probably starting in the next quarter. So with that color that gives you some idea of how we're thinking about the year. We have not in anticipation of looking forward to the year broken out PROPEL and SINUVA separately, although we do expect to continue to report them with granularity at the end of each quarter.

Allen Gong -- J.P. Morgan -- Analyst

Got it. And then I guess a quick follow-up. So it sounds like you already have some of your doctors obviously using SINUVA multiple times, would you say that, for the ones, who have kind of held off on using it multiple times, is that something that will change, now that you have ENCORE data on hand or do you think they're going to wait for the indication?

Lisa Earnhardt -- President and Chief Executive Officer

Yeah. We will see the ENCORE data as being an impactful as it relates to physicians decision-making around repeat use. I do believe given that the dose and the safety profile of SINUVA in and of itself, it stands on its own. I just want to clarify though, when we spoke about 100 physicians having ordered SINUVA five or more times, those aren't necessarily for the same patients, those are for the vast majority, it's actually new patients are being treated. We do have a report anecdotally of some physicians treating patients more than once, but the vast majority of use has been de novo use of SINUVA.

Jeryl Hilleman -- Chief Financial Officer

And I also want to just update. We're doing this for clarity in the dosage section. The indication doesn't speak to repeat use. This is really -- right now the dosage section says that, repeat use hasn't been studied and this will provide data to provide safety profile on repeat use.

Allen Gong -- J.P. Morgan -- Analyst

Thank you, guys.

Operator

Our next question will come Bob Hopkins of Bank of America. Please go ahead.

Robert Hopkins -- Bank of America Merrill Lynch -- Analyst

Hi. Thanks so much for taking the questions. A couple of quick ones. I'd love to just get your kind of a gut check on the J-Code, you expressed some optimism, but obviously there are some optimism expressed before, so what incrementally can you share with us that is, sort of, driving the comment you just made on J-Code?

Lisa Earnhardt -- President and Chief Executive Officer

Yeah. Bob, I think the biggest determinant of our optimism is really with regards to the CPT codes that were in existence last year, that sunset at the end of 2018 and that was the reason why CMS has given us, that they didn't award and it felt like a separate J-Code was necessary. So between those codes being sunset in the last communication we had with CMS, which is following their final decision in the sort of probably late November time frame, we do believe we're in a very good position moving forward and look forward to the preliminary decision to be rolled on in May.

Robert Hopkins -- Bank of America Merrill Lynch -- Analyst

Okay. That's helpful. And then on the guidance for next year, I realize you don't want to break it out at this point, but the Street is modeling, I think, about $12 million in SINUVA sales and I think it'd just be helpful to know if you thought that that was way off your thinking, just so we don't have mismatched expectations there?

Lisa Earnhardt -- President and Chief Executive Officer

Yeah. I think, if you look at the fourth quarter and assume that over the course of the year, particularly as we move toward the second quarter, which is historically a very strong quarter for ENTs with allergies and so forth, I think you should see a ratable level of increase that could align order of magnitude with the Street, but we don't want to give specific guidance.

Robert Hopkins -- Bank of America Merrill Lynch -- Analyst

Okay. And then lastly, Lisa, I was intrigued by your comments about -- as it relates to SINUVA potential inflection in the next coming months, so I was wondering if you could just flush that out a little bit, perhaps it's something coming from your Sales Meeting and then maybe just provide us with a little bit of perspective on last year relative to your original expectations. Now that you've had some time to really reflect, if you had to kind of really pinpoint what was the core driver of the disappointment and what's causing you to make this comment about potentially seeing an inflection in the coming months? Thank you.

Lisa Earnhardt -- President and Chief Executive Officer

Yeah. I'll start first with the inflection. I mean, we did really are coming off of very strong Sales Meeting and feel like we have the recipe for success develop this year and as we communicated previously we know it will take time and we'll ramp over the course of the year, but we are encouraged by that sort of ingredients we have on the table to make this being a fantastic year. And, I think, if I reflect back on 2018, probably the one element that was most challenging for us was with regards to product access and while we're super encouraged by what a strong position we are from a payer coverage perspective at this point, the fact that specialty pharmacy is an option for some patients, but not all patients with sort of the new learning for us, because, as you know, that was absolutely the preferred route for a number of physicians, because it provided a lower risk and easier way to access the product versus buy-and-bill. And so, I think that was clearly our biggest learning as we reflect upon the year, but I do feel like we have put the team in place to be able to address this. We're doing all the right blocking and tackling and I'm encouraged about the opportunities we have ahead.

Robert Hopkins -- Bank of America Merrill Lynch -- Analyst

Great. Thanks for taking the question.

Operator

Our next question will come from Richard Newitter of SVB Leerink. Please go ahead.

Richard Newitter -- SVB Leerink -- Analyst

Hi. Thanks for taking the questions. I had couple here. Just to continue on the line of questioning around SINUVA. You know you have -- I think, you said greater than 70% of commercial lives covered, you've been added to formulary and seeing positive coverage, medical policy coverage, decisions for a number of payers in the recent months. Can you tell us, maybe, what that actually is doing for you at the ground level with those insurers and specifically with respect to how if at all it's facilitated a move back away from buy-and-bill to maybe allowing you to be more relying on specialty pharmacy situations?

Lisa Earnhardt -- President and Chief Executive Officer

Yeah. Rich, good questions there and I think it is important to note that some payers have it on formulary, others have a medical policy, some payers have both, where we just want to make sure that patients do you have access regardless of how they are required to access that product. So it's premature to sort of comment on what the split -- what could potentially happen in the future as it relates to potential drive more toward specialty pharmacy, I mean we have seen on the last quarter or two about a 50:50 split between specialty pharmacy and specialty distributor. Even if that is a presence of formulary, even if that is a bit of a tailwind for us having those positive physicians on formulary, we know that buy-and-bill will remain an important part of -- on the launch of the SINUVA and so it still is very much a focus of ours. So, we are excited that patients have access and the fact that we have over 70% of commercial covered lives is a positive, but we do want to make sure that physicians and our sales team are -- and the reimbursement team are all ready to support what's required for both specialty pharmacy and buy-and-bill.

Richard Newitter -- SVB Leerink -- Analyst

And with respect to the buy-and-bill, the data that you are collecting on the actual payment that gets received by doctors, where are you on kind of that cumulative collection of data points and presumably it's positive and building and can you give us any sense as to what the ASP percentage addition is?

Jeryl Hilleman -- Chief Financial Officer

We continue to acquire what are called EOBs, or explanation of benefits, which show the exact payment rates for the physician offices as it relates to buy-and-bill. We feel like we're in a good place. The last number we shared was over 50 EOBs. We continue to collect, but we think that is sufficient and really provides a nice robust library that can be relied upon. So, we think unlikely that we would update the number of EOBs we have moving forward. We view that more as a launch metric and something we would update moving forward. All that said, the payment rates have been coming down pretty consistently to average selling price plus some sort of margin. I don't want to give any specific numbers, but it's obviously up to the physician and their contracted rates what they end up billing, what they end up collecting, but it's been a very appropriate value and something that would be -- provide the right level of reimbursement for them to incorporate this into their practice.

Robert Hopkins -- Bank of America Merrill Lynch -- Analyst

Thanks. And maybe just one on the pipeline, the ASCEND trial for your drug-coated balloon. Lisa, what are the next steps? So, what is the data reads out toward the end of the year? What does that means? Does that mean you will be able to potentially submit to the FDA or that's going to dictate whether you need another trial after that, maybe just help flush out that? Thank you.

Lisa Earnhardt -- President and Chief Executive Officer

Yeah, it could be either one of those things, Rich. So we've -- when we talked about this trial, it's our first randomized trial that we've done with it, we're obviously really excited about the potential of a drug-coated balloon to provide incremental benefit of what's available today. All that said, it is the first randomized trial that's been done in this fashion and so we will have the data by the end of the year and if that's positive that could lead to a submission in 2020 of the ASCEND product. Otherwise, it could cause us to do some additional clinical work. So, we'll certainly look forward to updating you later this year on which path we're in.

Robert Hopkins -- Bank of America Merrill Lynch -- Analyst

Thank you.

Operator

Our next question will come from Matthew O'Brien with Piper Jaffray. Please go ahead.

Matthew OBrien -- Piper Jaffray -- Analyst

Afternoon. Thanks so much for taking the questions. Just continuing following up on all these SINUVA questions. I think you mentioned those 100 clinicians that are buying five or bought at least five SINUVA products at this point, I think it was -- 400 was the last quoted number of docs that were treating patients. Is this just a signal that you're really trying to go deeper within that 400 down to 100 and at the other 300, you're not doing as much business with or are you still continuing to add more and more clinicians and I'm just overreading the statement?

Lisa Earnhardt -- President and Chief Executive Officer

Yeah. So just to clarify, I think we had said at the end of the third quarter call, we had about 400 physicians that had treated at least one SINUVA patient and at the end of the fourth quarter, we had about 500 physicians who had used the product just under. And so as we look at the 100 physicians, those are physicians who have ordered SINUVA at least five times. So, we don't have visibility whether they treated patients or not and how many they treated, but we're really encouraged that with those 100 physicians, they've now started to use not just once but multiple times and are starting to incorporate into a more routine part of their practice.

Matthew OBrien -- Piper Jaffray -- Analyst

Got it. And then as we think about the Q1 guidance, either Jeri or Lisa, it was a little lighter than I was expecting and it kind of signalled the pretty meaningful slowdown in the core business regardless of what SINUVA number that you threw in there on a two-year stack basis and I know it's seasonal and everything else like that, but is there something specifically with the core business you're signaling here in Q1?

Jeryl Hilleman -- Chief Financial Officer

Yeah. I don't know that it's so much signal, you're absolutely right about the seasonality. And if you look at where we were in Q4, it's a guide of around 20% down from Q4, which ties very much to seasonality. And typically as we start the year, we do guide from Q4 to Q1 in line with seasonality. The other factor to note is that, in Q1 of last year, it was the last quarter before our anticipated launch of SINUVA, so both having Contour, we were still in the first year of the Contour launch and all of our sales force really touching base with the doctors before the SINUVA launch. We ended up with a very strong quarter. So it's also a challenging comp, which I think will also move through the year, we'll be back more into an apples and apples type of comparison between the dynamics of the quarter, but between seasonality and between some of the prior year dynamics that really led us to put guidance where we did.

Matthew OBrien -- Piper Jaffray -- Analyst

Got it. And last one for me. Just on the OpEx spend for the year, clearly this is an investment year with all the headcount additions both last year and then this year and then the spend on R&D, but it was -- it is higher than we were expecting, I think some investors were expecting. So this will be another deleveraging year for the company down at the bottom line. So, do we think about that persisting into 2020 and it again being a deleveraging year as you continue these investments or could we start to see revenue growth start to fall in line with OpEx growth?

Jeryl Hilleman -- Chief Financial Officer

Yeah. Now, I think that's the question we can answer better later in the year after we really see the rate and pace of growth at SINUVA and obviously the answer to your question is going to be very dependent on what we anticipate SINUVA will contribute as we go into 2020.

Matthew OBrien -- Piper Jaffray -- Analyst

Fair enough. Thank you.

Operator

Our next question will come from Brian Weinstein of William Blair. Please go ahead.

Andrew Brackmann -- William Blair & Company -- Analyst

Hi, good afternoon. This is actually Andrew Brackmann on for Brian. Maybe just following up on Matt's questions around the seasonality and recognizing you guys don't want to guide specific to base business and SINUVA, but maybe you could add a little bit more granularity on pacing throughout the year, is there anything other besides typical seasonality and the SINUVA ramp that we should be contemplating? Thanks.

Jeryl Hilleman -- Chief Financial Officer

Yeah. I think one of the other factors we talked about with regard to SINUVA, so I won't repeat just what we said to Matt, but we add on to that. As we think about SINUVA, we are excited with the traction we're getting, the question that we raised is also it's the first quarter with resetting of deductibles. So, we'll be learning through that process and we tried to reflect some degree of that as we think about our guidance for Q1.

Andrew Brackmann -- William Blair & Company -- Analyst

Thanks. And then I may have missed this, but did you say the number of sales reps you plan to add in 2019? Thank you.

Lisa Earnhardt -- President and Chief Executive Officer

We did not quantify the number of reps. We think we really lead into a pretty heavily at the latter part of 2018. So while we will have some modest growth it will not be as -- probably as pronounced as last year.

Andrew Brackmann -- William Blair & Company -- Analyst

Thanks.

Operator

(Operator Instructions) Our next question will come from Ravi Misra of Berenberg Capital Markets. Please go ahead.

Ravi Misra -- Berenberg Capital Markets -- Analyst

Hi. Thanks for taking the question. Just one on ENCORE, maybe just around the reimbursement for repeat placement, can you help us understand what the dynamics there? Are there any restrictions around that or zero days? And then with the kind of SINUVA kind of assumptions, if I heard you right and I apologize if I'm wrong, I mean, I'm jumping between calls, it sounds like we should be anticipating ramping sales throughout the quarters of 2019. What kind of pricing assumptions are baked into that? Thanks.

Lisa Earnhardt -- President and Chief Executive Officer

Right. So in terms of the repeat usage, from up here perspective, we have not yet seen that be an issue except for maybe a very small number of payers where they may have put a limiting factor on potentially SINUVA could only be used once a year. I think we only have one major payer that has that stipulation. All the other payers that I'm aware of it, as we mentioned on the call, we have hundreds now of payers that are covering SINUVA really focus that based on the indication statement, i.e. if the patient has polyps, returning within terms that had prior surgery, they potentially could be indicated for SINUVA. And so, we're encouraged by that.

We also will continue to supplement our data with payers and looking at things like the budget intact model and the cost effectiveness of that. And we do know payers, even if they were to treat a patient multiple times throughout the year, it's still a cost effective alternative relative to other options. And so, ENCORE will just be a small piece. That really is, as Jeri mentioned earlier, something to address the dosage section of our labeling where it does mentioned that repeat use hasn't been studied and we think that will be a net positive to have that statement removed.

Your second question was about SINUVA, it is going to be ramping over the course of the year. And on pricing, Jeri, do you want to answer that question?

Jeryl Hilleman -- Chief Financial Officer

Yeah. We ain't -- we don't really anticipate any shifting in the pricing. We has given you some indication of the net pricing, which feeds into revenue of roughly a 1,000 in implant against list price of $12.75. And just to clarify that a little bit, the difference between the list price and what we take in revenue is a combination of fees paid for our channel partners and government-mandated discounts that are available to certain customers.

Ravi Misra -- Berenberg Capital Markets -- Analyst

Great. Thank you very much.'

Operator

Ladies and gentlemen, this will conclude our question-and-answer session. At this time, I'd like to turn the conference back over to Lisa Earnhardt for any closing remarks.

Lisa Earnhardt -- President and Chief Executive Officer

Great. Thank you so much for joining us today. We certainly appreciate your interest and support. Have a wonderful evening. Bye-bye.

Operator

The conference has now concluded. We thank you for attending today's presentation. You may now disconnect your lines.

Duration: 34 minutes

Call participants:

Jeryl Hilleman -- Chief Financial Officer

Lisa Earnhardt -- President and Chief Executive Officer

Allen Gong -- J.P. Morgan -- Analyst

Robert Hopkins -- Bank of America Merrill Lynch -- Analyst

Richard Newitter -- SVB Leerink -- Analyst

Matthew OBrien -- Piper Jaffray -- Analyst

Andrew Brackmann -- William Blair & Company -- Analyst

Ravi Misra -- Berenberg Capital Markets -- Analyst

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