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Dermira (NASDAQ:DERM)
Q1 2019 Earnings Call
May. 07, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good day, ladies and gentlemen, and welcome to the Dermira first-quarter 2019 earnings conference call. [Operator instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's call, Mr. Andrew Guggenhime, chief financial officer.

Sir, you may begin.

Andrew Guggenhime -- Chief Financial Officer

Great. Thank you, operator, and good afternoon, everyone. I'd like to welcome you to Dermira's earnings conference call to discuss the financial results for the quarter ended March 31, 2019. I'm joined today by our chairman and CEO, Tom Wiggans, our chief commercial officer, Lori Lyons-Williams, and our chief development officer, Luis Pena.

Earlier this afternoon, Dermira issued a news release announcing the company's results for the quarter. Copies of news releases and SEC filings can be found in the Investors section of our website. Before we begin, I'd like to remind you that during the course of this conference call, we'll be making certain forward-looking statements about Dermira based on management's current expectations, including statements regarding Dermira's business plans, development programs, strategies, prospects, market opportunities and financial forecasts and guidance. These statements are subject to numerous risks and uncertainties and actual results could vary materially from the results anticipated by these statements.

Investors should read the risk factors set forth in Dermira's Form 10-K for the quarter ended March 31, 2019 and any subsequent reports filed with the SEC. With that said, I'd like to turn the call over to Tom Wiggans. Tom?

Tom Wiggans -- Chairman and Chief Executive Officer

Thanks, Andrew. Good afternoon, everyone, and thank you for joining us. The first quarter represented substantial forward progress for Dermira including notable, commercial and clinical milestones that move us closer to our long-term goal of providing better solutions for the millions of people seeking new treatment options for chronic dermatologic conditions. We are pleased to provide an update on some of the key highlights during this period and share some early insights from the past several weeks, including our progress to date on the QBREXZA launch, our positive lebrikizumab or lebri Phase IIb program and our plans for going forward and the significant progress we made in strengthening our balance sheet.

Before turning the call over to Lori, Luis, and Andrew for more detail on each of these topics, I'd like to share a few of my thoughts with you. First, with respect to QBREXZA, we are officially seven months into the launch, and we continue to be encouraged by our progress as we build the market for the first and only FDA-approved topical prescription treatment for pediatric and adult patients living with primary axillary hyperhidrosis or excessive underarm sweating. As we previously outlined, prior to the launch, we identified several key metrics and objectives across three critical success factors with respect to patient activation, commercial coverage and physician adoption. I'm very proud of our team as they continue to meet or exceed all of those metrics.

They have worked diligently to establish a strong foundation, we believe will support accelerated demand and sales growth throughout the remainder of the year. Now turning to lebri. We continue to be incredibly excited about the potential of this program in the wake of the recent Phase IIb data reported in March. As many of you know, moderate to severe atopic dermatitis or AD is a highly prevalent, chronic and debilitating condition with limited treatment options, representing a large and underserved market.

Although dupilumab has had a high bar, new therapies that are both safe and effective will certainly be needed and prescribed. IL-13 is a central pathogenic mediator that is believed to drive multiple important aspects of AD pathophysiology including skin barrier dysfunction, itch, skin thickening getting an infection. Our approach is to build on the experience in targeting IL-13 with dupi by using a best-in-class IL-13 inhibitor in lebri to deliver a broad efficacy profile covering a range of symptoms that are important to AD patients while at the same time leveraging a class safety profile that has now been established in tens of thousands of patients. When we initiated our lebri AD program, we believe that lebri's unique molecular profile combining very high affinity, a differentiated pharmacokinetic profile and a targeted mechanism of action presented an opportunity to deliver improvements in efficacy, safety and convenience relative to both dupi and other potential competitors in development.

We are pleased that our Phase IIb results supported this thesis and if we are able to achieve similar results in Phase III, we can deliver these improvements. With lebri, we have an opportunity to fully unlock the potential of targeted IL-13 inhibition, putting us in a position to deliver a best in disease therapy to AD patients. We are eager to finalize our plans for the Phase III program and are scheduled to meet with the FDA, mid-year, which will allow us to move quickly into Phase III by the end of the year. Finally in the first quarter, we also continued to take steps to further strengthen our balance sheet through a series of measured and purposefully executing transactions, culminating in our recent equity financing.

With that, I'll turn it over to Lori to provide an update on the QBREXZA and share the commercial team's latest thinking on the lebri opportunity. Lori?

Lori Lyons-Williams -- Chief Commercial Officer

Thanks, Tom. As Tom mentioned in his opening remarks, we continue to be encouraged by the progress we see across our key performance indicators. As we've said, since we launched QBREXZA in October, we've been measuring ourselves by our ability to first activate people living with hyperhidrosis to seek treatment. Second, obtain broad quality payer coverage.

And third, drive growth in physician adoption and prescriptions. We remain pleased with our performance across each of these areas and the fundamentals of our launch are very strong. As it relates to patient activation, encouraging data show that nearly a year after its launch, our multimedia disease state awareness campaign continues to expand awareness of hyperhidrosis and importantly is driving people to seek treatment. Our efforts to-date have resulted in year-over-year growth in the market size for topical hyperhidrosis therapies of approximately 15% showing that we continue to expand what has historically been a flat market in the context of limited treatment options.

Notably in dermatology, which is where our advertising direct people to seek treatment, we are pleased to report 56% growth for the hyperhidrosis market year over year and approximately 85% of all QBREXZA prescriptions are coming from our target audience. As many of you have seen, we recently launched our branded DTC campaign Life Unfolds and we're encouraged by what we've seen so far. Since the launch of the campaign, overall traffic to QBREXZA.com has increased 6-fold, which equates to an average of more than 50,000 unique visitors to the website per week. We've already heard from dermatologists that patients are requesting QBREXZA by name after seeing the commercial.

This name recognition will drive our return on investment and contribute to the therapies long term success. As the campaign rolls out across various television, digital, print and social platform. We expect to see awareness of and demand for QBREXZA to continue to increase throughout the remainder of 2019, putting us in a position to further expand both the overall market and QBREXZA share of it. We also know that our efforts to-date have resulted in approximately 77% of new QBREXZA patients being new to therapy, meaning they had not previously been on a hyperhidrosis prescription in the previous 12 months.

Highlighting our ability to successfully grow the market. We expect our investment to continue to expand the market in the months and years to come. These data confirm we are successfully executing on three very important strategy, we believe are critical components to our investment thesis. No.

1, that we can activate patients to seek treatment. No. 2, that we can expand the hyperhidrosis market and No. 3, that many patients will seek treatment from a dermatologist once they're activated.

Now turning to payer coverage and patient access to QBREXZA, we've made tremendous progress on this front as well, which is contributing to our ongoing success. Our team continues to exceed expectations and approximately 80% of all commercial lives in the U.S. now have QBREXZA coverage. As we previously discussed, our patient savings card program was designed to ensure seamless access to QBREXZA at launch.

The initial program was designed to address any potential gaps, while we work to expand commercial coverage. We always plan to adjust the program and given our early success, we're in a position to do so, earlier than expected. On April 1, we discontinued the $70 card for uninsured and underinsured patients while no new patients have access to the $70 card. The previous participants will be eligible to use the savings card one more time before June 30, while the $35 saving cards program will continue, a maximum savings of $200 per pill has been implemented.

We expected to see a temporary decline in prescriptions filled as a result of these changes and this proved to be the case for April. As prescriptions were down an estimated 10% from the March total. However and as expected in the same period, the gross-to-net or GTN margin improved significantly, such that despite the small decline in prescription volume, we expect April net sales to actually increase over March, establishing a strong foundation for growth in the months to come. For context, an improvement in the GTN margin of roughly 25 percentage points from our Q1 rate would result in a doubling of net sales at any gross sales amount overnight.

In just a few short weeks, we're already seeing the market respond well to these changes. Notably, there is significantly lower utilization of the $70 program. Our early assessment of the Q2 GTN is consistent with the improvements we expected, and most importantly, demand is quickly approaching the weekly levels observed before the changes. These are all encouraging trends that reinforce our confidence in the decision we made to eliminate the costly [ph] portion of our access program, now that coverage is well established.

We expect continued progress over the course of 2019. Physician adoption of QBREXZA is the third element of the launch that we believe is important to our long-term success. There are now more than 8,200 unique prescribers who have written QBREXZA. Of these prescribers, 64% have written more than one prescription and more than a third have written at least four.

When we compare our launch to other dermatology launches, we know that the breadth and depth of writers, sets us up for success. The prescription growth rate for the first quarter was approximately 59% quarter-over-quarter for both Symphony and IQVIA plus our preferred dispensing partner. As we have previously noted, the underlying weekly shipments for our wholesalers generally fall somewhere between the numbers reported by these two external sources. Tying it all back to our three key success factors for QBREXZA launch.

No. 1, we are activating people living with hyperhidrosis to seek treatment. Remember that 77% of new QBREXZA patients are new to therapy and in dermatology, the historically flat hyperhidrosis market has grown to 56% year over year. No.

2, we've obtained broad quality payer coverage faster than anticipated, 80% of all commercial lives in the U.S. currently have QBREXZA coverage. And No. 3, we're driving growth and physician adoption and prescription.

There are 8,200 unique QBREXZA prescribers and the prescription growth rate for the first quarter was 59%. We're incredibly encouraged by the progress to-date meeting or exceeding key metrics for the launch, which confirms our belief that QBREXZA represents a $500 million to $600 million peak year sales opportunity. Before I turn the call over to Luis, I want to take just a few moments to offer my perspective on the commercial opportunity for lebri. The robust commercial assessment we performed based on the top line results from the Phase IIb study, quantitatively validates our belief that lebri could be a best in disease therapy in a market that's widely anticipated to become the largest in dermatology.

To underscore how we see it, I'd ask you to consider the following five points. No. 1, much like Enbrel transformed a stagnant market for oral -- oral immunosuppressants and psoriasis more than 15 years ago, dupi have started that same transformation in AD. In psoriasis, substantial unmet need remained after Enbrel, and the same is true for AD after dupi.

It's widely believed, the U.S. AD market will exceed $50 billion [ph] by 2025, driven in large part by new potential entrants including lebri. No. 2, it's our belief that dupi has set the bar high in terms of safety.

We expect lebri to offer comparable and perhaps even better safety profile which cannot be assumed for many other investigational therapies with targets further upstream. For example, when approved in other indications, JAK inhibitor carry black box warning for serious safety risks, lab monitoring requirements and a potential risk for birth defects. Our research indicates this dynamic specifically in AD will likely lead to the IL-13 class being utilized first line positioning lebri as a foundational therapy and relegating the upstream mechanisms to second and third line use. No.

3, as observed in psoriasis, efficacy expectations will similarly continue to rise as new products enter the AD market. Based on our Phase IIb data and specifically considering the exciting results for lebri in itch as well as the robust data in the most stringent endpoints like EASI-90 and IGA clear or almost clear, we see a great opportunity to differentiate lebri on efficacy relative to competitors including dupi. This efficacy profile if confirmed in Phase III makes lebri hugely compelling which physicians indicate will drive significant market share. No.

4, we know that clinicians find conjunctivitis to be the most challenging AE to manage with dupi, and patients often require a referral to an ophthalmologist for treatment. Our Phase IIb results showed extremely low conjunctivitis rates overall at approximately 3%, which is similar to the rates reported in patients receiving placebo in many AD studies. By comparison, the real world data is showing conjunctivitis rates for dupi reported in up to a third of patients. In a market where no real alternative exists, many patients opt to remain on dupi and physicians continue to prescribe.

However, when otherwise safe and effective products are launched with lower conjunctivitis rates, our research indicates another competitive advantage for lebri is likely to emerge. And finally No. 5, given our ability to safely maintain high target coverage for extended periods of time via the combination of lebri targeted mechanism, very high affinity, an approximately 4 week half-life and as clinically validated in the Q4-week data in Phase IIb. We see a great opportunity to deliver less frequent dosing.

In a chronically managed condition, patients certainly prefer the convenience of less frequent dosing and this potential advantage may further differentiate lebri relative to other products that are not likely to deliver the same profile. It goes without saying, that we're eager to get the Phase III program under way to confirm these promising results. With that, I will turn the call over to Luis to provide an update on next steps for the lebri program and a brief overview of some of the other opportunities we're considering for QBREXZA, lebri and our early stage pipeline. Luis?

Luis Pena -- Chief Development Officer

Thanks, Lori. As Lori mentioned, as we continue to analyze the Phase IIb data over the past few weeks, we remain impressed by the performance of lebri in patients with atopic dermatitis. Before I share our current thinking regarding next steps with the program. Let me briefly review the key findings from the Phase IIb study.

First, all three doses of lebri evaluated in the study met the primary endpoint with statistical significance. Second, we observed the dose response across all efficacy endpoints with the best response observed in the highest-dose treatment group. While both the 250 milligram Q2 week and Q4 week regimens are attractive doses. The Q2 week dose performed the best across all endpoints.

Third, lebri was well tolerated and adverse events were primarily mild or moderate and infrequently led to treatment discontinuation, consistent with our expectations based on previous studies evaluating lebri. Notably rates of conjunctivitis and infections were particularly low. Finally, these data confirm our belief that IL-13 plays a central role in driving multiple aspects of AD pathophysiology and selectively targeting IL-13 with lebri may be the best approach to safety and effectively treat the range of AD symptoms including skin manifestations and itch. The findings of this study, along with the substantial body of clinical and non-clinical data further support our belief that lebri has the potential to be a best in disease therapy in AD offering a compelling combination of safety, efficacy, tolerability, convenience and ease of use that is differentiated from dupi and other therapies in development.

As we prepare for the Phase III development program, we are currently considering a trial design that would evaluate lebri in patients 12 years and older. Our current thinking is that the program would include two pivotal trials that would evaluate a 250 milligram dose of lebri every two weeks in the 16 week induction phase following the loading dose and then have the flexibility to study every four-week dosing in the maintenance phase. Based on our experience with other biologic programs. We believe this design could enable us to deliver a convenient once-monthly maintenance treatment regimen.

We have an end of Phase II meeting with the FDA scheduled for mid-year and following the agency's feedback, we plan to move rapidly to initiate a Phase III development program. We expect to report top line results in the first half of 2021, if we initiate the program by the end of the year as planned. Before I turn it over to Andrew, I just want to take a few moments to provide you with an update on some program expansion opportunities we are considering for lebri and QBREXZA as well as a brief update on our early stage pipeline. With regard to lebri, we are laser focused on rapidly initiating AD Phase III program.

That said, as the best in class IL-13 inhibitor, it is certainly possible though lebri may have compelling applications in other dermatologic and non-dermatologic conditions. A view shared by many of our advisors. We are carefully evaluating these opportunities. With respect to QBREXZA, we continue to hear that there is a need for people suffering from excessive sweating and other parts of the body.

We also know that there is interest in alternative delivery forms for our QBREXZA like therapy that offers improved efficacy and greater convenience. In keeping with our commitment to the hyperhidrosis patient community, we will take a thoughtful look at these opportunities to determine if there is a path forward. I also want to quickly share that we have been diligently working to advance multiple early stage programs in our pipeline. We are excited about the potential for these programs and look forward to sharing more information with you, later this year.

With that, I will turn it over to Andrew to discuss our financials. Andrew?

Andrew Guggenhime -- Chief Financial Officer

Great. Thanks, Luis. I'll be covering three main topics today. First, the key aspects of our financial results for the first quarter of 2019.

Second, our balance sheet strength and cash runway outlook. And third, our financial guidance for the year. Revenue in the first quarter totaled $2.5 million comprised solely of QBREXZA product sales. As Lori noted, QBREXZA prescriptions were up by more than 50% sequentially from the 2018 fourth quarter.

Our investments in our finance -- patient financial assistance program created a temporary disconnect between revenue and prescription growth during the Q1 period. In the first quarter, the GTN discount applicable to QBREXZA sales was 76% with the largest component of the discount continuing to be our investments in the co-pay assistance program. We saw an increase in the GTN discount from 2018 levels for two reasons. First, we continue to see significant use of the $70 program.

And second, the average cost to us of the $35 program increased due to the resetting of deductibles at the beginning of the year. With the co-pay program changes we have now made, we are seeing revenue per script levels to begin to normalize and track more closely to prescription growth trends. As of April 1, we saw an immediate and significant improvement in the GTN discount, which I'll touch upon when I get to our financial guidance. Total costs and operating expenses for Q1 2019 were $65.2 million compared to $57.2 million in the same period of the prior year with an increase in SG&A expenses in connection with the launch of QBREXZA more than offsetting a reduction in R&D expenses .Relative to the fourth quarter of 2018, total costs and expenses in the first quarter of 2019 actually decreased by $7.6 million.

Turning now to the balance sheet and cash runway. During the past five months, we have taken a number of steps to strengthen our balance sheet and improve our financial flexibility in what we believe has been a shareholder-friendly manner, taking into consideration the cost, dilution and strategic impact of such initiatives. Over this period, we completed four transactions, our structured financing facility, the Almirall agreement, the Roche Agreement amendment and most recently, the equity financing. In aggregate, these transactions could ultimately provide us with access to up to approximately $440 million.

As we have reduced our near-term cash requirements by approximately $65 million, raised $205 million and may receive for have access to up to an additional $170 million. Based on these transactions, we believe, we are in a position to fund our operations into the first half of 2021 and importantly through the expected top line data readout from our lebri Phase III program. Lastly, turning to our financial guidance for the year. For QBREXZA, we are not providing sales guidance.

As we have previously mentioned, we expect quarter-to-quarter prescription growth over the course of the year and we expect this growth to accelerate in the second half of the year, based primarily on the expected effects of our branded DTC campaign. For GTN, as I mentioned earlier, we already have seen a market improvement in the four weeks since the co-pay program changes went into effect and expect the GTN discount to improve from 76% in Q1 to a range of 45% to 55% in Q2. You may ask, why we're confident we can achieve these improvements. It's because based on the actual data over the four week since the program changes became effective, we are already at these levels, largely due to a dramatic drop in the utilization of the $70 program.

As Lori stated earlier, this has resulted in an immediate improvement to our revenue per script such that at the midpoint of our Q2 GTN discount estimate as compared to Q1, net sales doubles at a comparable gross sales amount. We expect the discount to further improve in the second half of the year to approximately 40%. The expected increase in net revenue per unit due to this improvement in GTN would result in net product sales growth that outpaces the expected growth in demand. For QBREXZA gross margins, we expect to reach pharma like levels in the 80s [ph] in the second half of this year.

Moving to collaboration and license revenue, we expect to be accounting for the $30 million option payment we received in Q1 will depend on Almirall's upcoming decision to exercise its option to license lebri in Europe, a decision which we expect mid-year. For operating expenses, we expect GAAP, R&D and SG&A expenses for 2019 of approximately $295 million to $315 million including approximately $35 million in estimated stock-based compensation. The estimated increase in 2019 R&D and SG&A expenses compared to 2018 is primarily due to an increase in R&D expenses to prepare for and initiate the lebri Phase III program as well as the annualization of SG&A expenses incurred in 2018 related to the QBREXZA launch. I would note that we expect full-year 2019 SG&A expenses to be essentially flat to Q4 2018 annualized levels.

With respect to the expected mix between R&D and SG&A expenses and quarterly trends over the course of the year. Please refer to the disclosures in the Form 8-K filed today. I will note that we expect the peak expense quarter for the year to be Q2 due to the QBREXZA DTC campaign. In addition to these estimated R&D and SG&A expenses, we expect an additional $20 million acquired in-process research and development expense related to the anticipated milestone payment due Roche upon the initiation of our lebri Phase III trials, which would be recognized in the period in which the milestone is owed.

With that, I'll turn the call back over to Tom for some brief closing remarks. Tom?

Tom Wiggans -- Chairman and Chief Executive Officer

Great. Thanks, Andrew. To summarize, it was a strong first quarter for the company and we're excited about the months ahead. Our focus will be on accelerating the growth for QBREXZA, working quickly to initiate a lebri Phase III development program and continuing to enhance our financial flexibility, which will be key to our ability to deliver on our commitment to provide important new treatments to the millions of people living with chronic dermatologic conditions.

And with that, I'd like to now open up the line to questions. Operator, please do so.

Questions & Answers:


Operator

Thank you. [Operator instructions] Our first question comes from Louise Chen from Cantor. Your line is open.

Louise Chen -- Cantor Fitzgerald -- Analyst

Hi, thanks for taking my questions here. I had a few. My first question is on the Almirall collaboration, have you sent them the data package yet. And then second question is just on the atopic dermatitis space, lot of competitors here.

So how do you expect to differentiate lebri in order to gain share, does first to market matter. And then, what kind of data do you think you'll need to see in the Phase III studies to be confident in the going forward opportunity for this product. And then last question I had here was just, are there any synergies or efficiencies that we -- can we gain through the sales force for hyperhidrosis and for AD if lebri is approved and launched and then how many sales reps will be necessary to launch lebri. If you get that approved.

Thank you.

Tom Wiggans -- Chairman and Chief Executive Officer

Hi, Louise, it's Tom. Let me start. I'll see if I can remember all of the questions, I probably can't. With regard to Almirall, we have said that we expect their decision by mid-year.

So that is, that's where that stands. With regard to differentiating lebri in the market. I mean, the short answer is , we would like to see the same results in Phase III that we saw in Phase II. The safety, efficacy, we believe are highly competitive and potentially would represent a best in disease therapy.

So that's the short answer to what we're looking for in the Phase III trial. With regard to how can we be competitive in the market. I think you're absolutely right, we see significant synergies between what we're doing now and the ability to be successful with lebrikizumab. We have a great product development team, supply chain manufacturing team that coordinates our supply chain and manufacturing and of course, I think the commercial team we put in place is highly competitive and so the short answer to your question on synergies is across all elements of the business as we direct our activities at medical dermatology and dermatologists, there's high synergy across all aspects of the business.

So Andrew, do you want to add anything?

Andrew Guggenhime -- Chief Financial Officer

No, well said.

Louise Chen -- Cantor Fitzgerald -- Analyst

OK. Thank you.

Tom Wiggans -- Chairman and Chief Executive Officer

Louise, did I miss anything?

Louise Chen -- Cantor Fitzgerald -- Analyst

No. I think that answers all the questions. Thank you very much.

Operator

Our next question comes from Umer Raffat of Evercore. Your line is open.

Umer Raffat -- Evercore ISI -- Analsyt

Hi guys, thanks for taking my question. I've been thinking about your plans for Phase III on lebrikizumab. And my question really is, I know you mentioned a 12-week period where it will be dupi like dosing for every two weeks. And my question really is why take the competitive advantage away from -- from new starts on lebri especially at the get-go.

And perhaps you can address that with the data point on current average duration being observed on dupi and atopic dermatitis.

Tom Wiggans -- Chairman and Chief Executive Officer

Well, Umer, let me start. When you said 12 weeks. I think you mean 16 weeks in the induction phase. And could you ask your question again about the advantage of getting alerts.

Umer Raffat -- Evercore ISI -- Analsyt

So I basically, so if I'm a new start. Right. My point is like if I'm a new start. The true benefit of dosing profile doesn't kick in for three months to four months.

And I guess that was my question, presumably the trial could be structured where, a patient could have an option of starting relatively on a monthly like regimen from the get-go. Is that not a possibility and why, maybe -- could -- you could speak to the average duration we are observing on dupi and atopic dermatitis currently.

Tom Wiggans -- Chairman and Chief Executive Officer

OK, thank you for that clarification. Let me make a couple of comments. And then I'll turn it over to Lori. I think as we indicated, as we went into the Phase IIb trial based on previous experience with biologics in the scan, we felt a loading dose was important and a loading dose has the potential to get patients up the efficacy curve very quickly and even though 16 weeks at the primary endpoint in both Phase IIb trial and those data will be presented in due time.

So as the Phase III trial, we will be measuring and looking for how fast is the onset of action and certainly that will be an area where we think we can be very competitive. So that's really the basis of the trial. The endpoints before the primary endpoint. And I will have Lori add to it, because obviously the team has done a great deal of market research to really find out what is going to differentiate this product in the market.

Lori Lyons-Williams -- Chief Commercial Officer

Thanks. Yes, Umer, I think that our research and even conversations with key opinion leaders as recently as this weekend indicates that the trial design very likely could allow us to capitalize on those potential benefits of increased efficacy with lebri, as well as an improved dosing profile. So by that I mean you know as Tom said, as we deliver the loading doses, as we go Q2 week in that induction phase, it allows us to get up that curve more quickly and frankly, we believe it's going to maximize the amount of efficacy you see longer term on the product as well. And our research really indicates that you want to maximize for efficacy first, right, so we want to do everything we can to create the most efficacious profile and then it is also a huge benefit to go to longer-term improve dosing profile.

So that -- our research would indicate that, that benefit really is seen over the course of time, because as you know, these patients are chronically managed and they don't really want to take an injection as frequently over time if they don't have to. But we don't see it as giving up that benefit. We actually see it as maximizing both potential benefits.

Umer Raffat -- Evercore ISI -- Analsyt

Got it. And if I may just one for Andrew as well. Andrew, where do you see the open profile for the company heading. This is a question, I feel that comes up often in investor conversations, but not really on these earnings calls.

And my question is not really on R&D because it's, it's obvious that the lebri is heading Phase III. So that's good news that there's more R&D to be spent, but more so on SG&A, where do you see these spending patterns on SG&A shaking out beyond '19. Should we expect this to be a plateau of sorts now?

Andrew Guggenhime -- Chief Financial Officer

Yes, Umer, good question. I wouldn't, I wouldn't know that I'd say, it's a plateau, but as indicated, the guidance we've given for 2019 is effectively flat to the Q4 run rate in terms of SG&A expenses. Not withstanding any increase in the advertising and promotional efforts, as we've talked about for both the branded and unbranded effort. So we see that as a -- as we look forward, a pretty good estimate for future years.

I mean, I think, there will be a point from a commercial perspective where we may be in a position to do less branded work, but I think over the next couple of years, I think, it's a pretty good reflection. And we wouldn't expect to market increase or decrease in the run rate.

Umer Raffat -- Evercore ISI -- Analsyt

Thank you very much.

Operator

Your next question comes from Stacy Ku from Cowen and Company. Your line is open.

Stacy Ku -- Cowen and Company -- Analyst

Hi, good afternoon. Congratulations on the progress. And thank you for taking my questions. I have a few.

First, regarding QBREXZA, could you give us any current metrics on refill rates and persistence. And also could you give us additional details for ending the patient financial assistance program, were there any other milestones met beyond the 80% managed care coverage? And I'll follow up with one on lebri.

Lori Lyons-Williams -- Chief Commercial Officer

Hi, Stacy. This is Lori. So I'll start first with the refill question. So based on the data we have to date.

Admittedly, at six months of data, we. We would -- we remain confident in the previous statements we've made on refill. So you'll remember that to get to our $500 million to $600 million peak year sales opportunity. We made an assumption of three refills per year and there is nothing in the data so far that would make us change that assumption.

As we get further into the launch, maybe as we get through the remainder of this year. If there is any favorability to pickup there, we would probably know by that point, but so far I think the data is consistent with what we would have expected. And then on the second piece, I think there are few things that drove our decision to make the changes in the co-pay card. The first one and it's fundamental and you already mentioned it is the 80% coverage.

We would not have been in a position to make these changes this soon, had we not overdelivered on that performance. And so that first and foremost, but I would also highlight the experience that physicians and patients are having on the product. I think, it's in my experience and launches that you want physicians and patients to have good clean access to the product when you're launching because you want them to be able to trial the product and form their own opinion. The clinical data are great, but they really want to get their hands on it to see how it works in their experience and just anecdotally, we've heard from a physician even as recently as the last week or so who because of the experience that he had using the trial or using QBREXZA in early patients, he's now really willing to go through the stages that he needs to go through to make sure that his patients get the prior authorization approved and can get access to the product.

So I think, we wanted to make sure that the -- that physician and patient experience was well established and the fact that we now have 8,200 unique prescribers makes me confident that that's happened. So it's all these, leading indicators that put you in a position to make these changes first and then importantly to pivot to the opportunity for growth by turning on the branded DTC campaign. So that's really what's going to allow us to maximize our growth as we get through the rest of the year.

Stacy Ku -- Cowen and Company -- Analyst

OK. Perfect. And then, just two questions on lebri. What would be needed in between the end of Phase II meeting and the initiation of the Phase III program by year end.

And also, would you be able to disclose at which upcoming dermatology meeting any additional or secondary lebri data might be released. Thanks.

Luis Pena -- Chief Development Officer

Hi, this is Luis. So yes, so at the end of Phase II meeting and year after that, it will be finalizing the protocol based on their feedback and then operationally, making all the submissions and getting the drug ready to move into multiple countries that we plan to conduct the studies, both in the U.S. and abroad. And as we mentioned earlier, we'll do that as quickly as possible.

And the second question.

Andrew Guggenhime -- Chief Financial Officer

Data presentation.

Louise Chen -- Cantor Fitzgerald -- Analyst

Yes. And then in terms of data presentation, we will be definitely presenting at one of the major medical meetings in the fall. And in addition, are quickly moving to make sure that the Phase IIb data is published.

Stacy Ku -- Cowen and Company -- Analyst

OK. Thank you.

Tom Wiggans -- Chairman and Chief Executive Officer

Thanks.

Operator

Our next question comes from Seamus Fernandez from Guggenheim Securities. Your line is open.

Unknown speaker

Hi, this is Esther filling in for Seamus. Just a couple of questions for me. So the first. So we have about three data points in terms of IQVIA prescription volume since the termination of the program.

I just wanted to know the termination of the program. And so, wanted to know whether or not sort of QBREXZA performance for the -- for those three or four data points, if this is tracking along with your expectations for the balance of the year from a volume growth perspective. And then the other question on lebri, sort of as you review other potential opportunities for lebri -- lebrikizumab, I just wondered if there were any indications that that sort of stand out to you relative to the basket of autoimmune disease indications that you could potentially pursue. Thanks.

Lori Lyons-Williams -- Chief Commercial Officer

Hi, Asther, this is Lori, I'm going to start and then I'll turn it over to Luis for the questions on lebri. So yes, to your point on the IQVIA volume. What we've seen in the data in the weeks since we made the changes. I would say is at least meeting our expectations and really only exceeding them a little bit.

What we have seen as a reminder, is that if you look at the April data over the March data. It's about a 10% decline in the volume of prescription and as we talked to you about prior to the changes, we did expect some of that bumpiness. But we're already starting to see in the most recent weeks of data that we're kind of getting back up into that 80% to 90% range of where we were before the changes were made and we feel good about the trajectory that we've put ourselves on. When we connect that to the overnight improvement in gross to net, certainly, from a total net sales perspective, we're really confident in the decisions that we've made.

So I think that the dynamic that setting up really puts us in a position where we say, all the fundamentals are really healthy and now it's time to just accelerate growth with DTC. So with that, I'll turn it over to Luis for the lebri question.

Luis Pena -- Chief Development Officer

Thanks, Lori. Yes, I mean I think first and foremost, I want to make it clear that our key priority and especially near-term priority is atopic dermatitis. I mean this is a major opportunities, healthy return focus in and we will continue to push that as soon as possible. That said, we're quite compelled obviously by the data especially with the data with higher doses that we use in lebrikizumab.

So we think these performed quite well as well as our advisors and so we believe and our advisors believe that there may be multiple opportunities for lebri both in dermatologic and non dermatologic indications. And so we will definitely closely evaluate that now at the right time then give more guidance in terms of what are the next indications that we will proceed with.

Unknown speaker

Great. Thank you.

Lori Lyons-Williams -- Chief Commercial Officer

Thank you.

Operator

Our next question comes from Serge Belanger from Needham & Company. Your line is open.

Serge Belanger -- Needham and Company -- Analyst

Hi, good afternoon. A couple of questions on QBREXZA, first. Can you discuss where inventory levels were at the end of 1Q and then Lori, you mentioned in terms of the volume in QBREXZA scripts, 77% of them were for well new brand. The other 23% are these patients stepping through other products to access QBREXZA?

Andrew Guggenhime -- Chief Financial Officer

Great. Serge, this is Andrew. I'll take the first question and turn it over to Lori. With respect to inventory levels, I think where we ended Q1 was really at a steady state days on hand level that you'll see persist over the course of the coming quarters.

There was no significant impact that inventory levels had on the end of Q1. In fact, I would say if anything, it had a slightly detrimental effect, as you recall, we had to drop into the channel product at the end of Q3 to support sales in Q4 and Q1, and we kind of work through that initial Channel Load such that we expect days on hand to be consistent in future quarters with what we saw at the end of the first.

Lori Lyons-Williams -- Chief Commercial Officer

Yes. And Serge, hi, this is Lori. On the 77% new to brand, the 23% that are in the other category, really hedges to then on another therapy in the previous 12 months of history. So what that means, I think and at least what we take from it is to say, you have a small percentage of the patients who were probably already there and actively seeking care and getting a prescription treatment and for the most part, Serge, that's topical aluminum chloride.

If you look at those data more closely, what we think is exciting about the 77% is that we believe that is one of the many indicators we're seeing that says, DSA really is working, and it's driving new people into the market, it's apt, it's driving them to ask for new therapies. We know that the total market in derm is up 56% year over year and that's been a flat market for a long time. So I think, it's a 56% year-over-year growth of the total market and then the fact that 77% of our patients have not had something else in the previous 12 month, look back, that really gives us confidence that the investment we're making in this direct-to-consumer advertising is actually turning out with what we need, which is them seeking treatment and hopefully, getting prescription. So hopefully, that answers the question.

Serge Belanger -- Needham and Company -- Analyst

Yes. And then just a follow-up on the prior question regarding lebri's potential extension to other indications. Are you looking at those as potential licensing collaboration opportunities? Or is there some, or is that -- or is there, plans, maybe to conduct proof-of-concept studies for these potential indications?

Tom Wiggans -- Chairman and Chief Executive Officer

Yes, Serge. As Luis indicated, our focus right now is moving AD as fast as possible. Although at the same time, we will be continuing both other indications as well as potential partners or structures to move those indications forward. So I think the short answer to your question is nothing is off the table right now, but the focus is clearly moving lebri into the Phase III trial by the end of the year.

Serge Belanger -- Needham and Company -- Analyst

OK. Thank you.

Operator

[Operator instructions] Our next question comes from Pasha Sarraf from Leerink. Your line is open.

Mike Kratky -- SVB Leerink -- Analyst

Yes. Hi, everyone. This Mike on for Pasha. Thanks for taking my call.

So regarding the Phase III lebrikizumab study. How are you thinking about the selection criteria for who would be moved to less frequent dosing?

Luis Pena -- Chief Development Officer

So, so it would be all the responders would be from the induction phase would move into a maintenance phase and be moved to less frequent dosing throughout the maintenance phase.

Mike Kratky -- SVB Leerink -- Analyst

OK. That's very helpful. And I guess...

Tom Wiggans -- Chairman and Chief Executive Officer

I think your question might be when you move into the maintenance phase after their rerandomized into one of two treatment regimens for how do you determine whether they should be rerandomized if they are non-responder?

Luis Pena -- Chief Development Officer

So that's what your -- is that, was that the question?

Mike Kratky -- SVB Leerink -- Analyst

Yes, yes. That'd be helpful to -- to hear about.

Luis Pena -- Chief Development Officer

OK. So they would be randomized into the maintenance arm and then we would have a certain threshold that if they drop below that threshold then they would move into the more frequent dosing arm.

Mike Kratky -- SVB Leerink -- Analyst

OK. Got it.

Tom Wiggans -- Chairman and Chief Executive Officer

Mike, in connection with our discussions and end of Phase II. I think once we disclose the specifics of the Phase III program, we'd be sharing how that randomization works and the thresholds that would dictate whether somebody stays in a particular arm or drops to another. So the details are forthcoming once we finalize and have the end of Phase II meeting.

Luis Pena -- Chief Development Officer

Yes. And that's key. I mean, we always work closely with agencies, so we allow them to have the ability to weigh-in and partner with us in terms of what they want to see going forward.

Mike Kratky -- SVB Leerink -- Analyst

OK. Appreciate the clarity there. And then just as a follow-up there, how would you kind of quantify the advantage of the different dosing regimens. In terms of not lebri yet but companies that you know that are currently implementing this kind of strategy today.

Lori Lyons-Williams -- Chief Commercial Officer

Currently implementing the strategy of less frequent dosing. Is that what you mean?

Mike Kratky -- SVB Leerink -- Analyst

Yes. So specifically within the autoimmune space. If there are any examples, what kind of advantages that have, whether it would be on market share or a company's advantage there.

Lori Lyons-Williams -- Chief Commercial Officer

Yes. Our research really indicates that the most beneficial part of the profile is maximizing efficacy into -- to as high as you can. And so, I think that's really why we feel excited by the Phase IIb work that we've seen because if we're able to duplicate that in Phase III, we do, see that a way in which we'll be able to differentiate on some of the more stringent efficacy endpoint. So I think that's kind of priority No.

1. And then our research does support and this isn't a large quantitative study, as well as backed up from key opinion leader conversations that patients do want to use therapies, less frequently over time. And so we think that's really an advantage that lebri may offer that's unlike the other products that are either approved or being studied. And so the advantage we think is just that as these patients down their therapy for long courses of time, that they are likely to prefer the one, all things being equal, that they have to take less frequently.

I think that if you look, it's hard to draw maybe perfect parallels, but if you look at the Eylea market as an example, I mean there are things that are used less frequently, that if they are basically the same efficacy profile, the ones that are used less frequently tend to be the ones that are more utilized and so I think there are number of examples like that and then that's just validated from our own research as well. So hopefully that answers the question, Mike.

Mike Kratky -- SVB Leerink -- Analyst

That's perfect. Thank you very much.

Operator

Our next question comes from Elliot Wilbur from Raymond James, your line is open.

Elliot Wilbur -- Raymond James -- Analyst

Thank you. Good afternoon. First question, you mentioned earlier potential exploration of franchise extension strategies around QBREXZA and I'm just wondering based on either physician or patient feedback sort of what are some of the attributes that you think you can improve on based on that feedback, is it maybe more related to some sort of enhanced delivery system or a potentially -- a more favorable application system. Just any thoughts you could share with us beyond kind of what you already stated.

And then for Tom, obviously, the lebri data is still relatively fresh in hand. But what would you characterize is sort of the gating factor in terms of thinking about potentially bringing in another compound, another development program maybe in areas more associated with traditional derm where there's a lot of vacancies. And you still have attractive assets, low risk at relatively low valuation, is it more tied to progress in the lebri Phase III program or getting to a certain point with QBREXZA revenue where you're comfortable that the momentum there is sustainable and you could focus on another asset. Thanks.

Tom Wiggans -- Chairman and Chief Executive Officer

Hi, Elliot. Thanks for the questions. Let me, let me take both of them and then Lori can follow-up or Luis can follow-up. With regard to franchise extension, you hit on what we would be looking at.

Obviously, we've announced that we're doing a proof of concept study for palmar, which we think is important to learn more about both from a company standpoint, from a patient standpoint. But alternate ways to deliver it are also things that we're looking into. So those are relatively low-cost opportunities to extend the franchise and build in potential enhancements to the product profile that patients would find attractive. So that's the answer to the franchise extension.

With regard to another compound, again, you kind of summarized it yourself. I mean, we are focused on QBREXZA launch. We think that's very strong asset that needs our attention for the foreseeable future. Lebri is a very exciting asset, we will continue to focus on those.

At the same time, we do, we are constantly looking for other assets to bring into the portfolio. So that has been the business model since the company was started, we will continue to do that. Yes. The focus is on continuing to build our two core assets, at the same time, again, we constantly scan the horizon and we would, we would look for the opportunity to bring another commercial product into the bag at some point and leverage our very effective commercial organization.

And certainly, I think our expertise in product development and medical dermatology is very, very good and we're always happy to look at things to bring in and leverage that capability. That answer your question.

Elliot Wilbur -- Raymond James -- Analyst

Yes. Thank you, Tom. Appreciate it.

Tom Wiggans -- Chairman and Chief Executive Officer

OK. Elliot. Thanks a lot.

Operator

Our final question comes from Douglas Tsao from H.C. Wainwright. Your line is open.

Douglas Tsao -- H.C. Wainwright and Company -- Analyst

Hi. Good afternoon. Thanks for taking the questions. Just really quickly, Lori.

On the managed care of the coverage of -- for the product, you've obviously, sort of hit your initial target of 80%. There are several large plans that you sort of put six months holds on products right after launch and we're obviously now past six months into the commercialization. Do you see an opportunity to sort of get that coverage rate up a little bit more? And how -- how much of a priority is it for the company? Or do you sort of feel where you're in a really good spot.

Lori Lyons-Williams -- Chief Commercial Officer

Thanks, Doug. I appreciate the question. I would say on the answer to that question is both. We are really proud of the 80% and specifically proud that we reached 80% so quickly.

And we do think that that has put us in a position to make some of the decisions that we've made and really accelerate our growth through the back part of the year. Having said that, we're not settling for 80% either. And we have a plan in place that's currently being executed. Our goal would be to get to at least 90% of all commercial lives coverage -- covered.

And so I think we have a plan in place that will allow us to do that. I would say that for the large plans, it's really a good story there. In so far as all of the major PBMs and payers, with the exception of one has already elected to cover QBREXZA and frankly in a market that's not mature and not well established. We think that's a really big accomplishment.

Of course, the one that has not picked up coverage yet, we are very focused on to try to -- to try to change that. And then there are number of smaller more regional players that will also add coverage over the course of the next six months to nine months. So I'd say, right on track. And frankly, ahead of track and then we'd like to get that number up above 90% as we get to steady state.

Douglas Tsao -- H.C. Wainwright and Company -- Analyst

And Lori, just one quick follow-up, in terms of that 90%, I mean, do you have a sort of timeframe that you're thinking about for that target?

Lori Lyons-Williams -- Chief Commercial Officer

Yes, what we've said is that we expect to get to that by early next year. And so that would still be our goal.

Douglas Tsao -- H.C. Wainwright and Company -- Analyst

OK. Great. Thanks.

Tom Wiggans -- Chairman and Chief Executive Officer

Thanks, Doug. Let me just add to that, because you know we've talked about Lori's team's efforts in getting the coverage and in transitioning from the $70 co-pay plan to another one, and I said in my opening remarks, we were proud of them. They've done an outstanding job to get to 80% for this product. I think, it's been a great accomplishment for them and frankly, when we determine that was time to end the $70 co-pay program, they prepared for that.

That was an overnight one day, you could get it. And the next day, you couldn't. And I think, we were anticipating all of the potential outcomes but the transition has been very smooth. As Andrew alluded to, that is an overnight change in gross to net.

And the fact that we saw a small dip in prescription. That is coming back. With that change in gross to net. I think, it's been a very significant accomplishment in a very short time.

Operator

I'm showing no further questions at this time. I would like to turn call back over to Andrew Guggenhime for closing remarks.

Andrew Guggenhime -- Chief Financial Officer

Great, thanks everyone for joining us this afternoon, management is available over the coming hours and day to follow-up on this call and we look forward to engaging with you in the weeks and months ahead. Thanks for your time. Bye-bye.

Operator

[Operator signoff]

Duration: 56 minutes

Call participants:

Andrew Guggenhime -- Chief Financial Officer

Tom Wiggans -- Chairman and Chief Executive Officer

Lori Lyons-Williams -- Chief Commercial Officer

Luis Pena -- Chief Development Officer

Louise Chen -- Cantor Fitzgerald -- Analyst

Umer Raffat -- Evercore ISI -- Analsyt

Stacy Ku -- Cowen and Company -- Analyst

Luis Pea -- Chief Development Officer

Unknown speaker

Serge Belanger -- Needham and Company -- Analyst

Mike Kratky -- SVB Leerink -- Analyst

Elliot Wilbur -- Raymond James -- Analyst

Douglas Tsao -- H.C. Wainwright and Company -- Analyst

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