BioDelivery Sciences International, Inc. (BDSI) Q2 2019 Earnings Call Transcript

BioDelivery Services International, Inc. (BDSI)
Q2 2019 Earnings Call
August 8, 2019, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day and welcome to the BioDelivery Sciences second quarter 2019 financial results call. Today's conference is being recorded. At this time, I would like to turn the conference over to Terry Coelho, Chief Financial Officer. Please go ahead.

Terry Coelho -- Chief Financial Officer 

Thank you and good afternoon, everyone. Welcome to our second quarter 2019 earnings conference call. Leading the call today is Herm Cukier, Chief Executive Officer. We are joined by Scott Plesha, President and Chief Commercial Officer. Following our prepared remarks, we will conduct a question and answer session. Earlier today, BioDelivery Sciences issued a press release announcing its financial results for the second quarter 2019. A copy of the release can be found on the investor relations page of the company's website.

Before we begin, I would like to remind everyone that certain statements may be made during this call which may contain forward-looking statements. Such forward-looking statements are based upon current expectations and there can be no assurances that the results contemplated in these statements will be realized.

Actual results may differ materially from such statements due to a number of factors and risks, some of which are identified in our press release in our annual quarterly and other reports filed with the SEC. These forward-looking statements are based on information available to BDSI today, August 8th, 2019 and the company assumes no obligation to update statements as circumstances change. An audio recording and broadcast replay for today's conference call will also be available online in the investor section of the company's website.

With that, I'd like to turn the call over to Herm Cukier. Herm?

Herm Cukier -- Chief Executive Officer

Thank you very much, Terry. It is my pleasure to welcome everyone to BDSI's second quarter 2019 earnings call. The second quarter of 2019 was a very successful and important period of time for our company. To begin with, we once again achieved record level sales performance for BELBUCA with very strong quarter-over-quarter and year-over-year growth, outperforming expectations and providing very high confidence in the sustainability of this growth momentum for the rest of this year and into 2020.

Given the accelerated market demand for BELBUCA, we are once again raising our 2019 net sales guidance for BELBUCA from $90 million to $93 million from the previous level of $83 million to $88 million and total company net sales from $101 million to $105 million from previous level of $92 million to $100 million.

This strong continued growth trajectory is a result of a tremendous effort by all BDSI employees day in and day out. Together with the medical community, we are helping to fundamental change the management of chronic pain. Specifically, we are seeing more and more physicians using BELBUCA as the first long-acting opioid when shifting patients from short-acting opioids in their treatment continuum. There is evidence that suggests this is part of a broader growing recognition among the medical community of buprenorphine's differentiated profile in efficacy and safety with is Schedule III designation.

Supporting this paradigm shift, during the second quarter, we were very pleased to see the final report issued by the Best Practices Pain Management Interagency Taskforce, chaired by Health and Human Services, which calls for payers to provide more access and reimbursement for buprenorphine for chronic pain and encourage primary use of buprenorphine for chronic pain management.

We have already experienced very positive reactions by both the medical community and payers for this federal guidance, as influenced by the significant number of regional insurance plans that expanded coverage for BELBUCA during the second quarter. With this expansion, more than 90% of commercially covered Americans have access to BELBUCA through their insurance plan. We will continue our efforts to ensure all patients have appropriate access.

This level of activity clearly signals we are entering a new era in the management of chronic pain and that BELBUCA is being viewed more and more as an option to treat these suffering patients. The growing support for use of buprenorphine as the first long-acting opioid, because of its differentiated profile will be a key driver of our company's sustained growth into the future and we are well-poised to fully capitalize on this unique opportunity.

Building on our success with BELBUCA and capitalizing on the high-performing commercial team we've built, during the second quarter, we licensed and successfully integrated Symproic for opioid-induced constipation into our portfolio. Symproic is an ideal tuck-in acquisition, given its operational, strategic, and complementary financial profile for our company.

I am very excited to have this clinically differentiated product with exclusivity through 2031 for a disease category to our physician and patient customer base. I'm very proud of our team's ability to quickly and smoothly integrate Symproic into our operations during Q2 and achieve record level prescriptions, experiencing more than 40% growth year over year. I'm very confoident in the continued growth opportunity for Symproic and believe it will become the category leader over time.

In addition, during the second quarter, we significantly strengthened our balance sheet, both by restructuring existing debt and issuing new equity, the operation cash flow accretive as well as having significantly improved terms and extended maturity. Our improved financial flexibility enables continued focus on sustaining our commercial momentum and further driving long-term value for the company and our shareholders.

To summarize, the second quarter was marked with dramatic accomplishments by our organization and has positioned us to control our destiny and further build upon our commercial success. With this continued growth momentum, we now expect combined long-term net sales for BELBUCA and Symproic to be between $425 million and $500 million from our previous level of $325 million to $400 million.

Our organization is executing at an exceptional level. As we'll describe momentarily, all of our key metrics support our potential for substantial growth going forward. Our future is indeed very promising and I have ever-growing confidence for the remainder of 2019, 2020, and beyond.

With that, I will turn the call over to Scott to provide more details of the operational success during the second quarter. Scott?

Scott Plesha -- President and Chief Commercial Officer

Thank you, Herm. As Herm noted, we experienced a very strong second quarter, with our commercial team continuing to execute at a high level and delivering record levels of BELBUCA prescriptions and revenue. As we review our dashboard analyzing BELBUCA's performance, every metric is meeting or exceeding expectations or agreeing, as we categorize them.

During Q2, BELBUCA's accelerated growth resulted in our achieving an all-time high at more than 80,000 retail prescriptions. We generated BELBUCA's largest TRx quarter-over-quarter increase to date at 14,700 TRx, which represents more than a 23% increase compared to Q1. BELBUCA also had its largest year over year TRx increase of 44,560 TRx's for 125% from Q2 of 2018. As a result, we outpaced the previous all-time TRx that we established during Q1 of 2019.

We continue to be encouraged by our strong execution and believe there are key drivers and market dynamics supporting the growth of BELBUCA. One important driver is the expanding BELBUCA prescriber base. During the quarter, we added more than 1,100 new prescribers, the most added since Q2 of 2018. These new prescribers contribute to the record 6,579 total prescribers for the quarter. This represents an increase of 52% versus same period a year ago.

In addition to accelerating our growth by adding new BELBUCA prescribers, we gained greater traction within our established customer base, who are more frequently prescribing BELBUCA for their chronic pain patients. This is supported by the quarter over quarter TRx growth of 14% or more.

During the quarter, we greatly increased the number of new patients being prescribed BELBUCA, which is reflected in new highs for new to brand prescriptions count and new to brand market share. We generated more than 16,000 NBRxs during the quarter, which is up from 13,680 in Q1 and 9,100 from a year ago, an increase of 76% year over year.

We more than doubled BELBUCA's new to brand market share from 3.3% in Q2 of 2018 to 7.3% in the second quarter of 2019. Importantly, more than 70% of patients that were new to BELBUCA were either switched from short-acting opioids or BELBUCA was added to one. This highlights the paradigm shift that Herm described, where we're seeing healthcare professionals fundamentally change the way they treat chronic pain by utilizing BELBUCA more frequently as their first LAO of choice when medical appropriate.

The primary use of BELBUCA, buprenorphine prior to failing other class two opioids aligns with the recommendation from the Taskforce report. These recommendations have been very helpful to HCTs as they consider appropriate treatment options for chronic pain and use of buprenorphine for their patients. As a matter of fact, buprenorphine is the only long-acting opioid molecule used to treat chronic pain that has exhibited year-over-year growth and this growth has been driven by the success of BELBUCA.

As Herm mentioned, these taskforce recommendations have also had an impact on payers, as we've seen a significant number of payers improve their coverage of BELBUCA since the final report was published. We've also seen increased interest from payers and plans that may not cover BELBUCA or require patients to fail C2 long-acting opioids prior to having access to BELBUCA.

We are encouraged by the increase in meetings we are having and tone of these meetings. While it's difficult to predict future coverage wins, we are focusing on providing patient access to BELBUCA and believe we will continue to build upon our recent success.

As we previously discussed, our strategy was to gain more regional plan level wins in 2019 and we've executed very well against this. Through our effort, several prominent regional commercial plans have helped enhance BELBUCA coverage by moving its preferred status or initiating coverage on BELBUCA.

During Q2, we saw an important improvement in coverage of approximately 6 million lives. During our Q1 call, we discussed the recent commercial formulary win. I'm excited to report the sales team has done an excellent job of executing, growing prescriptions within the plain by 31% from Q1 to Q2. We're excited about the progress we continue to make with BELBUCA and the impact that it's having it's having on patients suffering from chronic pain and we are focused on building upon our current growth.

Building on our success and execution with BELBUCA, we have also successfully transitioned Symproic to BDSI, which has gone as we expected. We believe Symproic provides a complementary product to BELBUCA and allows us to leverage our high-performing salesforce within our target audience. We are very encouraged by the reception we're receiving for our promotion of Symproic.

I'm pleased to share that in Q2, Symproic retail prescriptions reached 15,510, a new quarterly high and increase over Q1 by more than 1,900 TRx's or 14%. This is the largest quarter-over-quarter increase the brand has experienced since Q2 of 2018. In addition, Symproic grew by 4,450 TRx's from Q2 of 2018 to Q2 of 2019 or 40.3%.

During the quarter, we successfully added 960 new prescribers for Symproic, which helped the brand reach a new quarterly high of 4,530 prescribers. Importantly, our current BELBUCA targets provided much of the growth that we saw for Symproic during the quarter. We had a strong quarter with BELBUCA and I'm encouraged that BELBUCA has continued into Q3, resulting in all-time TRx highs in July.

Our focus remains on improving market access, growing the number of patients receiving BELBUCA for the first time and expanding our prescriber base. Additionally, we are confident that our commercial expertise and execution will have a positive impact on Symproic sales and we look forward to updating everyone on our progress on our next call.

With that, I'll turn the call over to Terry to cover the financials in more detail. Terry?

Terry Coelho -- Chief Financial Officer 

Thank you, Scott. Second quarter financial results exceeded the first quarter of 2019 and prior year quarterly results. Total net revenue for the second quarter ended June 30th, 2019 was $29.7 million, an increase of 50% compared to $19.8 million in the first quarter of 2019 and an increase of 144% compared to $12.2 million in the second quarter of 2018.

The total net revenue growth was driven by BELBUCA, which accounted for 86% of total sales the addition of Symproic to our commercial portfolio. BELBUCA net sales in the second quarter were $24.1 million, an increase of 29% compared to $18.7 million in the first quarter of 2019 and an increase of 147% compared to $9.7 million in the second quarter of 2018.

The growth in the second quarter versus prior quarter was primarily driven by the significant script growth, which Scott shared, and the impact of the mid-March price increase. In addition to an approximately $1.3 million impact from wholesalers bringing inventory levels up to more appropriate levels of 2 to 3 weeks to support our continuing growth in demand. These increases were partially offset by an increase in gross to net deductions.

Symproic net revenue in the second quarter ended June 30th, 2019 was $3.2 million, which accounted for 11% of total sales. As a reminder, this is the initial quarter of our commercialization of Symproic following the acquisition of the product on April 4th.

Bunavail net sales in the quarter were $821,000, a reduction of $235,000 from the first quarter of 2019 and a reduction of $199,000 compared to the second quarter of 2018, reflecting market trends for that product and our prioritization of BELBUCA, along with the recent acquisition of Symproic. Royalty revenues for ex-US sales totaled $1.6 million, including $160,000 for net milestone payments received.

Gross to net deductions in the second quarter were 51.5% for BELBUCA compared to gross to net deductions of 48.7% in the first quarter of 2019, reflecting higher wholesaler fees, increasing utilization impacting Medicare Part D cost, and the impact of the price increase taken in mid-March. Gross to net deductions in the second quarter were 38.9% for Symproic, reflecting the terms of the distribution agreement with Shionogi, which was effective through June 30th.

Total gross margin for the quarter was 83.4% compared to 62.5% in the second quarter of 2018 and 79.5% in the first quarter of 2019. The increased gross margin reflects improvement in BELBUCA manufacturing cost, the beneficial gross to net profile in the second quarter related to the Symproic distribution agreement terms and the royalty revenues and milestone income previously mentioned.

Total operating expenses in the quarter ended June 30th, 2019 were $22 million compared to $17 million in the first quarter of 2019 and $14.9 million in the second quarter of 2018. The increase compared to the first quarter was driven by the Symproic acquisition impact as well as the timing of certain spend, as certainty of BELBUCA marketing initiatives began to ramp up in the second quarter. The year-over-year increase is primarily driven by the impact of the expanded salesforce and market access teams as well as the medical affairs and MSL team together with the Symproic spend in the quarter.

The GAAP net loss for the quarter was $11.1 million or $0.13 per share compared to the net loss of $3.8 million or $0.05 per share for the first quarter of 2019 and a net loss of $9.8 million or $0.16 per share in the second quarter of 2018. The increase in net loss is driven by the one-time debt refinancing impact of $11.9 million.

Non-GAAP net income for the quarter, which excludes the impact of the debt refinancing, stock-based comp on the amortization of intangible assets and warrant discounts was $4.4 million. EBITDA for the quarter was $4.8 million compared to $103,000 for the first quarter of 2019 and negative $5.6 million for the second quarter of 2018. We believe this is an encouraging metric that highlights our commercial success, driven by higher revenues along with operational effectiveness.

As previously shared, under the terms of our agreement relating to the acquisition of Symproic, BDSI paid Shionogi Incorporated an initial upfront payment of $20 million at closing and will pay an additional $10 million in October of 2019. In addition, Shionogi is eligible to receive quarterly tiered royalty payments based on net sales of Symproic.

As Herm mentioned, we've taken significant steps to strengthen our balance sheet and provide greater flexibility as we execute our commercial strategy. In April, we received approximately $47.6 million in net proceeds through an underwritten equity offering. This offering provided an opportunity for new and existing investors to participate in the momentum BDSI has been experiencing.

Also, during the second quarter, we successfully refinanced our debt to the lower cost debt facility that improves our cash flow by lowering our annual interest costs, extends our debt maturity, and lowers our overall cost of capital, providing even more flexibility to drive our continued success.

The new $60 million term loan along with available cash on hand was used to repay and retire the company's existing term loan, which had an outstanding balance of $61.8 million. In doing so, we are now benefiting from expected interest cost savings of approximately $1.5 million annually, interest only payments for the first 36 months, as well as an extension in our debt maturity from 2022 to 2025.

Operating cash flow in the second quarter was negative $1.5 million, an improvement of $1.4 million compared to first quarter 2019 operating cash usage of $2.9 million. At June 30th, 2019, BDSI had cash and cash equivalents of approximately $57.2 million. This compares to cash and cash equivalents of approximately $41.3 million at March 31st, 2019.

Our overall positive cashflow in the quarter of $15.9 million includes the impact of the April equity raise of $47.6 million net, offset by the first upfront payment for the Symproic license and related transaction cost of $20.7 million, the one-time cash impact of the debt refinancing of $11.6 million, operating cash usage of $1.5 million and other cash income of $600,000.

We continue to anticipate being operating cash flow positive by the first quarter of 2019 following higher cash utilization expected in the third quarter primarily associated with the number of key annually paid expenditures.

In terms of our 2019 topline expectations, based on higher than forecasted revenue during the second quarter and our continued strong momentum, we are raising our 2019 net revenue guidance for BELBUCA to $90 million to $93 million, from $83 million to $88 million previously, and total company net revenue to $101 million to $105 million from $92 million to $100 million.

Similar to last year, we anticipate that the fourth quarter revenue will be higher than third quarter. Total net revenue expectations for 2019 include $7 million to $9 million of forecasted Symproic sales, which is in line with our previous expectations. Looking forward, we expect continued strong growth momentum with combined long-term potential of BELBUCA and Symproic to be in the range of $425 million to $500 million.

At this point, I'd like to turn the call back over to Herm for some concluding remarks before we open the call for Q&A. Herm?

Herm Cukier -- Chief Executive Officer

Thanks, Terry. I want to reiterate that in addition to our commercial success over the past several quarters and the very strong growth trajectory we've demonstrated thus far, we believe this is only the beginning. We have established a sales infrastructure and a differentiated product portfolio that we believe positions BDSI to capitalize on a substantial long-term revenue opportunity. By focusing on continued commercial execution, we expect to drive significant value over the near term and during the years to come.

Now, we would like to take your questions. Operator?

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, if you would wish to ask a question at this time, please signal by pressing *1 on your telephone keypad. Please ensure the mute function on your telephone is switched off to allow your signal to reach our equipment. Again, please press *1 to ask a question. We'll take a brief pause to allow all participants the opportunity to signal for questions.

We will now take our first question from Oren Livnat of H.C. Wainwright and Company. Please go ahead.

Oren Livnat -- H.C. Wainwright & Company -- Analyst

Thanks. I never get in first. Congrats on a big quarter. A couple questions -- obviously, you made a big increase to your long-term peak combined potential of about $100 million. I'm wondering does that assume the same peak potential of $75 million to $100 million for Symproic?

Also, what are those based on? Is that based on detailed market research? What inputs are going into that or are you projecting the trajectory long-term? Are you making specific assumptions about anything happening to the long-acting C2 opioid market? Also, what pricing maybe goes into those assumptions? Then I have a follow-up.

Herm Cukier -- Chief Executive Officer

Sure. Thank you so much, Oren. So, to answer your question with regard to the contribution that Symproic will make to that -- our view of Symproic is consistent with what we have expressed before. We are very pleased by early days and the team is doing a tremendous job of including them in our portfolio and already seeing the impact with the customers that we're calling on.

Our continued accelerated believe in the long-term potential of BELBUCA is really driven by a number of factors. One is the success that we're seeing in the marketplace and the accelerated scripts that we're experiencing not only during the second quarter, but as Scott pointed out, we're off to a strong start in the third quarter as well.

Also, as we referenced, the Pain Taskforce report, I think, is a significant milestone in members of the policy community recognizing the differentiation of buprenorphine and the contribution that buprenorphine can make to the treatment of patients suffering from chronic pain, calling for more coverage and more reimbursement and encouraging the primary use of the product and the treatment of chronic pain.

Also, the momentum that we're gaining with the payers and the continued ability to actually gain access to the product and we anticipate that over the next several years, we'll continue to see more and more momentum and success in getting better coverage for patients. So, I think those are some examples, Scott, and I'll ask if you have anything else to contribute to that.

Scott Plesha -- President and Chief Commercial Officer

What I would add is we've had very predictable trend lines in place. When we looked across many different metrics, prescribers, payers, payer mix, and see the growth trends we have in place, we remain very confident we can maintain the current growth rates we're seeing and build on those going forward.

Oren Livnat -- H.C. Wainwright & Company -- Analyst

Since you have reiterated your long-term optimism in Symproic, I see clearly a differentiated and better label for that product versus the competitors, but it's not lost to me that the scripts has rolled over a little bit most recently after a strong Q2. What dynamics are you seeing out there competitively? What will it take? I'm assuming there's real competitive rebating pressure in the market. What do you see and what will it take to start to gain significant market share?

Scott Plesha -- President and Chief Commercial Officer

I appreciate that question, Oren. In my experience, this is very typical when you have a transition from one company to another. There could be a little bit of flattening prescription. I can promise you we're working really hard using our expertise in execution that we've had with BELBUCA, very similar principles. We do feel that we have an opportunity to improve upon market access. There's still some work to be done there. If anything, our team has proven the ability to gain access at reasonable rates. So, we'll continue to work hard and do that. That will be important to us going forward.

Herm Cukier -- Chief Executive Officer

I would just add to Scott's correct comments that we have exclusivity to 2031. So, we're just getting started. We have a long journey ahead of us. As you pointed out, Oren, this product has the potential to be best in class. That's the kind of feedback we're hearing from our customer. As Scott said, what we've seen in the marketplace is very much what we've expected and we remain very optimistic over the long-term potential of the assets.

Oren Livnat -- H.C. Wainwright & Company -- Analyst

Thanks so much. Congrats again.

Operator

Our next question comes from Gregg Gilbert of SunTrust.

Greg Fraser -- SunTrust Robinson Humphrey -- Analyst

Thank you. It's Greg Fraser on for Gregg Gilbert. Congrats on the quarter. In terms of the expanded insurance coverage that you had in the quarter, how important was that interagency taskforce in securing that coverage. You clearly had a lot of lives but you were also winning coverage prior to that work. Obviously, you're very positive on the report. I'd just like to hear a little bit more color on that.

Scott Plesha -- President and Chief Commercial Officer

Appreciate that question. We did have some really nice wins this quarter, including adding Blue Cross Blue Shield in Tennessee and Alabama and then independent Blue Cross Blue Shields, Health Delegates, Select Health. I would say we had some nice momentum with payers anyway. We were already engaged in great discussions, but it truly has added to that momentum and definitely in interest at a payer level. So, we're having some really productive meetings right now around some of that. As you can imagine, we use those recommendations daily with our payers.

Greg Fraser -- SunTrust Robinson Humphrey -- Analyst

It's probably early in terms of discussions for 2020, but do you think the taskforce report will give you more leverage with the national payers so you can get better coverage in 2020 than you have for 2019?

Scott Plesha -- President and Chief Commercial Officer

I can promise you that's what we're working to do. That is a goal, to always try to provide as much affordable access and clear access to this product for patients. They deserve the right to get it.

Herm Cukier -- Chief Executive Officer

I would just add to what Scott just commented on, the final report specifically calls on CMS as one of the payer entities to provide more coverage of buprenorphine for chronic pain. That's an area that we've had more challenges in the commercial sector. We're certainly optimistic that this could be a lever that could enable us over time to improve and increase our coverage in the Medicare state. It gives us an opportunity to continue to have those discussions with CMS and the entities that are covering Medicare live and we're optimistic that over time, we'll be able to make more traction in that particular market segment.

Scott Plesha -- President and Chief Commercial Officer

I would add I think it's important to note when we are able to obtain a win and open up access, usually, the key thing we're trying to do is remove step through long-actings and allow patients and physicians to move from a short-acting, that we be the first long-acting of choice. Basically, if you look at any win we have across the board, as soon as we open up those lives and are able to share our message with physicians, we see a very predictable growth trend off of that. We don't see a jump in business and then a flattening. It's a continual growth curve going forward.

Operator

Our next question comes from Brandon Folkes of Cantor Fitzgerald.

Brandon Folkes -- Cantor Fitzgerald -- Analyst

I wanted to go back to the final Taskforce report. Can you provide any color whether you've felt this benefit yet at the prescriber level? Obviously, we're reporting Q2 now, but we have scripts post the quarter. So, any feedback you're receiving at the prescriber level would be great. Thank you.

Scott Plesha -- President and Chief Commercial Officer

Appreciate the question. Our reps are sharing that information and the reps have the ability to provide them with that information. It's being received well. You can imagine it reinforces what current prescribers are doing. Many of them are seeing the value of BELBUCA. We do think it's opening eyes and maybe gaining the attention of those who haven't written. We do know offices are also using it as they look get authorizations with the payer level too as well. We do see success there as well. I think it's early to really quantify that. Being out there with quantitative feedback, it feels like it is being helpful, for sure.

Brandon Folkes -- Cantor Fitzgerald -- Analyst

Thanks. So, is it fair to say that will remain a tailwind for some time?

Herm Cukier -- Chief Executive Officer

I absolutely believe so. As Scott pointed out, we're still very much in the early days. It just adds to the conversation. It adds to the confidence. It adds to the comfort. I think for those that have already started to more frequently utilize BELBUCA, it reinforces their own experiences and own belief, especially the specific encouragement of utilizing it for primary usage in the management of chronic pain, not just for a failure of other opioids as well.

Those that are still in the process of gaining more understanding of the molecule and gaining more individual personal experience, I think it can only serve as a benefit and accelerant for their journey timing. In and of itself, it's a complement to all the great work our teams have already been doing. It will be an increase in medical information that our medical teams are developing and will providing through the medical congresses.

It's just a growing understanding and awareness of the important role that buprenorphine can play in the conversation of how to evolve the optimal management of patients that are suffering from this very difficult challenging disease. We're seeing very positive results in the marketplace accordingly.

Operator

Our next question comes from Scott Henry of Roth Capital. Please go ahead.

Scott Henry -- Roth Capital -- Managing Director

Thank you. Good afternoon. Following on to the question with regard to changes in best practices and guidelines, it all seems to be geared toward moving BELBUCA earlier into the treatment algorithm. Do you think there's any possibility to start to look at the label and some of the boiler plate language in the limitations of use section of the label, speak about using alternative treatment options prior to using BELBUCA? Do you think over the next year or so there may be opportunities to amend the label?

Herm Cukier -- Chief Executive Officer

Scott, thank you for your question. As you well know, this was an interagency taskforce. There were many representatives from different parts of the federal government, including the FDA. So, we're certainly encouraged by the fact that there were many voices and many contributors to what was ultimately included for buprenorphine in the taskforce report.

I think that does certainly provide perhaps a pathway to continue the dialogue and discussion with CMS for discussions on coverage with FDA to understand that there are opportunities to revisit the label and include some of the particular recommendations that were provided by the taskforce. And ultimately, perhaps as well with the CDC as they perhaps consider future evolutions of their opioid use guidelines. I think it was a stepping stone toward continuation of the dialogue and we look forward to participating in that process and are optimistic of perhaps what can happen over time.

Scott Henry -- Roth Capital -- Managing Director

Thank you for the color there. A couple model questions -- first, with BELBUCA, the revenue per script was a little higher than perhaps I expected in 2Q. The question is was there anything unusual that happened in 2Q that could impact revenue per script or is it just increasing with the price increases?

Terry Coelho -- Chief Financial Officer 

So, Scott, this is Terry. Two things -- we did have, as you know, a price increase in the middle of March, so there would be some impact from that and then secondly, if you were to look at revenue per volume shift to the wholesalers, and I mentioned the $1.3 million that we saw, you would probably come up with a slightly different revenue per script, if you like.

Scott Henry -- Roth Capital -- Managing Director

So, it sounds like it's just normal variance.

Terry Coelho -- Chief Financial Officer 

Yes.

Scott Henry -- Roth Capital -- Managing Director

The second question, the cost of goods sold seemed a little lower in the quarter. Were there any dynamics with the Symproic launch that would have depressed that or is this a good number going forward? I know you've been working on cutting costs there.

Terry Coelho -- Chief Financial Officer 

So, actually, BELBUCA gross margin improved a little bit in the quarter, which is anticipated as the supply chain team has been working on different manufacturing improvements since last year. So, there was a minor improvement from that, maybe 1 percentage point. But as I mentioned previously, Symproic, we did have a distribution agreement in place just for the first quarter of the arrangement through June 30th and that had basically an agreed upon gross to net profile, which was pretty favorable and no royalty payment associated with that first quarter. So, I would not anticipate that continuing.

I think you could think about the mid-80s for Symproic. BELBUCA is in the mid to upper-80s and I would see Symproic in the mid-80s going forward. That's one of the reasons we liked this acquisition as well. It really fit in very nicely in our overall portfolio and overall, we're still generating the same kind of gross profit for the business.

Scott Henry -- Roth Capital -- Managing Director

Great. Thank you for the color and thank you for taking the questions.

Operator

Our next question comes from Esther Hong of Janney. Please go ahead.

Esther Hong -- Janney Capital Markets -- Analyst

Hi, thanks for taking my questions. So, on BELBUCA, any update on the respiratory depression study? And then on Symproic, it's been about a quarter since Symproic has been in your portfolio, so, can you provide any insights on physician receptivity, any interactions between physicians and sales reps? Thanks.

Herm Cukier -- Chief Executive Officer

Hi, Esther, thank you so much for your questions. The respiratory study has been initiated. We're recruiting patients. So far, everything is going according to plan and we look forward to sharing results of that study in the early half of next year. And then from there, I'll ask Scott to talk a little bit about the recent activity that we're seeing in the marketplace on Symproic from physicians.

Scott Plesha -- President and Chief Commercial Officer

Hi, Esther. We've been actually very pleased with the reception. When you look at the growth we had this quarter, the majority of it came from our targets. They seem to really value the profile of the drug, the convenience of taking it with or without food, with a laxative, and also, we're valuing the clinical data that comes along with it.

So, the Gastroenterology Society actually put out guidelines and reviewed the different products and their data. Symproic has the strongest rating in that section. We're confident as we go forward, again, we'll be able to build some growth going forward. Appreciate the question.

Herm Cukier -- Chief Executive Officer

Scott, if I may, I'll add to some of your comments there. You and I were talking a little bit about this earlier. Launches have changed a lot in our industry. Getting access and coverage is such an imperative element of the ability to actually have physicians getting the comfort in writing scripts. Symproic is still very much in the early stages of its launch.

We're really only in year two of its launch. It has a good start to coverage. I think that's an area that over time, we're going to work very hard, just like we've done with BELBUCA to improve the coverage. I think that would be an important lever moving forward to see the kind of growth that we all know will come given the profile of the product.

Scott Plesha -- President and Chief Commercial Officer

I look back to where BELBUCA was in early 2017, it probably was very similar to what we see right now with Symproic and the approval rates and covered and what not. Again, we have an opportunity to first and foremost improve assets and get the approval rating improved and I think once we do that, we'll see an even faster uptake in business. I'm still confident we can grow it going forward.

Herm Cukier -- Chief Executive Officer

It sounds like our teams are having some very encouraging discussions so far.

Scott Plesha -- President and Chief Commercial Officer

We feel confident in our ability in early 2020 to be able to enhance our coverage.

Esther Hong -- Janney Capital Markets -- Analyst

Great. Congrats on the quarter.

Operator

Our next question comes from Tim Lugo of William Blair. Please go ahead.

Tim Lugo -- William Blair -- Analyst

Thanks for the questions and congratulations on the strong quarter. On the contracting side, it sounds like you still have some room for additional wins. Is there a tipping point around contracting where you decided to stop offering the terms you've previously been fine with given the taskforce report, given the overall market trend and eventually patient and physician acceptance and preference?

Scott Plesha -- President and Chief Commercial Officer

So, there are a lot of ways we look at it. For example, Humana is a Medicare plan that we were able to improve access there to a preferred status. We're sitting at well over 4% market share. Overall, we're at 2.6% for the quarter, 2.7%. When we look at other Medicare lives, while we're getting the product approved at about 80% approval rate, our market share is lagging. It's 1.4%-1.5%. If we can add more of those going forward, we would hope that we see an acceleration in similar trends that we see when we have a win.

Again, the ones where we've had wins, we see, again, very consistent growth lines, they're very linear. And I think that in the coming quarters and years, we'll be able to add on Medicare, that will be a focus. We still had some regional plans that we really would like to try out. There are still some larger PDMs that we have some work to do with.

Herm Cukier -- Chief Executive Officer

I think that's well said, Scott. I would add that even though we have very good commercial coverage at this point, with just over 50% having preferred coverage, there's still an opportunity to enhance the coverage and increase the number that have preferred coverage. Tim, I think your point is well-taken. We'll be very thoughtful and ensure that we're not just buying our way to access. Even on Medicare, as you correctly point out, it's clear that we have a differenaite asset.

We try to focus on clinical conversation and the importance of ensuring that Medicare patients have appropriate access to a product like BELBUCA, especially given the kind of language and encouragement that comes out like the taskforce. I think those discussions are ongoing and again, as Scott pointed out, we're very optimistic over the next period of time of the ability to have those meaningful clinical discussions, both on the commercial and Medicare side and continue to improve coverage of patients.

Scott Plesha -- President and Chief Commercial Officer

Tim, I would add these HHS guidelines and recommendations have really been a stimulus for meetings. Some plans that are typically very difficult to get in front of have immediately requested us to provide updates on clinical. It's been a nice catalyst for us.

Tim Lugo -- William Blair -- Analyst

That's great to hear. Maybe just a follow-up question -- Terry, in your comments, you mentioned Q4 cash flow positivity after some seasonal issues in Q3. You don't have to give 2020 guidance today, but how should we think about breaking into cash flow positive territory? Is something that structurally the company will be set up for going forward once you break into that cash flow positivity? Or is something that varies quarter to quarter based on operating trends, seasonality, gross to net, all of that?

Terry Coelho -- Chief Financial Officer 

So, great questions, Tim. I think we've talked a lot about the -- obviously, you've seen the growth trajectory, but also we've given you an indication of where we think the business is heading in the longer-term as well.

So, as we see the growth continue to happen, you can imagine we have the infrastructure to support that growth and at that point, there's no reason that basically, the gross profit isn't being fully leveraged and the margins being able to move forward and being cash flow positive going forward. If you think about the growth rate we're seeing and infrastructure in place, without me giving 2020 guidance, I think you can expect a pretty good trajectory going forward.

Operator

Our next question comes from Matt Kaplan of Ladenburg Thalmann. Please go ahead.

Matt Kaplan -- Ladenburg Thalmann -- Analyst

Thanks for taking my questions and congrats on the quarter. I just wanted to dig in a little bit more in terms of strategies or initiatives, programs that you have in place to drive growth beyond gaining access or expanding coverage. You're mentioning clinical questions. What programs or strategies do you have given the best in class characteristics of BELBUCA?

Herm Cukier -- Chief Executive Officer

You may recall that we put in place a four-point acceleration plan a few quarters ago for BELBUCA. Those four points were the expansion of the salesforce, expansion of access, the creation of the medical team in developing more medical communication and awareness of buprenorphine, BELBUCA specifically and the utilization for chronic pain, and then also, finally, engaging with patients and bringing back the voice for patients suffering with chronic pain ensuring they are sufficiently armed to ask the right questions of their healthcare provider and receive the optimal treatment for themselves.

We still feel those are the right four levers to focus on. That is where we continue to make our investments in 2019 and we will continue to do so moving forward to 2020 and beyond. As Scott pointed out, we're seeing the success and productivity that we're gaining from the salesforce expansion. As you point out, we've seen tremendous accelerated recognition of the importance of buprenorphine by the managed care entities, more work to do there, as we were just discussing. But again, we believe that will continue to head into the positive trajectory over the next period of time.

In the past, we've talked a lot about the medical investments that we're making, including starting a respiratory depression study, which we think given the opioid epidemic is an imperative development of clinical consideration and having more definitive understanding and information about BELBUCA specifically and how to recognize within dose assurance exactly what that can mean in the decision making process for patients.

I think it will be very important when that data comes out early next year as well as having a lot more presence and a lot of other information and publications and abstracts that are going to be provided through medical congresses and other medical forms and journals, etc.

Finally, we've started to think about and very slowly approach appropriately how to engage the patient, recognizing again, obviously, this is an area where patients are suffering tremendously from this disease. There's a lot of noise and a lot of complexity on getting the right information to engage in a process discussion with the healthcare provider and we're exploring ways we can engage more profoundly in playing the responsible role of providing patients with that voice in this process.

For sure, we are not just focused on one of those levers, but we're seeing a lot of success already from those levers and anticipate that they will be the ones that continue the very strong momentum into 2020 and years to come.

Scott Plesha -- President and Chief Commercial Officer

Matt, one of the points I'd really like to build upon is really the encouraging impact we've seen from expansion. It's really what we thought would occur. We added 28 territories October/November, two different training classes as we track the prescriptions in those territories, it will start at a lower baseline, there was an 80-script per month lift on average per territory.

So, by the month of May, incremental business had pretty much paid for those reps. In my experience, that's pretty effective in getting people quickly up to speed and having an impact. We also saw an average of 14-prescriber per month increase per rep as well. We did that and they were usually subsets we pulled off of other territories we weren't getting to as well. When you look at the territories that weren't expanded, if anything, it accelerated during that period of time or since then.

So, we're really encouraged. It reinforces the effectiveness of the plans we put in place and the execution by the salesforce. They've done an excellent job.

Matt Kaplan -- Ladenburg Thalmann -- Analyst

That's very helpful. One last question in terms of given the new guidelines, do you think you'd be able to leverage new guidelines to help you in terms of negotiating more access and with payers to have a lower discount in terms of getting coverage?

Herm Cukier -- Chief Executive Officer

Yeah. Thanks very much, Matt. The inter-agency taskforce is a set of recommendations and obviously, it's a very comprehensive report about best practices in pain management. Within the pharmacology arena, we're really calling out buprenorphine. Scott, maybe you want to reiterate the amount of energy and success. We really, very quickly, already had a lot of payers.

Scott Plesha -- President and Chief Commercial Officer

We did. We had an outreach to every one of our customers to begin with. Others reached out to us. What we will do is first off, use it to gain access into these plans to reopen conversations where coverage isn't where we want it to be. It will depend plan by plan whether we're able to leverage those. They are guidelines. It's not a requirement on these plans. We will talk to them about the recommendations, obviously. We're going to be very thoughtful about what we do on the rebate side. We want to make sure it's profitable access, not just growing business.

Operator

Ladies and gentlemen, there are no further questions at this time. Therefore, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Duration: 54 minutes

Call participants:

Terry Coelho -- Chief Financial Officer 

Herm Cukier -- Chief Executive Officer

Scott Plesha -- President and Chief Commercial Officer

Oren Livnat -- H.C. Wainwright & Company -- Analyst

Greg Fraser -- SunTrust Robinson Humphrey -- Analyst

Brandon Folkes -- Cantor Fitzgerald -- Analyst

Scott Henry -- Roth Capital -- Managing Director

Esther Hong -- Janney Capital Markets -- Analyst

Tim Lugo -- William Blair -- Analyst

Matt Kaplan -- Ladenburg Thalmann -- Analyst

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