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Aimmune Therapeutics Inc (NASDAQ:AIMT)
Q3 2019 Earnings Call
Nov 6, 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 Aimmune Therapeutics Third Quarter Earnings Call. [Operator Instructions] Thank you.

I would now like to turn the conference over to your host, Ms. DeDe Sheel, Vice President of Investor Relations. Please go ahead, madam.

DeDe Sheel -- Vice President of Investor Relations

Thank you, Katrina. Good afternoon, and thank you for joining us today to discuss Aimmune's third quarter 2019 financial results and operational highlights. Today's call is being webcast, and replay will be available on our corporate website at Aimmune.com.

Joining me on the call today are Dr. Jayson Dallas, President and Chief Executive Officer; Andrew Oxtoby, Chief Commercial Officer; and Eric Bjerkholt, Chief Financial Officer. After our prepared remarks, we will open the call for Q&A.

Before we begin, I would like to remind you that during today's call and Q&A session, we will be making forward-looking statements. These forward-looking statements include Aimmune's expectations regarding the potential benefits of PALFORZIA, including potential benefits for patients, caregivers and allergists, potential approval of PALFORZIA by the FDA and the EMA, including approval timelines, the potential commercial launch of PALFORZIA including launch timelines, the potential REMS for PALFORZIA, the potential receipt of comments to the MAA, the first potential market in Europe, the timing for payers in the United States to add PALFORZIA formularies, potential timing for completion of enrollment for Aimmune Phase 2 clinical trial for AR201, the sufficiency of Aimmune's cash resources, Aimmune's ability to access an additional $130 million from its credit facility, and Aimmune's expectations regarding potential applications of the CODIT approach to treating life-threatening food allergies.

Risks and uncertainties that contribute to the uncertain nature of the forward-looking statements include the expectation that Aimmune will need additional funds to finance operations, Aimmune's or any of its collaborative partners ability to initiate and/or complete clinical trials, the unpredictability of the regulatory process, the possibility that Aimmune's or any of its collaborative partners' clinical trials will not be successful, Aimmune's dependence on the success of PALFORZIA, the reliance on third parties for the manufacture of our product candidates, possible regulatory development in the United States and foreign countries, and Aimmune's ability to attract and retain senior management personnel.

These forward-looking statements are based on assumptions and are subject to risks and uncertainties that can cause actual results to differ significantly from those stated on this call. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Please refer to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2019, for some of the important risk factors that could cause actual results to differ materially from the forward-looking statements made on this call.

Except as required by law, Aimmune disclaims any obligation to publicly update or revise any information to reflect the events or circumstances that occur after this call. Finally, I'd like to point out that Aimmune's food allergy treatments are investigational and are not FDA approved.

And now I'll turn the call over to Jayson.

Jayson Dallas -- President and Chief Executive Officer

Thanks, DeDe, and good afternoon, everyone. Thank you for joining us today to discuss our third quarter financial results and some operational highlights.

This is a very exciting time for us as we are working closely with FDA to complete the review of the BLA for PALFORZIA. If approved, PALFORZIA will be the first and only approved treatment for any form of food allergy. We look forward to offering a potential FDA approved treatment option to the millions of children and teens with peanut allergy, their families and the physicians who treat them. Of course, we could not have done any of this without the patients, caregivers, investigators, and the entire food allergy community, who participated in and supported our clinical trials. And we are immensely grateful to all of them.

On our call today, I'll review some of our achievements this quarter, Andrew will discuss our launch preparations, and Eric will review the third quarter financial results. As most of you know, on September 13, the FDA's Allergenic Products Advisory Committee or APAC met to discuss and make recommendations on the safety and efficacy of PALFORZIA. I'm delighted to reiterate that the APAC voted seven to two that the efficacy data and eight to one that the safety data in conjunction with additional safeguards support the approval of PALFORZIA.

The FDA has requested the implementation of risk evaluation and mitigation strategy for REMS program if PALFORZIA is approved. The REMS will help support the safe and appropriate use of PALFORZIA. As part of our original BLA submission, we proactively proposed a number of risk management measures that were consistent with the conduct of our Phase 3 clinical trial protocol. These risk management measures form the cornerstone of the REMS. Since the APAC meeting, we have been working with the FDA to finalize the details of the REMS and do not expect its implementation to have a material impact on the timing of PALFORZIA's approval.

Patient safety has been central to us since the beginning of PALFORZIA's development. It has undergone the same rigorous clinical development required by the FDA for any drug candidates seeking regulatory approval. As a result, we have generated the largest, most clinically robust database ever assembled for a therapeutic approach to peanut allergy, with over 1,200 patients in our trials, and well over 1,000 patient years of experience.

FDA approval would be significant for allergists and their peanut allergy patients. For allergists, PALFORZIA would provide a clinically validated pharmaceutical-grade oral immunotherapy. Each dose has been precisely measured and sourced and manufactured to minimize like-to-like variability. For patients and their caregivers, PALFORZIA would be a prescription therapy that is covered by insurance and administered by an allergist to support its safe and appropriate use. We will also offer support services to patients and families to provide information, promote adherence, and ensure access.

These services will include a variety of educational materials, a dedicated call center, a copay card for eligible patients, and product delivery options in consultation with their physicians. Although we have not yet disclosed the price, we intend to price PALFORZIA to reflect its value as biologic oral immunotherapy that has undergone rigorous clinical development, is manufactured under GMP standards and provides the infrastructure to support streamline patient access and assistance.

We continue to educate the allergist community as we generate, present and publish PALFORZIA data. As outlined in our press release last week, we will be presenting data from more than half a dozen studies at the American College of Asthma, Allergy and Immunology Annual Scientific Meeting, taking place this week in Houston. We will present additional safety and efficacy data on PALFORZIA, as well as real-world insights, regarding the implementation of oral immunotherapy in clinical practice.

Before closing, I'd like to provide a brief update on our regulatory process of PALFORZIA in Europe and our ongoing clinical trial program. The European Medicines Agency or EMEA is currently reviewing the marketing authorization application that we submitted in June. We expect to receive the Day 120 questions this month, and given a standard overall review time of 12 to 15 months, marketing authorization in Europe could occur in the second half of 2020. Upon approval, we expect our first European launch to be in Germany.

In September, we submitted an application to Swissmedic, the authority responsible for the authorization and supervision of therapeutic products in Switzerland. The standard review period for Swissmedic is approximately 18 months. Andrew will provide additional information on our launch preparations in Europe.

Our Phase 3 POSEIDON trial, evaluating the safety and clinical efficacy of PALFORZIA in patients between one and four years of age continues to enroll. And finally, as we have previously announced in August, we dosed the first patients in our Phase 2 clinical trial for patients with egg allergy, and we continue to enroll in the study. We expect to complete enrollment in the second half of 2020.

I will now turn the call over to Andrew.

Andrew Oxtoby -- Chief Commercial Officer

Thank you, Jayson. And if I may start with a brief apology. I've been battling a head cold and it left me with a bit of a sore throat. So I appreciate your indulgence in listening to me, and I can assure you that I feel much better than I sound. So as Jayson mentioned, this is an exciting time as we prepare to launch our first medicine. We are building a strong commercial organization, which has been specifically designed for PALFORZIA's launch upon its potential FDA approval.

As I mentioned on the last call, the three critical areas we have focused on are ensuring we have the best people in place to successfully introduce PALFORZIA to physicians and patients, providing tools and resources to support the safe and appropriate use of PALFORZIA, and understanding the patient, physician and payer communities.

We are finalizing the hiring for all of our 80 field-based practice account manager roles. We had over 5,000 applications for these 80 positions. We were able to be very selective about who we hired. The practice account managers or PAMs will work closely with allergists and their teams to train them on the implementation protocol, so the patients, physicians, and their office staff have positive safe experiences with PALFORZIA.

When we were recruiting, we looked for people with diverse skills, which were broader than those of traditional pharmaceutical sales representatives. Many of our hires have experience in specialty launches, marketing, market access, patient services, and commercial operations in addition to experience a field-based sales force. [Phonetic]

As you know, we were informed by the FDA just prior to our advisory committee that we should plan to implement a formal REMS program for PALFORZIA. Even with the short degree of advance notice, I'm pleased by the incredible speed of execution and flexibility from both our internal team and our vendor partners to accommodate these requirements into our commercialization plans. And as a result, we still anticipate being able to launch PALFORZIA, if approved in January 2020.

With this launch timeline in mind, we have set the employment start dates for our practice account managers as January 2, and we have a rigorous training program developed onboard them. As a reminder, with these 80 PAMs, we have appropriate resources to be able to cover the approximately 5,400 board-certified allergists in the U.S. At launch, our team will focus on supporting the 1,300 allergists we have identified, as the physicians most ready to initiate PALFORZIA therapy soon after potential approval.

Our market access team has met with payers representing over 90% of covered lives. We continue to work with payers to help them understand how the product will be prescribed and administered biologists and to define who the appropriate patient for PALFORZIA will be. While payers understand the unmet need we are addressing, we expect the PALFORZIA will be gradually added to formularies over the course of 2020, as payer P&C committees meet. Prior to inclusion on formularies, PALFORZIA would be available via a medical exception.

We are establishing a patient support hub, which will provide product information and assistance navigating the PALFORZIA initiation process. This will consist of the individual sale with [Phonetic] case management that provides a person on the phone to handle patient queries, adherence programs, and reimbursement support. We also plan to offer a copay assistance cards to reduce out of pocket costs for patients, as well as the patient assistance program for qualified patients who are either uninsured or underinsured.

As part of our launch preparations, we have conducted a significant amount of market research with patients and their caregivers, as well as the physicians who treat them. We recently completed a quantitative survey of 122 U.S. allergists with varying levels of experience with immunotherapy in order to better understand the unmet need for patients with peanut allergy, and assess allergists' potential use of PALFORZIA.

I'd like to share a few insights and learnings from the survey. First, 78% of all respondents said they are interested in OIT to treat food allergies. Second, among these physician respondents who do not currently administer OIT, very strong agreement that there is a high unmet need in pediatric peanut allergy patients, and that the main reason they currently don't provide OIT is because there are no FDA approved OIT therapies available. Third, nearly 60% of physician respondents are willing to prescribe PALFORZIA right away with only some of their patients. 31% said they will be willing to try after learning more about it. And a small minority indicated that they would wait until it's been on the [Phonetic] market for a few months, and they have seen some preliminary usage data, although would wait until it's covered by insurance.

We also wanted to evaluate the readiness of the practices to administer PALFORZIA, and there were two key takeaways. First, 99% said they currently have patients four to 17 years of age whom they treat with allergy shots. This means their offices are physically set up to offer immunotherapy, observe patients after dosing and then they have staff trained to administer epinephrine if necessary. And second 90% of physician respondents report that their practice has a designated observation area for patients who are being monitored. We realized administering OIT will require a modification to their existing workflow. However, we are encouraged by these data. We feel that the data we are presenting on practice logistics at the college meeting in Houston this week will support these findings, as well.

Finally, we are making good progress in our initial European commercial build-out. As we previously announced, we submitted our MAA to the EMA in June, and our application for Switzerland to Swissmedic in September. Upon authorization, the first European launch market will be Germany. And in order to support this priority market, we have hired and onboarded both the general manager of the medical director for the Germany, Austria, Switzerland, markets. They will be providing that -- they will be building their team and preparing for a potential launch in the coming months.

And with that, I will turn the call over to Eric to review the financials.

Eric Bjerkholt -- Chief Financial Officer

Thank you, Andrew. We ended the third quarter in a strong financial position with $200 million of cash, cash equivalents and investments, compared to $304 million on December 31, 2018. The decrease primarily reflects net cash used in operating activities, partially offset by cash provided by financing activities, including net borrowings from our debt issuance in January 2019 of $36.1 million.

We expect that this loan agreement plus cash on hand will fund the launch of PALFORZIA and progress our pipeline. For the quarter ended September 30, 2019, net loss was $64.5 million compared to a net loss of $51.7 million for the comparable period last year. On a per-share basis, net loss for the quarter was a $1.03 compared to $0.89 for the comparable period in 2018.

R&D expenses for the quarter ended September 30, 2019, were $30.6 million compared to $31.7 million for the comparable period in 2018. The decrease was primarily due to the completion of certain PALFORZIA clinical trials, which was partially offset by higher costs related to regulatory activities and increased contract manufacturing costs to support the potential commercialization of PALFORZIA, as well as costs related to the Phase 2 clinical trial for AR201.

General and administrative expenses for the quarter were $34 million compared to $21.3 million for the comparable period in 2018. The increase was due primarily to additional employee-related costs and external professional services, as we continue to build our infrastructure to support the development and potential commercialization of PALFORZIA.

With that, we will open the call for questions.

Questions and Answers:

Operator

[Operator Instructions] For your first question, we have Charles Duncan from Cantor Fitzgerald. Your line is open.

Charles Duncan -- Cantor Fitzgerald -- Analyst

Hi, guys. First of all, thanks for taking the question. And Jason, and team, congrats on the progress in the quarter, looking forward to next year. But I had one question on commercial, and then one question on the pipeline, I wanted to ask you. Regarding the commercial question, this is kind of the bell that [Indecipherable] looking at pricing, but it really is about pharmacoeconomic value. And I'm kind of wondering if you have new information that would impact your thoughts on that relative to say earlier at this fall, perhaps even the discussed REMS at the recent AdCom or the Viaskin refiling, any thoughts on pharmacoeconomic value for PALFORZIA going into a possible launch next year?

Jayson Dallas -- President and Chief Executive Officer

Yes. Thanks, Charles. We have actually done quite a lot of work on the pharmacoeconomics beyond just pure pricing and price setting. And of course, this is an area that both clinicians and payers are very well used to, there is a lot of reimburses in therapies both to treat other kinds of allergies and to treat the complications and results of allergic reactions. But that being said, I don't think we've learned anything fundamentally different over the last few months. And I think every piece of guidance we've given in the past remains true.

But let me hand over to Andrew.

Andrew Oxtoby -- Chief Commercial Officer

Yes. I mean -- Jayson, this is correct, we've been continuing to build on an economic model that we share with payers, as we have discussions with them, but there is nothing fundamentally new that we've uncovered over the past few months in regards to them.

Charles Duncan -- Cantor Fitzgerald -- Analyst

But it sounds like you have a pretty firm understanding of pharmacoeconomic value and ready to launch should it be approved any time soon?

Andrew Oxtoby -- Chief Commercial Officer

Yes, we do. And I guess what I would say with regards to price, Charles, is that we've conducted research and we've bracketed the research between two sort of bounds, the lower bound being the price point for the split [Phonetic] therapy, which is out there today, which covers non-life-threatening conditions, which is somewhere between $3,500 and $5,000. The upper end of the research that we tested was -- at the launch price point for national biologics, which is around $20,000. So we've tested in between those two bounds and we feel that we've got a pretty good understanding of what the appropriate price point will be based on that research.

Charles Duncan -- Cantor Fitzgerald -- Analyst

That's very helpful. Appreciate that added color. Regarding the kind of pipeline question that I had. This may be looking way out ahead, but I'm kind of wondering, as you think about the application of the basic paradigm, I'm wondering as you look at multi-nut allergy, how does that really differ from peanut allergy in terms of severity prevalence and maybe technical challenges that you could see? And could we see an IND for a multi-nut in 2020? Thanks.

Andrew Oxtoby -- Chief Commercial Officer

Yes. So let me sort of take the middle piece of that first, which is the prevalence of multi-nut. So allergies to the composite of three nuts which is really walnut, hazelnuts, and cashew with sort of co-existing relationship -- coexisting allergies to [Indecipherable] pistachios, is about as a group as prevalent as peanut allergy is and so we see it as a sizable opportunity.

I think as much as we've been groundbreaking and innovative in terms of potentially now bringing the first-ever treatment for food allergy to the market with PALFORZIA, we're trying to be even further -- even more innovative, if you like with our multi-nut-program by trying to actually bring one therapy that has all of those nuts together in one place, right. And so this both from a technical perspective and from a regulatory perspective is again, yet another new paradigm.

So where we're at now is actually trying to physically make the product that is stable, and that is reliable enough for us to be able to think about, you can go into the clinic. And we think that's going to take us about -- the bulk of 2020. So I would not anticipating seeing an IND until the end of next year. There's a lot of technical complexity to this.

But if anything, Charles, the way to think about this as we've decided to go a little slower upfront to go way quicker at the end because if we did each of these nuts in series, it will be five or six different products over a course of many, many years. And we'd like to actually have a single solution that comes to market as a composite, a little bit quicker than that whole process would take.

Charles Duncan -- Cantor Fitzgerald -- Analyst

That makes sense to me, and I appreciate the added color. Good luck with the upcoming final review.

Jayson Dallas -- President and Chief Executive Officer

Thank you.

Operator

Next question is from Chris Raymond of Piper Jaffray. Your line is open.

Christopher Raymond -- Piper Jaffray -- Analyst

Hey, thanks, guys. So just a couple of questions, first, I guess, on access. So we ran across a webinar put up by the American College of Allergy, Asthma, and Immunology that I think you guys sponsored actually that walks through pretty detailed reimbursement coding for OIT.

I'm just curious, can you walk through the mechanics that you anticipate once approved for coding for reimbursement for PALFORZIA? When we look at this at the materials, these codes look pretty comprehensive. I guess, the question is, do you believe they're sufficient really for docs to be able to get reimbursed pretty easily like on day one of launch? Or is there some sort of interim period maybe where there will still be barriers and you'll have maybe more of a tailored coding system or something like that in place? Just give us some perspective on that. Thanks.

Andrew Oxtoby -- Chief Commercial Officer

Yes. Hi, Chris. It's Andrew. Thanks for the question. So you're correct. So the college put out some guidance. I think it was end of August, early September around coding that they would recommend for the various stages of administering an OIT immunotherapy. And worth reminding that today with food OIT, there are number of codes that are used out there. And so our role is not to provide guidance as to what codes to use, but to, I suppose, educate allergies as to which code are available either because they've have been recommended by the college or currently being used today for food OIT.

And we're very confident that the codes that exist will be used -- can be used. And there's also some discussions between the college and the academy, which is the two professional bodies representing allergists in the U.S. around aligning on codes that they would recommend together. Those are ongoing discussions and those are not discussions of which we're a part. So we are aware that the discussions are ongoing. And so as those codes are developed I guess some [Phonetic] consensus is reached. And that's further alignment on -- even more specific codes that could be used.

Jayson Dallas -- President and Chief Executive Officer

And, Chris, just sort of at a very high level. We don't anticipate that we need to have anything new out there for folks to be able to prescribe out the gate. As we look at it, because the actual mechanistics of this are so similar to [Indecipherable] subcutaneous immunotherapy, codes that are traditionally and standardly used in the allergist office for those therapies would translate quite nicely. And I think actually if you look at the college guidance, that's pretty much what it says.

Andrew Oxtoby -- Chief Commercial Officer

Yes.

Christopher Raymond -- Piper Jaffray -- Analyst

Okay, good. And then just on the -- you guys talk a lot about helping allergists with the workflow and the anticipated patient flow once approved. And I think I've heard you guys talk at length about having this initial 1,300 physician target. And I would imagine you don't want to give a lot of details on this, but can you just give -- maybe give some general sort of flavor for where that 1,300 doc population is in terms of having workflow readiness if you will? You discussed perhaps even some of these clinics changing around the walls and specific ways that their offices are designed, how extensive is that?

Andrew Oxtoby -- Chief Commercial Officer

Yes. So I guess that 1,300 probably divided into two broad categories, Chris. The first is, you've got about 200 to 250 allergists that were either practicing some form of food IT today or were involved in our clinical trials, and so they're pretty much set up and ready to go. And they're comfortable and familiar with the protocol, and what would be needed.

The remaining group, it really just depends on the individual practice and the particular physician. In some cases, it's understanding what their space requirements are to allow the observation of patients, and so making sure that either got a communal waiting area or if they prefer some individual waiting rooms for patients. In other cases, it may be that they need to add some nursing staff to be able to help. In other cases, it may be just office staff to help with some of the processing of the paperwork and the medical exceptions and prior off. So it depends on the practice. And we see our job to make sure that we are facilitating some best practice sharing between people that are doing it, and people that are getting comfortable with, and those that want to learn how to do it. And so that will evolve as we launch the drug.

Jayson Dallas -- President and Chief Executive Officer

And I think, just maybe to add one thing to that, Chris, this is the two segments that make up this 1,300 are really the two segments who essentially are both willing and ready to initiate therapy. Now there are largely high throughputs skin sensors and so their ability to do high volume immunotherapy procedures is already in place. And so it's more of a fine-tuning exercise in the practice, and that's exactly why we picked them as our launch population.

I would just sort of out-of-interest point you to one of the posters that we'll be presenting at the college meeting in Houston over the weekend, which actually looks at the real-world implementation of oral immunotherapy versus kit in this kind of practice, and just kind of an interesting read because it shows you at a high level, there's a lot of similarity.

Christopher Raymond -- Piper Jaffray -- Analyst

Great. Okay. And one more question, if you don't -- if I might. Just noticing AR201, I think last time you guys talked about it last quarter, enrollment was I think anticipate to be mid 2020, and I think you guys are now describing in the second half. Can you maybe talk about, is there any issue or challenges specific to egg allergy versus peanut? Or is this just a normal sort of wrinkle?

Andrew Oxtoby -- Chief Commercial Officer

I think this is -- I wouldn't call the the wrinkle. This is kind of normal variation, right. This -- it's still early in the recruiting process here. We don't yet have all of the sites up and running, and as we sort of learn from the sites what it takes to get patients and we will sort of revise our timelines.

There is one added level of complexity with the egg program and that is there actually two food challenge tests that has to happen with each of these patients. So because there are two kinds of egg allergy, there's an egg allergy to any kind of egg product versus an egg allergy only to eggs that are not baked. So there a population who are not allergic to baked egg. We actually have to do two food challenges and test them with both raw egg and baked egg preparations. And so it's slightly more complex study, and it's really important to do that because we have to tease out the powering of the study to ensure that we have sufficient representation of both components of the egg allergy. And so I think this is sort of normal tweaking up expectations as we learn about recruiting these patients, but there is no fundamental issue.

Christopher Raymond -- Piper Jaffray -- Analyst

Great. Well, thanks very much, guys.

Operator

Next question is from Kennen MacKay from RBC Capital Markets. Your line is open.

Justin Burns -- RBC Capital Markets -- Analyst

Hi. This is Justin on for Kennen. Congrats on all the progress and forward momentum this quarter. A quick question for us on sort of the wait list that you guys have seen out there. We did a recent physician check that highlighted about 2,000 patients that are sort of ready to go upon potential approval for PALFORZIA, and granted that set in major healthcare center, and likely an outlier at the high-end. We're just kind of wondering what the feedback as you're getting from the 1,300 physicians that you've been in contact with? And if they've also got waitlist and if those are sort of in the dozens or if those are close to the 100, sort of what that pent-up demand kind of looks like?

Andrew Oxtoby -- Chief Commercial Officer

Yes. Hi, Justin. It's Andrew. Certainly, what you've just shared is consistent with the conversations that we've also had with physicians. I mean, 2,000 which certainly be toward the high-end. There are academic centers out there, which do have a pretty large waiting list, so they are in the 1,000. You also have smaller allergy centers, which it's more modest waiting list, and either the dozens or the low 100s. That said, the consistent theme is that if you look across the physicians that we've talked to, particularly those that are really ready and waiting to prescribe the therapy upon approval, there are waiting lists, and there is a pent-up demand for patients that would like to go on this product.

Jayson Dallas -- President and Chief Executive Officer

Anything else, Justin?

Justin Burns -- RBC Capital Markets -- Analyst

No. Thank you.

Jayson Dallas -- President and Chief Executive Officer

Okay. Thank you.

Andrew Oxtoby -- Chief Commercial Officer

Thanks.

Operator

The next question is from Brian Skorney from Baird. Line is open.

Brian Skorney -- Robert W. Baird -- Analyst

Hey, good afternoon, guys. Thanks for taking my question. Building a little bit off of Chris's questions on reimbursement coding. Can you talk a little bit about how you envision coverage working here with the REMS requirement for around specialty distribution or each of the escalation dose is going to be provided by the allergists at their office to take home the remainder of that dose. To the home and then when it switches into more maintenance therapy, would you envision this being something that you can pick up the full dose at CVS? And how do you think insurers will kind of look at those two different payment models? Will the payment be reimbursed at the same level, whether it's administered and given upon the patient leaving the office or whether it's picked up in CVS?

Andrew Oxtoby -- Chief Commercial Officer

Well, -- so -- a great question. We have since the development of the program really, we've been planning on the specialty pharmacy model to distribute this product for a number of reasons, including the patient experience, but also keeping in mind the safe experience for the patient. And so the REMS requirements, even though there are some additional things that we need to work through in terms of reporting, the distribution portion of that is entirely consistent with the use for specialty pharmacy model.

And so whether they're in the initial dose phase or the up-dosing phase or the maintenance phase, the plan is that we will continue to use specialty pharmacy to distribute the product to patients either straight to the physician's office or to the patient's home.

Jayson Dallas -- President and Chief Executive Officer

And I' just would make the point, Brian, that we talk about having built a number of the components of what is now the REMS program into our initial BLA submission. And in fact this distribution model has been what we've planned all along. One of the things that we're very, very conscious of as we think about particularly the up-dosing phase is the risk that any individual single patient has more than the dose that they are -- on that exactly that time in their possession. And we've created a model with that never happens and that there is some -- a number of checks and balances in the process to ensure that, that doesn't happen.

Andrew Oxtoby -- Chief Commercial Officer

And Chris, the only other thing I would add as well, just getting back to your -- point of your question around sort of pricing differences for different points in the dosing procedure. We have -- we've guided to this point that we are looking at a flat pricing model. So that regardless of where the patient is, whether it's in the up-dosing phase or in the therapeutic maintenance dosing phase, the price will be the same. And so the distribution will be the same and there should be no difference from either the patient or the payer perspective.

Brian Skorney -- Robert W. Baird -- Analyst

Great. And then maybe just as a follow-up on sort of how the initial launch goes. When you think about the conversion of allergists who currently administered some form of OIT versus those who haven't yet adopted it as a treatment. I mean, what level of work is involved in terms of training physicians on PALFORZIA? How different, it is for those two different kinds of treating physicians? And do you kind of see that as somewhat of a limiting step adoption in the beginning?

Andrew Oxtoby -- Chief Commercial Officer

Well, I certainly think that the -- there will be some training upfront for physicians who have not to administered this before. As we indicated earlier, a lot of the physicians, the reason that they haven't administered it is because they've been waiting for an approved therapy to be able to start OIT.

And so, we will provide the training, both through our practice account managers, as well as by facilitating some peer-to-peer programs and best practice sharing from those and that sort of 200 to 250 number which all practicing some form of OIT today. So the group, which are ready to go, but need some of the initial training and perspective on how it's done.

The other thing I would say is that -- as we've consistently said, there is a pretty good analog between the administration of shots for environmental allergies today and how allergy will be administered, how [Indecipherable] administered. And so even though there's some training required around the specifics, certainly, we don't think it's going to be a huge paradigm shift from many of these folks sort of have been practicing environmental allergy shots for a number of years now.

Brian Skorney -- Robert W. Baird -- Analyst

Great. Thank you. That's very helpful.

Operator

Next question is from Evan Seigerman from Credit Suisse. Line is open.

Evan Seigerman -- Credit Suisse -- Analyst

Hi, all. Thank you for taking the question and congrats on the progress. Just one on how we should think about expense next year in terms of the commercial ramp. Any color as to what type of expense guidance, you want to give or not guidance, but just how to think about the investments [Phonetic] to make, as you launch PALFORZIA? And then I have a follow-up question.

Andrew Oxtoby -- Chief Commercial Officer

Sure. Hi, Evan. Yes. So expenses next year will clearly shift from R&D to commercial, but with the expected revenues, we do anticipate that the operating burn next year will be lower than what we've seen this year.

Evan Seigerman -- Credit Suisse -- Analyst

Okay. And then my follow-up question. In terms of the potential launch in Europe, I know you had mentioned some updates regarding your M&A application. Is the physician demand and the demand for -- in all the key product for peanut similar in Europe. What is your market research showing to construct -- frame that potential opportunity?

Andrew Oxtoby -- Chief Commercial Officer

Well, I think it's -- it really depends on the particular country, Evan. So there are some countries and France is a good example, which we think is a really good opportunity for this drug where there is some use of food IT today by people processing allergy. So that's a market where much like the U.S., we'll be going in with a group of physicians are already understand, not just the disease, but also how to use it -- immunotherapy to treat it. On the other hand, there are other countries and Germany is one where they need more education around immunotherapy as a way of treating this. And so it really depends on the particular country. We're very bullish about Europe an an opportunity. We think it is a longer term opportunity just because of the fact that some other countries will go through some of this education that I mentioned. But it really depends on a country-by-country basis.

Jayson Dallas -- President and Chief Executive Officer

Yes. And just to be quantitative, you know, there are 32 countries when you talk about Europe and vast differences between them. But in the top five markets in Europe, we have about the same prevalence in terms of patients between four and 17 which is the indicated population as we do in the U.S., about 1.5 million patients. And so there's not a whole lot of difference between that. We do see bigger differences when we start looking at Asia, where it's just slightly less common, but the need in Europe is just as high.

Andrew Oxtoby -- Chief Commercial Officer

And our Phase 3 trials enrolled really well in Europe, as well. So clearly, there is awareness and an unmet need.

Evan Seigerman -- Credit Suisse -- Analyst

Excellent. Thank you very much for taking the questions. I appreciate it.

Andrew Oxtoby -- Chief Commercial Officer

Thank you.

Operator

Next question is from Paul Choi from Goldman Sachs. Line is open.

Corinne Jenkins -- Goldman Sachs -- Analyst

Hi. This is Corinne Jenkins on for Paul. Kind of in the same theme, could you talk a little bit about what kind of size, you expect to need for a sales force in Europe? In the cadence, we could see with regard to a build-out, is there a commercial footprint there?

Andrew Oxtoby -- Chief Commercial Officer

Yes. And I suppose I would also direct you back to the answer we just gave around the dependence on the actual country itself. So for a country like Germany, which is about 85 million people, obviously, need a bigger sales organization. But it's still a fairly concentrated subspecialty physicians sort of the prescribing this. And so you're talking about a pretty modest and manageable number of people we have in the field, supporting that group. And then as you go into smaller and smaller countries, you'll be talking about much smaller -- low-single-digit numbers of people in the field. And so we think that Europe is something that's very manageable, again because of the very focused number of physicians that would treat and prescribe PALFORZIA.

Jayson Dallas -- President and Chief Executive Officer

And Corinne, maybe one other consideration is just if you think about the timing and the staging of resource deployment, right, because really you get approve -- we get approved in the second half of next year, your initial launches in Germany. And then it takes at least 12 to 15 months to work through the reimbursement process in the other key markets. And we will be extremely thoughtful about resource deployment in a staged fashion, really kind of gated on certainty or higher degrees of certainty that you're going to get reimbursement in each of these markets. So that we're sort of thoughtful about how we deploy resource rather than just casting a big footprint across Europe out the gate.

Corinne Jenkins -- Goldman Sachs -- Analyst

Great. Thank you.

Operator

Next question is from Derek Archila from Stifel. Line is open.

Ben -- Stifel -- Analyst

Hey, thanks, guys. Ben, [Phonetic] on the line. I know you've kind of touched on this, but is there any more feedback that you guys can share from talks that you heard from your reps right now? Thanks.

Andrew Oxtoby -- Chief Commercial Officer

Well, I would say, Ben is that the feedback continues to be -- this is a medicine that a lot of physicians have been waiting for. As we indicated in some of our opening statements, there is a -- the main reason that a number of physicians have not been prescribing OIT for patients today, there's a lack of an approved therapy. And so the fact, there'll be something approved that they can treat their patients with something that they're very much looking forward to. And so our focus is going to be very much on working with them and supporting them to understand how to administer the product safely and effectively.

Jayson Dallas -- President and Chief Executive Officer

Yes. So Derek, just to be clear, we don't actually have reps in the field. At the moment, we have an MSL team of about [Speech Overlap]

Ben -- Stifel -- Analyst

MSLs, yes.

Jayson Dallas -- President and Chief Executive Officer

...it's been out for about a year, right, and are doing some of this work. But that is really complemented with some quite extensive physician research that we've done in -- physician segmentation work that we've done. And I think the assumption that all allergists behave the same is something that a while ago we realized is just not true. And they really are discrete segments of allergists in terms of both the way they treat patients and the way they think about oral immunotherapy. We've consciously decided to focus our launch effort on what we think are the two most ready segments for OIT. Those who are already doing it and those who tell us they are ready and excited about doing it, not just waiting for an FDA approved option. And who have high throughput clinics.

There is a third segment that we kind of see us Phase 2 where we think our MSLs sort of move into as we bring the commercial team on board to cover those first two segments. And that's the population who are really willing to treat but maybe have a little more to learn about how to implement it into their practice. So we kind of see this in ways, and our whole approach is to sort of go to a place where we're going to sort of get early utilization for us and then go down into the rest of the allergy population over time.

And there is no question that when you see a new therapy come into a therapeutic area that hasn't had a solution before. That is exactly how it happens in any case, right. There are folks who sort of wait to see what happens and you kind of want to address those folks once you've got really good experience in the practices, who are ready to adopt early. And so it's kind of a way of saying there isn't really one answer to your question. It's really quite dependent on how you think about segmenting the population.

Ben -- Stifel -- Analyst

Got it. Thanks for the intro, guys, appreciate it.

Jayson Dallas -- President and Chief Executive Officer

Thanks, Derek.

Operator

I am showing no further questions at this time. I would now like to turn the conference back to Dr. Jayson Dallas.

Jayson Dallas -- President and Chief Executive Officer

Thank you so much. And just to sort of summarize, this is indeed a really truly exciting time for us here at Aimmune, as we potentially get close to bring in the first-ever FDA approved treatment to children and adolescents with peanut allergy. PALFORZIA, if approved will be the first and only FDA-approved treatment for any kind of food allergy, and we're really excited about that.

As we prepare for potential commercial launch of PALFORZIA, we're building out a commercial organization and other supporting functions in both the U.S. and Europe, and we've been able to attract extraordinarily talented individuals to help us in this important mission. We, therefore, have the resources both in terms of personnel and finances to launch PALFORZIA if approved as well as to advance our pipeline.

Finally, I would like to thank the entire food allergy community, especially the families who have participated in or are continuing to participate in our clinical trials without whom the progress we've made to-date would not be possible. And I look forward to speaking with many of you in the coming weeks and months. Thank you very much.

Operator

[Operator Closing Remarks]

Duration: 44 minutes

Call participants:

DeDe Sheel -- Vice President of Investor Relations

Jayson Dallas -- President and Chief Executive Officer

Andrew Oxtoby -- Chief Commercial Officer

Eric Bjerkholt -- Chief Financial Officer

Charles Duncan -- Cantor Fitzgerald -- Analyst

Christopher Raymond -- Piper Jaffray -- Analyst

Justin Burns -- RBC Capital Markets -- Analyst

Brian Skorney -- Robert W. Baird -- Analyst

Evan Seigerman -- Credit Suisse -- Analyst

Corinne Jenkins -- Goldman Sachs -- Analyst

Ben -- Stifel -- Analyst

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