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Flexion Therapeutics Inc (NASDAQ:FLXN)
Q3 2019 Earnings Call
Nov 7, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen, and welcome to the Flexion Therapeutics Third Quarter 2019 Financial Results Conference Call. My name is Dylan, and I'll be your coordinator today. [Operator Instructions]

I'll now turn the call over to the Company.

Scott Young -- Vice President, Corporate Communications & Investor Relations

Good afternoon. This is Scott Young, Vice President for Corporate Communications and Investor Relations.

Before we begin, I would call your attention to the metric slides that we will discuss in today's presentation. Those slides can be viewed directly via the webcast, in the 8-K we issued this afternoon, under the investors tab on flexiontherapeutics.com. In addition, our Q3 earnings press release and an archive of this conference call can be found there. Today's call will be led by Flexion's Chief Executive Officer, Dr. Michael Clayman; and he's joined by David Arkowitz, Flexion's Chief Financial Officer.

On today's call, we will be making forward-looking statements that include commercial, financial, clinical and regulatory projections. Statements relating to future financial or business performance, conditions or strategies or other business matters, including expectations regarding net sales, operating expenses, cash utilization, clinical, regulatory and commercial developments, and anticipated milestones are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Flexion cautions that these forward looking statements are subject to various assumptions, risks and uncertainties which change over time.

Additional information on the factors and risks that could affect Flexion's business, financial conditions and results of operations are contained in Flexion's Form 10-Q for the quarter ended September 30th, 2019, filed with the SEC today and other filings which are available at www.sec.gov, as well as Flexion's website. These forward-looking statements speak only as of the date of this call and Flexion assumes no duty to update such statements.

I will now turn the call over to Flexion's CEO, Mike Clayman.

Mike Clayman -- Chief Executive Officer & Co-Founder

Thanks, Scott, and thank you all for joining the call. It's my pleasure to provide an update on Flexion's third quarter business performance. Today I'll discuss ZILRETTA's progress in the market, recap our recent regulatory, clinical and business development achievements; and then turn it over to David for a deeper review of our commercial metrics and a summary of our financial performance; after that, we will open the line and take questions.

To begin, as we announced in the press release this afternoon, we recorded ZILRETTA net sales of $21.8 million in the third quarter, which represents growth of 29% over the second quarter. Throughout the course of 2019, we have seen increased traction with existing accounts, as well as strong penetration into new accounts.

As we have discussed previously, we believe this momentum can be attributed to several key factors, including the overwhelmingly positive feedback patients are sharing with their physicians, the reliable and expeditious reimbursement that has resulted from ZILRETTA's dedicated J-Code, changes we've made in our commercial organization throughout the year, and more recently, activities focused on enhancing the value proposition to purchasers and providers, including GPO contracting and a volume-based healthcare provider rebate program that we implemented in the third quarter.

Based on ZILRETTA's strong and consistent sales growth throughout the year, we are tightening our revenue guidance for the full year to $70 million to $75 million. Regarding our pending supplemental NDA-related to repeat administration, we had expected a decision by our PDUFA date of October 14th, but as we previously announced, the FDA informed us that this date would be missed. While the FDA's decision is still ahead of us and I can't speculate about the outcome, I can report that we are having ongoing discussions with the agency and we continue to believe that the totality of the data, support and improvement to ZILRETTA's label. We are hopeful that their review of the sNDA will conclude shortly, and we will certainly provide an update as soon as possible.

With respect to other clinical development activities, we recently initiated a Phase II trial to investigate the safety and efficacy of ZILRETTA in shoulder osteoarthritis and adhesive capsulitis, which is also known as frozen shoulder syndrome. We believe these two conditions present an opportunity assuming ultimate approval to expand the use of ZILRETTA with the subset of orthopedics who primarily focus on sports medicine and commonly treat these conditions with steroid injections. Of note, while approximately 20% of OA patients have diabetes, the prevalence in patients with adhesive capsulitis is almost double that. The potential for ZILRETTA to limit the incidents or magnitude of hyperglycemia following injection may be particularly relevant in this population. We anticipate that data from these trials will be available in the first half of 2021.

As for our Phase III trial investigating ZILRETTA in hip OA, on our last call we mentioned that we paused enrollment due to a non-safety issue related to the inability to deliver a full dose in a small number of trial participants. We subsequently conducted an exploratory study designed to resolve the issue, that study was unsuccessful, and as a result, we are discontinuing the Phase III trial in hip OA.

To provide some additional color behind our decision, we initially observed this issue during our PK study in shoulder and hip, also known as SHIP. During that study, we had one site experience difficulty administering the product in a few hip OA patients. And at that time, we believe the issue was related to dose prep or the administration technique employed by the investigator. Importantly, we did not observe anything similar in shoulder and we believe that this product administration issue is related to the specific architecture of the hip joint. Clearly, we hope that the hip trial would be successful, but our decision to discontinue it was driven by our commitment to placing our efforts and resources on the opportunities which present us with the greatest potential for success, patient benefit and value. For context, fewer than 5,000 injections are administered for hip OA annually as compared to approximately 1 million injections for shoulder OA and adhesive capsulitis combined, and nearly 8 million injections administered for new OA.

Regarding our pipeline, we made excellent progress in the third quarter with the IND clearance for FX201 and the addition of FX 301. With respect to FX201, our IND acceptance were supported by robust preclinical data which established a potentially safe and efficacious starting dose for our Phase I single ascending dose study. We remain on track to treat the first patient before the end of the year and the trial is expected to enroll approximately 15 to 24 patients who will be followed for 104 weeks, with initial readout in 2021. We will present compelling non-clinical data that was included in the FX201 IND submission at the upcoming American College of Rheumatology or ACR annual meeting. Additionally, as we announced last week, we have assembled a Blue Ribbon Scientific Advisory Board to provide ongoing technical and strategic guidance as the program advances.

As for FX301, in September, we signed an agreement with Xenon Pharmaceuticals for the global rights to develop and commercialize their NaV1.7 inhibitor XEN402, which we are formulating within a thermosensitive hydrogel for administration as a peripheral nerve block for control of post-operative pain. FX301 is a natural fit for Flexion, as it leverages our deep understanding of musculoskeletal pain and our demonstrated formulation expertise. Unlike typical local anesthetics, we believe the selective pharmacology of FX301 has the potential to deliver effective pain relief while preserving motor function, which could enable ambulation, rapid discharge and early rehabilitation following musculoskeletal surgery. We anticipate that FX301 will enter the clinic in 2021.

As for other scientific publications and presentations, in October, the results from our Phase IIa study evaluating the safety and systemic exposure of concurrent injections of ZILRETTA in patients with bilateral knee OA were published in the peer-reviewed journal, Therapeutic Advances in Musculoskeletal Disease. We initially presented these findings at the 2018 ACR annual meeting and they showed that concurrent, bilateral administration of ZILRETTA appeared safe and well tolerated, resulting in reduced systemic exposure and substantially lower plasma concentrations of triamcinolone acetonide compared to immediate-release triamcinolone acetonide in crystalline suspension.

In addition to our FX201 data, next week at ACR we will present the results from a study which evaluated the potential of artificial intelligence to measure and predict OA disease progression. The study used machine learning to evaluate MRI data from the osteoarthritis initiative to develop a three-dimensional OA bone shape model of disease progression. It looked at nearly 48,000 MRIs of more than 9,000 knees, taken at various time points over an eight-year period, with the aim of establishing a relationship between structure and clinical outcomes.

Finally, regarding our search for a Chief Commercial Officer, those efforts are ongoing and we will keep you apprised as developments warrant.

I'll now turn it over to David to walk through the commercial metrics, and summarize our third quarter financials.

David Arkowitz -- Chief Financial Officer

Thank you, Mike. I'll start by walking through our commercial metrics, which as Scott mentioned, can be found on our website and in the 8-K we issued today.

I'll begin with Slide 2, which includes several key metrics that provide important context on the progress of ZILRETTA's launch. As Mike mentioned, we recorded net sales of $21.8 million in the third quarter, representing growth of 29% over the second quarter, and we called on nearly all of our 4,600 target accounts. Our continued strong quarter-over-quarter sales growth we believe is attributable to a number of key factors, including ongoing and very positive patient and physician feedback, the permanent J-Code, enhancements to our commercial organization, and steps we have taken to address economic considerations associated with the adoption of ZILRETTA, such as the volume-based healthcare provider rebate program we introduced in the third quarter.

As we've discussed on previous calls, we expect the number of target accounts to grow as our sales reps broaden their reach. At the end of the third quarter, 3,130 accounts had purchased ZILRETTA, which is an increase of approximately 400 purchasing accounts compared to the 2,733 accounts that had purchased product as of the end of the second quarter. With respect to reorders, we have seen our reorder rate tick up over the last three quarters. As of the end of the first and second quarters, the reorder rates were 71% and 73%, respectively, and as of September 30, we had 2,344 accounts or 75% of purchasing accounts placed at least one reorder for ZILRETTA, and this increase is off of a growing customer base.

Moving to Slide 3. Here you can see a graph of our quarterly sales since launch, including the $21.8 million in net sales we recorded in the third quarter. This paints a very clear picture of ZILRETTA's growth in the market. And as Mike stated earlier, this provides us with the confidence to tighten our full-year 2019 net sales guidance range to $70 million to $75 million.

Now on Slide 4. This slide and the remaining two slides reflect purchases of ZILRETTA by accounts, which represent physician practices, clinics and hospitals of various sizes and purchasing potential. As we look at the distribution of accounts that have purchased ZILRETTA since launch, we stayed with the same groupings that we shared in the second quarter, accounts that have purchased 1 to 10 units, purchased 11 to 50 units or purchased more than 50 units. We continue to see a significant number of accounts with purchases of 1 to 10 units. And as of September 30, roughly 1,500 accounts had made purchases in this range.

As I mentioned before, we have continued to expand the customer base and new accounts generally place initial orders in this range with the frequency and size of their purchases often growing over time as they receive patient feedback on the benefits of ZILRETTA and experience consistent and reliable reimbursement. As of the end of the third quarter, more than 900 accounts had purchased 11 to 50 units. In addition, 670 accounts had purchased more than 50 units representing 45% growth over the period from launch through June 30, 2019. We continue to be very pleased with this progress. However, for these highest utilizing accounts, when we consider early adopters, there is still meaningful opportunity to more fully incorporate ZILRETTA into their practices.

Moving to Slide 5, you can clearly see the significance of these early adopting accounts on the total purchases of ZILRETTA to-date. While the total number of accounts that have purchased more than 50 units is 670, which is about 21% of the total purchasing accounts, these accounts purchased approximately 109,000 units or roughly 79% of all purchases since launch. As we have mentioned previously, accounts generally move along this ZILRETTA utilization continuum from 1 to 10 units to 11 to 50 units and then to more than 50 units, which highlights the potential for significant sales from our current customer base of approximately 3,100 purchasing accounts.

Looking at Slide 6, you can see how the ZILRETTA purchasing breaks out by new and existing accounts. As I mentioned previously, while we expect over time to see a slowing in the number of new accounts coming on board each quarter, the continued addition of new accounts gives us tremendous confidence in ZILRETTA's long term potential.

So now let me briefly walk through the third quarter financial results, which we included in the press release issued this afternoon and in our 10-Q. We reported net sales of ZILRETTA for the third quarter of 2019 of $21.8 million compared to net sales of $7 million for the third quarter of 2018. The cost of sales was $2.9 million and $1.6 million for the third quarter of 2019 and 2018 respectively. The net loss was $38.2 million or $1 per share for the third quarter of 2019 compared to a net loss of $43.6 million or $1.15 per share for the same period of 2018.

The third quarter 2019 net sales reflect a gross-to-net reduction of 14%. The gross-to-net reduction is primarily comprised of distributor and service fees, returns reserve, healthcare provider rebates and mandatory government discounts and rebates such as Medicaid 340B institutions and Veterans Administration and Department of Defense. As we previously mentioned in the third quarter, we started offering rebates to eligible healthcare providers that are variable based on the volume of product purchased. These provider rebates contributed 6% of the third quarter total gross-to-net reduction of 14%.

Research and development expenses were $20.9 million and $13.6 million for the three months ended September 30, 2019 and 2018, respectively. The increase in research and development expenses of $7.4 million was primarily due to a $3 million upfront payment to Xenon Pharmaceuticals for the global rights to XEN402 and $3.8 million for increased development expenses for ZILRETTA clinical trial costs related to shoulder and hip and other life cycle management activities.

Selling, general and administrative expenses were $32.1 million and $32.8 million for the three months ended September 30, 2019 and 2018, respectively. Selling expenses were $23.9 million and $23.7 million for the three months ended September 30, 2019 and 2018, respectively. General and administrative expenses were $8.2 million and $9.1 million for the three months ended September 30, 2019 and 2018, respectively, which represents a decrease of $0.9 million.

Interest income was $0.7 million and $1.2 million for the three months ended September 30, 2019 and 2018, respectively. Interest expense was $4.7 million and $3.9 million for the three months ended September 30, 2019 and 2018. We expect that our operating expenses will continue to increase, primarily driven by commercial activities in support of ZILRETTA, line extension clinical trials for ZILRETTA, continued development of FX201 and FX301, and development activities associated with future additions to the pipeline.

As of September 30, 2019, we had approximately $175.8 million in cash, cash equivalents and marketable securities compared with $258.8 million as of December 31, 2018. We believe that our current cash balance with the expected future sales of ZILRETTA and the ongoing prudent management of our expenses will bring us to profitability. With that said, it is important to add that, as always, we will be opportunistic as it relates to potential funding decisions and we will do what we believe is in the best long-term interest of Flexion and our shareholders.

At this point, I would ask the operator please open the line for questions.

Questions and Answers:

Operator

Thank you, sir. [Operator Instructions] Our first question comes from Randall Stanicky from RBC Capital Markets. Please go ahead.

Daniel Busby -- RBC Capital Markets -- Analyst

Hey guys. This is Dan Busby on for Randall. A few questions from me. First, if we take the midpoint of your updated ZILRETTA guidance and implies a deceleration in growth in 4Q relative to 3Q, is that the right way to think about the upcoming quarter or could there be some conservatism built into the guide?

Mike Clayman -- Chief Executive Officer & Co-Founder

Yeah, Dan, it's a great question. And as we've consistently said about our guidance, we are providing numbers be in a range that we believe are credible and achievable. And we believe $70 million to $75 million is both of those and we'd be very pleased with that.

Daniel Busby -- RBC Capital Markets -- Analyst

Okay. And second, with respect to your Repeat Administration sNDA, has FDA provided a reason for the delay as part of your ongoing dialog?

Mike Clayman -- Chief Executive Officer & Co-Founder

You have to realize that the agency tends to be reasonably opaque about these kinds of things. So we do not have any clear insight into exactly what is transpiring there. And as I expect that others will have questions about the status of the sNDA, I'll simply say that, at this point in essence, what we have put in the press release and in the script is the extent of our knowledge.

Daniel Busby -- RBC Capital Markets -- Analyst

Got it. Understood. And last question from me. Where do you expect gross-to-net to settle out once your volume-based rebate program is fully implemented and in place?

David Arkowitz -- Chief Financial Officer

Sure. So -- this is David. So at this point, we're not going to be providing a projection of our gross-to-net reductions as we are focused on continuing to address economic considerations related to ZILRETTA utilization, such as the introduction of the rebate program in the third quarter. There will be clearly greater variability on the future gross-to-net reductions. We're going to continue to in a thoughtful and judicious way, look at approaches and means in which we can handle the value proposition as it relates to ZILRETTA for healthcare providers and intermediaries such as GPOs.

Daniel Busby -- RBC Capital Markets -- Analyst

Got it. Thanks guys.

Mike Clayman -- Chief Executive Officer & Co-Founder

Thanks, Dan.

Operator

Thank you. Our next question comes from Gary Nachman from BMO Capital Markets. Please go ahead.

Gary Nachman -- BMO Capital Markets -- Analyst

Hey guys, congrats on the quarter, and great progress.

Mike Clayman -- Chief Executive Officer & Co-Founder

Thank you, Gary.

Gary Nachman -- BMO Capital Markets -- Analyst

So how is the direct ordering with physician practices and this value-based rebate program been helping uptake. I know it's early, but is that driving a lot of the shift to the 50 plus bucket that you highlighted?

David Arkowitz -- Chief Financial Officer

Gary, this is David. So we're not going to break out sales by these specific initiatives and activities. What we can say is, these things are all -- these things are all contributing to the performance that we had in the third quarter and we will continue to use these initiatives, these activities, and add to them in subsequent quarters to drive continued growth in utilization and adoption.

Gary Nachman -- BMO Capital Markets -- Analyst

Okay. And I mean within that bucket of 51 plus, is there a group that's really high. So curious where the ceiling might be for some of your best accounts, and at certain prices they are contributing to so much of the volume. I'm curious, just within that group how concentrated it might be?

David Arkowitz -- Chief Financial Officer

Sure. So I think what I can do is share a couple of additional pieces of information. The first is, if you look at the 50 -- more than 50 bucket and look at the average units purchased over the last couple of quarters -- over the last three quarters, it's gone from -- the average has gone from 120 on average to -- in the first quarter to 136 in the second quarter to 163 in the third quarter. So we're getting greater utilization out of those what we call the early adopters. That's point one. Point two is, we do have a number of accounts, more than 25 accounts that have purchased more than 50 units -- excuse me, more than 500 units of ZILRETTA launched to-date.

Gary Nachman -- BMO Capital Markets -- Analyst

Okay. That's very helpful. And then Mike, I know it's hard, there is not much that you could share in the communications with FDA. But since it's taking them a bit more time, you think it's more likely we'll see a modification of the language versus a complete removal of the LOU from the label?

Mike Clayman -- Chief Executive Officer & Co-Founder

Yeah, Gary, I simply say -- to avoid speculation, I'll simply say that we continue to proceed with confidence in the data that supports an improvement in the label. To go beyond that is to stray into the realm of speculation. And I think as you can appreciate, Gary, to speculate on who's [Phonetic] going to transpire with the FDA is to do so at your substantial risk.

Gary Nachman -- BMO Capital Markets -- Analyst

Okay. That's fair. And then, assuming that it does turn out favorably and there is some change, how quickly could you implement that to your promotional materials and how long before you think we might see a benefit? And then just, I know you've talked about in the past, but just characterize how much of a benefit you think it might be? Thanks.

Mike Clayman -- Chief Executive Officer & Co-Founder

Yeah. So in terms of translating the new label language, assuming we get new label language, translating that into marketing materials, I can tell you that there has been a -- this should come as no surprise to you that there has been a broad and deep cross-functional team focused on exactly that and they've done an outstanding job preparing for a variety of different outcomes, and I'm confident that we will see new marketing materials within hours to days after we get the finalized language from the agency.

We expect that this will provide progressive positive influence on sales, just like with the J-code, it is not going to be the flip of a light switch. It will create the opportunity for dialog and a lowering in the threshold for repeat dosing. It will have ramifications for prescribing physicians and those handful of payers that have had any resistance to the idea of repeat injection. That will be a process that will roll out over the months and quarters. But I can tell you, we have done internally everything humanly possible to prepare for rapid implementation of updated materials in the floor.

Gary Nachman -- BMO Capital Markets -- Analyst

Okay, great. Thank you.

Mike Clayman -- Chief Executive Officer & Co-Founder

Thank you.

Operator

Thank you. Our next question comes from Elliot Wilbur from Raymond James. Please go ahead.

Elliot Wilbur -- Raymond James -- Analyst

Hey, good afternoon. First question actually for David. With respect to gross margin trends going forward, been somewhat volatile over the last couple of quarters, but how do we think about this period sort of being a baseline going forward, especially as you implement some of these new volume-based and rebate-based programs?

David Arkowitz -- Chief Financial Officer

Yeah, Elliot. So gross margin in this quarter, the third quarter was about 87%, and that is a reduction from 92% in the second quarter. We've always said that expect some inherent variability in our gross margins as we continue to ramp from a manufacturing standpoint. Once we hit steady state, and we're not at steady state at this juncture, we think gross margins are going to be around 90%. So we're getting there, but we're not there yet.

Elliot Wilbur -- Raymond James -- Analyst

Okay. So your -- you would not anticipate some of these new initiatives to have a material impact on gross margins, basically is that?

David Arkowitz -- Chief Financial Officer

I think we're still going to see some variability over the near to intermediate time frame?

Elliot Wilbur -- Raymond James -- Analyst

Okay. And then a couple of questions for Mike. Based on -- now what I imagine is, rather significant interaction with the agency around the limitation of use language and the multi-dose study that you guys have put together, how might that inform your thinking about the study design in shoulder and adhesive capsulitis that I would -- I would assume that you would sort of look to address some of the issues that have risen knee indication and with the data in those studies, probably -- most likely sort of simultaneously with the submission itself?

Mike Clayman -- Chief Executive Officer & Co-Founder

Well, Elliot, it's a very good question. Under active -- I think we say under active consideration, what we'd like to do is do this sequentially. Let's see how we come out with this current round of discussions with the agency and that will inform our decision-making in shoulder.

Elliot Wilbur -- Raymond James -- Analyst

Okay. And one last question for you, Mike, as well. With respect to FX20, obviously knee OA is the big target here. But once you get through the Phase I study, how might your thinking evolves in terms of potentially running different joint program simultaneously. I'm assuming that obviously 201 would have applicability in joint similar to what standard TCA or steroids would, but just wondering if you might be considering more rapid development in other joints and more of a simultaneous development program rather than sequenced? Thanks.

Mike Clayman -- Chief Executive Officer & Co-Founder

Elliot, it's a very good question. And clearly that gene therapy does lend itself to a variety of different joints. I think it's fair to say that we will take this step-wise, we will define the value proposition in knee and devote our effort and attention and energy to knee since that is such an important part of the unmet medical need out there. And we will judicially consider other joints and other conditions that might benefit from this approach. Having said that, I do think knee is top of mind for us, because getting it right in knee and getting that across the finish line represent such an enormous opportunity.

Operator

Thank you. Our next question comes from Serge Belanger from Needham & Company. Please go ahead.

Serge Belanger -- Needham & Company -- Analyst

Hi, good afternoon. A couple of questions on ongoing commercialization efforts. First on DTC, can you give us an update there? Are you at a point where you can -- where you decide to expand the DTC advertising and then where are you at -- on the CCO search?

Mike Clayman -- Chief Executive Officer & Co-Founder

CCO. Oh, OK. So it relates to DTC, Serge, there are variety of different ways you can approach DTC and there are web-based approaches and print material approaches that we are embracing increasingly and I would say stay tuned on that. But we think that there is a big opportunity to reach even more patients going forward than we have to-date.

On the CCO search, I'd say that we're -- we continue to look for an individual who has great leadership skills and excellent track record of success leading a commercial organization, and someone who will add to the culture and be consistent with the values of this organization. We're proceeding with confidence that we will find an outstanding individual. And a follow-on question that you might have or someone else might have as well is our timeline to this, and the answer is yes, there is a timeline and that is as soon as possible.

Serge Belanger -- Needham & Company -- Analyst

Okay. And then just on the pipeline. I know the FX301 acquisition is pretty recent, but can you just give us kind of a broad timeline for how this product will move toward the clinic?

Mike Clayman -- Chief Executive Officer & Co-Founder

Yeah, I think we've guided to the fact that we expect to be in the clinic in 2021 assuming supportive toxicology -- GOP toxicology, and that's -- I think that's a very reasonable, incredible timeline.

Serge Belanger -- Needham & Company -- Analyst

Thank you.

Mike Clayman -- Chief Executive Officer & Co-Founder

Thank you, Serge.

Operator

Thank you. [Operator Instructions] Our next question comes from Patrick Trucchio from Berenberg. Please go ahead.

Iris Lon -- Berenberg -- Analyst

Hi, good afternoon. This is Iris Lon on for Patrick. So I just have a few question. The first related to LOU. You believe that the external expectation for 2020 are reasonable, whether that LOU can be removed from the label? And then on the OA hip, related to the continuation of the hip trial, should we think of ZILRETTA in OA hip that's being impossible or maybe is there perhaps a different formulation or lower dose that could work in this indication? Thanks.

Mike Clayman -- Chief Executive Officer & Co-Founder

Yeah, let me -- so just to be clear, I think we missed your first question. Can you -- do you mind repeating that?

Iris Lon -- Berenberg -- Analyst

Yeah, sure. So related to the LOU, I'm just wondering if you're saying that the external expectation for 2020 are reasonable, whether the LOU can be removed or not?

Mike Clayman -- Chief Executive Officer & Co-Founder

We have not spoken about 2020. We anticipate we will ultimately put out guidance for 2020. So I'd simply say stay tuned in that regard.

As it relates to hip, we don't use the word impossible around here very much. It's a question of where do you put your resources to achieve the best return on what our precious investor dollars, and at this point, we believe that those dollars are best spent on other very high potential opportunities. I can't preclude the possibility that the right time we might revisit hip, but given everything we know, we're turning our attention to other higher priority potential projects.

Operator

Thank you. I show no further questions in the queue. At this time, I'd like to turn the call over to Mike Clayman, CEO, for closing remarks.

Mike Clayman -- Chief Executive Officer & Co-Founder

I'd simply like to thank everybody for your time and attention. I have to tell you that we are very enthusiastic about where we've ended up in the third quarter through the dent [Phonetic] of efforts of a tremendous field organization who are working hard every day to get what we believe is a medicine that matters to patients in need. And we look forward to updating you on the fourth quarter results shortly after the beginning of next year. Thanks a lot.

Operator

[Operator Closing Remarks].

Duration: 37 minutes

Call participants:

Scott Young -- Vice President, Corporate Communications & Investor Relations

Mike Clayman -- Chief Executive Officer & Co-Founder

David Arkowitz -- Chief Financial Officer

Daniel Busby -- RBC Capital Markets -- Analyst

Gary Nachman -- BMO Capital Markets -- Analyst

Elliot Wilbur -- Raymond James -- Analyst

Serge Belanger -- Needham & Company -- Analyst

Iris Lon -- Berenberg -- Analyst

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