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OptiNose, Inc. (NASDAQ:OPTN)
Q4 2019 Earnings Call
Mar 5, 2020, 7:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the OptiNose Q4 2019 Earnings Call. [Operator Instructions]

I would now like to hand the call over to Jonathan Neely. Please go ahead.

Jonathan Neely -- Vice President, Investor Relations and Business Operations

Good morning and thank you for joining us today as we review OptiNose's fourth quarter and full year 2019 performance and our plans for the year ahead. I'm joined today by our CEO, Peter Miller; our President and Chief Operating Officer, Ramy Mahmoud; our new Chief Commercial Officer, Vic Clavelli; and our CFO, Keith Goldan. The slides that will be presented on this call can be viewed on our website optinose.com in the Investors section.

Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements. All statements that are not historical facts are hereby identified as forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated by such statements. Additional information regarding these factors and forward-looking statements is discussed under the Cautionary Note on Forward-Looking Statements section of the earnings release that we issued today, as well as under the Risk Factors section and elsewhere of OptiNose's most recent Form 10-K that is filed with the SEC and available at their website sec.gov and on our website at optinose.com.

You are cautioned not to place undue reliance on forward-looking statement. The forward-looking statements during this conference call speak only as of the original date of this call or any earlier date indicated in such statement. And we undertake no obligation to update or revise any of these statements. We will now make prepared remarks and then we will move to a question-and-answer session.

With that, I will now turn the call over to Peter Miller. Peter?

Peter K. Miller -- Chief Executive Officer and Director

Thanks, Jonathan, and good morning, everybody. We appreciate you joining us for our fourth quarter update. Before we get started with our business update, I'd like to introduce our new Chief Commercial Officer, Vic Clavelli, and let you know how delighted we are to have Vic joining David Fabbri, John Peterkins and the rest of our talented and experienced commercial team. Vic has over 20 years of great results as a commercial pharmaceutical leader with Pfizer where he was most recently the President of the North American Inflammation and Immunology business. While at Pfizer, he grew several blockbuster brands, including Lipitor, Viagra, Chantix and, most recently, Xeljanz, which grew from approximately $250 million in 2014 to over $1.5 billion in 2019 under Vic's leadership. I think you'll enjoy getting to know Vic and see for yourself why we're so excited to have him on the team.

Starting on Slide 3, we'll go in more detail in a moment, but I'd like to start by providing five key takeaways that we believe are supported by the details in today's presentation. First, as we close our first full year on the market, we feel our 2019 results indicate that we've adopted a successful commercial strategy that is driving strong XHANCE growth, as evidenced by six consecutive quarters of robust prescription and share trends. Second, there is a substantial opportunity ahead for XHANCE. Despite a significant share gains over the past year, a great deal of potential remains available for us to realize in the future. Third, our cash position is strong at $147 million as of December 31st, 2019, and the Pharmakon financing we closed in September has the potential to provide incremental cash of up to $70 million total through 2021, including $30 million we added recently. Fourth, our full year 2019 financial performance was aligned with our company guidance. Fifth, we're providing some additional company guidance related to first quarter and full year 2020 performance. We hope that our ability to deliver on our guidance in 2019 weighs favorably on your evaluation of our projections for the year ahead.

Turning to Slide 4. Since the launch of XHANCE, we focus largely on how we have performed on a quarter-over-quarter basis. With the end of 2019, our first full year on the market, we thought it would be useful to take a step back to evaluate our annual growth and provide a broader perspective on what our team achieved in 2019. For the full year of 2019, XHANCE net revenues increased 330% to $30.4 million, approximately 154,000 XHANCE prescriptions were filled and XHANCE net revenue per prescription averaged $198. Both the XHANCE net revenues and XHANCE net revenues per prescription were aligned with our guidance. In addition, we were disciplined with respect to our expenses. For full year 2019, we had $125 million of operating expenses, which was better than our guidance. In today's launch update, I'd like to dive a little deeper than we have in the past from the measures that we use to monitor performance and give us confidence in the growth potential of XHANCE.

Turning to Slide 6. I'm encouraged by the strong growth in total prescription volume we delivered through the last five quarters. However, knowing that we believe that underlying demand for a product underpins the mid to long-term success of the product, we believe it's important to dive a bit deeper and understand the relative contributions of new prescription demand and refill prescriptions to our overall prescription volume. Both new and refill prescriptions are important. The growth in new prescriptions suggest increasing customer interest in using the product, and each new prescription creates the potential from multiple future refill prescriptions. In fourth quarter 2019, there were more than 21,000 new prescriptions of XHANCE, that was a 19% increase compared to third quarter of 2019 and more than twice the number of new prescriptions in fourth quarter 2018. We believe that continuing to generate strong new prescription growth at this point in the launch is a very good sign of the health of the business and contributes to our confidence in strong long-term future growth.

Turning to Slide 7. In fourth quarter 2019, there were approximately 33,000 refill prescriptions of XHANCE, a 31% increase compared to third quarter 2019 and more than 6 times the number of refill prescriptions in fourth quarter 2018. In the refill area, we are very encouraged and, through 2019, we have seen a substantial increase in the number of prescriptions per patient per year. In fact, we observed a generally increasing trend in 2019, and we are now approaching four prescriptions per patient per year through our preferred pharmacy network. We believe this level of prescription refills is an indication that in a real world practice, patients are finding XHANCE to be helpful in treating their chronic condition.

Turning to Slide 8. Pulling the new and refill prescriptions together, the total number of XHANCE prescriptions in fourth quarter of 2019 was approximately 54,000. This represents 26% growth over the third quarter of 2019 and compared to the fourth quarter of 2018, an increase by nearly a factor of 4.

Turning to Slide 9. We believe there is a large market for XHANCE and therefore believe that there is tremendous upside that remains for the product in the current target audience of physicians. Growth in XHANCE share expressed as a proportion of all intranasal steroid prescriptions written by physicians in our target physician audience was rapid and steady in 2019. Share increased from 0.9% in fourth quarter of 201% to 3.5% in fourth quarter of 2019. We believe it as more physicians continue to observe XHANCE treatment results in their own patients, they are likely to continue to increase their prescribing of XHANCE, which will result in continued strong growth.

When we asked these physicians why they're prescribing XHANCE at these levels, they typically respond, they have found for themselves with the product really works for their patients and report that XHANCE access and affordability has proven to be better than the originally expected. We believe both of these factors may become increasingly apparent to physicians in our target audience during 2020.

Overall, we are confident that continued execution against our current commercial model can increase share in 2020 and continue to convert physicians from early experimenters to more substantial layers. Our plan includes a continued focus on communicating XHANCE efficacy and differentiation, providing seven-day samples and trial programs so physicians can more easily see results in their own patients, and communicating our support for patient access and affordability. To the last point, we're providing our sales force new tools to educate physicians on the actual access and affordability we achieved in today's environment because we're finding that many physicians have a core belief that it is difficult for any recently launched branded product like XHANCE to gain strong access and affordability. I'm pleased to report and as we enter 2020, we continue to have XHANCE coverage approximately 75% of commercially insured lives with the significant majority of all commercially insured patients paying between zero and $30 after application of our co-pay savings. This is a strong access and affordability message and our sales team will continue to educate physicians on our access and affordability.

I'd also like to note that in January we hired 80 territory managers for deployment into new geographic territories to further boost growth in 2020. We treat a condition with easily recognizable symptoms and our market research suggests a substantial number of people have dropped out of regular care in frustration over available treatment options, because of this we continue to believe that in the long term direct-to-consumer advertising could play a strong role in building the business. In 2020 we are continuing to take a disciplined approach to experiment -- experimentation with DTC marketing.

I'm pleased to report that our single season multichannel test market pilot in Cleveland, Charlotte and Hartford in 2019 produced encouraging results with regard to the ability to produce patient awareness of its hands and also drive intent to act on that interest. However, before jumping into a broader and more costly deployment we would next like to test ways to increase the efficiency with which activated patients can be connected with a physician who is knowledgeable about XHANCE. We believe that increasing the rate at which patients are able to find physicians well informed on XHANCE could increase the rate at which DTC activated patients ultimately receive treatment with XHANCE. As a next step, we'll be extending the pilot in the same cities during the spring season of 2020.

Turning to Slide 10. Another measure of performance that we monitor is the number of physicians who have patients filling a certain number of prescriptions per quarter. What you can see is that both -- both breadth and depth of prescribing has increased over the last five quarters, specifically both the number of prescribers and proportion of prescribers who write more prescriptions have been increasing.

Regarding breadth, in fourth quarter 2019, more than 5,800 physicians had a patient fill at least one prescription of XHANCE, an increase of 50% compared to third quarter 2019 and an increase of more than 90% compared to fourth quarter 2018. Regarding depth, the number of prescriptions who had patients fill more than 15 prescriptions in the quarter has grown even faster with the number of physicians with patients filling greater than 15, increasing by 25% from third quarter to fourth quarter and by more than six-fold over fourth quarter 2018.

It's important to note that the average number of prescriptions for the fourth quarter among the 828 physicians in the top group was approximately 40%. Thus, in fourth quarter 2019, these physicians were responsible for approximately 33,000 prescriptions or 60% of our total prescriptions. As described earlier, we believe that this growing subset of physicians have adopted XHANCE as part of their treatment paradigm due to results they're seeing in their own patients and their experience that access and affordability are not generally a barrier.

We believe this sustained trend is indicative of one key mechanism supporting continued growth of the product and of the future product potential as an increasing number of called-on physicians become full scale adopters. With the expansion of the called-on universe such as additional new territories, we can reach an additional growth lever, and with the third lever of future DTC to activate so-called dissatisfied dropouts, we believe we have multiple avenues to future growth.

In a few moments, I'll update you on our Chronic Sinusitis program provide some closing remarks. And now, I'll turn the call over to our CFO, Keith Goldan, for comments regarding fourth quarter and full year 2019 results and perspectives regarding full year 2020. Keith?

Keith Goldan -- Chief Financial Officer

Thank you, Peter, and thanks to everybody for joining us today. Turning to Slide 12, as we've reported, OptiNose recognized $11.1 million of XHANCE net revenue in the fourth quarter and $30.4 million for the full year 2019. This is consistent with our previous full year guidance for 2019. As noted on prior calls, one of the metrics that we track is average XHANCE net revenue per prescription, which is calculated by dividing net revenue for the quarter by the estimated number of XHANCE prescriptions dispensed during the quarter, and we continue to believe this is a useful metric to evaluate the net revenue generated per prescription.

Based on available XHANCE prescription data purchased from third parties, and also on data we received directly from our preferred pharmacy network partners, our average XHANCE net revenue per prescription for the fourth quarter of 2019 was $204, which was an increase over the third quarter average of $202. The increase from third quarter is primarily a result of our need to provide less co-pay assistance as more patients met out-of-pocket maximums as the year progressed.

Typically, once a patient meets the out-of-pocket threshold for the year, insurance benefits pick up more the cost of the prescription drugs, which in turn reduces the amount of co-pay assistance provided by our affordability program. As highlighted earlier, for the full year 2019, average XHANCE net revenue per prescription was $198, also consistent with prior guidance.

Moving to Slide 13. This morning, we were discussing our initial first quarter and full year 2020 guidance -- thoughts around guidance. First, we expect full-year 2020 XHANCE net revenue to more than double on a year-over-year basis. As part of that expectation, we anticipate first quarter 2020 XHANCE net revenue to decrease compared to fourth quarter 2019 XHANCE net revenue of $11.1 million. I'll discuss this in more detail, but the primary driver for the sequential decrease for revenue in the first quarter of 2020 is our expectation that Q1 2020 average XHANCE net revenue per prescription will be between $120 and $140.

For the remainder of 2020, we expect XHANCE net revenue prescription to improve substantially. We are confident that XHANCE net revenue per prescription will improve for the remainder of 2020 because the major factors that influence our gross to net deductions has now experienced structural changes relative to where they stood for the final nine months of 2019. Overall market access, which drives rebates, is generally consistent and, in terms of our co-pay assistance program, are unchanged.

The expected decrease in XHANCE net revenue and average XHANCE net revenue per prescription from the fourth quarter of 2019 is primarily driven by two effects that we believe are common for chronic treatments in the pharmaceutical industry. First, like last year, because of patient insurance deductible resets that occur in January, we expect greater first quarter co-pay support to be provided by us under our assistance programs, which blunt the out-of-pocket expense effects of deductible resets on patients. The second factor contributing to this decrease is the delay or loss of refill prescriptions by patients whose insurance coverage changed with the new year. Refill prescriptions, as Peter just discussed, made up a much larger proportion of our business in the fourth quarter 2019 than they did in the fourth quarter of 2018. These prescriptions are relatively more profitable than a new prescription because a higher proportion of these patients have insurance that covers XHANCE.

Patients whose insurance coverage changes with the new year, for example to a different insurer, can experience a delay in refilling a prescription if a new claim needs to be processed before a refill can be provided. Moreover, some proportion of the patients are lost. We believe XHANCE refill prescriptions experienced some of this effect in early 2020, which will create downward pressure on both XHANCE net revenue and XHANCE net revenue per prescription in the first quarter of 2020. What we believe is important for investors to hear is that we remain confident and this prospects for growth in 2020 as new patient demand remained strong, and we believe the effects on average at XHANCE net revenue per subscription due to insurance changes should resolve within the first quarter of 2020.

Third, our initial guidance for 2020 operating expenses includes increases associated with key commercial and development initiatives. These include the annualization of the early 2019 expansion of our sales force as well as the recent addition of approximately 10 new field-based commercial team members to fill new sales territories and engage with our key opinion leaders. As well as the conduct of our chronic sinusitis clinical trials and an increasing number of clinical sites.

For the full year 2020, we expect total operating expenses to be in the range of $148 million to $153 million, of which approximately $12 million is expected to be stock-based compensation. Total operating expenses, excluding non-cash stock-based compensation, are expected to be in the range of $136 million to $141 million.

I will now turn the call back over to Peter to give a brief pipeline update and closing remarks. Peter?

Peter K. Miller -- Chief Executive Officer and Director

Thanks Keith. Turning to Slide 15. In addition to the launch of XHANCE with the current indications, we believe significant additional long-term value could be created by achieving a first-ever therapeutic indication for the treatment of chronic sinusitis. This new indication may increase the effectiveness of promotional access and a significantly expanded target audience of over 40,000 physicians treating an incremental 7 million patients, more than double the number of patients currently treated by the ENT allergy specialty audience we are currently calling on.

In effect, we believe this indication can help increase the leverage we can obtain with the incremental growth levers I referred to earlier. Today, we announced that we expect top-line results from the second of two pivotal CS trials in the second half of 2021, which lines up with our previously issued guidance for the first pivotal trial -- first pivotal CS trial. We look forward to providing future updates on the CS program, which we find particularly exciting. This is because CS is an indication for which we believe XHANCE could be the first-ever FDA-approved drug treatment and because of this condition with very high prevalence, which is treated by substantially expanded universe of physicians.

Turning to Slide 17. In closing, what we hope you heard in our prepared remarks is that we are confident that our commercial strategy can continue to drive strong growth for XHANCE in both prescriptions and net revenue in 2020 as it did in 2019. Our growing yet still modest share penetration is indicative of a large market that offers great potential for not just 2020, but on into the future even within our current audience with our current indication. In addition, we have a strong balance sheet bolstered by the recent addition of $30 million with future potential to access up to another $40 million in the year ahead. Our cash position while it stayed heads down focused on execution of our commercial strategy.

We've delivered 2019 performance in line with our public guidance. Our ability to deliver on our commitments to our stakeholders, including investors, is important to us. And finally, we provided initial corporate guidance for first quarter and full year 2020 to better inform this audience about our expectations for the year ahead.

I look forward to future updates. Thank you. And now I'd like to open up the call for Q&A.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from Gary Nachman of BMO Capital Markets. Your line is open.

Gary Nachman -- BMO Capital Markets -- Analyst

Hi. Good morning, guys. To achieve a more than doubling revenue for 2020, what are you assuming for net revenue per prescription compared to 2019 on a full year basis, up, down or flat? And do you think refill rates will continue to increase as part of that from the level you saw in Q4? Then I have couple of follow-ups.

Keith Goldan -- Chief Financial Officer

Sure, Gary. This is Keith. Thanks for the question and good morning. I'll take the first part of the question. So, just to back up a moment, in the past going back to last year, we provided average net revenue per prescription guidance for XHANCE beginning in the first quarter and waited until our second quarter call in August to provide full year net revenue guidance. And we did that because in January, we weren't even four quarters into the launch. And when we gave guidance, we wanted to make sure that we are confident that we could achieve the numbers that we were sharing with the public.

Starting this year, we're going to change that and give, as we did today, guidance on net revenue. Today we set the floor for 2020 at least more than doubling our 2019 numbers. And we're going to pull back from giving specific guidance on average net revenue per TRx. That being said, I think it's reasonable for you to assume that the cadence follows relatively similar pattern to that that we saw in 2019. And that's really for two main factors, which I commented on in my remarks. Number -- and it's all around the fact that there's no structural changes this year. And the two biggest factors that are affecting our gross to net deductions, the first being market access. We expect to pay rebates that are similar to the rebates that we paid in 2019. And secondly, with co-pay assistance. There have been no changes to our co-pay assistance affordability program, and that gives us confidence that the pattern of increase that we see throughout the year and average net revenue per TRx should follow similar pattern.

Peter K. Miller -- Chief Executive Officer and Director

Gary, the only thing I'd add to that -- this is Peter -- is just that obviously we had a more pronounced effect of this turn of the calendar effect as we call it. We had the same effect on the co-pay reset, but we did have a bigger effect this year, because of the refills that we talked about in Keith's remarks. But as Keith said, we feel -- we're already sort of seeing the effect washing through. So we're confident that as the year goes on, it will sort of normalize to sort of where there shouldn't be anything dramatically different from last year across the balance of the year.

On refill rates, Gary, I think approaching four in terms of the patient prescriptions per year is a very good number for a chronic med that's symptomatic. So we think four is going to continue to be sort of a good number relative to think about the number of prescriptions per patient per year. But what's encouraging, Gary, you sort of see how our -- even as our new prescriptions are growing, because we're getting four prescriptions per patient per year, the refill percentage just continues to climb, and we expect that to happen across this year as well.

Gary Nachman -- BMO Capital Markets -- Analyst

Okay. Great. And then, just when we look at IQVIA, can you just confirm if that's still reflecting about 85% of the volume? So, as you add more specialty pharmacies to the network, does that percentage go down? And maybe just give us the status of the specialty pharmacy network at this point? And then just one last one. I'll throw it now. Just how had the additional reps been helping? Are they going after additional physicians or are they helping to go deeper with existing writers? So, are they moving -- or is the plan for them to move docs more into the higher volume bucket? So just talk about how you expect progress on that front with the help of the new reps? Thank you.

Keith Goldan -- Chief Financial Officer

Sure, Gary. Thanks. This is Keith. I'll take the first part of that question and let Peter answer the second. With respect to IQVIA, we understand this is important because a lot of you on the phone kind of rely on the data to predict total prescriptions. Just doing the math for you, in the fourth quarter, if you take the scripts that we reported as TRx and just look at the IQVIA numbers, it would indicate that IQVIA is capturing about 84% of the total scripts.

Now, looking forward over longer periods of time, we believe that 85% -- approximately 85% is a good metric to use in terms of the capture rate for IQVIA. However, I can mention that in early 2020, the first quarter thus far, we have seen a decreased correlation between IQVIA estimate and the TRxs that are reported by our PPNs that report directly to us. We have perfect data from that perspective. We -- I would -- I'll say hope and expect that that decreased correlation would correct. And as I just mentioned in the long-term, we would expect that to return back to the kind of 85% capture rate.

Peter K. Miller -- Chief Executive Officer and Director

Gary, on the network itself by the way is, we're really pleased with the network we've built and have a great team that manages it. Senior leadership from our company meets with senior leadership of many other companies that we're working with. So we really believe that we're building something that's really valuable to the business. And as I look to the future of the company, which I'm not going to talk a lot about today, but as we think about new products eventually being brought into the company, we think the network we're building on the pharmacy side is very interesting both in terms of getting higher percentage of patients on first fill versus a retail channel also getting more refills than you typically get in a retail channel. So we're feeling really good about the network overall.

In terms of reps and the role they're playing, I think relative to the roughly 28 reps that we've added since the start of our initiating in 2018, the huge majority of those reps are going into new territories with new doctors. So they're not necessarily increasing frequency on the current called-on audience. They're really going after new targets largely in new geographies, high-value targets by the way I might add. We are seeing by the way that those reps are producing benefit reasonably comparable in terms of the ramp, if you will, than what we saw in the established territories in terms of the ramp that we saw in those territories.

The thing I'll add Gary is that obviously we're always evaluating the business and the responsiveness of sales. We just completed a pre-extensive promotional response analysis. And the good news is, we're seeing good response from detailing effort by our reps on doctors. And all I'll say is, we're evaluating ways to increase the frequency that we can get on doctors, because we find when we get more frequency we get more business.

Gary Nachman -- BMO Capital Markets -- Analyst

Okay. Great. Thank you.

Operator

Our next question comes from Ken Cacciatore of Cowen and Company. Your line is open.

Ken Cacciatore -- Cowen and Company -- Analyst

Good morning, guys. Congrats on all the progress. Just wanted to get an update on -- do you think that managed care level that you're at is going to increase or is that what we're going to be working with? And then, you have about 5,900 prescribers and I know you're doing this more focused DTC experiments. And obviously, having the breadth of clinician base is critical not just activating the patients. So just wondering in those targeted markets, could you just not have the clinician base to the point that could this leave these patients just a little confused as to -- I would have thought you would have had both sides kind of a good managed care access in that region, good clinician coverage, so just discuss a little bit of what went on there and what kind of level of clinician base do we need before we turn this more national? And then also, like to hear from Victor, if you would comment on his thoughts on what he'd want to do differently and what he'd want to build upon or anything that he is seeing that could further help the great progress you guys have had? Thank you.

Peter K. Miller -- Chief Executive Officer and Director

Yeah, Ken. Thanks for the questions. I'm excited to have Vic give his thoughts. I really am thanks for asking. Relative to market access, Ken, is 75% we've been stable there for a bunch of months now really across nine months, 12 months or so. We do think there is opportunity to improve. When we get that, Ken, it's hard to predict honestly. But we for sure believe there's another five points out there of improvement in market access. We're certainly working hard to get it. And I'm not going to give any kind of guidance as to when we expect to get it. But I think, there's a reasonable likelihood over the next 12 to 18 months, we should be able to improve this.

As we've said on past calls, we have a good story on the market access front. Relative to DTC, I think your question was really about what's going on there. And to add a little bit of color, we have a really good add that we know for sure is activating patients. And we know for sure that we have patients who have an interest in being activated. And we measure that, all sorts of ways by tracking in the market in terms of awareness as well as looking at website activity in those regions. So, we're confident at this point that when you deliver a message even in a nasal polyp environment not in the broader indication, we can get a fair amount of patients interested.

What we're working toward, as you know, we're currently in specialty audience and we're trying to do two things. One is, can we direct activated patients to our target audience by tools on our website and other means; and can we provide patients with the right tools so that they go to a physician who may not be as aware of XHANCE that we can convert it, if you will, into a script. So -- and by the way, one season is frankly really not enough to evaluate a test, if you will, in my view and it really does take time traditionally and Vic can probably comment on. He's got great experience in DTC, one of the reasons we brought him among many frankly.

So hopefully that added a little bit of color, Ken. But here's what I know. I know for sure DTC eventually will play a significant role in this business whether or not we can do it in with a more concentrated physician audience is what we're sort of evaluating at this point. So, Vic, I'm delighted to have you make some comments.

Victor Clavelli -- Chief Commercial Officer

Yeah. Thanks, Peter. And Ken thanks for the question. I mean, it has been a real pleasure to join this team and to see what they're doing to connect what I see as a really differentiated product with patients.

I'd start by saying, I think it's -- I think the team has done tremendous work to gain access to this product for patients. I mean, the access metrics that Peter shared are very strong. And I think, we'll continue to look at ways to make sure as many patients as possible to access to XHANCE. And what I mean by that is both improving the percent of patients who have coverage as well as making it easy as possible for physicians to choose that product.

And Peter talked about the number of physicians who are choosing it regularly within their patient population, I think there is a tremendous opportunity to broaden that base and we're going to look at ways that we can get even more physicians to make it a regular part of their practice. We track pretty closely the number of prescriptions they write in the marketplace, and there's a lot of opportunity to broaden that.

You asked a question about direct-to-consumer advertising. We absolutely see that, all those dissatisfied patients a new reason to step back into the market. And we're going to look at ways that we can activate those patients and help them understand that XHANCE could be a step forward for them.

Peter K. Miller -- Chief Executive Officer and Director

I will give Vic the benefit. By the way, I think he's on day 12. So -- but I'll tell you, we are just clearly more delighted how he's fitting with the team and some of the fresh thinking and new ideas to build on what we think is a very successful commercial strategy.

Ken Cacciatore -- Cowen and Company -- Analyst

Great. Thank you so much.

Peter K. Miller -- Chief Executive Officer and Director

Thanks, Ken.

Operator

Our next question comes from David Amsellem of Piper Sandler. Your line is open.

David Amsellem -- Piper Sandler -- Analyst

Thanks. So, I wanted to talk or ask -- sorry, about your long-term plans for the sales organization. And to the extent that you have favorable data in the nonpolyp setting and you can get that differentiated data into the label. Peter, I wanted to get your thoughts, and I know you've talked about this in the past as to what's the extent to which you would expand the sales organization? How deep into the general practitioner community would you have to go? And I think in the past you've alluded to a potential co-promotion. So I just wanted to reprise that topic and get your latest thoughts on how you're thinking about all that? Thank you.

Peter K. Miller -- Chief Executive Officer and Director

Yeah. And I'll sort of take it in a couple of places, David. Thanks for the question by the way. We feel we're building a strong organization in ENT allergy. We're very pleased with the sales team, the penetration we're getting. So, within ENT allergy, that's going to be this company's focus. And I was sort of alluding to this earlier and I don't want to get into too much because we're still in the evaluation phases, but we know we have a promotional responsive product, we know it. And when we get more details, we get more scripts.

So, even in ENT allergy, in addition to getting to new doctors, we're evaluating ways that we can get increased frequency on those doctors efficiently, and obviously that's very, very vital. So, within the ENT -- and I know you'd initially ask it, but I want -- you asked about sales force generally. I just feel really good about our ability to build a really good business in ENT allergy. And our view is that's going to be what OptiNose is going to do really well.

I alluded to it earlier, the expanded indication potentially unlocks a significant opportunity in roughly 40,000 primary care doctors treating 7 million patients. And we think there's two ways to do that. Candidly, the preferred way to do it, David, would be through partnering and find a partner who has broad deployment in primary care with other products because obviously a lot more efficient to have multiple products calling on in audience and that is -- our preferred way and we've been very sort of public about that. But it unlocks as you can imagine enormous potential. In lieu of partnering, or I should say in a parallel evaluation, we can expand in primary care. We're already calling on approximately 2,000 primary care doctors today. We could increase the reach to those doctors. I don't think we'd ever get to the full audience frankly, because it's very hard without the efficiency of our products in the bag.

So I hope that answers your question. Vic, I don't know if you have anything to add to that?

Victor Clavelli -- Chief Commercial Officer

No, I think that sums it up.

Peter K. Miller -- Chief Executive Officer and Director

We're excited about CS though, very, very excited about the potential of the product with the indication.

David Amsellem -- Piper Sandler -- Analyst

That's helpful color, Peter. And I guess, as a related question with your sales organization being a leverageable asset, how active are you looking at assets to bring into the company? And in that vein, are you willing to take on R&D as for development stage assets? Help us understand your thought process there.

Peter K. Miller -- Chief Executive Officer and Director

We're frankly getting pretty active, David, in evaluation, so really clear. We're in an evaluation stage right now. Job one is to build XHANCE. And our view is, we just can't take our eye off that ball in the near-term. And we don't want to distract the sales team. We know we have a promotional responsive product. So, our focus right now and our effort is how can we really build XHANCE into the business that it can be. Having said that, we're on our way to building a really successful product. We do have capabilities as you said that are absolutely leverageable. So we are in discussions, David, and I think it's fair to say that in the near-term, the financing [Phonetic] certainly the next quarter to three to six months, we're focused on XHANCE.

But beyond that timeframe, are we considering opportunities? We are. And our real focus, David, is on near-term opportunities. I mean, we understand with our current cash position even though we feel really good about cash, we're going to be really careful about using cash. So, we're going to look for later-stage assets frankly, and those are the kind of discussions we're having currently that won't require significant use of cash, but can produce benefit commercially. And as we continue to build the business, we'll think about going in earlier stage development of products, but for now, the focus is largely on later stage.

David Amsellem -- Piper Sandler -- Analyst

Okay. Great. Thank you.

Operator

Our next question comes from Brandon Folkes of Cantor Fitzgerald. Your line is open.

Brandon Folkes -- Cantor Fitzgerald -- Analyst

Hi. Thanks for taking my question and congratulations on the progress. Firstly, just circling back on the four prescriptions per patient per year, do you have any color you can add as to whether these are differing between patients using XHANCE for nasal polyp or CS? And then secondly, you talked about getting more frequency with docs. What do you think gets these prescribers into that high-prescribing category? Is it familiarity with the data, patient experience, or just perception of reimbursement? Thank you.

Peter K. Miller -- Chief Executive Officer and Director

Relative to the first question -- thanks Brandon for the question by the way. Relative to the use of the product in polyps versus non-polyps, we honestly don't have a lot of good data on that, Brandon, so it's hard for me to comment on it. I think you know we have a fair amount of the use outside of the polyp indication. So, it would suggest that we have to be getting reasonably good frequency, if you will, of the use of the product outside of nasal polyp. And going back to the core disease and I don't want to spend too much time on this Brandon, but you know the disease is chronic sinusitis. Some people have polyps some don't.

The symptomatic nature of the product is reasonably the same whether you have polyps or not, polyp patients are a little bit more severe. But people tend to suffer reasonably the same throughout the year because the disease is reasonably the same and people suffer four to six months of the year whether you have polyps or not. So, I would expect you wouldn't honestly see much difference, but we don't have data to support it.

Relative to what converts a doctor, what makes one of those 828 doctors who really have adopted the product; I like to use the simplistic term, Brandon. The doc believes it's worth it. And worth it's comprised in my view of they're convinced that the product is differentiated on efficacy and we have an enormous benefit here. I've talked about this a lot. We really do work and we have two ways doctors get feedback by the way. The first is from patients, because it's symptomatic. So unlike asymptomatic conditions the patients would say, hey, doc, I'm feeling a lot better. So that builds confidence in the product, as I've talked on prior calls.

Especially in ENT, we also have the benefit that doctors can observe objectively whether inflammation is being reduced in the nose via endoscopic evaluation or scans. So, doctors who could get converted, they first and foremost have to believe that the product really does work. And it's where we feel so good about the long-term prospects of this. This is because we do. We know that in a real-world setting in addition to the clinical trials.

The second piece of is it worth, it is really about access and affordability. And I mentioned this on the call, doctors today come in with a perception that any new product is going to have bad access and affordability based on the recent experience, especially in our category by the way, because there were several products launched across the last three to five years that did not achieve good access and affordability. So we have to sort of battle through the perception that you're not going to have good access and affordability. And that is why we talked about some of the things we're doing to arm our reps, because we really do, as Vic commented, we have good access, we have good affordability. And then candidly, we do have some prior authorizations associated with the product that our sales team has to make sure they work with the physicians to really limit the actual not just the perceived, is it worth it for the doc and the staff.

So that was somewhat of a long-winded answer, but it's where our focus is. And we feel really good about the data we have on physician perception of efficacy. The area Vic is coming in and we've been really focused on even prior to Vic is giving the sales force tools to help the doc really understand our access and affordability.

Brandon Folkes -- Cantor Fitzgerald -- Analyst

Great. Thank you very much.

Operator

Our next question comes from David Steinberg of Jefferies. Your line is open.

David Steinberg -- Jefferies -- Analyst

Okay. Great. Thank you. I have three questions. The first one is relating to dupilumab. I know it's been on the market for a little while, and it's a different approach treating nasal polyps for refractory patients and add-on therapy. But are you seeing any impact either positive or negative on XHANCE thus far?

Secondly, with regards to DTC, I think you made a comment Peter that you were encouraged by the three cities. You have a pilot program, but you're not going to expand any further. You're going to do some more work there. So does that imply that this -- for 2020 you're not going to expand DTC to additional cities or even do national adds?

And then thirdly, I just wanted to check on your supply chain. Implicitly you have a more complex product, because it's not just a drug it's drug plus the device. And given what's going on in macro, are you seeing any disruptions or do you see any place of disruptions in any part of your supply chain globally? Thanks.

Peter K. Miller -- Chief Executive Officer and Director

Thanks, David. Thanks for getting up early by the way. I feel it's early out there. Relative to Dupixent, we are taking a different approach. I think you know David they were studied in a really pretty severe population. And what the doctors, and it's really intended to be used after sort of everything else has failed, if you will, in terms of how the product was studied and how it's -- and frankly priced that it's such that that's really where it sort of fits in treatment.

I think you also know by the way that Dupixent was studied on top of an intranasal spray. So all of the studies and the way docs are using it is on top of an intranasal spray, so I set that up sort of as background. We've not seen a dramatic impact, David, on Dupixent. Candidly, they are growing their business if you listen to commentary from Regeneron and Sanofi. But in terms of this number of patients, they're building a lot of revenue, because the cost per patient is very high, but the number of patients has not been dramatically impactful on our business.

And as I said, we think there's an opportunity to be complementary with Dupixent as we think about co-positioning and talking to the doctor about how you can think about both therapies. Relative to DTC and I've got to answer your question. Ramy, I don't know if you have anything to add on Dupixent?

Ramy A. Mahmoud -- President and Chief Operating Officer

No, I think that was clear. Thanks Peter.

Peter K. Miller -- Chief Executive Officer and Director

Relative to DTC candidly, David, it's too early to tell on expansion in 2020. We just have a lot. We're still learning. We're going to be very careful and measured. I think it's probably less likely than more likely to be significantly expanded in 2020, but it's all about what we can learn about on how you get patients to the right doctors or frankly how you can get more doctors aware of the product and efficient means. And to be clear, because patients -- a lot of patients go to primary care, if we don't have coverage on those doctors, you may not end up with an activated patient ending up with a prescription. So that's the area that we're focused on.

Supply chain, David, I feel great about our supply chain. It's not as complex as you think, because we're making plastic injection molded parts. We really have our arms around that business. We have lots of capacity in the molds that we build, lots of sites to do an assembly. We've got a great team that works on that by the way. And relative to making the drug substance, we understand that very well.

So relative to current situation, we're very confident in supply chain. Relative to potential future impact of coronavirus and things of that nature, we don't have a lot of the huge majority of our parts and our facilities are in areas that are not currently significantly impacted by coronavirus and we sort of remain confident in our ability to continue to supply.

Keith Goldan -- Chief Financial Officer

And David just -- this is Keith. Just to add to Peter's comments about DTC. As you know, we're extremely mindful of cash. And from a budget perspective, we have not allocated beyond the testing that's continuing in the three markets that Peter mentioned. We have not allocated for an expansion of DTC this year in 2020.

Peter K. Miller -- Chief Executive Officer and Director

Yes. Well you guys know us and we're only going to expand if we have clear ROI.

David Steinberg -- Jefferies -- Analyst

Okay. Thanks.

Operator

There are no further questions. I'd like to turn the call back over to Peter Miller for any further remarks.

Peter K. Miller -- Chief Executive Officer and Director

Well, we appreciate you joining us and look forward to our next update. Thanks very much.

Operator

[Operator Closing Remarks]

Duration: 50 minutes

Call participants:

Jonathan Neely -- Vice President, Investor Relations and Business Operations

Peter K. Miller -- Chief Executive Officer and Director

Keith Goldan -- Chief Financial Officer

Victor Clavelli -- Chief Commercial Officer

Ramy A. Mahmoud -- President and Chief Operating Officer

Gary Nachman -- BMO Capital Markets -- Analyst

Ken Cacciatore -- Cowen and Company -- Analyst

David Amsellem -- Piper Sandler -- Analyst

Brandon Folkes -- Cantor Fitzgerald -- Analyst

David Steinberg -- Jefferies -- Analyst

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