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OptiNose, Inc. (NASDAQ:OPTN)
Q1 2020 Earnings Call
May 7, 2020, 4:15 p.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 Q1 2020 Earnings Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Jonathan Neely. Thank you. Sir, please go ahead.

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

Good afternoon, and thank you for joining us today as we review OptiNose's first quarter 2020 performance and our plans for the year ahead.

I'm joined today by our CEO, Peter Miller; President and Chief Operating Officer, Ramy Mahmoud; our 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 and Form 10-Q 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 statements. 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, Board of Directors

Thanks very much, Jonathan, and good afternoon, everybody.

We appreciate you joining us for our first quarter update. I hope everyone is safe and well in these challenging times.

Before we get started with our business update, I'd like to begin by thanking all of my colleagues at OptiNose for the incredible job they have done in rising to the challenges presented by operating in an environment completely reshaped by the coronavirus pandemic. I'm proud of what they've accomplished in such a short period of time, finding completely new ways to support our commercial partners, our physician customers, the patients they treat and the clinical researchers engaged with us in the development of XHANCE as a treatment for chronic sinusitis. In true one mission fashion, this team has risen to the occasion.

Our view of the road ahead for OptiNose starts with the necessary nod to the heroes who stand at the epicenter of the global response to COVID-19, our healthcare professionals. The healthcare professionals we serve saw unprecedented disruption to their practices and faced the necessary task of finding new ways to care for their patients while protecting themselves and their staff.

Today, we'll provide an update on our business, discuss how we've mobilized the organization in response to today's environment and discuss the important role that XHANCE will fill in the context of the emerging marketplace.

Starting on slide 3. We'll go into more detail in a moment, but I'd like to start by providing five key takeaways from today's presentation. First, since our last earnings update, we primarily focused on adapting our business to drive performance in the COVID-19 environment, and we'd dive into the details of actions we have taken and how our business has performed during the initial weeks of entry into this new environment.

Second, we're taking actions to reduce operating expenses and preserve cash, given the economic uncertainties while protecting our investment in our commercial model and clinical programs so that we emerge stronger and more prepared to realize the full potential of OptiNose. Third, we are updating our guidance to reflect the reductions in operating expenses I just mentioned., near-term uncertainty for revenues and expectation for substantial improvement in XHANCE's average net revenue per prescription for the remainder of the year.

Fourth, we'll review first quarter XHANCE performance, which provides continuing evidence that we have an effective commercial strategy and are driving sustained growth. And fifth, we continue to believe there remains substantial room for long-term growth in XHANCE prescriptions and believe that the actions we have taken in response to the current environment are strengthening our ability to win in the emerging marketplace.

Turning to slide 5. Since our last earnings update, we have mobilized to drive performance in the COVID-19 environment in which we now operate. In March, many of our physician customers began to experience significant reductions in patient volume relative to pre COVID-19 norms. Many also moved to offer some remote visits as a means of seeing patients. In the case of ENT surgeons, many were restricted by the local authorities from performing elective surgery, one of the key drivers of the patient flow. While this dynamic clearly presents challenges, particularly for seeing and initiating therapy for new patients, the COVID-19 pandemic has not reduced the significant number of patients who suffer from chronic nasal disease and certain dynamics may even create new opportunities for XHANCE.

Although medical management and surgical care are generally complementary, the short-term restrictions on elective surgeries increase reliance on treatment with medications such as XHANCE. In the midterm, backlogs of patient care during lockdowns may continue to focus fixed surgical capacity on the most urgent or severe cases, with continued increases in the use of medications for other patients. In the longer run, an increased volume of positive treatment experiences with XHANCE should support our goals of broadening adoption and help disrupt ingrained treatment habits. We're adapting our commercial plans accordingly so that we emerge strong as this crisis resolves.

The health and safety of the communities we live and work in is foremost among our concerns, and we implemented a work from home model for all employees if their job functions allowed, starting in mid-March. Importantly, our virtual model includes tools that enable our territory managers to engage in many of the types of promotional activities they have in the past, albeit virtually rather than face to face. They can detail physicians, provide samples and host educational programs. Our territory managers have gained increasing comfort with the new suite of digital engagement solutions, but we've also prepared plans that will enable them to stay protected and productive as they reengage in person with their practitioners as offices scale up to meet the backlog of deferred patients.

As I just mentioned, despite the clear negative influences of the crisis environment, we've also identified certain environmental factors that we believe may favor trial and adoption of XHANCE in this evolving period. Increased virtual care, the reluctance of patients to make in-person visits to offices and pharmacies, concern over potential for disease transmission risk with nasal procedures, constrained elective surgery and other factors all may contribute to dynamics like the ones I discussed a moment ago. We are working to identify these emerging opportunities and respond by partnering with physicians to improve care in new ways.

One early response, launched on March 25, is the XHANCE assist program to offer an option with potential to help physicians and patients faced with postponement of elective surgical procedures and reduced office visits. Assist offers a full three months of XHANCE to new commercially insured patients, delivered to the home at zero out of pocket cost. Based on the recent strength in our retail business, we believe this program is a worthwhile investment for our business, our customers and ultimately for our patients. Longer-term, we expect this program will accelerate new patient initiations. Feedback from physicians on the assist program has been quite positive.

Our clinical trials investigating XHANCE as a potential treatment for chronic sinusitis have had to adapt to the COVID-19 environment as well. In response, all global trial sites have temporarily paused new patient enrollment. Sites in different regions are adopting safe practices and adhering to varying regional guidance for resuming medical care during the pandemic. We expect enrollment to gradually begin to restart during May. For subjects that were already enrolled, procedures to facilitate ongoing treatment and capture of data have been put in place. While the COVID-19 environment adds some uncertainty, we are maintaining our previous guidance related to the expected timing of top line results which are expected in the second half of 2021.

Finally, given the economic uncertainties created by the global pandemic, we have taken actions to reduce our full year 2020 operating expenses by approximately $17 million compared to the previous guidance. Importantly, we have planned reductions that we believe will protect our ability to continue to fully execute our growth strategy for XHANCE and allow us to reaccelerate growth as the environment stabilizes and doctors' offices scale back up to manage the backlog of patient visits. As we discussed on our last call, we've learned that the XHANCE business has been highly sensitive to promotional efforts, and we believe it's important to protect our ability to drive growth and evolve the standard of care for the 10 million patients suffering from nasal polyps. Keith will have more details in his remarks.

Turning to slide 6. Before I move to the first quarter commercial review, I'd like to call out the performance of XHANCE during the initial COVID-19 crisis period. XHANCE prescriptions increased by 8% for the six week period ended April 24 compared to the prior six week period ended March 13. The six week period ended April 24 is notable for two reasons. First, it is the first six week period when our territory managers transition to our virtual model, and second, because it coincides with the nationwide COVID related environmental shifts that led to substantially reduced patient volumes for our target physician audience.

Anecdotally, some of these physicians or practice groups have relayed to us that during this time they experienced patient visit decreases in the range of 50% to 90%. Given that environment, we are encouraged by the resilience of XHANCE prescription volumes. At a time when many businesses are reporting decreased growth rates and decreasing volumes, we believe XHANCE as a proven treatment for a chronic condition has under-appreciated relative strength.

Turning to slide 8. Turning to our first quarter results. We continue to be very encouraged by the growth in total prescription volume for XHANCE and what was largely a pre COVID-19 environment. In our last call, we discussed factors common to chronic disease products with high refill representation such as co-pay resets and insurance reauthorizations for ongoing prescriptions which we believe influence refills and average net revenue per prescription early in the year. Late in the first quarter, in the last couple of weeks in March, we began to see the impact of the pandemic, though from a starting point of a strong trajectory in late February and in the first weeks of March.

As we did on the last call, in addition to overall TRx performance, we will now dive a bit deeper into details that help describe the performance of the business. In the first quarter 2020, there were 22,300 new prescriptions for XHANCE, a 75% increase in new prescriptions compared to first quarter 2019. We believe 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. Refills, supported by reminder programs managed by our preferred pharmacy network partners, are a true strength of our business. In first quarter 2020, there were 33,700 refill prescriptions of XHANCE, a 246% increase compared to first quarter 2019.

Turning to slide 9. Pulling the new and refill prescriptions together, the total number of XHANCE prescriptions in the first quarter of 2020 was approximately 56,100. This represents 149% growth over the first quarter of 2019. It's not shown here, but I believe it's important to note that prescription growth rates within the first quarter improved as the quarter progressed up until the point where COVID-19 restrictions started to put some pressure on growth, as previously noted.

On our last earnings call, we discussed in depth the concept that for medications, particularly chronic disease medications, early in the year there was a downward pressure on refills related to patients who change insurance. This change of insurance can drive the need out a new claim approved before refilling for the first time in the new year. In line with our expectations, refill growth started to recover in mid-February and continued to improve up until the point where COVID-19 began to put pressure on growth.

Notably, this first quarter effect, which we expect to be a recurring phenomenon, was much less pronounced for XHANCE last year due to a much smaller proportion of prescriptions coming from refills in the first quarter of 2019 compared to 2020. This emphasizes the tremendous growth in refills during 2019 and increases our confidence in future prospects based on the underlying engine of our new prescription trend. I believe it's important to highlight this dynamic with refills because they are now approximately 60% of XHANCE prescriptions, a major driver of value over the long run, and after a blended start in the first weeks of 2020, rebounded as forecasted.

Turning to slide 10. We believe there is a large market for XHANCE and therefore believe that there is tremendous upside that remains for us in the current target audience of physicians. XHANCE's share expressed as a proportion of all intranasal steroid prescriptions written by physicians in our target physician audience increased from 1.5% in first quarter of 2019 to 3.8% in the first quarter of 2020. This is a great increase, but the numbers also illustrate the magnitude of potential for continued growth.

Overall, we are confident that our continued execution against our current commercial model can continue to increase share in 2020 and convert physicians from early experimenters to more substantial writers. Notably, we've continued to see share growth in recent weeks in the COVID-19 environment and believe we will continue to be able to produce share growth, especially as returning to more traditional promotion across the balance of the year.

Turning to slide 11. 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 breadth and depth of prescribing has increased over the last year. Regarding breath, in the first quarter 2020, more than 6,300 physicians had a patient fill at least one prescription of XHANCE, an increase of 71% compared to first quarter 2019.

Regarding depth, the number of physicians with patients filling more than 15 prescriptions in a quarter has grown even faster, with the number of physicians with patients filling greater than 15 increasing by more than 200% from the first quarter 2019 to first quarter 2020. We believe this sustained trend is indicative of one key mechanism supporting continued growth of the product and the future product potential as we see an increasing number of hold-on physicians becoming full-scale adopters. This top group of physicians is important to our business, and we believe that this growing subset who adopted XHANCE as a part of their treatment paradigm due to results they are seeing in their own patients and because their experience is that access and affordability are generally not a barrier. Growing the size of this group is a strategic priority for the Company.

In a few moments, I'll provide some closing remarks, but I will first turn the call over to our CFO, Keith Goldan, for comments regarding our first quarter 2020 results and perspectives regarding our corporate guidance.

Keith Goldan -- Chief Financial Officer

Thank you, Peter, and thank you to everybody for joining today.

As we reported, OptiNose recognized $7.1 million of XHANCE net revenue in the first quarter of 2020.

As noted on prior calls, one of the metrics that we track is XHANCE's average net revenue per prescription, which is calculated by dividing net revenue for the quarter by the estimated number of XHANCE prescriptions dispensed during that quarter. We continue to believe that this is a useful metric to evaluate net revenue generated per prescription. However, we remind you that this metric is subject to variability. That variability is a result of factors that do not necessarily reflect a change in the price that is paid for an individual unit of XHANCE, including ordering patterns and inventory levels for our wholesale customers and pharmacies that we sell to directly, utilization rates of patient affordability programs, the proportion of patients acquiring XHANCE through an insurance benefit and other factors.

Based on available XHANCE prescription data from third parties and also on data we receive directly from preferred pharmacy network partners, our average net revenue per prescription for the first quarter of 2020 was $126, which was within our guided range of $120 to $140.

Moving to slide 14. This afternoon, we are revising our corporate guidance to reflect the effects of the coronavirus pandemic on our business and actions we are taking to reduce operating expense. First, we are withdrawing full year 2020 XHANCE net revenue guidance, and we'll evaluate providing guidance once there is more clarity regarding when public health efforts to mitigate the spread of COVID-19 will relax in a way that permits a broad return to the in-person model for XHANCE promotions. Previously, we expected XHANCE net revenue to more than double compared to 2019 net revenue of $30.4 million.

Second, we remain confident that XHANCE's net revenue per prescription will improve for the remainder of 2020 because the major factors that influence our gross to net deductions have not experienced structural change relative to where they stood in 2019. Overall market access, which drives rebates, is generally consistent, and the terms of our base copay assistance program are unchanged.

The expected increase in XHANCE's average net revenue per prescription from the first quarter of 2020 to subsequent quarters is primarily driven by two effects that we have discussed when we set expectations in our last call and that we believe are common for chronic treatments in our industry. First, because of patient insurance deductible resets that occur in January, we expect copay support provided by us under our assistance programs, which [Indecipherable] out of pocket expense effects of deductible resets on patients, to be highest in the early part of the year and then decrease as the year progresses.

The second factor contributing to this increase is the recapture of refill prescriptions by patients whose insurance coverage change with the new year. We feel prescriptions are relatively more profitable than other prescriptions because a higher proportion of these patients have insurance that covers XHANCE. Patients whose insurance coverage change with the new year, for example, to a different insurer can experience delays in refilling their prescription if a new claim needs to be processed before a refill can be provided. We believe XHANCE's refill prescriptions experienced some of this effect in early 2020 which created downward pressure on both XHANCE net revenue and XHANCE net revenue per prescription in the first quarter.

We predicted, and in fact observed, increasing number of refill prescriptions as the quarter progressed, and as a result, believe that as the year progresses, this dynamic should support improvement in average net revenue per prescription. As mentioned earlier, given the economic uncertainties presented by the global pandemic, we are reducing expenses and expect an overall reduction in 2020 operating expenses of approximately $17 million compared to our previous guidance. These expense reductions include the reprioritization of project spending, a reduction in payroll costs and lower 2020 clinical trial expenses as a result of pauses in new patient enrollment.

As a growth stage company, we are oriented toward building for a promising future. To get there, though, we are always mindful that we need to be judicious with capital and focused on optimally deploying it against our growth objectives. Consequently, the extraordinary circumstances of pandemic require some changes to our plans. Importantly, as we look forward to relative normalization of business conditions, we believe that we have maintained the capabilities necessary to both reaccelerate XHANCE's growth and pursue our development objectives for XHANCE as a treatment for chronic sinusitis.

For the full year 2020, we expect total operating expenses to be in the range of $131 million to $136 million of which approximately $11 million is expected to be non-cash stock-based compensation. Total operating expenses, excluding the stock based compensation, are expected to be in the range of $120 million to $125 million. Finally, regarding our clinical trials evaluating XHANCE as a potential treatment for chronic sinusitis, while COVID-19 restrictions add some uncertainty, we are maintaining our guidance related to the expected timing of results.

I'll now turn the call back over to Peter to give brief closing remarks. Peter?

Peter K. Miller -- Chief Executive Officer, Board of Directors

Thanks, Keith.

In closing, the COVID-19 environment has created real challenges for most businesses, including ours, the full impact of which is not yet fully known. We remain confident we have a business capable of continued strong growth but are mindful of the areas where we need to focus to produce that growth. This begins with maximizing results in the currently constrained promotional environment, but even more importantly, means understanding how the market is likely to evolve and develop plans to capitalize on opportunities as regions of the country begin to reopen.

In many geographies, physicians are telling us that they are already beginning to take actions to give patients the confidence to return to their offices for care. We know that many regions of the country are reducing restrictions on elective surgery, which will potentially facilitate ENT efforts, but we are watching carefully how patients will react. We're working closely with physicians to continue to play our role in assisting them and aggressively working on plans to produce an acceleration of our business as the market evolves. As we look further out, we remain excited by the potential for XHANCE, especially given our growing yet still modest share penetration and the significant opportunities that could be created by the addition of chronic sinusitis indications.

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 the line of Randall Stanicky.

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

Randall, you may be on mute if you're trying to ask the question right now. Operator, could you just to move to the next question, please?

Peter K. Miller -- Chief Executive Officer, Board of Directors

He can come back [Indecipherable].

Operator

Our next question comes from the line of Gary Nachman.

Raffaello -- BMO Capital Markets -- Analyst

Hi, good afternoon. It's Raffaello [Phonetic] on for Gary.

Peter K. Miller -- Chief Executive Officer, Board of Directors

Good afternoon.

Raffaello -- BMO Capital Markets -- Analyst

Hi. How much pressure are you anticipating on net revenue per prescription over the course of the year? Just some patients may migrate to government pay from commercial given some of the broader macroeconomic trends.

Peter K. Miller -- Chief Executive Officer, Board of Directors

We don't think that's going to have an enormous impact on the business. There is no doubt there is going to be some migration. But we are largely a commercial business, and as we look across the balance of the year, we continue to be confident, as Keith said, we're going to see, as we expected and as we've talked, nice rising increase of average net revenue per prescription. Obviously, there is going to be some impact of people who are displaced because of their jobs, but I do not think it's anything that's going to be that significant at this point.

Raffaello -- BMO Capital Markets -- Analyst

Got it. And then, do you have any visibility on the extent to which ENTs are leveraging telemedicine and how comfortable they are potentially starting new patients on XHANCE virtually?

Peter K. Miller -- Chief Executive Officer, Board of Directors

Well, I mean, the thing we know pretty much for sure -- we sort of said in the call -- is that the physician practices over the past six weeks have been pretty impacted in terms of in-person patient visits and also overall patient visits. I think we got many anecdotal reports of reductions of 50% to 90%. The huge majority of the practices, both ENTs and allergists, tried to enable virtual care. However, particularly in the case of ENTs, a lot of what they do is a physical exam of patients with an endoscopic evaluation. So they all moved toward it. They saw a lot less patients is what they told us in the virtual visits. The thing that we felt really good about -- and I mentioned this on the call -- is we did see increasing share in our business in the six weeks post the pandemic.

So, your question about their comfort of using XHANCE, I think the growth in share we saw was a good sign that there's real comfort in using the product. And as I mentioned in my remarks, we think XHANCE is potentially set up in a really positive way, with the pandemic, given that patients are going to have delayed surgeries and other things that are going to force delayed care. It doesn't mean the patients are still suffering. And medical treatments, potentially, are going to be more utilized, and we think XHANCE could be in a very good position to capitalize on that.

Raffaello -- BMO Capital Markets -- Analyst

Great. Thank you so much.

Operator

Our next question comes from the line of Ken Cacciatore.

Ken Cacciatore -- Cowen and Company -- Analyst

Hey, guys. I just had a couple of question. I know the most recent data that we all have is from April 24, and this is such a fluid situation. But I was wondering, can you take us all the way up kind of as close to the up-to-the-minute as you can? Seeing that we were seeing a little bit of an inflection on the 24th, can you just talk about what you're seeing even more recent than that? Is the trend still moving in the right direction?

And then on XHANCE assist, it sounds like a really interesting program. Can you just give us a little bit more detail, just wrapped up, kind of in short, are you having someone execute this for you? It looks like a good way of kind of capturing patients and getting even more intimate with them once you get them?

And then lastly, could you just base us on where coverage stands as we exited last year and where we stand real-time? And I know there're some moving parts with all the high levels of unemployment, but can you give us a sense of the covered lives, where we were, where we are, that'd be great. Thank you so much.

Peter K. Miller -- Chief Executive Officer, Board of Directors

Yeah. Thanks, Ken. I mean, 24th is pretty up to date. But I will tell you that we obviously have some leading indicators that we look at, and up till the moment, if you will, the trends are pretty consistent of what you saw across the six weeks. We continue to see a nice resiliency to the business, honestly, and we're seeing that obviously in the six weeks that we reported, but also in, I guess it's a week and a half that has been since then, we continue to feel this is a business that is resilient. And, as I mentioned in the call, a lot of that's to do with our refill business remains solid. And the new prescription business actually is doing frankly a little bit better than what we would have expected given the significant decline in patient volume. And I will say, Ken, this week, we had about 50 of 100 territory managers out in the field this week. Now, how productive they are and how busy offices are, that's yet to be seen. But I think there is encouraging signs. We know that physicians are interested in getting back into their practices.

In terms of assist, the beauty of assist, Ken -- and it may not have been completely clear here -- this just leveraged the patient support program we already had in place. So this is not creating something new for physicians. They write the prescription the same way they historically wrote it to our preferred pharmacy network. The only differential is, we added, instead of -- I think you know, we always offer the first month free as part of our patient assistance program. But because of the pandemic, we thought it made sense to offer three months free. So, the nice thing about it was it didn't require a dramatic change on the part of physicians in terms of what they had to do. And as I said, we heard very positive feedback from physicians and how much that's contributing to our ability to sort of sustain our business during the pandemic, and as I said earlier, grow share during this time frame, we don't really know. But it's certainly -- we've heard good anecdotal comments about it.

Regarding coverage -- and Vic Clavelli can jump in. Vic, by the way, has been a tremendous addition to our team as our Chief Commercial Officer. I think we introduced Vic on the last call, came over from Pfizer. But in terms of coverage, we're right about 75% to 80%. It's reasonably consistent. We do see line of sight, Ken, to getting to closer to 80%, and eventually even 85%. I don't know for sure whether it will happen over the balance of the year, but we're in discussions with payers, and as I said, see line of sight to getting to that 80% and 85% in the reasonable near term.

Vic, anything to add?

Victor Clavelli -- Chief Commercial Officer

Peter, the only thing I'd add to that is, as we approached this pandemic, we really looked at it from three perspectives. First, how do we keep our employees safe so they can return to the field when they could; secondly, we wanted to enable them with tools that would make them more effective when they did return to the field, and you spoke to that a little bit. And you know the third part of it is, we looked at a program like assist to see if we could expand the patient opportunity, the number of patients that each physician would consider us for. And we're pleased with the way that's worked,

Ken Cacciatore -- Cowen and Company -- Analyst

And I know guys, you're looking to save a little bit of money here. And it makes a lot of sense. But any thoughts on when we could turn on DTC with the kind of coverage that you're talking about, at some point, getting closer over the 80%? Any kind of updated thinking around that?

Peter K. Miller -- Chief Executive Officer, Board of Directors

We're still in test mode on DTC, Ken. I think as I said in the last call, the thing we know pretty confidently based on the pilot that we've been running is that we can activate patients. The thing we got to make sure that we have in place is broad physician awareness of the product, because we can't -- it's hard -- we were trying to steer patients in the ENT and allergists, but that's the piece we have to continue to work on before we do broad expansion.

Ken Cacciatore -- Cowen and Company -- Analyst

Got it. Thank you.

Operator

Our next question comes from the line of David Amsellem.

David Amsellem -- Piper Sandler & Co. -- Analyst

Thanks. So, I just had a couple. First, just a clarification on the net revenues per Rx. So I know with the launch of the XHANCE assist program, you're ostensibly providing more free products. I'm wondering how that impacts net revenue per Rx. And I realize that you're providing just directionality but can you talk to how that would impact that metric? That's number one. And then number two is, as you think about the promotional landscape, what's your sense regarding how much of this whole virtual model is going to endure post pandemic and what that might mean for your overall level of spend, longer-term? Thanks.

Peter K. Miller -- Chief Executive Officer, Board of Directors

Keith, I'll ask you to talk about impact on average revenue per and then we'll have Vic talk about the virtual model.

Keith Goldan -- Chief Financial Officer

Great. Yeah, thanks for your questions, Dave. So you are right. So the assist versus the other program, which you know as 0-30-50 [Phonetic], giving three prescriptions at zero copay, whereas the 0-30-50 give one. We would anticipate it to have a negative impact on average net revenue per prescription. We probably saw some of that in the end of the first -- very, very probably last week of the first quarter but it didn't impact average net revenue per prescription too much. And in the second quarter, there will be a larger magnitude of effect.

However, we don't anticipate it to have a really big impact from a full year perspective on average net revenue per prescription. As I made a comment in my remarks, we expect to see the increase this year very consistent with last year, again because of the fact that the base copay assistance program which is still largely utilized is consistent with what we had in place last year. And as Peter just commented, our commercial coverage is largely consistent with what we saw last year.

Peter K. Miller -- Chief Executive Officer, Board of Directors

Yeah. David, the thing I would add to that too. Assist -- I would probably should have been clear on this. The program only is going to run through the end of May, and it's only on new prescriptions. So if you put it in the context of the full year, it's a few months and it's only new, the retail business. As we said earlier, refill is now over 60% of our business. So, not materially consequential.

Keith Goldan -- Chief Financial Officer

Really intended for those patients that hadn't been on XHANCE before, that were perhaps waiting for surgery because their surgery got delayed.

Peter K. Miller -- Chief Executive Officer, Board of Directors

Vic, I'll let you handle the promotional question on virtual.

Victor Clavelli -- Chief Commercial Officer

Yeah. So [Indecipherable] suite of virtual tools to help the representative engage with the physician and perhaps in the connection to the question around assist, assist actually ended up being a very valuable catalyst to encourage physicians to engage with those virtually so they can learn about the program. We were really pleased with the number of physicians who engage with us and frankly the number of times we could engage with those physicians. Clearly, face to face is the more effective way for us to communicate our message. But we believe that there'll be a continued place for virtual engagement moving forward. We've learned a lot about it, and we see how it can help our model be even stronger.

Peter K. Miller -- Chief Executive Officer, Board of Directors

The interesting thing [Indecipherable] because Vic and the team were sharing some data with me this morning. If we can get really a true virtual engagement with a live detail virtually, if you will, it's actually really pretty effective. So, obviously, phone calls and emails are not as effective, but a true virtual engagement with AVEVA Engage platform which we have enabled to our sales team actually have proven to be pretty effective; not quite as effective as a face to face, but it's something, as Vic said, I think it's something for sure over the next few months, we're going to continue to use and it might become part of how we work with physicians on an ongoing basis.

David Amsellem -- Piper Sandler & Co. -- Analyst

And that's helpful. Thanks.

Operator

[Operator Instructions] Our next question comes from David Steinberg.

David Steinberg -- Jefferies -- Analyst

Thanks. A couple of questions. First off, I know you suspended the revenue guidance for the year. Does that mean you don't think that revenues will at least double or are you just not sure? Secondly, I know you said you've reduced your expenses, and one of the items that you reduced was payroll. Did you lay out any sales reps or any other notable people in the Company? And then the last thing -- I may have missed it. Did you -- ASPs last year, for the year, of $198 -- have you confirmed whether you think that'll be at that level or different levels for the course of 2020? Thanks.

Keith Goldan -- Chief Financial Officer

Hey, David. Thanks for the questions. This is Keith. I'll start with your last question first, with respect to the ASP. Peter made some comments upfront, but again, we're not going to provide at this point average net revenue per TRx for the full year, largely related to the economic uncertainty going forward. And we commented a little bit on the changing dynamic of the patient base. It's unclear today if or how increased unemployment is going to affect average net revenue per script. It could affect our payer mix, it could affect overall healthcare benefit utilization; we just don't know. So, not trying to do a dance around it, but the honest answer is, we're not going to provide guidance at this point. We don't feel confident in projecting that.

Peter K. Miller -- Chief Executive Officer, Board of Directors

Keith, the thing I'll say, there was -- Keith said in his remarks, David, that structurally nothing has dramatically changed year-over-year in terms of payer contracts, rebates, coverage. So you would expect continued -- we're guiding that you're going to see continued increase -- and if the dynamics that Keith was referencing don't materialize -- I'm not going to say it's going to be equivalent to last year, but I'm going to say that the structural elements are pretty similar.

Keith Goldan -- Chief Financial Officer

So working backwards, your second question was about the operating expense reductions, and specifically with respect to payroll. As I commented in my remarks, the objective here was balancing the preservation of balance sheet strength with the maintenance of the ability to drive XHANCE growth coming out of the back end of this uncertain period. And we need the sales force to accomplish that. So, if we were able to get the $17 million of savings while still preserving the commercial structure as it stands.

And then going to your first question on revenue guidance. If visibility improves, we are going to evaluate reissuing guidance for the year, but at this point, for the reasons I commented earlier, just don't have the visibility in these uncertain economic times to provide better guidance right now.

Peter K. Miller -- Chief Executive Officer, Board of Directors

I think, Keith, that's going to come down to -- I think that's going to come down to patient flow. The thing that we just need to see is -- the thing we we're hearing from all of the physicians is that they want to reopen their practices, and candidly for two reasons. They want to treat patients who are sick and they also have an economic incentive to do that. So, physicians are very motivated to get their practices open, and that's a positive sign. As I said, we had 50% of our reps out in the field this week -- are out this week. What we just don't know is how patients are going to react. And that's why, at this point in time, we just got to see how the market dynamic plays out over the next few weeks and months.

David Steinberg -- Jefferies -- Analyst

All right. Actually one more thing. Some of the companies that we've been speaking to indicate that because a lot of these doctors have less than full days, that they actually are making inroads in the relationships and also doctors are learning the materials better and working more closely with the companies. And I was just curious, since you're still kind of in launch mode and you're still a relatively new company to these doctors, has this kind of hiatus with the doctors have afforded your sales reps or the management team to build better relationships with the key clinicians and also educate them more about your product which, once we get to the other side of COVID, could actually be helpful to the Company?

Peter K. Miller -- Chief Executive Officer, Board of Directors

I'll start and I'll pass it to, Vic, David. Yeah, I mean, I think in many cases, this has enabled a different kind of dialog. We actually sponsored two events that the American Rhinological Society put on, CME type events, that had very broad attendance back in, I guess right when the pandemic sort of started. And as a result of that, we just had some very good interactions with some of the real key opinion leaders. And as you said, there was some time for our rep having good interaction. So it certainly could help. The other thing it did, by the way, too, David, is our reps got a lot of practice with each other virtually. So where we had downtime, we also sharpened the messaging and the skills and the tools of our sales team, and I was really excited by that.

And, Vic, I don't know if you have anything to add.

Victor Clavelli -- Chief Commercial Officer

No. I mean, I think that's right. We definitely saw it strengthen our relationships. I think the physician prescribing community was very grateful for the assist program. They appreciated that we stepped up to help them during this time period. We also rolled out some new data and there was good engagement with that data through the virtual platforms. And we definitely took it as an opportunity to find new ways to engage customers and I think we've gotten great feedback on that.

Peter K. Miller -- Chief Executive Officer, Board of Directors

And the point I'll leave you with is that -- we'll end the call -- I just believe that XHANCE -- and we said this in the remarks -- there is a potential real opportunity for us because of a market dynamic of patients still very sick. But there will be a backlog and a delay in surgical procedures over the next few weeks and months. And it presents an opportunity for us to capitalize on.

David Steinberg -- Jefferies -- Analyst

Great. Thanks a lot.

Peter K. Miller -- Chief Executive Officer, Board of Directors

Thanks, David.

Operator

At this time we have no further questions.

Peter K. Miller -- Chief Executive Officer, Board of Directors

Well, thank you very much for your questions and we look forward to our next update, our second quarter update. Thank you very much.

Operator

[Operator Closing Remarks]

Duration: 45 minutes

Call participants:

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

Peter K. Miller -- Chief Executive Officer, Board of Directors

Keith Goldan -- Chief Financial Officer

Victor Clavelli -- Chief Commercial Officer

Raffaello -- BMO Capital Markets -- Analyst

Ken Cacciatore -- Cowen and Company -- Analyst

David Amsellem -- Piper Sandler & Co. -- Analyst

David Steinberg -- Jefferies -- Analyst

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