Aimmune Therapeutics (AIMT) Q2 2020 Earnings Call Transcript

Aimmune Therapeutics (AIMT)
Q2 2020 Earnings Call
Jul 30, 2020, 4:30 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 Aimmune's second-quarter 2020 earnings conference call. [Operator instructions] Please be advised that today's conference is being recorded. [Operator instructions] I would now like to hand the conference over to one of your speakers today, Ms. DeDe Sheel, vice president of investor relations.

Ma'am, please go ahead.

DeDe Sheel -- Vice President of Investor Relations

Thank you, Michelle. Good afternoon and thank you for joining us today to discuss Aimmune's second-quarter 2020 financial results and recent operational highlights. Today's call will be archived, and a replay will be available on our corporate website at aimmune.com. Joining me on the call today are Dr.

Jayson Dallas, president and chief executive officer; Dr. Daniel Adelman, chief medical officer; Andrew Oxtoby, chief commercial officer; and Eric Bjerkholt, chief financial officer. After our prepared remarks, we will open the call for questions. Before we begin, I would like to remind you that during today's call and Q&A session, we will be making forward-looking statements.

These forward-looking statements include Aimmune's expectations regarding the impact of COVID-19 on its business, including on the commercial launch of PALFORZIA and the company's clinical trials; the potential benefits of PALFORZIA, AR201 and AIMab7195; the commercial launch of PALFORZIA, including engagement of our commercial field team with allergists; the timing for when allergy practices may reopen; the timing for initiating direct-to-consumer mobilization activities and timing for payers in the United States to make policy decisions on PALFORZIA; the timing of a potential regulatory action date for the MAA for AR101 by the EMA and by Swissmedic; the timing of receiving data from a Phase 2 clinical trial for AR201; the planned timing for the announcement of data from the POSEIDON clinical trial for PALFORZIA; the timing for initiating a Phase 1 clinical trial of AIMab7195; plans to develop its multi-tree nut program; the sufficiency of Aimmune's cash resources; and the potential applications of the CODIT approach to treating life-threatening food allergies. Risks and uncertainties that contribute to the uncertain nature of these forward-looking statements include the effects of the COVID-19 pandemic on our business and financial condition; the expectation that Aimmune will need additional funds to finance its operations; Aimmune's dependence on the success of PALFORZIA; Aimmune's ability to build a commercial field organization and distribution network; the degree of acceptance of PALFORZIA among physicians, patients, healthcare payers, patient advocacy groups and the general medical community; Aimmune's ability to obtain favorable coverage and reimbursement from third-party payers for PALFORZIA; Aimmune's ability to implement and comply with the REMS for PALFORZIA; Aimmune's or any of its collaborative partners' ability to initiate and/or complete clinical trials; the unpredictability of the regulatory process; the possibility that Aimmune's or any of its collaborative partners' clinical trials will not be successful; the reliance on third parties for the manufacture of PALFORZIA and our product candidates; possible regulatory developments in the United States and foreign countries; and Aimmune's ability to attract and retain senior management personnel. These forward-looking statements are based on assumptions and are subject to risks and uncertainties that can cause actual results to differ significantly from those stated on this call. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements.

Please refer to our quarterly report on Form 10-Q for the quarter ended June 30, 2020, for some of the important risk factors that could cause actual results to differ materially from forward-looking statements made on this call. Except as required by law, Aimmune disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. And now, I will turn the call over to Jayson Dallas.

Jayson Dallas -- President and Chief Executive Officer

Thank you, DeDe, and good afternoon, everyone. Thank you for joining us today for our second-quarter 2020 financial results call. I hope that you and your families are staying safe and healthy during these challenging times. The world and the U.S., in particular, has been in constant state of flux since March due to the pandemic.

I think it's important to dive right into how this pandemic has affected the launch of PALFORZIA. We were well prepared for the launch following PALFORZIA's approval at the end of January. Prior to the declaration of the U.S. national state of emergency due to COVID-19 in mid-March, our field teams had visited 3,000 allergists and were fully implementing our REMS program.

As we entered the quarter in April, we conducted market research with 150 physicians and over 400 caregivers to understand how they were thinking about PALFORZIA in view of the new shelter-in-place requirements. From this market research, we were pleased to see that the demand for PALFORZIA as a treatment option had not diminished with either allergists or with caregivers. The results reinforced our expectation for the long-term potential of PALFORZIA. With this said, the research also highlighted that allergists anticipated that they would have an average appointment backlog of two to three months to work through once they reopen their practices, implying that it could be late summer before allergists began scheduling PALFORZIA patients.

As we reflect on the second quarter, each month needs to be reviewed individually. In April, the majority of allergists offices were closed, and those that were not avoided starting new patients on therapies. Allergists were consumed with the likely impact of the pandemic on their practices and on their business. In May, the focus of allergists changed to how best to reengage with patients.

Some allergists started reopening their practices. Our field force and medical science liaisons began to reengage both virtually and occasionally in-person with the allergists. As allergists' offices opened, the majority had a backlog of existing patients to treat before taking on new food allergy patients. June was a month of inflection.

The majority of allergy practices around the country reopened in some form. We saw a steady pickup in all of our leading indicator launch metrics. Specifically, we saw an acceleration of allergists and patients enrolling in the REMS program and allergists starting new patients on PALFORZIA. Our practice account managers, or PAMs, began more broadly engaging with allergists in person, once again, to assist them with REMS certifications, train them and provide additional educational resources.

This trend has continued through July. As of today, nearly 1,000 allergists and 600 allergy practices are REMS-certified. Approximately 100 allergists have enrolled patients in the REMS program, and half of these allergists have enrolled more than one patient. We are seeing some clinics beginning to fully operationalize PALFORZIA at scale with double-digit numbers of new patient starts.

These REMS enrollment figures represent a sharp increase since May, and we view these statistics as encouraging signs for the future uptake of PALFORZIA. I'd like to share with you a couple of the many anecdotes that we've received from the field force this quarter that reflect the enthusiasm for PALFORZIA from both allergists and caregivers. One clinic with an estimated 200 peanut-allergic patients created an educational post for caregivers about OIT on their website. They received so many calls from interested parents that they had to designate a separate phone and line and an office representative to start a waitlist.

Another allergist with over 150 pediatric peanut-allergic patients planned to notify all of them about PALFORZIA in two waves of mail-outs to their parents. The first 100 letters sent led to an overwhelming response, and the allergist is now scheduling patients for treatment. These are just a few of many such anecdotes, and we are very encouraged by them as they reflect the burden of disease and the need for a therapy for patients with peanut allergy. We recently initiated a targeted consumer marketing campaign to create awareness of PALFORZIA among patients and caregivers.

We've also continued to make significant progress with payers, which will be invaluable as more physicians start to treat patients with PALFORZIA. Andrew will provide more detail on these topics in a few minutes. We expect allergy practices to increasingly introduce PALFORZIA to their patients over the next few months. Although the country is still grappling with COVID-19, and we are in uncharted territory, we don't anticipate allergists shutting down their practices completely, as they did in March and April, since they have learned to adapt to this new environment.

Overall, we're optimistic and excited about the progress we're making on behalf of patients with food allergies. We are carefully balancing launch activities, pipeline advancement, and cash preservation. We remain confident in our prospects and steadfast in our mission to improve the lives of people with food allergies. I'll now turn the call over to Dan to discuss recently presented clinical data and our pipeline.

Dan Adelman -- President and Chief Executive Officer

Thank you, Jayson. We presented 18-month and two-year PALFORZIA data from our ARC004 study at the European Academy of Allergy and Clinical Immunology or EAACI meeting, which was held online at the beginning of June. The data we presented demonstrated ongoing immunomodulation during the first two years of daily treatment with PALFORZIA and associated improvements in safety and efficacy in patients with peanut allergy ages four to 17 years old. Desensitization response rates were assessed at one, one and a half and two years of daily treatment with PALFORZIA and showed progressive improvement with duration of therapy.

At two years, over 80% of the participants who completed ARC004 were able to tolerate a single dose with 2,000 milligrams of peanut protein or cumulatively 4,043 milligrams, which is equivalent to approximately 14 peanut kernels. To put this into context, the median dose of peanut protein reported to cause a clinically meaningful allergic reaction with accidental exposure is approximately one-half of one kernel, which implies that the level of protection achieved by our clinical studies is highly clinically significant. Similarly, total treatment-related adverse events, adjusted for duration of exposure, progressively declined with duration of [Inaudible]. Further modulation of immune responses and improvement in clinical parameters are anticipated with subsequent years of treatment with PALFORZIA.

Regarding our European regulatory filing. We are pleased with the progress we are making with the regulatory processing. We received the Day 180 questions from the EMA and expect that the EMA will complete its regulatory review of our marketing authorization application in the fourth quarter of this year. The Swissmedic review is also ongoing, and we expect that review to be completed in mid-2021.

Turning to our pipeline. We, like all other companies running clinical trials, experienced a pause in the enrollment of new patients in our ongoing programs during the pandemic. However, we are pleased to announce that we have been able to resume enrollment in the POSEIDON toddler study. As we mentioned on our last call, in part as a cost-saving measure, we closed enrollment in the AR201 Phase 2 clinical trial in patients with egg allergy.

The trial continues for the patients who are currently enrolled, and we intend to review the data from these patients when they are available and then determine the best path forward. With regard to our multi-tree nut allergy program. We had a productive pre-IND meeting with the FDA at the end of March that helped identify a clear path forward to the submission of an IND. There remains some CMC and analytical methods development work still to be completed.

This is an interesting and innovative program since we are aiming to develop a single drug that could potentially treat up to 85% of patients with allergies to tree nut. The prevalence of tree nut allergy in the United States is close in size to peanut allergy. And like peanut allergy, the majority of patients do not tend to outgrow their allergy to tree nut. Finally, we are excited about AIMab7195, our recently acquired monoclonal antibody and the potential it may have as an adjunctive therapy with PALFORZIA and other product candidates in our portfolio.

AIMab has the potential to improve the patient journey through the desensitization process and perhaps accelerate the time to remission in a larger percentage of patients than those treated with PALFORZIA alone. We expect to start dosing patients in the Phase 1b study early in 2021. I'll now turn the call over to Andrew.

Andrew Oxtoby -- Chief Commercial Officer

Thank you, Dan. And as Jayson mentioned, despite the challenges posed by COVID-19, we are beginning to see some positive leading indicators as allergists' offices begin to reopen after being affected by the pandemic. As we shared in our last earnings call, we conducted market research with over 150 allergists in April to understand the impact that COVID was having on their practices and their ability to prescribe PALFORZIA. While the research reinforced the allergists' enthusiasm for PALFORZIA as the first and only approved treatment option for their peanut-allergy patients, it also highlighted that practices were seeing no new patients and that deployment volume was down by an average of 65%.

Its inability to fulfill appointments with existing patients created an appointment backlog that allergists estimated would take two to three months to work through once their practices were able to reopen. Despite this backlog dynamic, we're beginning to see a gradual number of allergists across the U.S. initiating patients on PALFORZIA, and we're encouraged by the early trends that we are seeing. As of the end of July, over 50 allergists have now started patients on PALFORZIA, and half of them have initiated multiple patients.

Some clinics are beginning to more fully operationalize PALFORZIA. As an example, there's a single clinic run by two allergists in the Midwest with over 20-patient new starts already. Based on the market research that we conducted in April, we anticipated that it would most likely be early September before allergists cleared their existing appointment backlog and we're able to start initiating patients on PALFORZIA. So we're encouraged to be ahead of this pace.

Besides the steadily increasing prescriber numbers, we've also seen an acceleration in the number of HCPs who are REMS-certified, which is a leading indicator of our longer-term prescribing base. Recall that following our REMS website go-live date in late February, we had over 600 HCP certifications by the time the U.S. declared a national state of emergency due to COVID on March 13. We then saw a slowdown in the rate of REMS enrollment as allergists focused on the immediate impact of COVID on their practices, although we still saw this number to rise to 700 by May, the update that we shared in our last earnings call.

Encouragingly, over the past couple of months, the rate of enrollment has reaccelerated as practices begin to emerge from COVID. And as Jayson mentioned, by today, nearly 1,000 allergists and 600 allergy practices are REMS-certified. Furthermore, almost 100 allergists have enrolled patients in the REMS, and this number continues to climb week after week. Our field teams continue to work diligently to support allergists and their staff as they start to initiate patients on therapy.

The nature of these interactions continues to vary across the country with a mixture of virtual and face-to-face meetings, depending on how the allergist's practice is managing through the pandemic. Our teams have adapted well to this new way of working, and we have several examples across the country of practices which have received PALFORZIA education, logistics training, and full REMS certification in a fully virtual manner, which has enabled them to establish patient waiting lists. I'm also pleased to share that we began our digital and print marketing campaign targeting patient caregivers in early July, but we will be steadily ramping up our activities in this area for the remainder of this year. Multiple rounds of market research have confirmed the high demand from patients for approved treatment options, and this was reinforced by the research that we conducted with over 400 caregivers in April, which indicated no change in enthusiasm for PALFORZIA despite the COVID pandemic.

The goal of our patient engagement is to ensure that patient caregivers are aware of PALFORZIA as the first and only approved treatment option for peanut allergy, that they are directed to accurate information and that they are encouraged to consult with their allergists to determine if there will be an appropriate treatment candidate. With our HCP REMS enrollment numbers about to pass the 1,000 mark, with 600 certified healthcare settings nationally and with allergists beginning to prescribe PALFORZIA in accelerating numbers, we feel that now is the right time to increase patient awareness of treatment options. In order to maximize the impact of our assets, we ran analytics across different geographic markets and looked at multiple variables such as HCP REMS enrollments, peanut allergy patient numbers, and local COVID case incidents to identify which markets we should initially target. We are currently employing targeted online engagement, consisting of paid search, as well as banner ads on specific websites, which we know index well with the media consumption habits of the patient caregiver.

We will also begin advertising on social media on August 1. All of this is done in conjunction with our patient website as a source of information and support materials for the patients and their caregivers. As we go further into August and into the fall, we will add additional channels into the media mix, including print advertisements and commercials on addressable TV platforms, such as Hulu, which will enable us to reach our consumer audience on a highly targeted basis. On our last call in early May, we shared that we had made a strong start in our conversations with payers and that our team of strategic account directors had continued to engage the clinical committees of insurers via web conferencing to discuss the details of the final PALFORZIA label.

At that time, we shared that there were 15 plans in the U.S. which had either interim or permanent policies written regarding PALFORZIA, representing approximately 43 million lives. I'm pleased to share that we continue to make strong progress in this area. And as of today, we have 39 policies written, representing approximately 102 million lives.

Besides the creation of new policies from a number of commercial payers, including Aetna and Regence, we're also proud that the P&C committee at TRICARE, the insurer for over 9 million active U.S. military, retirees and their families, has elected to add PALFORZIA to their preferred formulary with only a $30 per month patient co-pay. We're obviously really pleased with the progress that our payer team has continued to make despite the challenges presented by COVID. As of the end of June, we have policies with prior authorization criteria established for almost 46% of our targeted 220 million lives across commercial and managed Medicaid books of business.

As a reminder, in situations where a patient's plan has not yet made a formal formulary coverage determination, PALFORZIA continues to be available via medical exception. We look forward to continued conversations with payers in Q3, including the largest PBMs, which we anticipate we'll be making coverage determinations in the next couple of months. In summary, we are highly encouraged by the leading indicators that we are seeing as the allergists' offices begin to reopen after being shut down by the pandemic. We're just beginning to ramp up our targeted consumer marketing activities, which will help facilitate treatment consultations between patients and their allergists.

And finally, despite the pandemic, we've continued to make strong progress with payers in Q2, and we anticipate further meaningful progress moving forward as more payers make coverage determinations in Q3. All in all, we're well-positioned to support allergists and their teams, and we look forward to helping more and more patients and their families who are living with the burden of peanut allergy. And with that, I'll turn the call over to Eric.

Eric Bjerkholt -- Chief Financial Officer

Thank you, Andrew. Our business continues to be fully funded based on our current business plan. We exited the second quarter of 2020 with $318 million of cash, cash equivalents, and investments. During the second quarter of 2020, we used $53.5 million of cash to operate our business, a significant decrease from the first quarter.

The decrease in cash used quarter over quarter is due to savings generated by our employees as they successfully executed the spend management plans that we mentioned on our last earnings call. These efforts yielded $14.5 million in operating expense savings, excluding the licensing of AIMab7195 in the first quarter. We plan to continue our cost management efforts for the remainder of this year. As we shared with you in our last quarterly earnings call, revenue to date comprises initial stocking by our specialty pharmacy and distribution partners and is not an indication of prescription pull-through to patients in the quarter.

In addition to distribution fees, we also pay our pharmacy partners fixed quarterly management and data access fees that are part of the gross to net adjustment of revenues. Consequently, for the second quarter, we did not record any net revenues. Cost of revenue for the quarter and six months ended June 30, 2020, was $4.9 million and $5.1 million, respectively, which included a $4.5 million write-off of inventory during the quarter ended June 30. The primary reason for the write-off is that prior to the pandemic, we had manufactured product supply in anticipation of a robust launch in the first quarter.

As the pandemic has affected our launch, we now anticipate that this inventory will not be usable based on its expiration date. Due to the unusual circumstances caused by the pandemic in the second quarter, we do not expect inventory write-off to be a recurring event. R&D expenses for the quarter and six months ended June 30, 2020, were $23 million and $59.5 million, respectively, versus $32 million and $63.3 million for the comparable periods of 2019. The decreases reflect cost-containment measures and the closeout of certain PALFORZIA clinical trials.

The R&D expense for the six months ended June 30, 2020, also includes the one-time $10 million license fee for AIMab7195. SG&A expenses for the quarter and six months ended June 30 were $38.1 million and $87.2 million, respectively, versus $31.2 million and $54.9 million for the comparable periods of 2019. The increases from prior year were primarily due to additional headcount to support the commercialization of PALFORZIA, including a specialty field team of approximately 80 practice account managers targeting practicing allergists and other costs related to medical affairs and the commercial launch. The Q2 SG&A expense of $38.1 million compares to an expense of $49.1 million for the first quarter, and the reduction reflects cost containment efforts.

For the quarter and six months ended June 30, GAAP net loss was $69.2 million and $155.7 million, respectively, versus $62.9 million and $117.1 million for the comparable periods of 2019. On a per-share basis, GAAP net loss per share for the quarter and six months ended June 30 was $1.06 and $2.40, respectively, versus the $1.01 and $1.88 for the comparable periods of 2019. In addition to reporting GAAP financial information, our quarterly results include non-GAAP financial measures which we believe provide useful supplemental information to investors. On a per-share basis, non-GAAP net loss for the quarter and six months ended June 30, 2020, was $0.81 and $1.84, respectively, versus $0.87 and $1.62 for the comparable periods of 2019.

Non-GAAP net loss excludes stock-based compensation, upfront cash, and equity payments associated with the execution of the AIMab7195 license agreement and inventory charges recorded in the second quarter of 2020. As CFO and as a leadership team, we can draw up cash preservation plans, but our employees are the ones who need to execute against those plans. We are grateful for their dedication toward this effort. As a management team, we are prioritizing commercial efforts to support a successful launch of PALFORZIA in the U.S.

while mindfully preserving capital necessary to fully fund our business plan. With that, we will open the call for questions.

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question comes from the line of Liana Moussatos with Wedbush. Your line is open. Please go ahead.

Liana Moussatos -- Wedbush Securities -- Analyst

Congratulations on your progress. I'm focused right now on Europe, Q4 potential approval, if that happens. What do you have to do to get the first launch? And how long will it take? And what are you doing to prepare for that now?

Jayson Dallas -- President and Chief Executive Officer

Thanks, Liana. This is Jayson. So I'll give you a high-level answer to that, and then I'll hand over to Andrew, who can give you a little bit more detail. So one of the things that has not -- because that sort of got impacted by the COVID-19 situation, is the European regulatory process, which, as you heard Dan earlier, layout has pretty much progressed as we had expected it to.

So as you say, we do expect approval at the end of this year in Europe. We have built a European core commercial organization over the course of the last 18 months. But we have also actually built the core of the German launch organization in Germany, and we have also appointed a general manager in France and the U.K. as we think about rollout in Europe.

And I think you know well that when you get approval in Europe, you really get the opportunities to launch immediately in Germany, and most of the markets require a reimbursement process before you can actually fully operationalize your launch. So again, that's sort of the high picture of what we've done. Let me hand over to Andrew and have him put some meat on the bone for you.

Andrew Oxtoby -- Chief Commercial Officer

Yeah. Liana, with the assumption that we would receive approval toward the end of the year, clearly, we wouldn't launch into the holiday period. So we've been looking at launching sometime in the first part of 2021. That said, upon approval, what that does allow us to do is to begin to promote and to increase the awareness of PALFORZIA as an approved treatment option in a number of European markets, even if you haven't actually started putting products into the marketplace, including Germany.

And I mention Germany because Germany would be one of our first two lead markets, so Germany, along with the private market in the U.K., which would be ahead of some sort of formal submission to NICE. So as Jayson mentioned, we've been building an infrastructure in Germany and in the U.K. and also France, because France is an important market as well now in anticipation of launching in those countries. And when you're launching in Europe, it tends to happen over a number of months.

And so it's probably about an 18-month to 24-month process to go from your lead markets through all of the reimbursement dossier submissions and eventually launching across markets in Europe. So that's sort of what it looks like right now, assuming we would get the approvals toward the end of this year.

Liana Moussatos -- Wedbush Securities -- Analyst

Thank you.

Operator

Thank you. And our next question comes from the line of Chris Raymond with Piper Sandler. Your line is open. Please go ahead.

Chris Raymond -- Piper Sandler -- Analyst

Thanks. Maybe a question for Andrew, if possible. And sorry, Andrew, if this has been sort of explained already. But I just wanted to dig into the payer metrics you gave.

I think I heard you say 39 plans have policies in place, and I think you said that that represents 42% of your target population. Can you just clarify? Does that mean that all 39 plans have favorable formulary decisions? Or is there some sort of categorization in that group that -- like different buckets that they fit into? And then I have a follow-up.

Jayson Dallas -- President and Chief Executive Officer

Yeah. It's a good question, Chris. So, yeah, so there are 39 plans with policies which spell out the prior authorization criteria that must be fulfilled for a patient to be able to be treated with PALFORZIA. So from a plan perspective, if you're a patient, there are two ways in which you can have your PALFORZIA treatment covered.

One is by obviously having it on formulary, or the other is via having on medical exception if it's not on formulary. In either case, the prior authorization is key, and that is the criteria that will be used, whether it's on formulary or whether it's on by medical exception, in order for the patient to be given a treatment. And this is standard for specialty products to have those sort of criteria. So the focus of our payer team right now is making sure that prior authorization criteria is in line with the label and doesn't create undue burden or barriers for patients to quickly get on product.

And very pleased to say that we're around 80% of the prior authorization criteria that had been written for those 39 policies. It's very acceptable in our eyes in terms of being able to get patients on to product. Whether or not a patient is -- whether or not a plan has a formal formulary position or whether it's via medical exception, the co-pay level will be the same. It's either going to be tier 3 or tier 4, depending on the design of the plan.

And therefore, the co-pay level will be the same. And the patient, if it's a commercial patient, can work with us to buy down that co-pay level to as little as $20 a month. So our focus right now is getting those policies published and making sure that when they're published, we're working with the payers so that the criteria are consistent with the label and the appropriate patient population for the drug. And just a slight correction on what you said.

It's 39 policies covering 102 million lives, and that represents 46% of the 220 million lives that we're targeting.

Chris Raymond -- Piper Sandler -- Analyst

OK. Great. Thanks for that clarification. And then obviously, there's been a lot of talk about regional differences in terms of opening back up from COVID-related effects and also some going in the other direction.

Can you talk about maybe any regional differences that you're seeing, positive or otherwise, in terms of your territories?

Jayson Dallas -- President and Chief Executive Officer

Yeah. Yes, certainly. So first of all, just to orient you, when we think about the country, we divide the country into 10 regions. So as we talked about, we have 80 practice account managers.

They're divided up equally into 10 regions, so eight per region. So first of all, all 10 of those regions have patients who have started on PALFORZIA, so from that standpoint, we see that consistently across the country. Now that said, as we've seen more and more patients go on the product, the first places we saw them go on were the South and Southeast, particularly Texas, Florida, and Georgia. And what's happened is we're now seeing more and more patients come on in New England and New York, and we're seeing them start to pick up momentum.

And I think it's easy to speculate that it would be -- that's really attributed to the incidents of COVID there currently and the fact that they're coming out of what was a heavier incidence rate a few months ago. At this point, the vast majority of our account managers are able to engage with allergists, to some degree, face to face across the country. Many of them are in some sort of hybrid model where they're doing a mixture of face-to-face, as well as virtual engagements using technology. The most challenging -- in terms of our ability to have face-to-face meetings, the most challenging area continues to be the Southwest, particularly around Los Angeles and the Inland Empire and also, to a degree, in Arizona.

So there are some differences there, clearly. And that, I suspect, will continue to be the case. But what is encouraging is even in areas where there are more challenges because of COVID, we're still seeing patients go on the product as allergists are working through how they're going to manage their practice given COVID. And maybe they're managing it at reduced capacity and have to do things so they can accommodate things like social distancing, but they're still persevering through that and working through the backlog of appointments that we talked about and looking to try and put patients on PALFORZIA where they can.

Chris Raymond -- Piper Sandler -- Analyst

Thank you.

Operator

Thank you. Our next question comes from the line of Charles Duncan with Cantor Fitzgerald. Your line is open. Please go ahead.

Charles Duncan -- Cantor Fitzgerald -- Analyst

Good afternoon, Jayson and team. Yeah. Liked all the updates on progress working through a challenging environment. A couple of quick questions for all of you.

First of all, for Andrew, it's nice to hear that you've got some patients that have been started on PALFORZIA. I guess I'm wondering if there's been any feedback from the field with regard to the early clinical experience and if that's consistent with what you had anticipated given the experience in the studies.

Jayson Dallas -- President and Chief Executive Officer

Yeah. Charles, it's obviously early days yet in the launch. But certainly, the feedback we've received has been exactly that, very consistent with what we saw in the clinical studies. Certainly, no surprises at all.

Charles Duncan -- Cantor Fitzgerald -- Analyst

And then in terms of the ability to deal with the REMS, is that consistent with what you had anticipated that doesn't appear to be a challenge for patients? In particular, I'm thinking about the activity level kind of requirement. Is that a challenge? And frankly, would you imagine that remote learning, if it occurs in the fall, could actually be helpful to putting additional patients on the drug?

Jayson Dallas -- President and Chief Executive Officer

Yeah. I'll answer maybe the second part, and I might turn it over to Dr. Adelman to comment on some of the other parts of your question. Certainly, we think that depending on where people are in the country and what the situation is with local schooling, many will see it as an opportunity to put patients on through the fall, particularly if they see that for the entirety of the fall semester, they're going to be working in a virtual remote environment.

So we certainly think that is something that, depending on where they are and what their situation is, they may well take advantage of that. Dan, do you want to provide a little bit of maybe additional flavor on the patient experience, particularly with REMS and anything we're hearing? Certainly, from my perspective, it's as we would expect, and there's no undue burden from the REMS process, either in the enrollment or on the ongoing administration of the drug.

Dan Adelman -- President and Chief Executive Officer

I'd echo that. Charles, I think one of the things that's important to remember is that this is a group of allergists who are administering this drug, and they are very familiar with immunotherapy and how to manage patients who are up-dosing, whether it be with subcutaneous immunotherapy or now with oral immunotherapy. And for them, so far, what I've been hearing is everything is going very smoothly, that the physician and healthcare professional journey is quite smooth. And so far, the patients have also experienced a pretty seamless experience in the clinic.

It's actually gone very, very well so far.

Charles Duncan -- Cantor Fitzgerald -- Analyst

OK. Very good. That's helpful. One more for you, Dan, and then one quick one for Eric.

And Dan, regarding the EMA process, you mentioned receiving the Day 180 questions. Is there any color you can provide us on kind of where those were oriented? Is there, perhaps, any different views with regard to the REMS or what the label could actually read in, in Europe, if you will, relative to the States?

Dan Adelman -- President and Chief Executive Officer

Sure. So there is – you know, the REMS itself is unique to the United States. In Europe, we have something that's similar, but that doesn't have the legal piece that the REMS has in the United States. And it's called the risk management plan.

And the risk management plan that was submitted to the EMA was extremely close, if not identical, to the risk management plan that was included in our BLA. I don't believe that there are going to be any really substantive differences in the label. There is always going to be some small tweaks here and there, but the essence of the labels will be very similar between the United States and Europe.

Charles Duncan -- Cantor Fitzgerald -- Analyst

OK. Very, very helpful. Last question -- yes, I'm sorry.

Jayson Dallas -- President and Chief Executive Officer

Let me just add to that. Sorry. This is Jayson. But there was really nothing surprising in the Day 180.

So I think we had anticipated all of the questions we were going to get from the regulators, and we're well into being ready to respond to them.

Dan Adelman -- President and Chief Executive Officer

Yes. thanks for adding that.

Charles Duncan -- Cantor Fitzgerald -- Analyst

OK. Got it. And that's what I was really wondering if you would respond. So last question for Eric.

I know it's only, well, one month into a three-month quarter. But if you just -- and I'm going to ask you to speculate. If you take a look at the kind of patient starts, etc., what would you anticipate in terms of revenue for this quarter? How should we think about that? Should this be a revenue quarter, or should it be a restocking quarter? I mean, just how would you think about this quarter and maybe even the fourth quarter this year?

Eric Bjerkholt -- Chief Financial Officer

Well, I mean, we don't give guidance, so I'm not going to do that. You know, we do expect to see continued progress. And as we mentioned in our prepared remarks, the specialty pharmacies have to work through the inventory that they've already ordered. And so what that means in terms of new orders, it's too early to speculate on that.

Jayson Dallas -- President and Chief Executive Officer

And, Charles, I just want to make one other comment that we sort of alluded to as we've gone through the presentation today, and that is that we already have seen an inflection that we're at a turning point now. But the reality is that as these allergy practices get back up and running, they are working through their backlog of existing immunotherapy patients. And we will see a steady increase as we get into the sort of back end of this quarter of that increasing over time, right? So I think it's kind of hard for us to predict at what speed that's going to happen, but it is going to happen. And we do expect, particularly coming to the back end of the quarter, to see nice uptake going into the fourth quarter.

Charles Duncan -- Cantor Fitzgerald -- Analyst

Thanks. That's helpful. Appreciate all the color.

Operator

Thank you. And our next question comes from the line of Evan Seigerman with Credit Suisse. Your line is open. Please go ahead.

Jonathan Woo -- Credit Suisse -- Analyst

Yeah. Hi. Jonathan Woo on for Evan Seigerman. Can you expand on the clinical development plan for AIMab7195? And how do you think about balancing the R&D efforts required behind this asset versus the commercial efforts around PALFORZIA? Thanks.

Jayson Dallas -- President and Chief Executive Officer

Dan, do you want to start?

Dan Adelman -- President and Chief Executive Officer

Sure. So the AIMab7195 program is being developed as an adjuvant therapy for our product platform. We are looking at it as a way to improve the patient journey, perhaps, and certainly to accelerate the time to remissions in a larger proportion of patients. It's an R&D program.

And like most biotech companies, it's important for us to have a pipeline of products that we continue to move forward. And this is one of the products in our portfolio.

Jonathan Woo -- Credit Suisse -- Analyst

Thank you.

Operator

And our next question comes from the line of Kennen MacKay with RBC Capital Markets. Your line is open. Please go ahead.

Bikramjot Singh -- RBC Capital Markets -- Analyst

Hi, guys. This is Bikramjot on for Kennen. One question for us. You mentioned some of the allergists have single patients, and half of them have more than a single patient enrolled.

So we were just wondering if what would it take for these low single-digit patients to increase to double digits for the allergists who have already enrolled some patients? Thank you.

Andrew Oxtoby -- Chief Commercial Officer

Jayson, do you want me to take that? Yeah. Yeah. So obviously, it's it depends on the situation. The one thing that we know is happening, when we found this in the research we conducted in April and certainly, what we're seeing out there in the field and we're hearing from allergists is -- bears this out.

There is a backlog of appointments of patients for other conditions that the allergists are seeing that they're working through. And so when patients -- when they're starting to put PALFORZIA patients on, it's often because a patient is saying, hey, I know that you don't have any appointments free, but I really want to get my child started on this. And so they're slotting them in opportunistically in their existing appointment schedule. And so to answer your question, the way that those practices that now have maybe a handful of patients are going to go to multiple handfuls and then dozens and on from there is really going to be if that appointment backlog is cleared through and the scheduled slots open up.

As I said, we do have an example where one clinic has managed to work through that situation and now is able to start putting on double digit and now over 20 patients on. But it's going to depend on the clinic and their own particular situation as they work through their backlog that was created by the shutdown because of the pandemic.

Bikramjot Singh -- RBC Capital Markets -- Analyst

Got it. Super helpful. And just to follow up on that, the clinic you just mentioned, which has enrolled 20 patients, is that in Midwest in an area where COVID cases are kind of on the decline? Or is that anything related to COVID or not?

Andrew Oxtoby -- Chief Commercial Officer

I don't think it is, actually. As I look at where that is, it's not necessarily an area where it's been highlighted as being either low or particularly high with COVID. I mean, it's been somewhere where it was -- that there was certainly COVID there. There continues to be COVID there.

You don't see a dramatic decline. I think they've just determined that they were going to persevere and work through it and figure out how they're going to reach out to their peanut-allergy patients, get appointment scheduled and then respect social distancing and get them through. So that's why I mean it's such a case-by-case basis. But in this case, it's not like we could point to that and say that that happened to be in an area with very low COVID.

That wasn't the case, actually.

Bikramjot Singh -- RBC Capital Markets -- Analyst

Thank you so much. Congrats again on the quarter.

Andrew Oxtoby -- Chief Commercial Officer

Thank you.

Operator

Thank you. And our next question comes from the line of Boris Peaker with Cowen. Your line is open. Please go ahead.

Boris Peaker -- Cowen and Company -- Analyst

Great. Thanks for taking my questions. The first one, I just want to understand in terms of the allergist practice. Since many allergists treat a lot of seasonal allergies, let's say, in a normal environment, let's put COVID aside for a minute, is there a seasonality to patient flow in their office? And if so, is there any particular time of a year that's normally the slowest?

Jayson Dallas -- President and Chief Executive Officer

So, Boris, I'll start and then Dan can jump in as a practicing allergist and he can maybe add a little flavor to it. So there is absolutely seasonality to allergy practice. But it's also important to remember that once you start somebody on immunotherapy for seasonal allergies, you're essentially committing to a treatment period that lasts somewhere between three to five years, right? So the first six months, the injection is every week. For the second six months, it's every two weeks, and then it's every month for up to three to five years in total.

So it's a long-term treatment plan. So when we talk about backlogs, what we're talking about is when the practices were closed, the folks that were already well into their desensitization weren't getting their weekly or monthly injections as they should have been. And they need to get back into the practice and get them back on track. What is definitely real this year in terms of the dynamic is that that time period when things were shut, which is sort of middle of March through middle to back end of May, depending on where you are in the country, is exactly the time when the new wave of seasonal allergy patients would tend to come into a practice, right? So that would be your sort of new patients that you're bringing into the practice to build on, and many allergy practices actually missed that new wave this year.

And that actually frees up theoretically some capacity for them once they've worked through their backlogs to introduce new therapies like PALFORZIA into the practice. Dan, anything that you want to add to that?

Dan Adelman -- President and Chief Executive Officer

No. I think everything that Jayson said is correct. I think some of those patients who didn't get their allergy shots during that three-month period of time come back in, they're down-dosed and they're reup-dosed relatively quickly, and that's part of the backlog. And then, of course, if you see patients who have got asthma or atopic dermatitis who haven't been seen during that typical pollen season, you want to check back in with them and make sure that their medications are properly being administered.

And that's part of the backlog. But everything that Jayson said is absolutely correct.

Boris Peaker -- Cowen and Company -- Analyst

Gotcha. And my second question is on PALFORZIA specifically. If a patient starts treatment and then needs to stop in dose-escalation phase, whether it's because COVID comes back or for whatever the reason, and they want to restart a few months later, can they continue with the last dose they were in? Or would that be recommended to start from the first and – basically, first dose and go to, basically, square one?

Jayson Dallas -- President and Chief Executive Officer

So, Boris, it kind of depends on what they've done. And we've created the way that we get drug to patients in a way to create a lot of flexibility. In an ideal world, what would happen is that if they started and they were somewhere on the up-dosing and, for some reason, they didn't want to go back to the doctor to go up to the next dose level, they could actually stay at whatever dose level they were at almost for an infinite period of time. So if they wanted to wait a couple of months, we could just make certain that they continue to get the dose that they were on.

And then when they do go back to the doctor's office, they can continue on their up-dosing regimen as it should have been, right? The two weeks per dose level is really a speed limit. You shouldn't go quicker than that, but you can stay on each dose in the up-dosing for a very long period of time. And there's nothing wrong with slowing down the up-dosing period. If folks miss their dose, say if they miss it for a few days, then you can think about keeping them on the same dose or lowering it just once.

If they miss it for weeks, then you probably have to take them right back to the beginning and start at the beginning of the up-dosing, which is exactly why we've built the flexibility and to be able to provide them with ongoing supply of whatever dose it was that they were on when they last went to the doctor's office.

Boris Peaker -- Cowen and Company -- Analyst

Gotcha. And lastly, if they were to be on this kind of stable intermediate dose, would the insurance still cover that? Is there a request for kind of a special exception because they're not escalating doses higher?

Jayson Dallas -- President and Chief Executive Officer

So when we crafted the flexibility into the plan, actually flat priced the beds. So it doesn't matter what dose you're on, the cost to the insurance and the out-of-pockets are exactly the same. And that's because some patients do need to up-dose and then down-dose, and there has to be a sort of flexibility for the allergist to tailor the up-dosing to the individual patient. So far, we haven't seen any issues or concerns with payers around any of this.

This, by the way, is something that's very, very common. When the allergists are up-dosing people for their seasonal allergies, they up-dose them. They hold them flat. They down-dose them again.

That flexibility is very common in the world of allergy and something that both the clinical practitioners and the payers are used to.

Boris Peaker -- Cowen and Company -- Analyst

Thank you very much taking my questions.

Operator

Thank you. And our next question comes from the line of Paul Choi with Goldman Sachs. Your line is open. Please go ahead.

Paul Choi -- Goldman Sachs -- Analyst

Thank you and good afternoon, everyone, and thank you for taking our questions. I had maybe one on the commercial side here. And could you maybe characterize for us what you're seeing in terms of the early adopters that you mentioned earlier, particularly those who are seeing double-digit type numbers of their patients? Are these patients, to the degree you have these details, experienced OIT patients who are converting to an approved program? Or are these de novo patients? And then secondly, in terms of the clinics who are prescribing here, are you mostly seeing at ones who had existing practices? Or are you also seeing a fair number of first-time OIT prescribers? And then I have a follow-up question.

Andrew Oxtoby -- Chief Commercial Officer

Yeah. Paul, it's Andrew. So I don't have -- we're now at a point -- in terms of number of patients, I don't have visibility on every single case by any means. But I can say that to my knowledge, all of the patients are de novo patients who are starting and who have not converted over from any other sort of OIT.

And from a practice standpoint, the majority, and there probably are a couple of exceptions, but the majority are clinics that are starting PALFORZIA and therefore -- and also OIT the first time. So there may be some that are doing some OIT for other foods, but they're in the minority. I think the vast majority are clinics who are taking advantage of this as the first approved immunotherapy and are doing this for the first time with PALFORZIA.

Paul Choi -- Goldman Sachs -- Analyst

Great. That's helpful color. And then turning to the European side, just given the environment there and with respect to just the COVID situation, as you look to 2021, is it correct to assume -- how are you framing sort of what uptake might look like in the European experience in 2021? Would you assume, reimbursement aside, faster or higher utilization in the early quarters of the launch? Thank you very much.

Jayson Dallas -- President and Chief Executive Officer

Andrew, you want to answer that as well?

Andrew Oxtoby -- Chief Commercial Officer

Yeah, I will. So obviously, it's hard to predict the future, and we would anticipate launching in Europe in the first part of '21. So who knows exactly where we'll be? But if you look at Europe and the way that the pandemic is being managed and frankly, the encouraging rate that the cases are going down, one would think we'll be able to launch in that situation without a great deal of impact from COVID. Certainly, I'm optimistic that will be the case, and so I don't think there'll be any major change to what we're currently planning in terms of what we expect to see from an uptake standpoint in Europe.

Jayson Dallas -- President and Chief Executive Officer

And, Paul, I'd maybe add one thing to that, and that is that Europe we talk about as a single entity, but it's actually 32 separate countries. And each of those countries have slightly different ways of practicing medicine and slightly different ways of reimbursing and slightly different ways of thinking about patient flowing through their systems. And so we have to look at them individually. And we have market research in all of the key markets that tell us how best to think about a go-to-market strategy in those markets, and there's a nuance in all of them.

Obviously, our initial attention and focus is on Germany, and so that's where we spent a lot of time working. And the sort of second really important thing for us to get right at the end of this year and the beginning of next year is the quality of the submission that we put in for reimbursement of OITs in the other markets.

Operator

Thank you. And our next question comes from the line of Derek Archila with Stifel. Your line is open. Please go ahead.

Derek Archila -- Stifel Financial Corp. -- Analyst

Hi, guys. Thanks for taking my questions and congrats on the progress. Just two questions. I guess, first off, you kind of gave us a bit of information in terms of how you recognize revenue.

And I guess typically, how should we be thinking about the stocking assumption? And obviously, with COVID-19, are practices more reluctant to stock this product until they get more visibility, or how is that going? And then a second question for Eric. You talk about being able to fund the company through its current business plan. Does that include profitability? And I guess as we think about the second-half spend, should it kind of mirror what we just saw here in the second quarter? Thanks.

Jayson Dallas -- President and Chief Executive Officer

So let me take the first piece, and then Eric can add a bit more flavor to it and answer your second question. So just a point of clarification there. PALFORZIA is not a buy-and-bill product, so the practices themselves do not tend to stock any of this at all. The only thing that we ship to the practices directly is the initial dosing kit, which is the dosing up-titration that they use on the very first day, and then the office dosing kit, which is the box of all the individual starting doses, right? So the bulk of the supply is shipped directly to the patients.

And so, therefore, inventory is held at our specialty pharmacy level. We recognize revenue when product changes hands from the 3PL to the specialty pharmacy. And then, Eric, you want to just add a bit more to that and answer Derek's second question?

Eric Bjerkholt -- Chief Financial Officer

Yeah. In terms of the runway, which is the essence of your question, we do see ourselves as fully funded based on our current business plan. And our current business plan, of course, makes assumptions about how we see the introduction of PALFORZIA continuing to ramp. So we feel good about that.

And then in terms of the burn rate, yes, I mean, it should be -- we continue to manage our expenses very closely. And every quarter, there's some give and takes up and down, but we can continue to see really good cost -- we expect to see continued really good cost containment for the rest of the year.

Derek Archila -- Stifel Financial Corp. -- Analyst

All right. Thanks, guys.

Operator

Thank you. And I'm showing no further questions at this time. And I would like to turn the conference back over to Jayson Dallas for any further remarks.

Jayson Dallas -- President and Chief Executive Officer

Thank you, everyone, for joining our call today. I'm very proud of the team at Aimmune and the progress that we've made during this extremely challenging time. With almost 1,000 physicians signed up for the REMS, payer policies covering 102 million lives, and our recently initiated targeted consumer marketing campaigns, we anticipate the PALFORZIA launch picking up over the coming months. Our market research shows that there is still strong demand from allergists and caregivers for a treatment for peanut allergy, and we're excited to be able to offer them the first and only FDA-approved therapy.

We have been and will continue to be thoughtful about our spend so that we can get PALFORZIA to those in need while preserving capital. We believe the long-term prospects for PALFORZIA and Aimmune remains strong and promising, and we look forward to providing future updates. As always, I thank you for your ongoing support and for joining us on today's call.

Operator

[Operator signoff]

Duration: 60 minutes

Call participants:

DeDe Sheel -- Vice President of Investor Relations

Jayson Dallas -- President and Chief Executive Officer

Dan Adelman -- President and Chief Executive Officer

Andrew Oxtoby -- Chief Commercial Officer

Eric Bjerkholt -- Chief Financial Officer

Liana Moussatos -- Wedbush Securities -- Analyst

Chris Raymond -- Piper Sandler -- Analyst

Charles Duncan -- Cantor Fitzgerald -- Analyst

Jonathan Woo -- Credit Suisse -- Analyst

Bikramjot Singh -- RBC Capital Markets -- Analyst

Boris Peaker -- Cowen and Company -- Analyst

Paul Choi -- Goldman Sachs -- Analyst

Derek Archila -- Stifel Financial Corp. -- Analyst

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