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Chiasma (NASDAQ:CHMA)
Q2 2020 Earnings Call
Aug 10, 2020, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Thank you for standing by. This is the conference operator. Welcome to the Chiasma second-quarter 2020 earnings conference call. [Operator instructions] And the conference is being recorded.

[Operator instructions] I would now like to turn the conference over to Glenn Garmont, investor relations. Please go ahead.

Glenn Garmont -- Investor Relations

Thank you, operator. Welcome to our conference call. Today, we issued our second-quarter 2020 operating and financial results press release, a copy of which may be found on our website. During this call, we will be making certain forward-looking statements about events and circumstances, including, but not limited to, statements concerning our plans and expectations before the commercialization of MYCAPSSA, including its reimbursement and market adoption, the size and composition of the U.S.

market for MYCAPSSA, the commercial or therapeutic potential of MYCAPSSA and anticipated market acceptance of MYCAPSSA, our expectations regarding the manufacturing supplement that we submitted to FDA for MYCAPSSA, and our plans to submit an additional manufacturing supplement and expectations regarding the availability of product supply, the timing and success of a potential commercial launch of MYCAPSSA in the United States, our ability to convert endocrinologists and patients to MYCAPSSA from octreotide and lanreotide injections, our plans concerning the number of customer-facing employees and the timing of their hiring, our expectations regarding financial results and the potential receipt of additional funds under our royalty agreement with Healthcare Royalty Partners and the timing of top-line results from the EMPOWER trial and potential application for EU marketing approval. These statements are based on current expectations and information available to us. You should not place undue reliance on these statements. We may not achieve our goals, carry out our plans or intentions, or meet expectations.

Actual results or events may differ materially due to numerous risks and uncertainties, including those detailed in the Risk Factors section of our Form 10-Q filed with the SEC for the quarter ended June 30, 2020, as well as our subsequent filings with the SEC. We encourage everyone to read these documents. Except as required by law, Chiasma disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events, or otherwise. Joining the call today is Raj Kannan, chief executive officer; Anand Varadan, executive vice president and chief commercial officer; Bill Ludlam, senior vice president of clinical development and medical affairs; and Mark Fitzpatrick, president and principal financial officer.

Now, I would like to turn the call over to Chiasma's chief executive officer, Raj Kannan. Raj?

Raj Kannan -- Chief Executive Officer

Thanks, Glenn, and thank you, everyone, for joining the call today. We've been very productive during the second quarter, both preparing for the commercial launch of MYCAPSSA in the U.S., while in parallel, continuing to advance our MPOWERED Phase 3 trials to support the potential approval of MYCAPSSA in the European Union. I wanted to highlight three areas in my review of the second quarter, all of which relate to MYCAPSSA. The first is the FDA approval and the broad indication we received.

The second is our launch preparedness. And the third is our resources to support the planned robust commercial launch. First, the FDA approval of MYCAPSSA, the first and only oral somatostatin analog on June 26, was truly a significant and transformational achievement marking a vital comeback for the company. We delivered on a key 2020 goal in transforming Chiasma into a commercial-stage company with, what we believe is, a significant therapeutic advancement in the treatment of acromegaly.

We believe MYCAPSSA could become the new standard of pharmacological care in a patient population that faces significant challenges with existing somatostatin analog injectables. Additionally, this approval validates our transient permeability enhancer, or TPE, the technology delivery platform that we believe allows us to potentially develop additional oral therapies designed to reduce the burden of chronic injections for people with rare diseases. Importantly, we believe the broad MYCAPSSA label provides us with the opportunity to access all patients who have responded to and tolerated long-term maintenance treatment with either octreotide or lanreotide. We estimate the approved label allows us to promote MYCAPSSA to approximately 99% of the somatostatin analog injectable therapy market, which we estimate to be approximately 8,000 patients in the U.S., for whom other treatment options, including surgery to remove the pituitary tumor, do not provide sufficient clinical benefits.

Now that we have an approved product with a broad indication, let me comment on our launch preparedness as my second topic to highlight. As we indicated on June 26 on our approval call, the U.S. acromegaly market is very concentrated, allowing us to market this innovative oral therapy ourselves with a small and targeted specialty sales force. It is estimated that approximately 90% of patients with acromegaly are managed by fewer than 1,000 medical accounts.

As of today, we have hired the first wave of our customer-facing team, which is about one-half of our planned full force of up to approximately 45 individuals. In these age days of COVID-19, this concentrated force allows us to be nimble and adapt quickly to an initial remote launch, which leverages telehealth capabilities that are gaining acceptance by physicians across the U.S., including endocrinologists. We intend to expand this initial team, depending on market conditions, including when and if the frequency of face-to-face interaction increases to appropriate levels or return to normal. Anand will provide a more detailed review of our commercial readiness activities in a moment.

In terms of our commercial supply readiness, we continue to work with our finished product packaging manufacturer to release the initial commercial supplies of MYCAPSSA. We expect this work to be completed and product to be made available to our specialty pharmacies by the end of this quarter. On June 29, we submitted to the FDA a CBE 30 manufacturing supplement to our approved NDA, referencing our primary commercial octreotide acetate API manufacturer, and we now await the FDA's acceptance. As of today and subject to finished packaging release, we have produced sufficient MYCAPSSA capsules to meet our initial projected commercial demand.

As we announced in late July, we were very pleased with the 48-week open-label extension data generated in patients treated with MYCAPSSA following the 36-week CHIASMA OPTIMAL trial, which demonstrated the durability of response on safety and efficacy with MYCAPSSA over the longer term. Bill will walk you through additional details on this meaningful and relevant clinical data in a moment. Lastly, we believe we are well capitalized to support our planned commercial launch and ongoing MYCAPSSA development activity. We ended the second quarter with $87.1 million of cash, cash equivalents, marketable securities, and restricted cash, excluding the approximately $75.5 million in net proceeds from the equity financing that we completed last month and another $25 million we received through our revenue interest financing agreement with Healthcare Royalty Partners in mid-July.

Following the availability of commercial supply and the first commercial sale of MYCAPSSA in the U.S., we expect to receive an additional $15 million from Healthcare Royalty Partners under the terms of our agreement. In summary, we have achieved every milestone planned to date this year, and we remain on track for the exciting commercial launch of MYCAPSSA in the fourth quarter. And now, I will turn the call over to Bill Ludlam. Bill?

Bill Ludlam -- Senior Vice President of Clinical Development and Medical Affairs

Thanks, Raj. On today's call, I will review additional clinical data generated for MYCAPSSA in our recently released 48-week open-label extension results for the CHIASMA OPTIMAL trial and provide you with an update on the MPOWERED trial. Recall that 90% of patients who completed the 36-week CHIASMA OPTIMAL study on MYCAPSSA enrolled in the open-label extension, or OLE, reflecting their strong preference to continue with an oral therapy to manage their condition. I would like to provide additional insights we learned from the 48-week OLE data, which we recently announced.

Notably, the mean of the IGF-1 levels for the population of all 19 MYCAPSSA-treated patients that completed the 36-week double-blind, placebo-controlled, or DPC, CHIASMA OPTIMAL trial and continued into the OLE was maintained within normal limits at the end of the 48-week OLE period. 90% or 18 of the 20 patients enrolled in the OLE who were treated with MYCAPSSA during the DPC phase of the study completed the 48-week OLE period. All 14 patients who enrolled into the OLE as responders to MYCAPSSA, meaning IGF-1 within normal limits, completed the 48-week OLE period, and 93% maintained their response within the normal limits at the end of this period. Finally, the safety profile observed during OLE was generally consistent with the safety of MYCAPSSA noted in the 36-week CHIASMA OPTIMAL trial with no new patterns noted with the increased duration of exposure.

In summary, we believe the longer-term data from the open-label extension demonstrated the durability of the safety and efficacy seen in the pivotal trial. Importantly, it also confirmed the high levels of patients' adherence to the drug regime over a longer term. I will now turn to our ongoing MPOWERED Phase 3 clinical trial designed to support the potential regulatory approval of MYCAPSSA in the EU. As of today, a total of 92 patients randomized into the nine-month double-blind, placebo-controlled phase of the trial as responders to MYCAPSSA protocol, 85 have completed the trial, and four patients remain active in the nine-month randomized phase.

We continue to work with the clinical sites to ensure the safety of the patients and site personnel in light of the ongoing COVID-19 pandemic. Notably, the trial has already met the EMA's required minimum of 80 patients randomized to the nine-month randomized control phase of the trial. The trial is progressing as planned, and we continue to expect to report top-line data from this important trial in the fourth quarter of 2020. If the trial is positive, we plan to complete our marketing authorization application for submission to the EMA in the first half of next year.

Importantly, when the MPOWERED trial is complete, MYCAPSSA will have been evaluated in more than 300 acromegaly patients globally across all three of our Phase 3 studies. This extensive clinical data set should provide confidence to prescribing physicians who are considering switching their patients from octreotide or lanreotide. At this point, I will turn the call over to Anand for an update on our commercial activities. Anand?

Anand Varadan -- Executive Vice President and Chief Commercial Officer

Thanks, Bill. As Raj indicated, we're continuing to advance toward the commercial launch of MYCAPSSA, which we expect will commence in the fourth quarter. Our launch preparations are focused on three main priorities. The people we now have on board to execute the launch, promotional execution that can pivot with changing market conditions and market access, and patient support to provide reimbursement and other support for patients transitioning to MYCAPSSA.

On the people front, we have built our internal commercial team with top talent highly experienced in rare disease markets and competitive settings with numerous successful product launches to their credit. We have now also hired and trained our first wave of sales and patient services personnel, and they're currently educating customers about MYCAPSSA and our support services. Our Chiasma access and patient support or CAPS team is ready to provide personalized support to patients and providers to obtain access, arrange home delivery, and assist with the transition process from injectables. And our account management team is engaging key payers to advance the process of obtaining broad access to MYCAPSSA for patients.

We're extremely pleased with the quality, drive, passion, and track record of success of the team we've been able to attract to Chiasma and with several members of our sales team having prior acromegaly selling experience. Our promotional execution builds on our efforts to raise awareness of the treatment burdens endured by many patients on current injectable therapies. This includes injection site pain, injection site reactions, and missed workdays from having to visit a physician's office for a painful monthly injection. As the first and only oral somatostatin analog, we believe MYCAPSSA will provide a much-needed treatment option to help alleviate the challenges acromegaly patients have had to face with their current octreotide LAR or lanreotide therapies.

Our multifaceted digital promotional program went into effect immediately after FDA approval, and we have seen encouraging signs of both patient and HCP interest in learning more about the potential benefits of MYCAPSSA. Our first wave of sales representatives began personal promotion to top-tier endocrinology accounts at the end of July. This team has been equipped with remote tools to engage customers who are currently not open to face-to-face interactions due to COVID-19 restrictions. As a reminder, our current customer-facing team is about one-half the size of the total 45 members we expect to ultimately have, and we plan to scale up to that number as market conditions permit.

With a concentrated customer base with approximately 90% of patients treated at fewer than 1,000 medical accounts, we anticipate that we can be effective with an efficiently sized customer-facing team. With payers, we expect MYCAPSSA will be seen as significant innovation with important benefits to patients, and we believe they will ultimately provide broad coverage, at least on par with current treatment. It is worth noting that payers already account for somatostatin analog injection treatments in their budget, so MYCAPSSA is not expected to represent an entirely new cost for them. We believe our announced pricing of MYCAPSSA positions us competitively to existing injectable therapies, and we're working with payers to ensure that newly prescribed patients can obtain broad access to MYCAPSSA through coverage policies implemented in the coming months.

We believe our go-to-market strategy is well adapted to succeed in the current COVID-19 environment, and we plan to continue to evolve our efforts based on changes to the marketplace and our own learning. Notably, the entire process of converting a patient from injectable therapy to MYCAPSSA can be accomplished with limited physical contact if desired, from a telehealth consultation with the clinician, a prescription communicated over the phone or internet, mobile phlebotomy for labs, and MYCAPSSA delivery and oral administration at home. Overall, we're very excited by the opportunity to bring MYCAPSSA to patients, are ready to launch as soon as the commercial product is available, and are confident that we are well-positioned to bring MYCAPSSA to acromegaly patients in need of a new oral treatment option. And now, over to Mark.

Mark Fitzpatrick -- President and Principal Financial Officer

Thanks, Anand. As was summarized by Raj at the outset of the call, we believe we are well-capitalized for the planned commercial launch given our strong cash position at June 30 and our more recent financing activity. As we have emphasized in the past, we will continue to prudently manage our cash resources to ensure that we are investing in the business to further stockholder value. General and administrative expenses were $10.7 million for the second quarter ended June 30, 2020, compared with $2.6 million for the same period of 2019.

General and administrative expenses were $18.2 million for the six months ended June 30, 2020, compared with $5.1 million for the same period of 2019. The current year results include our continuing pre-commercial activities, which were $5.6 million and $8.6 million for the three and six months ended June 30, 2020, respectively, an increase in compensation-related expenses and increased other administrative costs as we prepare for the planned commercialization of MYCAPSSA in the U.S. in the fourth quarter of this year. Research and development expenses were $9.7 million for the second quarter ended June 30, 2020, compared with $5.5 million for the same period of 2019.

Research and development expenses were $17.8 million for the six months ended June 30, 2020, compared with $12 million for the same period of 2019. The increase in current-year period results were primarily driven by the manufacturing of octreotide capsules to support our planned commercial launch, costs associated with our disease state registry, scientific literature publications, and increased regulatory costs, which were offset by a decrease in clinical trial costs. Going forward, manufacturing costs related to the production of commercial supplies of MYCAPSSA will no longer be captured in R&D expense but will be capitalized to inventory. For the quarter ended June 30, 2020, net loss was $21.1 million or $0.50 per basic share, compared with a net loss of $7.8 million or $0.25 per basic share for the same period of 2019.

For the six months ended June 30, 2020, net loss was $36.5 million or $0.86 per basic share, compared with a net loss of $16.6 million or $0.59 per basic share for the same period of 2019. Given the many variables associated with our commercial plans and the estimated timing of product availability, it would be premature to provide financial guidance for 2020 and 2021 at this time. However, the following information may be helpful. Our operating expenses in the first half of 2020 were $36 million.

These expenses included increasing pre-commercial expenses, as well as the costs of gradually expanding and readying our customer-facing team. We ended March 2020 with 49 employees. And in July, we completed the hire of approximately half of our planned customer-facing team, bringing our total full-time employee headcount to 68 at the end of July. Also, please bear in mind that our pre-PDUFA API and manufacturing costs to produce MYCAPSSA to support our planned commercial launch were significant in the first half of this year and are entirely contained in R&D expense.

These ongoing expenditures will now be capitalized to inventory going forward. Immediately following MYCAPSSA's approval, we began incurring promotional program costs that we expect will increase. In addition, if we have positive MPOWERED trial results, we anticipate increased spending for our EMA submission in the first half of 2021. Finally, we expect additional costs for potential pipeline product development, which are likely to be relatively low until we progress further into the U.S.

launch of MYCAPSSA. We will, of course, continue to refine our cost estimates as we evolve our commercial plan, after which we will seek to provide more detailed guidance. We ended the second quarter with $87.1 million of cash, cash equivalents, marketable securities, and restricted cash, compared with $92.4 million as of December 31, 2019. In April 2020, the company received a $25 million payment less certain transaction expenses from Healthcare Royalty Partners under the previously announced revenue interest financing agreement.

We received an additional $25 million from HCR in mid-July, triggered by the FDA approval of MYCAPSSA. In July, we also raised approximately $75.5 million of net proceeds from an underwritten equity offering. Upon completion of these financing activities in July, we believe we have adequate capital to achieve our planned commercial and developmental milestones, including the commercial launch of MYCAPSSA in the U.S. expected in the fourth quarter, top-line data from our Phase 3 MPOWERED trial also expected in the fourth quarter, EMA regulatory submission planned for the first half of next year if the MPOWERED trial is positive and anticipated U.S.

revenue growth and pipeline advancement utilizing our TPE technology. Now, let me turn things back over to Raj before we open the call to Q&A.

Raj Kannan -- Chief Executive Officer

Thanks, Mark. We're excited for the planned U.S. commercial launch of MYCAPSSA to potentially transform the lives of people with acromegaly in need of a new oral treatment option. We've assembled a world-class team, and we look forward to executing on our robust commercial plan.

Operator, would you please open the line for the Q&A.

Questions & Answers:


Operator

[Operator instructions] Our first question is from Edward Tenthoff with Piper Sandler. Mr. Tenthoff, your line is open.

Edward Tenthoff -- Piper Sandler -- Analyst

OK. Thank you very much. Guys, congrats on all the success. Really exciting to hear getting MYCAPSSA launched in the fourth quarter.

I wanted to get a sense for a little bit more what was in the manufacturing supplemental, whether there's anything to, kind of, pay attention to there. And then with respect to supply, can you give us a little bit more characterization in terms of what you have on hand for the launch? And does the manufacturing supplemental impact that supply at all? Thanks so much.

Raj Kannan -- Chief Executive Officer

Hi, Ed. This is Raj. Thanks for the question. I'll make an overarching comment on the supply and the manufacturing supplement, and I'll provide it to Mark to add any additional comments as well.

On the manufacturing supplement, as we stated before, we had filed a CBE 30, which we are awaiting the FDA decision to accept the actual filing and then approve it. We had mentioned that there is a possibility if the FDA approves it or accepts it on time, there is a possibility of an earlier-than-expected approval. But given the uncertainty around the manufacturing supplement in terms of when the FDA will review, accept, and approve it, we are maintaining our current guidance of a 4Q launch. In terms of supply, we had indicated in our prepared remarks that we have adequate commercial supply in hand to meet our initial projected demand.

However, that is incumbent upon the FDA's acceptance of our CBE 30, which allows us to then put that commercial supply into the marketplace. Mark, if I've missed something in that comment, feel free to weigh in.

Mark Fitzpatrick -- President and Principal Financial Officer

Raj, I think you've captured it just fine.

Operator

The next question is from Brandon Folkes with Cantor Fitzgerald. Please go ahead.

Brandon Folkes -- Cantor Fitzgerald -- Analyst

Hi. Thanks for taking my questions and congratulations on all the progress during the quarter. Just maybe following on from the prior question. How quickly post an approval of the supplement would you be able to launch just in terms of getting inventory out into the channel? Would you need a few weeks? And then maybe secondly, since approval, and based on your discussions with prescribers since that approval, do you think there's any aspect of MPOWERED that has become a bit more important or that prescribers may place -- prescribers in the U.S.

may place a little bit more emphasis on wanting to see to further drive that adoption here in the year? Thank you.

Raj Kannan -- Chief Executive Officer

Hi, Brandon. Thanks for those questions. First and foremost, on the supply availability, I believe, in our prepared remarks, we have said that we would be able to get the commercial supply to our 3PL or specialty pharmacies by the end of this quarter. So I think that is still our expectation.

Whether we can release that commercial supply into the marketplace, as we said before, depends on the FDA's acceptance of the CBE 30 manufacturing supplement. So that's the answer to the first question. The second question was on MPOWERED. Obviously, MPOWERED, as we know, is an important trial that will generate complementary data to OPTIMAL.

And so we expect that physicians will pay attention to the kind of data that we'd be able to generate, which is, one, the relative benefit versus injectables because that is a head-to-head non-inferiority trial. And importantly, there are many aspects with the quality of life information and the symptom mitigation questionnaires that we would be able to address the hypothesis that whether a daily dose of MYCAPSSA versus a monthly depo injection does contribute to symptom mitigation for patients on injectables. I hope that both answers your questions, Brandon.

Brandon Folkes -- Cantor Fitzgerald -- Analyst

It does. Thank you very much.

Operator

The next question is from Douglas Tsao with H.C. Wainwright. Mr. Tsao, your line is open.

Douglas Tsao -- H.C. Wainwright -- Analyst

Hi. Good afternoon. Thanks for taking the question. Just maybe a little bit of a following up on Brandon's question.

Just curious in terms of the early days that you've been interacting with physicians post approval, just what point around MYCAPSSA or sort of points of feedback are you -- have you been getting from clinicians in terms of what they're most excited about, the types of patients that are most interested in potentially switching. Just any color would be helpful. Thank you.

Raj Kannan -- Chief Executive Officer

Hi, Doug. Thanks for that question. I would say that the overarching response to our introduction of MYCAPSSA and the approval has been very encouraging, both from HCPs patients and payers. And especially in the COVID-19 environment, this is, in particular, quite an important option to consider for patients.

But I'll let Anand weigh in more on the specific insights that we gathered from primary research, as well as our field force that have been engaging with our KOLs and our physicians since we put them on the ground. Anand?

Anand Varadan -- Executive Vice President and Chief Commercial Officer

Sure. Thanks, Raj. I appreciate it. Hi, Doug.

So Doug, the field sales organization has just been out there now since the end of July, so it's been a couple of weeks. The interactions since then, I think, has pretty much tracked with our expectations around how the profile of MYCAPSSA would be received and what have we seen in prior market research. And essentially, what it is, is that it's coming across as a viable option for those patients who are on octreotide or lanreotide raided, who are eligible for an oral therapy and for human oral therapy would be quite strong. And I think that in that respect, we've been pleased with that level of reception of the overall profile of the product and then -- for the specific patients that would be eligible for it.

The other thing that we've been encouraged by is the interest level on the part of HCPs and patients that we saw before our sales organization was out in the field. And I'm basing this on the traffic that we've seen to both our -- to our HCPs, as well as patient website and the engagement that the visitors have had with the various aspects of it. So they're not just sort of coming in and leaving. They're spending time.

They're going through the various modules. They're downloading information, and they're doing this, from what we've gathered from our agencies, at a rate that exceeds what the benchmarks have normally been. So all of that put together puts us in an optimistic mood and also one that says that we think that the product is coming through to the clinicians and for the patients that they think are eligible for it.

Douglas Tsao -- H.C. Wainwright -- Analyst

OK. Great. And then just one quick follow-up. In terms of MPOWERED, obviously, Europe has had much greater success in terms of controlling the virus.

So at this point, is the study really, sort of, executing to plan? And some of the modifications that you had anticipated, are those not really -- or put into place, those not having as big an effect or not as needed, just given the situation there? That would just be helpful to know, understand as we look forward to that data. Thank you.

Raj Kannan -- Chief Executive Officer

Yes. So let me just provide a couple of things from Bill's prepared remarks, right? So Bill had mentioned in his prepared remarks that we had 92 patients randomized as responders. And then 85 of them have already completed, and I want to remind folks here that the EMA requirement, the minimum requirement for the randomization was 80 patients. So we're well above that particular mark, and we have four patients active.

And it is a global trial, so it's not just Europe alone, but we are on track. Bill, is there anything else that you would like to add to provide the sort of the confidence that we have that MPOWERED is on track?

Bill Ludlam -- Senior Vice President of Clinical Development and Medical Affairs

No. So as we have been saying all along, we're using a time-weighted average analysis, which accounts for any missing data. We have only four patients, as Raj just mentioned, I mentioned earlier, that are still in the RCT. Everything is moving along very nicely, exactly to plan.

Douglas Tsao -- H.C. Wainwright -- Analyst

And just to clarify, I was just going to say just in terms of -- I mean, so obviously, I know the time-weighted average accounted for any missing data. But just given how quickly sort of ex U.S., people were able to get control of the virus. I mean, has that been less of a factor than you potentially anticipated which -- than several months ago?

Bill Ludlam -- Senior Vice President of Clinical Development and Medical Affairs

Well, we haven't gotten into the specifics. Again, this is an ongoing trial. I can tell you that there has not been any loss of patients due to COVID-19 issues. We very proactively early on in the process began to create all kinds of safety measures.

So we're able to follow-up closely with patients, provide drug, and working very, very closely with the sites that are working closely with the patients. So we've been able to navigate through this really very well. And as we said, patients are continuing to go through as planned, and we only have four that are currently remaining.

Douglas Tsao -- H.C. Wainwright -- Analyst

OK. I will follow with you offline.

Raj Kannan -- Chief Executive Officer

OK. I was also going to say we also remain on track to report the top-line data still in fourth quarter. And we remain excited about that particular milestone as well.

Bill Ludlam -- Senior Vice President of Clinical Development and Medical Affairs

Absolutely.

Douglas Tsao -- H.C. Wainwright -- Analyst

OK. Great.

Operator

Your next question is from Kumar Raja with Brookline Capital Markets. Mr. Raja, your line is open.

Kumar Raja -- Brookline Capital Markets -- Analyst

Congratulations on all the progress and thanks for taking my questions. With regard to the manufacturing supplement, have you had any interactions with the FDA following the submission in June? Do you have a sense whether a site inspection would be required?

Raj Kannan -- Chief Executive Officer

Yes. Hi, Kumar. Thanks for that question. Obviously, there's ongoing interactions with the FDA that we specifically don't comment on.

However, with regard to the inspection, remember, we had mentioned this before that given the recent inspection history of the primary API supplier, we do not believe this is going to be the case. However, we always caveat that at saying that the FDA always reserves the right to conduct an inspection at any given point in time. That's why we are remaining conservative in our guidance, and we continue to say that our launch is still scheduled to be in the fourth quarter and not necessarily jumping the gun and taking the best case and putting that out there right now.

Kumar Raja -- Brookline Capital Markets -- Analyst

And with regard to the two patients who did not complete the 48-week open-label extension, what are the factors due to which they could not complete? And any clarity with regard to what time point they discontinued the trial?

Raj Kannan -- Chief Executive Officer

Bill, do you want to take that question?

Bill Ludlam -- Senior Vice President of Clinical Development and Medical Affairs

Yes. We haven't given any further clarification other than what we've released in the press release and the script today. We will be giving a very complete overview of the data. We're very pleased with it in the upcoming academic setting, and we'll publish it soon.

We have not gotten, at this point, into any further details. 90% completed. The OLE that went in, we thought that was very, very positive, very consistent with what we've been seeing, a very nice maintenance on treatment, good experience for clinicians and patients, and haven't gotten any further granularity on that.

Raj Kannan -- Chief Executive Officer

Yes. And what I would also say, Kumar, is that I think we were very pleased with the durability of safety and efficacy that we saw over the longer term. So this only validates the response is maintained over a much longer period. So we hope that that will also be replicated in the real world.

And that is an important data point for clinicians to be able to adopt and prescribe MYCAPSSA.

Kumar Raja -- Brookline Capital Markets -- Analyst

And finally, one housekeeping question with regard to the supply of the specialty pharmacy. If you get approval for the manufacturing supplement before Q3, I think in last quarter, you said that you'll be recognizing revenues once you supply to the specialty pharmacy. So if the approval comes through in Q3, you'll be recognizing those revenues in Q3, I believe?

Mark Fitzpatrick -- President and Principal Financial Officer

So the...

Raj Kannan -- Chief Executive Officer

Sorry, Mark. Go ahead.

Mark Fitzpatrick -- President and Principal Financial Officer

I'm sorry to interrupt you, Raj. Yes. So Kumar, if there's shipment to the specialty pharmacy in Q3, that's the revenue recognition event for the company.

Kumar Raja -- Brookline Capital Markets -- Analyst

OK. Great. Thanks.

Operator

This concludes the question-and-answer session. I would like to turn the conference back over to Raj Kannan for closing remarks.

Raj Kannan -- Chief Executive Officer

Thank you for joining us on the call today. We always appreciate your continued support, and we look forward to sharing our progress updates and our continued progress periodically. Have a wonderful day and a safe rest of the summer. Thanks again.

Talk to you all soon.

Operator

[Operator signoff]

Duration: 46 minutes

Call participants:

Glenn Garmont -- Investor Relations

Raj Kannan -- Chief Executive Officer

Bill Ludlam -- Senior Vice President of Clinical Development and Medical Affairs

Anand Varadan -- Executive Vice President and Chief Commercial Officer

Mark Fitzpatrick -- President and Principal Financial Officer

Edward Tenthoff -- Piper Sandler -- Analyst

Brandon Folkes -- Cantor Fitzgerald -- Analyst

Douglas Tsao -- H.C. Wainwright -- Analyst

Kumar Raja -- Brookline Capital Markets -- Analyst

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