Global Blood Therapeutics (GBT) Q4 2020 Earnings Call Transcript

Global Blood Therapeutics (GBT)
Q4 2020 Earnings Call
Feb 24, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to Global Blood Therapeutics conference call. [Operator instructions] As a reminder, this conference is being recorded. I would now like to turn this conference over to Mr. Steven Immergut.

Please go ahead, sir. You may begin.

Steven Immergut -- Senior Vice President, Head of Corporate Communications, and Investor Relations

Thank you, and welcome to GBT's conference call to discuss the company's financial results for the fourth-quarter and full-year 2020 and to provide a business update. I'm Steven Immergut, head of communications and investor relations. Joining me on the call are Dr. Ted Love, our president and CEO, who will provide a high-level update on our progress in the fourth quarter and over the full-year 2020; jeff Farrow, our chief financial officer, who will provide an overview of our financial results; and David Johnson, or DJ, our chief commercial officer, who will give an update on the Oxbryta launch.

Ted will then close with an update on our pipeline activities and other long-term growth initiatives. Earlier this afternoon, we issued a press release announcing GBT's progress and financial results for the fourth quarter and year ended December 31, 2020. Before we begin, I would like to remind you that certain statements we make on this call that are not historical facts may be forward-looking statements that are subject to risks and uncertainties. Information concerning factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements are contained in our SEC filings, including, but not limited to, our most recent annual report on Form 10-K, as well as in today's press release.

Copies of our SEC filings and press releases can be obtained from the Investors page of our company website at gbt.com. The forward-looking statements made on this call are only as of the time they are made and should not place undue reliance on such statements. Future events or simply the passage of time may cause our beliefs to change, and we disclaim any obligation to update any forward-looking statements other than as required by law. With that, I will turn the call over to Ted.

Ted Love -- President and Chief Executive Officer

Thank you, Steven, and good afternoon, everyone. 2020 was a historic year for GBT, headlined by the launch of Oxbryta and significant progress on our R&D pipeline. We are in a position of strength, and we continue to build value with multiple commercial, regulatory, and clinical milestones in the coming months and years. It is clear that Oxbryta's fundamentals are strong.

This is supported by several facts: first, strong adoption and awareness. During the first full year of the launch, we generated nearly $124 million in revenue, making it the most successful launch in sickle cell disease history. This happened despite a once-in-a-century pandemic. In addition, physician and patient awareness of Oxbryta is extremely high.

Nearly 100% of healthcare professionals who are aware of Oxbryta, either have prescribed it or planned to. Second, robust data. The growing body of clinical data, including the HOPE Study, shows that Oxbryta resulted in durable improvements in hemoglobin and hemolysis over 72 weeks of treatment. Both the HOPE Study and the published real-world experience data shows most patients taking Oxbryta report improvement in overall health status.

We've seen in real-world data, statistically significant reductions in blood transfusions and VOCs. And I know many patients that have returned to their normal daily activities, including getting back into the workforce. And third, broad access. Our analysis of prescription trends confirm that HCPs are starting a broad range of patients on Oxbryta, irrespective of their baseline hemoglobin, VOC history, and age.

We established broad payor coverage in less than a year, one quarter ahead of our 2020 goal, which demonstrates that payors understand the benefits of Oxbryta. Based on these points, we believe Oxbryta is well on its way to become foundational in SCD care. In every launch, you learn and adapt. COVID-19 has accelerated this process for our team, and we believe this will put GBT in an even stronger position coming out of the pandemic.

Until that time comes, we believe we can continue to sustain our current levels of new prescriptions and look forward to the opportunity to accelerate our growth when the pandemic subsides. We have a deep appreciation for the disproportionate impact of COVID-19 on sickle cell patients and the ratio and inequalities in healthcare, which have been magnified by the pandemic. As part of our long-term commitment, GBT's support for the sickle cell community has increased each year, and we are proud to have helped this community in a variety of ways in 2020. Total financial support was more than $2 million, and a couple of specific examples include, number one, GBT, our employees, and members of our board contributed nearly $400,000 to directly support the urgent patient and family needs related to the COVID-19 pandemic; number two, we also provided funding to nonprofit organizations working to improve access to care in SCD through our ongoing ACCEL Grant Program; and thirdly, we hosted the 9th Annual Sickle Cell Disease Therapeutics Conference to further advance healthcare for people living with sickle cell disease.

Overall, we are very happy with our launch progress. GBT is a clear leader in sickle cell disease, and we are poised to deliver for patients in 2021 and beyond. With that, I will turn the call over to Jeff to provide an update on our fourth-quarter and full-year results.

Jeff Farrow -- Chief Financial Officer

Thank you, Ted. GBT delivered solid results in the fourth quarter and full-year 2020, and we have continued to maintain a healthy balance sheet. It is also exciting to see the investment we have made in our SCD pipeline evolve as we move two new assets into the clinic. Total net revenues from sales of Oxbryta was $41.3 million for the fourth quarter of 2020 and $123.8 million for the full-year 2020.

Despite the ongoing impact of COVID-19, fourth-quarter revenue grew by $4.4 million or 12% over the third quarter. The sequential revenue growth was driven by patient demand for Oxbryta primarily from prescription refills. This was partially offset by the impact on new prescriptions due to the pandemic and the Thanksgiving and Christmas holidays. Our gross-to-net adjustment was approximately 12% in the fourth quarter.

As previously noted, we continue to expect our gross-to-net adjustment to increase over time driven by patient insurance coverage, prescriptions filled by 340B pharmacies, the Medicare Part D coverage gap, and patient copay assistance. Our gross-to-net adjustment in fourth-quarter revenue benefited by approximately $600,000 related to a reversal of our return reserve for Oxbryta. As we come to the end of our first year of launch and review actual levels of returns, which have been de minimis, we've adjusted the return reserve to appropriate levels. In terms of inventory, days on hand at our distributors was approximately three days higher than the elevated level of inventory we experienced in the third quarter.

So as we think about the first quarter of 2021, this could result in less bottle purchases as distributors utilize the inventory built up in Q3 and Q4. Overall, I'm pleased with the revenue from Oxbryta in 2020. As we think about the first quarter of 2021, we anticipate flat revenue compared to the fourth-quarter 2020, which includes the expectation of a higher gross-to-net adjustment. We also expect new prescriptions to remain flat, and we do not expect to see significant growth until the pandemic subsides.

Based on the latest thinking, our best estimate is that this may not occur until the second half of this year, after which we anticipate we will be able to incrementally increase new prescriptions quarter over quarter. DJ will talk more about some of our ongoing efforts. Cost of sales for the fourth quarter was approximately $1 million and for the full year was approximately $2 million as compared with $48,000 for the fourth quarter and full-year 2019. The cost of sales was low in the prior year as the majority of the manufacturing costs related to Oxbryta sales were incurred prior to FDA approval and thus, were recorded as R&D expense.

We continue to expect that the cost of Oxbryta sales as a percentage of revenues will increase as fully expensed product manufactured prior to FDA approval is utilized. We continue to believe that we have a robust commercial supply of Oxbryta to sustain estimated patient needs into 2022. And the production of Oxbryta by our contract manufacturers has not been impacted by government-mandated COVID-19 vaccine production orders. R&D expenses for the fourth-quarter 2020 were $41 million compared with $65 million for the same period 2019.

For the full year, R&D expenses were $155 million compared with $175 million in the prior year. The fourth quarter of 2019 includes $20 million in expense related to Syros Pharmaceuticals collaboration agreement signed in December 2019. Excluding the Syros expense, the decrease in R&D expenses in the fourth quarter was primarily due to lower manufacturing costs for Oxbryta. As following FDA approval, we capitalized manufacturing inventory.

This decrease was partially offset by an increase in external costs related to our inclacumab program and preclinical research activities related to our Syros collaboration. Sales, general, and administrative costs for the fourth quarter of 2020 were $59 million compared with $45 million for the same period in 2019. For the full year, SG&A was $211 million, compared to $117 million in the prior year. The increase in SG&A expenses was primarily due to increased employee-related costs, including non-cash stock compensation and other professional and consulting services associated with the build-out of our commercial operations and launch of Oxbryta.

Our increased patient and HCP education and promotion efforts are also reflected in SG&A expenses in 2020. Net loss for the fourth quarter was $62 million, compared to $96 million for the same period in 2019. Net loss for the full year was $248 million, compared to $267 million in the prior year. Basic and diluted net loss per share for Q4 was $1 per share compared with $1.59 per share for the same period in 2019.

Basic and diluted net loss per share for the full year was $4.04 per share compared to $4.57 per share in the prior year. We ended the year with a strong balance sheet and with cash, cash equivalents, and marketable securities of $560.9 million compared with $535.2 million at September 30, 2020. In summary, in an unpredictable year, I'm extremely pleased with GBT's 2020 results. Our revenue from Oxbryta has far exceeded pre-pandemic Street expectations and we're in a strong financial position.

I also remain confident that when COVID-19 subsides, our growth will accelerate, and our positioning for the long-term will remain strong. And with that, I will now turn the call over to DJ.

DJ Johnson -- Chief Commercial Officer

Thank you, Jeff, and good afternoon, everyone. We ended 2020 by delivering another quarter of solid progress with the Oxbryta launch. We achieved this in spite of growing COVID-19 cases across the U.S., which is a testament to the passion and dedication of our team. I want to thank all of our employees for the efforts throughout the launch.

As I've done in prior quarters, I will provide an update around the three key metrics that combined with net revenues will give you further insight into our progress. These metrics are new prescriptions for Oxbryta, which informs underlying patient demand; the number of healthcare providers prescribing Oxbryta, which captures the progress we're making in adoption; and payor coverage, which speaks to the access environment for Oxbryta. First, new prescriptions. Nearly 5,000 new prescriptions were written for Oxbryta between launch and the end of 2020, including approximately 950 during Q4.

This is despite a continued decrease level of sickle cell patient and healthcare provider interactions due to the pandemic. We're pleased that we were able to maintain this level of new prescriptions in the fourth quarter given the dramatic and rapid rise in COVID-19 cases, coupled with the normal impact of the holidays. As we continue to increase the number of patients in our patient claims and lab data, it now reflects more than 2,400 patients. We continue to see a broad patient profile for Oxbryta.

Nearly half of Oxbryta patients have an average base hemoglobin above 8 grams per deciliter and about one-third have a baseline of three or more annual VOCs. In addition, more than half of Oxbryta patients are on a combination regimen. These trends bode well for the future of Oxbryta as it shows a broad range of use. Beginning in Q3, we rolled out several new websites and drove social media that increased our interactions with healthcare providers and patients in the second half of the year.

At the end of 2020, we had more than 425 visits per day to our HCP-focused websites. We recorded more than 14 million digital impressions from HCPs in the second half of 2020, with 75% growth in the impressions in Q4 over Q3. And our patient-focused disease awareness program, Sickle Cell Speaks, has now grown to more than 60,000 followers on Facebook. We think that's a great indicator of our ability to educate on SCD.

We continue to roll out new content in 2021, leveraging a broader toolbox of marketing and educational materials. For example, we now offer getting-started guides and brochures, which can be provided to patients to support discussions on Oxbryta. For GBT Source Solutions, we now exclusively offer our high-touch model, which has shown to result in better adherence rates. And we recently launched the gbtsource.com website to provide information for patients, caregivers, and healthcare professionals about starting and staying on Oxbryta.

We also recently partnered with the iconic magazine brand Essence to educate and motivate our patients and caregivers via sponsored content and digital advertising. And finally, after following the requirements of the FDA presubmission under Oxbryta's accelerated approval process, we will have new patient tools, including everything from treatment journals, side effect management tip sheets, and smart bottle cap stickers and alarms with the goal of improving overall adherence. In addition, our field teams have been trained on the 72-week analysis of the Phase 3 HOPE Study, which was presented at ASH in December to use in the field, supplementing our already compelling 24-week data. Our medical field teams also are trained on the emerging real-world data and have been educating HCPs on these important findings.

In addition, the team recently launched a new MSL on-demand capability so that they can interact with healthcare professionals in real time. This new offering allows us to address the challenge of limited in-person meeting opportunities with healthcare professionals while maximizing the impact of our interactions. We believe our digital and field engagements will continue to build awareness with patients, as well as support for more physicians prescribing Oxbryta, while also helping them keep their patients on therapy in hopes of achieving better outcomes, which leads me to my second metric, healthcare provider penetration. In the fourth quarter, COVID-19 continued to be a headwind causing decreased in-person interactions by both patient and our field teams.

We continue to drive in-person interactions in the geographies where we are able to do so and virtual engagements continue in all areas. While interactions were curtailed during the quarter due to the pandemic, we continue to engage in discussions with HCPs with a focus on fostering deeper relationships and gaining an even better understanding of the patient journey. We continue to bring greater awareness to GBT and Oxbryta. And I want to flag what Ted mentioned earlier, of those HCPs who are aware of Oxbryta, nearly 100% have either prescribed it or plan to in the future.

Our efforts in 2020 have contributed to achieving 1,365 unique healthcare providers who have written a prescription for Oxbryta from launch through the end of the year, including about 190 new prescribers in Q4. This is important because we know that new writers typically start multiple patients on Oxbryta. When we look at the breakdown of writers, we continue to see prescriptions being written by both specialists and non-specialists, which we believe is a positive trend for the long-term trajectory of the launch. This is a great start in the solid base of prescribers and consistent with all the launches in my career.

As we enter year 2 of the launch, we are optimizing our sales efforts with learnings from year 1. This includes better targeting of our most active HCPs and adjusting territories to maximize access, referral trends, and institutional dynamics. We believe these improvements will position us even better for the future. Turning to payor coverage.

As we previously reported, as of September 30, we achieved broad payor coverage one quarter ahead of our goal. This coverage provides access to 90% of covered lives in the United States. In Q4, we made small incremental gains, and we will continue to work to optimize coverage. In summary, we have acted nimbly in the face of COVID-19, and we have taken the learnings from the first year of launch to enhance how we approach the market.

We've also rolled out new materials that focus on expanding adoption and supporting adherence. I believe we are in a stronger position as an organization because of these actions, and I continue to be confident in the long-term potential of Oxbryta. I will now turn the call back over to Ted to discuss the potential expansion of Oxbryta and our pipeline.

Ted Love -- President and Chief Executive Officer

Thanks, DJ. As you've heard today, we made significant progress with the launch of Oxbryta, and we continue to refine our tactics in 2021. We also continue to make good progress in our regulatory efforts to broaden access to Oxbryta. We continue to plan to file our regulatory application with the FDA to expand the Oxbryta label to include children ages four to 11 by mid-2021.

Providing Oxbryta access to younger patients is one of our top priorities. We believe that mitigating red blood cell sickling and destruction early in life will modify the course of the disease and alleviate serious and life-threatening complications. In the U.S., we recently enrolled the first patient in our pediatric expanded access program, or EAP, to provide access to Oxbryta prior to its potential approval for younger children. In January, we announced that the European Medicines Agency accepted our submission for Oxbryta for regulatory approval.

Based on standard timelines, including clock stoppages, we estimate their review will take about 12 to 15 months. As the EMA works through their review, physicians are able to gain experience with Oxbryta through an EAP that we launched for eligible patients in Europe and other regions outside the U.S. In the six GCC countries in the Middle East, we continue to work with our distributor partner, Biopharma-MEA to make Oxbryta available. We intend to establish a similar partnership for Latin America, including Brazil, where the bulk of the region's SCD patients live.

Now, turning to our R&D pipeline. I'm really thrilled about the progress we made this past year. In December, we announced the appointment of Dr. Kim Smith-Whitley as EVP and head of research and development.

Kim is a highly accomplished global leader in sickle cell disease with an impressive track record. She joins our leadership team from Children's Hospital of Philadelphia, where she will continue to see patients part-time. She will officially join us in May. Let me take a moment to update you on the pipeline.

First, inclacumab is potentially the best-in-class P-selectin inhibitor. This therapy has been dosed in more than 700 patients in a previous non-sickle cell program, which gives us confidence in its safety. At ASH, we shared data that shows it binds to a unique site that allows inclacumab to Inhibit P-selectin more potently, which we believe will enable quarterly dosing versus the currently available monthly intravenous dosing. For an intravenous infusion, quarterly versus monthly dosing is a very important distinction for patients.

We plan to initiate two pivotal studies, Phase 3 studies for inclacumab in the first half of 2021. The first study will focus on reducing VOCs over a 48-week treatment period. The second study enabled by inclacumab's quarterly dosing potential will focus on reducing 90-day hospital readmission following an initial VOC hospitalization. The two studies are designed to potentially enable two independent regulatory submissions for separate indications.

Moving to GBT021601 or 601, our next-generation hemoglobin polymerization inhibitor also has the potential to be best in class. At ASH, we presented data that shows 601 has the potential to normalize hemoglobin through improved red blood cell survival and improved organ function. If this plays out in the clinic, 601 has the potential to provide a functional cure in a once-daily pill. We have enrolled patients in a healthy volunteer study, and our goal is to have proof-of-concept data in sickle cell patients by year-end.

In closing, I want to reiterate three key points regarding the outlook for GBT. First, we are continuing on our path to be the leader in sickle cell disease. Every day, our team is focused on discovering, developing, and delivering highly effective, safe, and scalable therapies for patients living with this terrible disease. We have a strong track record of execution and a deep commitment to the SCD community.

We are proud to make a difference and determine to end the disparities in healthcare these patients suffer. Second, the Oxbryta launch has been a great success. The fundamentals are strong, and we believe this first-in-class oral therapy will become foundational in SCD care. Lastly, we are building for the long term with our pipeline and global expansion.

Our two lead clinical candidates have best-in-class potential, inclacumab with potentially more potency and quarterly dosing, and 601 with early data suggesting it may provide a functional cure for sickle cell disease. We could not do any of this without our employees, and I want to thank them for contributing to the impressive progress we made in 2020, and the continued passion they bring every day. We continue to be driven by our mission, and we are getting closer to our goal of transforming SCD into a well-managed condition. With that, we'd like to open the call for questions.

Operator?

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question comes from the line of Gregory Renza with RBC Capital Markets. You may proceed with your question.

Ning Lu -- RBC Capital Markets -- Analyst

Hi. This is Ning Lu on for Greg. Thank you for taking our question and congrats on the quarter. Maybe just a question on the feedback on patients and doc assistance program, which has been very positive and notably aggressive.

I was wondering, how should we foresee that push being sustained? And what is the right level of support at steady state? Thanks.

Ted Love -- President and Chief Executive Officer

Were you asking about the feedback that we're getting from physicians? I just want to make sure I understood the question. This is Ted.

Ning Lu -- RBC Capital Markets -- Analyst

Yeah, just feedback from physicians and maybe from patients, too, if possible.

Ted Love -- President and Chief Executive Officer

Yeah, yeah. Happy to take that. The feedback has been excellent. I mean, as you know, every drug can have side effects and our side effects have been generally well manageable related to reversible GI issues, and that is a minority of patients.

From the HOPE study, I think it was about 25% of patients had GI side effects that were always manageable. But in terms of the patient's feedback, I think one of the abstracts that I would point you to was from ASH, and I think about 80% of the patients reported that their health status was significantly or at least moderately improved after being on therapy. And that was actually quite consistent with the blinded placebo-controlled data that we gathered in the HOPE Study. So we have excellent data to show that it's not just anecdotal that these patients feel better, it's documented through blinded, placebo-controlled work.

And then as I mentioned, in the prepared remarks, we've definitely seen patients also who were unable to work, who've been able to get back into the workplace. So that's all very exciting for us, and I think it's great news for patients.

Ning Lu -- RBC Capital Markets -- Analyst

Thank you and congrats on the quarter.

Ted Love -- President and Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of Liana Moussatos with Wedbush Securities. You may proceed with your question. Liana, your line is live.

Liana Moussatos -- Wedbush Securities -- Analyst

Sorry, I was on mute. So you had told us that Q4 would be flat over Q3. And now, you're telling us Q1 will be flat over Q4. Just wondering the success for Q4 revenues, was that due to what you were describing as increased hand-holding with patients that you were going to show them more attention? And apparently, if that's it, it worked.

But now, you're saying flat over because of some inventory for a couple of days. But it seems to me that it might be higher than that since Q4 was higher than Q3. Any comments?

Ted Love -- President and Chief Executive Officer

So, Liana, this is Ted. Thanks for the question. I think I'll ask Jeff to speak to some of the specifics.

Jeff Farrow -- Chief Financial Officer

Sure. Yeah. No, I do think some of the DJ's team's efforts have been helping as we move forward. Clearly, the pandemic really reared its ugly head in the second half of Q4.

Despite that, we were still able to get 950 new RXs. But there was a couple, sort of, I would characterize them a nonroutine events that happened in Q4, that if you take them out, it really is more of a flat quarter in Q4. We did have the inventory buildup that you had mentioned in the fourth quarter of about three days. So we do expect -- and we've seen it, quite frankly, in the first month and a half here of the quarter, where the distributors are not buying as much initially.

Now, that could change toward the end of the quarter, but currently, it's a little bit less than the run rate we saw in the fourth quarter. We also had the impact of a reduction in the gross net given our return reversal of about $600,000. We won't have the benefit of that in the first quarter. And we also expect that gross to net to continue to move up incrementally quarter over quarter.

So those are really sort of the reasons that we expect a flat Q1 as it compares to the fourth quarter.

Liana Moussatos -- Wedbush Securities -- Analyst

All right. Thank you very much.

Operator

Our next question comes from the line of Alethia Young with Cantor. You may proceed with your question.

Alethia Young -- Cantor Fitzgerald -- Analyst

Thanks for taking my question. Kudos to you guys for kind of working through all this. It's a lot to work through. I guess in your script, you talked a little bit about like demand associated with script refills.

Is it sort of fair to think that's picking up a little bit fundamentally? And I guess in terms of like as it relates to the doctors that you see are coming on, do you feel like there's kind of going to be -- kind of another small bump up as we go through the year, as you kind of continue to add doctors and perhaps they add a new tranche of patients? Thanks.

Ted Love -- President and Chief Executive Officer

Thanks, Alethia. I'll ask DJ to respond to that.

DJ Johnson -- Chief Commercial Officer

Sure. Alethia, yes, we did see refills were strong in Q4 and that helped us out. So we do think our tactics are helping there. And of course, we have many more tactics that we rolled out throughout Q4 and into Q1.

We just had a really effective national meeting this month, where we rolled out the 72-week HOPE data to the field, lots of new materials, including the starter kits, including the patient brochures, and of course, we're activating our hub to do even more for patients. So all of this is going to help us. That said, Q4 with the spike in COVID, we did see a decrease in the number of interactions between patients and healthcare providers in the sickle cell community in Q4 from Q3 because of that spike. But that said, we do have some tailwinds that we think are going to help us.

So we're very confident about this year being able to grow, especially once we get past the pandemic.

Operator

Our next question comes from the line of Ritu Baral with Cowen. You may proceed with your question.

Lyla Youssef -- Cowen and Company -- Analyst

This is Lyla on for Ritu. Thank you for taking the question and thank you for the update. I guess maybe in terms of your rollout and switching to exclusively using the high-touch model, could you maybe remind us what left you have with this plan? And if you -- or when exactly you would anticipate potentially seeing an impact to NRXs with this high-touch model? Thank you.

Ted Love -- President and Chief Executive Officer

Thanks, Lyla. DJ.

DJ Johnson -- Chief Commercial Officer

Sure. Yes, the high-touch model was turned on, and we've always had a high-touch model throughout last year. We gave patients a choice when they enroll in the GBT Source Solution to do high-touch adherence program or a more of a low touch. What we found in year 1 is the high-touch model works better at encouraging patients and giving them the information they need to stay on therapy.

So we've done away with the low-touch model, and we just simply enroll folks in the high-touch model. We did that. That was initiated at the end of Q4 last year. So all the patients going forward this year will be in that model.

In addition, we pushed some services down to the SP level as well, because we know that some patients through the 340B program or whatnot will go straight to our SP partner as opposed to straight to the hub. And we want to make sure they get the same support. So copay assistance, some adherence programs, and things like that are also going to be initiated at the SP level as well. So through all of these efforts, we would expect patients to benefit from these services throughout this year.

And the high-touch model is just more outbound phone calls, text messages, reminders, especially in that first month of initiating therapy.

Lyla Youssef -- Cowen and Company -- Analyst

Thank you. Very helpful.

Operator

Our next question comes from the line of Yatin Suneja with Guggenheim Partners. You may proceed with your question.

Yatin Suneja -- Guggenheim Partners -- Analyst

Hi there. Thank you for taking my question. Just two questions for me. Number one, for Jeff, if you can help us -- if you can maybe quantify how should we model gross to net going up? We understand you have this reversal, but how much high you could go? In the long term, you've said 25-ish percent.

What is the trajectory? And then I apologize if I missed it. I think in the past, you have provided a little bit more color on three or four metrics like abandonment rate, adherence rate, phasing, and lag time in picking prescription. Can you maybe give us an update relative to the December update that you provided during ASH? Thank you.

Ted Love -- President and Chief Executive Officer

Thanks, Yatin. Jeff, you want to speak to the gross to net? And maybe, DJ, you could speak to some of the other metrics.

Jeff Farrow -- Chief Financial Officer

Sure, happy to. Yatin, yes, I think absent the return reversal, we would have probably ended up pretty close to what we had for Q3, which would have been around 13%, 14%. l think we will see incremental increases in Q1. And it's tough to model, just given that when the 340B pharmacies come online, that's when we'll start to see more of that larger discount taking place, the 23.1% discount that they are eligible for.

So if we think about sort of when we expect new RXs to pick up, we would expect that to start to pick up again sometime in the middle to second half of the year. And then I think once we get to steady-state, we will probably end up around the 25% range. So it will be step-wise as we move through it and ramping up probably a little more significantly in the second half of the year. And then at steady state, which we hope will be sometime in 2022, will be around the 25% rate.

DJ Johnson -- Chief Commercial Officer

Yes. And, Yatin, we didn't comment a lot on those metrics mainly because there wasn't anything appreciably different from our Q3 metrics. Conversion rates still remain very high in the 75% range in terms of patients coming into the hub and being converted into a new patient start. So that remains consistent in Q4.

Abandonment rates kind of still at the same level it's been at, but we are very successful at converting the vast majority of patients to a new start. Adherence rates are consistent, right? We're still well within that range of first-year products being within 50% to 70% adherence rate for an annual rate, and we ended the year, again, well within that rate. So no changes there. And then start times, I think we've kind of optimized our start times to about two weeks.

From the time we get the prescription, it takes about two weeks for us to work with the payor. The prior authorization process, applying a co-pay assistance or any other support the patient needs, and then it's converted into a shipment. And so it was consistent in Q4 at about two weeks with Q3.

Yatin Suneja -- Guggenheim Partners -- Analyst

Got it. Very helpful. Thanks.

Operator

Our next question comes from the line of Jason Gerberry with Bank of America. You may proceed with your question.

Sadia Rahman -- Bank of America Merrill Lynch -- Analyst

Hi. This is Sadia Rahman on for Jason. Thanks for taking the questions. Just wondering if you can talk about the current market environment in a little more detail as far as like patient flows as a percent of normal interactions with healthcare provider more recently.

Ted Love -- President and Chief Executive Officer

Yes. Thanks for the question. I think that we've -- it's pretty much what we would expect. As we've seen the COVID cases rise, we've consistently seen physician-patient interactions go downward.

And as Jeff referred to that, that was certainly something that was very significant in Q4. So that's why we're, quite frankly, very happy that we've been able to hold our enrollments in the 1,000 range, 950 specifically, in Q4. We obviously expect that to improve as we get beyond COVID, and maybe there will even be a bit of a recovery because many of these patients probably have gone a significant period without seeing the physicians. DJ, do you have anything you want to add there?

DJ Johnson -- Chief Commercial Officer

Just that our overall engagement with our field teams and our target list was a little bit lower in Q4 than Q3, and some of that had to do with the two holidays in Q4. In addition, we were able to maintain, despite the increase in COVID, about 25% of our interactions were in person, higher in some markets like New York where it was about half of our interactions in Q4 were in person. And lower in other markets where it's a little bit more shut down. But we're doing, of course, virtual engagements across the board as well.

So Q4, because of the holidays, a little bit lower on the engagement and because of COVID.

Sadia Rahman -- Bank of America Merrill Lynch -- Analyst

OK. Great. Also on the durability of patients remaining on drug, just from the early adopting cohort specifically, those who started the drug in the first quarter of 2020, do you have numbers for what percentage remain on drug?

Ted Love -- President and Chief Executive Officer

Well, I think we really only report out one-year numbers because that's the only thing you can really compare to. As DJ likes to say, persistence always goes down, right, because patients get older, they die. So persistence ultimately will go to zero if you follow people long enough just through the mortality effect. So to be kind of consistent and then have something to compare to, we compare to the 1-year number and really want to just educate that when you look at the one-year number, we are consistent with other comparable products.

Sadia Rahman -- Bank of America Merrill Lynch -- Analyst

Thank you.

Operator

Our next question comes from the line of Mark Breidenbach with Oppenheimer. You may proceed with your question.

Mark Breidenbach -- Oppenheimer & Co. Inc -- Analyst

Hey, guys, thanks for taking the question. Just wondering if we should expect Oxbryta's European label to be materially different from the U.S. label since the EMA isn't requiring a post-approval confirmatory trial? And I just wanted to also make sure that of the 950 new prescriptions that you recorded in 4Q, does that include any contribution from the early access program in Europe or other ex-U.S. territories, or those are all U.S.

prescriptions? Thanks.

Ted Love -- President and Chief Executive Officer

So, no. The early access program is nonrevenue. So we would not count that as an enrollment. Even in the U.S., we would not count early access enrollment of children as enrollments.

And we also don't count patients that are restarting therapy as enrollment either. All the enrollments are new enrollments of patients that are within label that with -- in the majority of cases, be paying patients. The question with regard to the EMA is a good question. We obviously don't know how things will work out ultimately with EMA, but we've had, obviously, very good interactions with them to date.

Our requested indication in Europe is for the treatment of the anemia and hemolysis of sickle cell disease. So it's a slightly different wording than in the U.S. Essentially all patients with sickle cell disease have anemia and hemolysis. So it's not a terribly different label, but it is a label that speaks to something that we know the drug does, in fact.

And to your question about requesting of a confirmatory study. We've had no such discussions with them on that topic. We don't anticipate that, but of course, you don't know what's going to happen in a regulatory process until you get through it.

Mark Breidenbach -- Oppenheimer & Co. Inc -- Analyst

Got it. Thanks for taking the question.

Ted Love -- President and Chief Executive Officer

You're welcome.

Operator

Our next question comes from the line of Joe Hoven with Wells Fargo. You may proceed with your question.

Unknown speaker

Great. Thanks for taking our question guys and congrats on the progress. DJ, for patients who have not persisted on therapy, maybe can you provide us any color on efforts you're taking to get patients back on therapy? And then quickly, Ted, maybe just for next-gen 601, with the proof-of-concept data coming by year-end, can you just remind us how hemoglobin occupancy translates into improved efficacy, and maybe what's the target profile there?

Ted Love -- President and Chief Executive Officer

Right. Maybe I'll start first and then transition to DJ. So a lot of the information about what kind of occupancy you want is derived from genetic data. For example, in individuals with persistent expression of fetal hemoglobin, we find that those individuals are essentially normal when about 35% or more of their hemoglobin is fetal hemoglobin.

And we know from a lot of work that we did initially with Oxbryta, but ultimately, it's relevant for 601, that modifying a sickle hemoglobin molecule is functionally the same as introducing a hemoglobin app molecule. So we'd be looking for similar levels of modification in the 35% range. The data that we actually showed at ASH, which showed that sickle mice were essentially being cured of sickle cell disease was, in fact, targeting about 35% modification. So we think that's the right target.

And then finally, with regard to what we would expect to be showing in proof-of-concept data, we would be looking for occupancy. We'd be looking for kind of a maximum effect on hemolysis and the maximum effect on raising hemoglobin. And we're also likely to do some functional-looking at the cells using things like the LORCA technology to look at how flexible the cells are, how much you can elongate them, their reaction, essentially the oxidative stress. So we'd be looking at some of those functional data as well.

DJ Johnson -- Chief Commercial Officer

Yes. And then regarding discontinuations, first, by way of background, we wouldn't classify someone as a discontinuation based on missing a shipment and missing a few phone calls. We do a lot of follow up over the course of weeks and even months before we would classify someone as a discontinuation. That said, if somebody does discontinue, we still don't give up on them.

And we really approach them from four different support mechanisms. Educating the doctor's office to continue to reach out to the patient and encourage them to reengage. Our GBT Source Solution hub does outpatient outreach to engage with patients to reconnect. Our SP partners are very engaged in talking with the patient and trying to reengage the patient.

And lastly, we have a very strong advocacy team that is in touch with the community, and we engage the advocates and the community to educate them on the importance of staying on therapy. So we have those four mechanisms, and we've been successful. About 20% of our discontinuations ultimately restart. We found that out throughout last year.

Unknown speaker

Very helpful. Thanks. guys.

Operator

Our next question comes from the line of Paul Choi with Goldman Sachs. You may proceed with your question.

Paul Choi -- Goldman Sachs -- Analyst

Thank you. Let me add my congrats to your progress as well. My question is with regard to your commercial efforts, I guess. As you get feedback from your sales force and patient feedback, I guess over the near term in the course of 2021, which of the sort of levers do you think are most addressable and actionable by your sales force? Is it with regard to the abandonment rate at the top of the funnel? Or do you think it's payor coverage or payor rejections? And just maybe on that last part there, what is sort of the -- what has been the recent coverage rate by payors? Thank you.

Ted Love -- President and Chief Executive Officer

DJ, you may want to take that, and I'll add in if you like.

DJ Johnson -- Chief Commercial Officer

Sure. Well, I think our sales force is very focused on filling the funnel. So their biggest impact is always going to be on driving demand. We just had an incredible meeting this month, where lots of new materials for them to go out and use and educate on.

We found a 28% increase in enrollments with physicians that are trained through our physician speaker network and attended our speaker program, for example. So we're increasing our speaker programs. We're increasing the amount of information we can share now that we have a 72-week data and then the patient support materials that we're distributing, including starter kits, are going to be very helpful. So driving enrollments is the name of the game for our sales force.

But we don't have just one field team. We also have an access navigator team and a medical science team and a field-based payor team. So they're all working within their channels to also support patients. Our access navigators are kind of our GBT Source Solution field team that are out making sure patients are engaged and don't discontinue therapy and have the best chance of starting and staying on therapy.

So that's what their focus is on. And we think that with their new materials, they will be able to impact things like abandonment and adherence. So they're very focused on that. And the payor team has done a great job.

We're not done there. We have 90% coverage, right? But it's not always perfect, and there's still 10% that we're not covered in. So they're still very active, engaged with payors. Of course, we're very excited about our next expansion of our labels into pediatrics, and the payor teams can start those conversations early with payors.

We're planning for that this year to make sure payors aren't caught off guard with that. And the payor coverage picture has been very, very good, but we do still have a very active team out there educating payors on a daily basis.

Paul Choi -- Goldman Sachs -- Analyst

OK. Great. Thank you.

Operator

Our next question comes from the line of Matthew Harrison with Morgan Stanley. You may proceed with your question.

Matthew Harrison -- Morgan Stanley -- Analyst

Great. Good afternoon. Thanks very much. I guess I just wanted to confirm sort of your underlying assumptions for the demand picture.

It sounds like I know you've obviously highlighted a handful of one-time headwinds heading into the first quarter. But it sounds like to overcome them, you expect actually the underlying demand picture to get a bit better for patients, but I realize maybe marginally. So could you just comment on that and how you're thinking about that relative to the pandemic over the next sort of two quarters before you think there's a significant pickup in the second half?

Ted Love -- President and Chief Executive Officer

Sure, Matt. Thanks for the question. DJ, feel free to add, but I'll start off by saying that the biggest challenge that we've really been up against is sickle cell patients are afraid of getting infected. And the higher the infection rate in the country or in their community, the more likely they are to sequester at home and not even venture out to have an interaction with a prescriber and be able to prescribe the medication.

We think that is going to relax as the infections in the country go down and patients feel it's simply safe to get on mass transit and to get out into the world, and interact with people that they obviously don't know, and could be people that could infect them. So I think we really don't anticipate that that's going to change very much in the first half of the year. We're hoping, obviously, that in the second half of the year, the whole country begins to feel a lot more comfortable about interacting and less concerned about getting COVID. So that's really the big issue.

Operator

Our next question comes from the line of Danielle Brill with Raymond James. You may proceed with your question.

Danielle Brill -- Raymond James -- Analyst

Guys, thanks for the question. I guess as a follow-up to the last one, you commented in your press release that you expect new prescriptions to improve in the second half of the year and surpass pre-COVID levels over time. Do you still think that you can get back to your pre-COVID levels this year is the first part of the question. And then also just curious now that vaccines are ramping, and we're seeing some signs of recovery from the pandemic.

If you have any early insights into how things are tracking within the sickle cell community? Thanks.

Ted Love -- President and Chief Executive Officer

Yes. Thanks, Danielle. I think one of the reasons that we've tried to really restrain ourselves to commenting just one quarter ahead is because we really have no idea what's going to go on with COVID. Every day, you and all of us, listen to the news and we hear about new strains.

We hear about things going on. So we'd really rather not try to get out and predict quarter by quarter. Based on what we're seeing right now, we really don't think we'll be able to do much more than 1,000 enrollments in Q1. As we make progress, Danielle, we definitely will want to give you as much sight into the future as we think we can get, but we just think it's really difficult for us to try to anticipate what's going to happen with truly the country getting to 70%, 80% vaccinated.

What's going to happen with these new strains? We don't have enough insight into that to really, really, really predict feature that far out. We do feel very confident that we will get back to and exceed the Q1 performance, but that's really going to be driven by the change in behavior of people related to lack of fear of getting COVID and dying.

Operator

Our next question comes from the line of Matthew Holt with J.P. Morgan. You may proceed with your question.

Matthew Holt -- J.P. Morgan -- Analyst

Hey, guys, thanks for taking my question. So just a quick one for me. I'm curious if we can get an update on the status of the confirmatory Phase 3 trial for Oxbryta?

Ted Love -- President and Chief Executive Officer

Sure. Matthew, it's a great question. I can tell you all these trials that I know of in, particularly orphan diseases, are not enrolling. They really aren't enrolling because when patients have a reasonably long survival in front of them as opposed to somebody's dying of cancer in the next six months, they're trading off a high risk of dying if they get COVID for a benefit that's less certain, a longer-term benefit.

So it's very, very difficult to ask these sickle cell patients to come into hospitals and clinics for blood draws and visits and risk getting COVID. So these trials really are not enrolling. We think that we've been doing a great job, however, of getting the infrastructure up. So for example, we've been spending a lot of time making sure that we're doing remote learning to really educate the sites around the world really well, to do high-quality TCD, for example.

But we're not trying to get those sites to bring those children in because we really wouldn't want to be responsible for anybody dying of COVID.

Matthew Holt -- J.P. Morgan -- Analyst

Great. That makes sense. Thank you.

Operator

Our next question comes from the line of Raju Prasad with William Blair. You may proceed with your question.

Raju Prasad -- William Blair -- Analyst

Thanks for the question. Maybe a follow-up on, I think, one of those that was asked earlier, but given how engaged your sickle cell community, how is the vaccine distribution going with them? Is there -- have you noticed any apprehension with taking vaccine with the sickle cell community? And just given what you've learned from the U.S. launch, how are you thinking about the launch into kind of the other age groups, as well as EMA in the COVID world? Thanks.

Ted Love -- President and Chief Executive Officer

So I'll take the vaccine question, and, DJ, you can comment after that. So there is absolutely an issue of vaccine hesitancy in this country and actually around the world, based on what I read. And it's probably highest in minority communities. And that relates to a lot of the things that you know, as well as I know, about historical mistreatment by the healthcare system.

So that exists. I've been told by some individuals that in major hospitals, the rate of declining the vaccine has been as high as 60%, 65% in certain groups. It's not great in any group, but it's been as high as 60%, 65%. I do think, however, this could get much better because a lot of this is not necessarily -- how many are willing to take the vaccine.

I don't want to be the guinea pig. I don't want to be the first one to get it. So many of these individuals may come around to take the vaccine. They just may not want to be in the front group.

I can also tell you that we have a hodgepodge of rules around who's even eligible for the vaccine today. And I don't think many sickle cell patients have been even offered the vaccine in California until very recently. So I think it's early days to be conclusive. But your question about vaccine hesitancy, it's a real concern that it's not just in the sickle cell community.

But I would say that it's probably even more acute in communities of color.

Operator

Our next question comes from the line of Joon Lee with Truist Securities. You may proceed with your question

Miguel Coelho -- Truist Securities -- Analyst

This is Miguel Coelho filling in for Joon Lee. Thank you for taking our question. So for the two patients that had 1 gram increase in hemoglobin, but started to show clinical improvement, is there any other information as to why this happened? And could we expect higher numbers of patients to be additive to the clinical improvement analysis based on the tenfold higher numbers of patients you show for the 72-week VOC? And then what is the readout from the LentiGlobin bluebird trial pause? Any tailwind for [Inaudible] expect to hear?

Ted Love -- President and Chief Executive Officer

So let me try to touch on your question in a few ways. One is that there's no data showing a correlation between raising hemoglobin and lowering VOCs with the exception, quite frankly, of Oxbryta. What we've seen with Oxbryta is that the more hemoglobin goes up, the lower the VOC rate goes. But that's never really been seen before.

That makes perfect sense to me because the reason the hemoglobin is going up is because you are preventing the primary problem in sickle cell disease, which is the hemolysis, which leads to vascular inflammation and that leads to VOC. But ordinarily, there has not been a correlation of raising hemoglobin and lowering VOCs, although that is what we've seen with Oxbryta. We haven't really quantitated it. But I think if you go and look at the most recent abstracts from ASH, you can see our curves, where patients with hemoglobin's above 12 actually had very, very low VOC rates.

So that was super encouraging. With regard to the broader issue, I would refer you back to other abstracts that we presented at ASH and other major meetings. I would probably go back to ASH, not this past year, but the one before, where we've demonstrated a ton of data that shows the lower your hemoglobin, the worse your outcomes. And it doesn't take very big differences.

Differences as small as 0.2, 0.3 grams per deciliter decreasing their hemoglobin significantly increased your risk of multi-organ damage, damage to your kidneys, damage to your brain. We've also demonstrated data that shows that as you raise your hemoglobin, your TCD declines. And we know that TCD is a powerful predictor of your rate of having a CNS infarct or stroke. So there's a ton of data, but we really don't have time to go through it all on this kind of call.

But there is a wealth of data that shows that low hemoglobin is a bad thing and raising the hemoglobin by lowering the rate of red cell destruction due to the disease is very likely to be a benefit. And of course, that was the basis of the accelerated approval in the U.S.

Miguel Coelho -- Truist Securities -- Analyst

And the readouts from the bluebird trial pause to Oxbryta?

Ted Love -- President and Chief Executive Officer

Oh, bluebirds? I'm not sure what you -- what readout are you asking about from bluebird. I mean, I probably am not at liberty to say or involved about bluebird since I don't work for bluebird.

Miguel Coelho -- Truist Securities -- Analyst

Yeah. Just about the pause in the gene therapy trial due to concerns that gene therapy might cause cancer down the road. I would expect that this will be a positive tailwind for Oxbryta, targeting the same indication?

Ted Love -- President and Chief Executive Officer

Yeah. I think I'd reserve that question for Nick and his team at bluebird. They're obviously dealing with a situation. I can just tell you on a personal level, it's been painful for me because our goal has been for patients to have more options and for patients to get great outcomes.

So it's been sad to kind of watch some poor outcomes. But I know that bluebird and the FDA are still working through. And then hopefully, they'll get through this in a positive way.

Miguel Coelho -- Truist Securities -- Analyst

Thank you so much.

Operator

Our next question comes from the line of Joe Catanzaro with Piper Sandler. You may proceed with your question.

Joe Catanzaro -- Piper Sandler -- Analyst

Hey, guys, thanks so much for taking my questions. I want to follow up on a prior question, but maybe ask this a little bit differently. So, Ted, I think you've said in the past that you need to get back to at least the 1,650 new prescriptions you saw in 1Q to see meaningful growth in the business. And I understand it's very difficult to predict when you might get back there.

But is that still the benchmark that we should keep in mind when we think about returning to meaningful sequential growth?

Ted Love -- President and Chief Executive Officer

Yes. I think if we could get back to those numbers, you would obviously start to see the growth be quite robust. And really, the only thing that's different between today and Q1 of last year is COVID. The sickle cell population is big.

The vast majority of them, of course, are not on Oxbryta. The big variable here is this pandemic, which is tragically affected their community and has tragically, greatly diminished their interactions with healthcare professionals. So we're very bullish that once there's a perception that it's safe to leave your home, these patients will leave their homes, and they'll begin to behave like they were behaving in Q1 of last year.

Joe Catanzaro -- Piper Sandler -- Analyst

OK. Got it. Thanks for taking my question.

Operator

Our next question comes from the line of John Newman with Canaccord. You may proceed with your question.

John Newman -- Canaccord Genuity -- Analyst

Thanks for taking my questions. First question I had was for DJ. DJ, could you tell us the percentage of prescriptions that are heading out to patients via mail order? And is there a way that GBT can sort of encourage that going forward? And also, is it possible to prescribe a larger quantity of drug for a mail-order prescription? Second question I have is just kind of a broader question, which is would there be a time going forward where you would potentially consider maybe some targeted DTC advertising? Perhaps, it wouldn't last that long, but it just seems like they haven't -- it's been such a long time since there have been any therapies for sickle cell disease. I'm just curious if that's an approach that you might consider.

Thanks.

Ted Love -- President and Chief Executive Officer

Those are great questions for DJ, John.

DJ Johnson -- Chief Commercial Officer

Yeah. And, John, I swear I didn't plant those questions, but they're just exactly perfect because, yes, we have thought about DTC and targeted programs. We have a lot of digital targeted DTC going on right now, a bunch of which we initiated in the second half of last year and through the first half of this year that includes a lot of social media really driving people. We've seen a dramatic increase, for example, in web traffic to our websites because of it.

So that's one form of DTC, but we're looking at everything. There's lots of very targeted, as you know, media that we can use and look at, whether it be with the proliferation of streaming television. You can be very targeted and in a cost-effective way on TV now like you never could before, radio and out-of-home as well. So we're looking at all that.

And stay tuned. I'm sure we'll have more announcements on that later this year. Regarding mail order, yes, 100% actually of our prescriptions are mail order. All of our prescriptions are shipped right to the patient's door.

So we don't go through any retail channel. We have a very tight and small distribution channel. That's a closed channel. So we have very tight relationships with our SP partners, and all of those bottles get shipped right to the patient's house.

Now, there is, I guess, a small percentage of patients that can pick it up at their institution, if their institution decides to order through their 340B program. So there's a small percentage of patients that access it that way, but the rest are mail order. And in terms of the quantity of mail order, yes, we're happy to do that. But John, that's really controlled by the payor.

The payor decides, and usually a payor won't let you ship three bottles of a rare orphan more expensive specialty drugs. So it's highly uncommon for you to get approval to send more than a single bottle. That said, around the beginning of the year, we did contact our patients and make sure that anyone that was switching insurance, we wanted to proactively talk to them about their co-pays and out-of-pocket so that we could manage that and make sure they wouldn't gap in therapy. So we did ship some bottles out for our free drug program in advance during the new year to make sure some patients didn't gap there.

John Newman -- Canaccord Genuity -- Analyst

Great. Thank you.

Operator

Ladies and gentlemen, there are no further questions at this time. I would like to turn the floor back over to management for closing comments.

Ted Love -- President and Chief Executive Officer

I'd simply like close by thanking everyone for joining us today. I want to wish you all to stay healthy and safe and also encourage you to reach out if you have any additional questions. Thank you.

Operator

[Operator signoff]

Duration: 70 minutes

Call participants:

Steven Immergut -- Senior Vice President, Head of Corporate Communications, and Investor Relations

Ted Love -- President and Chief Executive Officer

Jeff Farrow -- Chief Financial Officer

DJ Johnson -- Chief Commercial Officer

Ning Lu -- RBC Capital Markets -- Analyst

Liana Moussatos -- Wedbush Securities -- Analyst

Alethia Young -- Cantor Fitzgerald -- Analyst

Lyla Youssef -- Cowen and Company -- Analyst

Yatin Suneja -- Guggenheim Partners -- Analyst

Sadia Rahman -- Bank of America Merrill Lynch -- Analyst

Mark Breidenbach -- Oppenheimer & Co. Inc -- Analyst

Unknown speaker

Paul Choi -- Goldman Sachs -- Analyst

Matthew Harrison -- Morgan Stanley -- Analyst

Danielle Brill -- Raymond James -- Analyst

Matthew Holt -- J.P. Morgan -- Analyst

Raju Prasad -- William Blair -- Analyst

Miguel Coelho -- Truist Securities -- Analyst

Joe Catanzaro -- Piper Sandler -- Analyst

John Newman -- Canaccord Genuity -- Analyst

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