Biodelivery Sciences International Inc (BDSI) Q4 2020 Earnings Call Transcript

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Biodelivery Sciences International Inc (BDSI)
Q4 2020 Earnings Call
Mar 10, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the BioDelivery Sciences Fourth Quarter and Full Year 2020 Earnings Conference Call. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions]

It is now my pleasure to introduce your host, Ms. Terry Coelho, Executive Vice President and Chief Financial Officer. Thank you. Please go ahead.

Terry Coelho -- Executive Vice President and Chief Financial Officer

Thank you, and good morning, everyone. Welcome to our fourth quarter 2020 earnings conference call. Leading the call today is Jeff Bailey, Chief Executive Officer. We are joined by Scott Plesha, President and Chief Commercial Officer. Following our prepared remarks, we will conduct a question-and-answer session. Earlier today BioDelivery Sciences issued a press release announcing its financial results for the fourth quarter and full year 2020. A copy of the release can be found on the Investor Relations page of the company's website.

Before we begin, I would like to remind everyone that certain statements may be made during this call which may contain forward-looking statements. Such forward-looking statements are based upon current expectations, and there can be no assurances that the results contemplated in these statements will be realized. Actual results may differ materially from such statements due to a number of factors and risks. Some of which are identified in our press release and our annual quarterly and other reports filed with the SEC.

These forward-looking statements are based on information available to BDSI today, March 10, 2021, and the Company assumes no obligation to update statements as circumstances change. Our 10-K will be filed with the SEC by Friday March 12. An audio recording and broadcast replay for today's conference will also be available online in the Investors section of the Company's website.

With that, I'd like to turn the call over to Jeff Bailey, our CEO. Jeff?

Jeffrey A. Bailey -- Chief Executive Officer

Thank you very much, Terry, and welcome everyone to our Company's fourth quarter 2020 earnings call.

I'm pleased to report that BDSI finished the year strong, including both our fourth quarter as well as our full-year 2020 results. In 2020, our team focused on responding rapidly to the evolving pandemic selling environment and developed a number of commercial tools to help prescribers and patients while continuing to ensure patient access through solid formulary coverage.

We also realigned resources to ensure continued prioritization of customer-facing resources, pursued operational excellence and further strengthened our balance sheet through a combination of healthy operational cash flow and selective borrowing. Year-over-year sales for the Company grew 40% for full-year 2020, in spite of the multiple headwinds we faced. We generated over $40 million of EBITDA, or 26% of net sales. Our business is healthy with strong cash generation, and we are beginning 2021 well positioned for continued growth.

I'd like you to have three main takeaways from today's call. First, prescription growth trends in the fourth quarter were highly encouraging and momentum for both BELBUCA and Symproic total prescriptions and new-to-brand prescriptions remained strong. So far in 2021, we are reassured to see demand and seasonality trends that are aligned with prior years. While there have been no unusual disruptions associated with the pandemic, we did see some impact from the severe winter storms in February in the south central part of the country, an area where we have a strong presence. Both brands continued to achieve all-time highs in market share and volume.

Second, our agile commercial team was able to rapidly adapt to the pandemic selling environment, with patient visits were down by implementing virtual tactics to communicate with physicians and developing a number of creative programs. As I had mentioned in our prior earnings call, we have rolled out BELBUCA First Start program on a national basis. First Start allows healthcare professionals to easily prescribe BELBUCA to appropriate commercial patients for the first time providing convenient access to BELBUCA, while the healthcare provider staff is securing prior authorization approval. We believe that this program is having a positive impact, and we are optimistic that it can generate incremental growth in 2021. Scott will provide more details.

Third, our Company has a strong balance sheet and ended the year with approximately $112 million in cash. This cash provides us with strategic optionality to maximize shareholder value. As a reminder, BDSI is highly profitable. In the fourth quarter, we generated $14.3 million in EBITDA with 34% EBITDA margins. This was accompanied by over $11 million in operating cash flow generation. Taken together, I'm highly optimistic in our ability to deliver continued growth in 2021.

The COVID pandemic is now one year old, but our performance remained strong, and we are well positioned in our respective markets and both of our high-performing brands continue to grow market share. I wanted to share a few key updates about our business. BELBUCA generated outstanding growth in the fourth quarter. BELBUCA's TRx volume grew 3.7% sequentially and 20.6% year-over-year.

Additionally, BELBUCA TRx market share hit another all-time high by growing to 4.5% in Q4 as compared to 4.1% in Q3. We are now in the second straight quarter of what appears to be a recovery following the low point in the second quarter of 2020 as a result of the pandemic, which led to a reduced number of patient visits to physician offices. Similarly, we also saw some product rebound and hit an all-time high for TRx volume and market share in the PAMORA class, which declined 6%. These results reflect the outstanding execution by our sales team and Symproic's favorable product profile.

Lastly, our balance sheet has never looked better. With $112 million in cash, we focused on prioritizing our investments during this disruptive time with the focus on preserving and growing our customer base and the longer-term health of our brands. Our balance sheet gives a significant optionality to expand our business organically or seek complementary opportunities at the right time and invest in our business.

2020 was a challenging year for the industry, and I am proud to see how the BDSI team really pulled together and also thrived. Our outstanding performance both in the fourth quarter and for all of 2020 positions us to remain on a strong growth trajectory. We have differentiated in growing products, a strong balance sheet, and a high performing senior management team. We are united in our mission to help patients with chronic diseases, while focusing as well on delivering increased shareholder value.

With that, I will turn the call over to Scott to provide more details of our performance during the fourth quarter. Scott?

Scott Plesha -- President and Chief Commercial Officer

Thank you, Jeff. As Jeff mentioned, during Q4, BELBUCA prescriptions grew by 4,200 to a new high of more than 118,800 retail, mail order and long-term care TRxs combined. This growth represents a 20.6% increase in BELBUCA TRxs compared to the fourth quarter of 2019 and the 3.7% increase over the third quarter of 2020. This was accomplished despite the continued decline in the overall long-acting opioid market.

We are pleased with BELBUCA's continued growth, which led to its Q4 TRx market share increasing to over 4.5% from 4.1% in the third quarter of 2020. During the fourth quarter, BELBUCA's new-to-brand market share of 7.8% grew from 7.4% in the third quarter significantly above its TRx share of 4.5%, which means there is still a meaningful opportunity to grow total prescription shares, as these metrics historically converge.

New-to-brand prescriptions continued to rebound in the fourth quarter. We believe that to accelerate current and future growth, it is important that we have robust NBRx growth. As Jeff mentioned, we implemented our First Start NBRx program on a national basis in October, after conducting a successful pilot in select territories during the prior quarter. Analysis from the pilot group suggested a 31% lift in NBRx volume and a 20% lift in TRx volume in participating prescribers and provided us with confidence to expand the program across all territories on October 20. We believe that this program contributed to the new quarterly high for NBRx share of 7.8% during Q4, and to the 2% increase in NBRx count from Q3 to Q4 in a LAO market that declined 2%.

We are pleased to report that BELBUCA prescribers -- prescriber base grew in the fourth quarter, after rebounding in Q3 and was up 9% year-over-year. We reached an all-time high of over 8,000 total unique prescribers in the quarter, up from the third quarter. With the introduction of the vaccine, we are optimistic that physicians' office -- offices will begin to gradually reopen and in-person promotion may begin to normalize.

Our market access with BELBUCA has improved greatly over time and has been important to our success. BELBUCA currently enjoys strong commercial coverage with over 90% of lives covered, of which, almost 59% are covered at a preferred level. While in Medicare, BELBUCA is covered in 33% of lives, with 10% of them being at the preferred level. We believe our current level of coverage provides a significant opportunity for growth, which is supported by our consistent TRx growth across all payer types and we continue to be committed to improving access to BELBUCA while balancing payer coverage and rebate levels, especially in Medicare.

Symproic Q4 prescriptions reached a new high of over 18,700, representing a solid 9.6% increase year-over-year compared to Q4 2019 and a 3.4% increase over Q3 2020. During the fourth quarter, we generated a 13.5% TRx share, up from 11.1% in Q4 2019, representing the highest market share to date. Additionally, we reached a 14% NRx share, up from 12.7% a year ago. We expect continued growth in revenues and total prescriptions for Symproic, as its new Rx share has consistently exceeded total Rx share since May 2019 when BDSI began active promotion.

In the fourth quarter, our prescriber count for Symproic increased slightly from Q3 at over 4,800 physicians, while also improving the productivity per prescriber. Like BELBUCA, Symproic is well positioned with covered status for 89% of commercial lives with 60% at preferred status. We believe our early 2020 market access wins with Prime Therapeutics and CVS will continue to drive additional growth in 2021. The BDSI sales force has done an outstanding job pulling through these wins, as TRxs have improved within Prime Therapeutics by approximately 152% from Q4 2019 to Q4 2020. We've also seen consistent growth within CVS, where TRxs have increased 37% over Q4 2019. While our 2020 TRx market share growth from 12.4% to 24.1% within these plans has been robust, we believe there remains room for growth in 2021 and beyond.

A testament to the focus and effectiveness of our commercial team is how our brands performed in the respective markets. We note that both BELBUCA and Symproic retail TRx growth outperformed in both the fourth quarter and full-year 2020. For example, BELBUCA retail prescriptions grew 30.2% in 2020 versus 2019 and 3.3% sequentially in Q4 compared to declines of 9.7% year-over-year and 5.9% quarter-over-quarter in the long-acting opioid market. Similarly, Symproic retail prescriptions grew 13.1% in 2020 versus 2019 and 3.8% sequentially in Q4 compared to declines of 5.9% year-over-year and 3.7% quarter-over-quarter in the PAMORA market.

I'm extremely proud of our team who has persevered and succeeded during the difficult times of the pandemic. As in-person access to physician offices continues to improve and patient visits increase, I believe that our high-performing commercial team will build upon our strong growth trajectory.

With that, I will turn the call over to Terry to provide an update on the financials. Terry?

Terry Coelho -- Executive Vice President and Chief Financial Officer

Thank you, Scott. As Jeff and Scott discussed, we are excited to report our fourth quarter and full year results, which have remained strong despite the continuation of the COVID-19 pandemic. 2020 was a transformational year from a financial perspective as we reached record level of sales, profitability and operating cash flows, culminating in closing the year with an increased cash position and a strong balance sheet.

Total Company net revenue for the full year 2020 was $156.5 million, up 40% when compared to $111.4 million for full-year 2019. The increase in 2020 is primarily driven by BELBUCA, which accounted for 87% of total sales for the year and the continued success of Symproic which was added to our product portfolio in the second quarter of 2019. Full year 2020 net sales of BELBUCA were $136.1 million dollars, up 40% compared to $97.5 million in 2019. Symproic net sales for 2020 were $14.7 million in its first full year of commercialization by BDSI's team.

Royalty revenues for ex U.S. sales of PAINKYL and BREAKYL totaled $1.9 million for 2020, compared to $3.5 million in the prior year. BUNAVAIL was discontinued in mid-2020 and generated net revenue of $3.7 million, which included a release of $2.4 million of sales returns reserves.

Total Company gross margin for full year 2020 was 84%, compared to 81% for 2019. The increase in gross margins was driven primarily by the favorable gross to net deductions as compared to 2019, largely due to the one-time impact of the channel refresh for BELBUCA in Q3 of 2020 along with the non-recurring negative impact of the BUNAVAIL sales returns reserves taken in Q4 of 2019.

Total operating expenses for 2020 were $98.8 million, compared to $86.1 million for 2019, comprising 63% and 77% of total revenues in the respective years. The year-over-year increase in spend is primarily driven by increased legal costs and the one-time impact of the CEO transition in Q2 of 2020.

GAAP net income for the full year 2020 was a record $25.7 million or net income of $0.26 per share compared to a GAAP net loss of $15.3 million for 2019 or a net loss of $0.18 per share. 2020 full-year EBITDA was $40.5 million, or 26% of net sales as compared to EBITDA of $12.5 million, or 11% of net sales in 2019. This marks the second straight year of positive EBITDA for BDSI.

Non-GAAP net income for full year 2020 was $44.2 million, a substantial increase compared to $13.2 million in 2019 and reflects GAAP net income, excluding stock-based compensation and non-cash amortization of intangible assets, certain warrant discount costs in 2019, one-time expenses related to the CEO transition incurred in the second quarter of 2020 and the non-recurring costs in 2019 related to the discontinuation of marketing of BUNAVAIL.

Let's turn to the fourth quarter of 2020. Total net revenue for the fourth quarter was $42.2 million, an increase of 33% compared to $31.6 million in the fourth quarter of 2019. BELBUCA net sales in the fourth quarter of 2020 were $35.6 million, an increase of 26% compared to $28.3 million in the fourth quarter of 2019 and an increase of $800,000 or 2.3% compared to $34.8 million in the third quarter of 2020.

Gross to net deductions did increase in the quarter as expected and discussed on the Q3 call based primarily on typical increases seen in the Medicare coverage gap, often referred to as the donut hole, along with increased Medicaid costs.

Net sales for Symproic in the fourth quarter of 2020 were $3.7 million, which reflects 35% growth year-over-year and 6% growth compared to the third quarter of 2020. BUNAVAIL net revenue for the fourth quarter was $2.4 million, compared to net revenue of negative $500,000 in the fourth quarter of 2019 and $600,000 in the third quarter of 2020.

Total gross margin for the fourth quarter was 80%, as compared to 77% in the fourth quarter of 2019 and below the 86% margin during the third quarter of 2020. The primary drivers for the quarter-over-quarter decline included the expected increase in gross to net deductions following the favorable channel refresh impact experienced in Q3 and increased BELBUCA inventory reserves.

Total operating expenses in the fourth quarter of 2020 were $21.4 million, compared to $23.8 million in Q4 2019 and $22.5 million in Q3 2020.

GAAP net income for the fourth quarter was $10.2 million, or $0.10 per share compared to a GAAP net loss of $700,000 in the fourth quarter of 2019. The year-over-year improvement in GAAP net income of approximately $11 million is primarily driven by the continued growth of our topline, improved gross margins and a decrease in overall operating expenses.

EBITDA in Q4 2020 was $14.3 million, or 34% of net sales compared with $4.1 million, or 13% of net sales in Q4 2019. This quarter marks the eighth consecutive quarter of positive EBITDA for BDSI.

Non-GAAP net income for the fourth quarter was $13.7 million and reflects GAAP net income, excluding stock-based compensation and non-cash amortization of intangible assets.

The Company has a strong balance sheet, with cash and cash equivalents as of December 31, 2020 of $111.6 million as compared to $63.9 million at year-end 2019. The combination of continued strong revenue growth and attractive gross margins together with prudent spend management and working capital improvements resulted in positive operating cash flow of $11 million in the fourth quarter and a total of $25 million over the course of 2020. $47.7 million increase in the total cash position from 2019 to 2020 reflects our positive operating cash flow, in addition to the net proceeds of $19.6 million from the drawdown in May 2020 of $20 million from our existing debt facility and $3.4 million in proceeds from the exercise of stock options, partially offset by $200,000 used to repurchase shares in the quarter. The Company's total long-term debt position as of December 31, 2020 remains at $80 million.

Our share buyback program initiated late in the fourth quarter and resulted in the repurchase of approximately 48,000 shares in 2020. The program has continued to execute purchases in 2021 with close to 660,000 shares repurchased thus far in the quarter. The $2.9 million in share repurchases to date represents more than 11% of the authorized amount. This reflects the continued confidence of the Board and the management team in the strength and value of our business.

We are very pleased with our year-to-date business and record financial performance, having delivered 40% year-over-year revenue growth, continuing profitability reflected in our 26% EBITDA margin, $25 million of operating cash flow generation and a strong balance sheet. Despite the impact of the pandemic for almost a full year on patient visits, physicians' offices and our limited ability to market in-person to healthcare providers, 2020 was a successful year for BDSI.

We once again achieved record level sales performance for BELBUCA, providing us with confidence in the sustainability of this growth momentum into 2021 and beyond. In addition, Symproic has been an attractive add-on for our sales force and fits well with our targeted physician group. Given solid market demand for our products, we expect net sales in 2021 for BELBUCA of $155 million to $165 million and 2021 total Company net sales in the range of $170 million to $180 million. These estimates incorporate the expected impact in quarter one from the winter storms, which affected some of our most productive territories, as well as an expectation that there will be a continuing improvement in live access to physicians' offices and a more gradual increase of in-person patient visits.

We estimate our total operating expenses to be in the range of $115 million to $120 million, as we continue to invest to support the growth of our brands. And we expect EBITDA to be in the range of $40 million to $50 million in 2021. Finally, we anticipate continuing to be operating cash flow positive throughout 2021.

On a final note, a three-day bench trial against Alvogen was conducted commencing on March 1, 2021 related to their Paragraph IV Patent challenge. Court has requested the parties to submit post-trial briefs over the coming two months, and a decision from the court is expected subsequent to the filing of the post-trial briefings. As you would expect, we are not in a position to comment any further regarding ongoing litigation.

I will now turn the call back to Jeff for some concluding remarks before we open up the call for Q&A. Jeff?

Jeffrey A. Bailey -- Chief Executive Officer

I want to take a moment and thank our employees that really performed when faced with the pandemic last year. The spirit of an empowered culture really delivered the 2020 strong results we highlighted. This would not have been possible, if we did not have great people. As a result of their hard work, BDSI and our brands are on solid footing, and we are thrilled to introduce our 2021 guidance that reflects our expectation for continued growth of our business.

We are looking forward to greater interaction between our sales force and healthcare professionals in 2021, especially in-person as the pandemic wanes and starting with what will hopefully be an even stronger year ahead for our customers, our patients and our employees.

We will now take your questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question is coming from Brandon Folkes of Cantor Fitzgerald. Please go ahead.

Brandon Folkes -- Cantor Fitzgerald -- Analyst

Hi. Thanks for taking my questions, and congratulations on another solid quarter of execution. Jeff, you mentioned the balance sheet has never been stronger. I guess, following on -- given that we can't speak about the litigation, but I think with the litigation and really COVID just really highlighting product concentration risk in smaller companies, what is your urgency to expand the portfolio over the coming months, and maybe sort of the rest of the year as well, but kind of prior to this decision in sort of two-plus months? And then secondly on Symproic's implied guidance, if I'm calculating this correctly, seems to imply sort of marginal growth to very significant growth. Can you just talk about some of the pushes and pulls around Symproic growth in 2021? Thank you.

Jeffrey A. Bailey -- Chief Executive Officer

Yeah. Thanks for the question, Brandon. Hope you're doing well. First of all on the urgency to expand the portfolio, very consistent with what we've talked about before as far as just really making sure that we're looking for the right asset at the right time. We have a very thorough complete process when it comes to looking at different assets to really focused on bringing home shareholder value. So when you do take a look at this right now and with the spaces we can typically look in and all that stuff that -- it's a really good stuff going on behind the scenes, but it's also one where, to your point, relative to the litigation and all that, that we will make sure that we really are in a position to be able to leverage our balance sheet, the cash position, the EBITDA, the continued growth that we see the momentum that we have going on. We're really positioned super well on that end and we're also being really careful to make sure that it's one where it's the right deal at the right time as far as making sure that it's one that brings shareholder value home.

So, I think you're connecting the right dots there. And it's one where -- we're really looking forward to expanding the portfolio, but it's one where we would be very prudent with that. So as far as urgency, it's not something that we see it -- not something that we have to do in the next few months, that's for sure. But if there is a right deal at the right time, then we're ready to make that move.

As far as growth of Symproic, I'm going to go and let Scott go ahead and weigh in on that as far as some of the growth drivers on Symproic, but we're very optimistic about what we see there. Scott, why don't you go ahead and weigh in?

Scott Plesha -- President and Chief Commercial Officer

Yeah, Brandon, thanks for the question. We were actually really happy with where Symproic ended the year, all-time high for the quarter, but also December well over 6,600 prescriptions. I think one of the things we wanted to be a little cautious with is the beginning of the year is always soft with the more as we traditionally see a pullback in Q1 in the entire market and then it kind of gains actually business throughout the year. So, we still think we can grow it. I think one of the crucial drivers though as it will be for BELBUCA is patients getting back into offices. There's IQVIA data that suggests that office visits are still down over 20% as we exited 2020 and then the face-to-face visits by our reps.

We are encouraged by that. We are seeing about 60% of our call activity through Q2 -- I'm sorry, Q3, Q4, just around 60%. And in recent weeks here, we're encouraged to see that rising just below 70%. So I think that's a positive. But until we fully see the impact of the vaccines and patients getting back into offices, I think we wanted to make sure that we were conservative of what we are putting out there.

Brandon Folkes -- Cantor Fitzgerald -- Analyst

Great. Thank you very much to both of you.

Jeffrey A. Bailey -- Chief Executive Officer

Thank you, Brandon.

Operator

Thank you. Our next question is coming from Gregg Gilbert of Truist. Please go ahead.

Gregg Gilbert -- Truist Securities -- Analyst

Thanks. Good morning. As you settled into the permanent CEO role, have you reconsidered the possibility of building a development pipeline? Or is the focus still on commercial assets, as you think about how the Company should evolve over the coming years? I think the Company has been pretty consistent that it is not in the development game, and as a commercial entity, but just curious to hear your thoughts on that as you look out a few years.

And secondly, as it relates to capital allocation, I noticed the share buyback obviously. Should we continue to expect it to be active around these levels? Or at this point, are you more focused on deploying that capital in other ways?

And maybe lastly, Terry, you can comment on the gross margin in the fourth quarter and what pressured that, and how you're thinking about gross margin for the coming year. Thanks a lot.

Jeffrey A. Bailey -- Chief Executive Officer

Thanks for the question, Gregg, hope you're doing well. Yeah, on -- as far as the types of assets we're looking at are ones that do not push us into becoming a development stage company. I think it's one where we want to be consistent with this that if we go way back into early stage and building out their complete infrastructure there, that's something that's a significant change from where we've been.

The types of assets that we're looking at our later stage type of assets or some of it could be early stage, already out there commercialized at this particular point. But it's one where the strength of our organization and it's really been proven as far as with the results in 2020, as far as the commercial strength that our team brings to the table, as far as -- across a lot of different functional areas really lined up to play the game quite well there to be able to really outperform markets and really go down that road. So we continue to stay focused on those types of assets that are mid to later stage type of assets to bring in, but that's not one where we view ourselves as development stage company at this point.

On the capital allocation and the buyback, I'm going to go ahead and let Terry weigh in on that, but I think it's also just one where really clear that it's one where we see ourselves as being undervalued. And so, that's an important part of why we focus on some things tied to the buyback, but Terry, I want you to go ahead and weigh in with some additional thoughts about capital allocation from your perspective.

Terry Coelho -- Executive Vice President and Chief Financial Officer

Thanks, Jeff, and hi, Gregg. So yeah, on the capital allocation, I think -- look, we mentioned before and Jeff just talked about how we feel value of the stock is and we will continue to evaluate the market. We will opportunistically do as we mentioned before. We don't expect to necessarily do one large buyback all at once. We'll be monitoring it. So I think you can be thinking about that right now, and you can imagine we've been in a quiet period, so there is a plan in place that is operating on its own, let's say with some guideline from us that we initially put in place.

In terms of the gross margins, as I shared on the call, there were probably two major drivers. One was, if you were comparing it to Q3, you may recall that we had the channel refresh, which had a favorable impact to the gross to nets in Q3. And therefore, the gross margins in Q3 and what we saw was the typical normal kind of second half of the year impact of higher coverage gap and so on, so it came back in line because of that. And then secondly, the -- I shared that we had some BELBUCA inventory reserves that we took in the quarter.

Gregg Gilbert -- Truist Securities -- Analyst

And for the year -- the coming year, Terry?

Terry Coelho -- Executive Vice President and Chief Financial Officer

For the coming year, so we've talked -- I think in general, we still see ourselves in that kind of mid-80s. Both brands have pretty attractive gross margins, and I would expect that to be able to continue.

Gregg Gilbert -- Truist Securities -- Analyst

Thanks. If I could just follow up with one last one, Jeff. I know you guys are not looking to comment specifics of litigation, but correct me if I'm wrong, that a win or a loss here could be quite transformational for the Company. Am I over-playing that thought? Is it something that really helps define the types of deals you're looking to do or the sense of urgency with which you need to do them? Any sort of just philosophical thoughts around the importance of this event would be helpful. It seems to be the elephant in the room for a lot of investors at this point.

Jeffrey A. Bailey -- Chief Executive Officer

Yeah, no, it's a good question, Gregg. No, it's an important outcome for us. That's clear. We will continue to take a prudent approach to our business development activity. And actually, there is a link between the outcome of the trial and our BD efforts. However, we remain very focused in parallel with our BD efforts, really bringing shareholder value in the meantime. So, it's one where the strong balance sheet really positions us well, what we've developed at this particular point, when we see the right assets at the right time, we're able to move forward with it. But I think you have the right perspective, Gregg. So it's hopefully with some helpful background.

Gregg Gilbert -- Truist Securities -- Analyst

Thanks a lot. Appreciate it.

Jeffrey A. Bailey -- Chief Executive Officer

Thank you.

Operator

Thank you. Excuse me, our next question is coming from David Amsellem of Piper Sandler. Please go ahead.

David Amsellem -- Piper Sandler -- Analyst

Thanks. So just a hypothetical to the extent that you do win in your case versus Alvogen and you have shored up the exclusivity runway for BELBUCA. Can you talk about the extent to which you would invest further in the brand? Whether that a larger sales organization or other activities. Just give us your sense philosophically on how you think about further investment. Or is this sort of a brand where you just execute on the formulary front, but in terms of commercial support, you're pretty much where you want to be for the duration of the exclusivity runway? Thanks.

Jeffrey A. Bailey -- Chief Executive Officer

Yeah. David, really good question. As far as the way that we're viewing at the execution with BELBUCA and Symproic is that, as you can see from some of the numbers and some of the things that Terry was talking about as far as projecting into 2021, we are very focused on investing in our brands, sort of where we see so much more upside for these brands in the coming years. And a lot of this is about marketing muscle. It's about really funding that COVID world, it's one where we reallocate resources to customer facing and we did the right thing there. It really paid off for us there. But investing even more into these brands, that it's really one where that helps drive that upsize -- upside for us that we see clearly.

If you take a look at the size of our sales force, Scott and I spent a lot of time with this team talking about this. We really feel strongly we are right sized with that. A lot of the investments that we're talking about is really on the marketing side and things that are adjacent to the marketing effort to really drive this. The thing I really like about this so much that we control our destiny on this as far as where we take this thing, it's really good old fashion, operational excellence, the right block, the right message, the right frequency and just really our team just continuing to do what they're doing and continuing this growth trajectory going forward. But with some additional marketing resources behind, it will be really helpful to really drive that.

Scott, do you have anything else you want to add to that as well?

Scott Plesha -- President and Chief Commercial Officer

It's a great summary, Jeff. Only thing I would add is that we obviously made a pivot last year and really built out the digital component of our promotions. And I think importantly also moved a large part of our dollars from a non-branded promotion setting to branded. So -- and I do think when you look at our performance year-over-year compared to the markets we're in, I think that was a big part of it, obviously, as well as the reps doing a really nice job at a distance virtually as well as the face-to-face interaction. So, that will be all I'd add to that, Jeff.

Jeffrey A. Bailey -- Chief Executive Officer

Thank you. David did we give you the background you needed there?

David Amsellem -- Piper Sandler -- Analyst

Sorry about that. Yeah. And if I may just make a follow-up. I know you talked about formulary access, but another philosophical question here, just on -- this time on the payer front. I guess, how aggressive do you want to get in terms of contract? I mean, again, assuming that you shored up the exclusivity runway here, how aggressive do you want to get in terms of rebating in order to improve formulary positioning, particularly as it relates to Part D?

Jeffrey A. Bailey -- Chief Executive Officer

So, I will let Scott to weigh in, but let me cover a couple of things upfront. So if you take a look at where we are right now and the team with Terry, Scott, myself, we have a lot of experience in this area. We would have the opportunity, if we really wanted to. We could go out and sign a ton of contracts right now and they'd make great headlines as far as press releases about X number of million more lives that are covered and all this sort of stuff.

But when you take a look at the math behind them, we are really super prudent behind that, making sure we're doing the math behind, that's as far as your future contracting. A lot of our work is really about making sure that we're maintaining good contracting, good access. We have very good access for our products right now that really play through. And so, we're very focused on that, but we're also very opportunistic as far as looking at -- to give you an example as far some refill plans and some things that are very targeted with that.

So you take a look at where we are in the product lifecycle that the team has done a really good job as far as contracting and getting us to a good place. As far as the additional contracting, we will remain opportunistic. But one thing I want to make sure, just from a shareholder standpoint that we are really prudent about doing the math behind the scenes that -- what really makes sense or not. So, we can make some great headlines in the short term, make us feel really good about like expanding some things, but I want to make sure there's confidence knowing that we're doing the math behind the scenes that what was really best for our business.

And Scott, do you have anything else you want to add to that?

Scott Plesha -- President and Chief Commercial Officer

No, I think Jeff is spot on here, David. We are always -- and I think it was in my prepared remarks, but we're committed to improving access, but we're also trying to balance rebates with that access and making sure that it makes sense from a business standpoint and just spot on. We could go out and sign a bunch of contracts tomorrow almost, but they wouldn't make sense financially to the Company.

And so, we're trying to be very prudent. I think the other thing that's really important, and I know we've talked about this in the past, is that Medicare probably when you look at it that might look like the opportunity, but we have really high approval rates there, almost 90%. It's almost identical to commercial. So what that means is if a physician or a mid-level prescribes the product BELBUCA and they do the proper PA authorization, that about 90% of the time it's going to get approved, which is quite good in the marketplace.

So, we feel we have coverage in place that is going to allow future growth. We'll continue to look for some improvement in smaller plans on the commercial side because that's really about what's left as sub-plans. And then on the Medicare, again, if it makes sense from a rebate level, we will move forward with those, but not until we do extensive analysis on the financial side and financial impact.

David Amsellem -- Piper Sandler -- Analyst

Okay, thanks. That's helpful.

Jeffrey A. Bailey -- Chief Executive Officer

Thanks, David.

Scott Plesha -- President and Chief Commercial Officer

You're welcome.

Operator

[Operator Instructions] Our next question is coming from Scott Henry of ROTH Capital. Please go ahead.

Scott Henry -- ROTH Capital Partners -- Analyst

Thank you, and good morning. Just a couple of questions. First for Terry, just for clarification, the operating expense guidance for 2021 of $115 million to $120 million, is that inclusive of cost of goods sold?

Terry Coelho -- Executive Vice President and Chief Financial Officer

No. That does not include cost of goods sold.

Scott Henry -- ROTH Capital Partners -- Analyst

Okay. So...

Terry Coelho -- Executive Vice President and Chief Financial Officer

It does include amortization, however.

Scott Henry -- ROTH Capital Partners -- Analyst

Okay. So, should I interpret that to be -- when I look at the model, the second half spending was down pretty significant in 2020 and the first half was higher. So I mean should we think it more of the first half of being a reflection of operating expenses for 2021?

Terry Coelho -- Executive Vice President and Chief Financial Officer

Yeah, I think so. So as I shared on the call with my prepared remarks, I think we see a couple of things. One is we want to make sure we're continuing to invest behind our brands and support the growth. We're still looking to grow nicely. And I think the other piece of it is, we are expecting to see a return to more normal market conditions, being able to have the reps out in the field and traveling and everything else. So, we have some of that built into our assumptions as well.

Scott Henry -- ROTH Capital Partners -- Analyst

Okay. Thank you for that color. And then, just a couple of questions for Scott. When I look at the Symproic prescriptions, market share steadily increased pretty consistently month over month and then it dipped at least according to the numbers I'm looking at in January. The question is, is that noise, or is there anything that could be causing that?

Scott Plesha -- President and Chief Commercial Officer

Scott, thanks for the question. Yeah, so we're watching that carefully. And I think it's just noise at this point. I think we have enough data to conclude, there's a trend there. So -- and then, I think Jeff had mentioned in his remarks also and Terry did that February was pretty disruptive to our business as well. The winter storm that hit in that area, that's where some of our biggest businesses, so that definitely impacted and there's some IQVIA reports that -- report that Texas for example was down 40% alone in retail prescriptions during that week. So, I think it's early. We've actually seen the brand recovering here in recent weeks, so I anticipate us getting back on track there.

Scott Henry -- ROTH Capital Partners -- Analyst

Okay, great. And then with regards to BELBUCA, the opioid category continues to decline. How are you thinking about the level of decline in 2021 versus 2020? I don't know if it was 2020 impacted additionally by COVID, so if we don't get that. I'm just wondering if you expect the category to stabilize at lower declines or to continue at the current rate.

Scott Plesha -- President and Chief Commercial Officer

No. So, we've modeled a slower decline going forward. And that's been the case really year-after-year here, Scott. If you were to go back to 2017, 2018, 2019, the decline is definitely slowed. As a matter of fact last year, actually, as we exited '19 going into early '20, especially on the NBRx side, it was really flatten -- flattening out and almost completely flat and then COVID hit and pulled it down a little bit. So, I do think that we've gotten to the level of more kind of appropriate prescribing of opioids it appears, everything you look at, it's kind of flattening out. And I think a lot of the different programs put in place have helped kind of get to a more normalized area. And again, I do -- we do anticipate a flattening of that curve over time.

Scott Henry -- ROTH Capital Partners -- Analyst

Okay. Greg...

Jeffrey A. Bailey -- Chief Executive Officer

And I would Scott to that -- and Scott, just a couple of data points to supplement what Scott just covered is that, the guidance we're providing is we view as being conservative and achievable, which is probably, hopefully, where everybody would want us to be in our mindset. But as far as also the background goes and this ties back to your market question, we're really paying super close attention to NBRx market, that last year, the NBRx market was down about 15% [Phonetic] compared to 2019. And the real driver there was patient visits were down in the second quarter of last year were down 45%. And that's a key driver to that part of the market and also sales rep face-to-face interactions were down 56% for the year, that's according to IQVIA data.

So when you take a look at, that's what we're paying really close attention to about the market and that's something where -- for our view of 2021, we see some trends where that's coming back I think that's favorable for the market, but it's what we're paying super close attention to that as far as how we're viewing the road in front of us. So I just want to provide a little bit more data behind your question as well, Scott.

Scott Henry -- ROTH Capital Partners -- Analyst

Okay, great. Thank you. And then final question with regards to the litigation and not specific to this trial, but perhaps you can add some color, what would you typically expect for the timeline between a bench trial and a decision? I don't know if there's any guidelines that we should be thinking about, but I want to hear your thoughts. Thank you.

Jeffrey A. Bailey -- Chief Executive Officer

Scott, the only thing we really can comment on there is that, just for everybody else on the call as well that there is a three-day bench trial that was conducted commenced on March 1 and it was one where the court has requested the parties to submit post-trial briefs over the coming two months, and the decision from the court is expected subsequent to the filing of the post-trial briefing. So, there is no real like super clear timeline on that end. But that's really what's out there that's playback from the courts. So as you can imagine, that we cannot really comment further on the litigation, but that's really where we stand at this particular point. So -- and I hope I gave everybody a sense -- a bit on the timeline.

Scott Henry -- ROTH Capital Partners -- Analyst

Yes. That's helpful. I appreciate that. Thank you for taking the questions.

Jeffrey A. Bailey -- Chief Executive Officer

Thank you, Scott.

Scott Plesha -- President and Chief Commercial Officer

Thanks, Scott.

Operator

Thank you. Our next question is coming from Tim Lugo of William Blair. Please go ahead.

Tim Lugo -- William Blair -- Analyst

Thanks for the question. And I guess given the Alvogen case timing, do any of the overhangs impact payer discussions in Q4? Maybe some payer who were looking at preferred contracts, but they wanted to know what the kind of ongoing tail end of the contract would look like? And you expect hopefully given our favorable outcome, would you have a more active payer round in Q4 2021?

Jeffrey A. Bailey -- Chief Executive Officer

Scott, do you want to take that? I know the answer is no, but please do you want to provide a more color behind that?

Scott Plesha -- President and Chief Commercial Officer

No, I appreciate that. Tim, there is really no awareness at a payer level of around the trial at all. And I can honestly say that it's not come up one time in our discussion, so -- and really, it's just been normal contract discussion. So again, going forward, the other part of your question, I don't really see any impact there as well.

Tim Lugo -- William Blair -- Analyst

Okay. And Scott, I guess, given the recent tick-up in in-person call activity, I think you said maybe about 10% or so. Have you seen any of that flow through to I guess RXs or prior authorizations or maybe new-to-brand growth? And I guess, in general, how happy are you with the script trends in January and February, given the normal seasonality?

Scott Plesha -- President and Chief Commercial Officer

So I'll take the first question first. We really don't have enough data yet, Tim. As you know, it lags a good amount, at least a few weeks. So we get a full picture and really has been over the -- only last two to three weeks and there was a good -- there was a week -- two weeks in February where we had a virtual national sales meeting and then the weather hit. So those weeks were lower on call activities. So, it's hard to draw any conclusions, where we would have been, but Jeff mentioned this earlier, I'm a firm believer that it's number of calls on the right physicians with the right message and us having additional touch points face to face. While we've enhanced our digital, I still believe that synergistic with getting in front of our prescribers. So that to me, that's kind of a crucial for us to see that going forward and then the return of the patients to the offices like Jeff had mentioned.

Tim Lugo -- William Blair -- Analyst

Okay, I understand. Thank you.

Scott Plesha -- President and Chief Commercial Officer

And I'm sorry, what was your other -- I'm sorry, the other question?

Tim Lugo -- William Blair -- Analyst

I was looking to ask you general comfort...

Scott Plesha -- President and Chief Commercial Officer

Oh, the trends, yes.

Tim Lugo -- William Blair -- Analyst

January and February trends.

Scott Plesha -- President and Chief Commercial Officer

Yeah. So when we go back and look at kind of seasonality of BELBUCA in 2019, we had a very similar trend to what we're seeing now, excluding again that week and half in February where we saw very soft. And we can go back and trace that directly to the states impacted by winter storm Uri. And what we will typically see is March being our next kind of inflection point in growth after a little bit of a tick down in January and February. It's always a short month, so that -- that's kind of difficult to look at it as a monthly basis. But March is usually the rebound month for us. And I think we're positioned well to do that.

Tim Lugo -- William Blair -- Analyst

Great, thanks for that.

Scott Plesha -- President and Chief Commercial Officer

Thanks for the question.

Jeffrey A. Bailey -- Chief Executive Officer

Thank you, Tim.

Operator

Thank you. Our next question is coming from Tim Chiang of Northland Securities. Please go ahead.

Tim Chiang -- Northland Securities -- Analyst

Hi, thanks. Jeff, maybe you could just comment on how active you guys have been looking at potential BD transactions. Is there a lot out there that you guys have seen? And do you think that there is complementary assets that you could bring in near term?

Jeffrey A. Bailey -- Chief Executive Officer

Yeah, Tim, hope you're doing well. Yeah, no, we're very active as far keeping our finger on the pulse. That is the best way to phrase it, so sort of just give you from a process standpoint. We have a weekly call based on the different team members that we're doing there. There are some interesting assets. We see a number of attractive assets out there, neurology CNS rare disease that we see as being complementary to our focus. We're so much focused on products that are focused on unmet medical needs. And that's really something that we've always -- we also focused Tim on anything that leverages our core capabilities. Our backbone of the commercial team and really making sure that sufficient operating model as best as possible looking at some things there.

So, it's good process in place. If you take a pie chart of where I spend my time, Terry and Scott as well, it's become a significant part of the pie chart, but also it's -- one make sure that everybody takes away from the call that it's a very prudent process to make sure that it is well thought out and very much focused on shareholder value, anything we're doing on that end. So, there is some interesting stuff out there, but it's also the diligence and making sure that we're really solid as far as the process goes, is really what's top of mind. So the senior management team is very focused on this and there is some pretty good things from that end.

Tim Chiang -- Northland Securities -- Analyst

Okay, great. And maybe just one follow-up for Scott. I mean, Scott, I mean obviously you guys are doing a valiant effort promoting BELBUCA, but what sort of push back are you still getting on the product here? I mean obviously there is no shortage of scheduled to opioids being prescribed in this country. I am a little surprised that you're not getting more traction. I mean, is there something that's holding BELBUCA back?

Scott Plesha -- President and Chief Commercial Officer

Tim, I think the Number 1 thing always in getting something prescribed is just changing habits. Obviously, there are a lot of healthcare providers that over the years have gotten very comfortable in prescribing the C2s and they work very well. So there is a -- there's a large base of business in that area. And there are lot of short-actings also of those same molecules that are short-acting that are very easy to transition to a like molecule long-acting. So, it's really getting people to change how they practice medicine and how they treat their patients. So, it's really about changing habit and that's why earlier I mentioned being able to be in front of our healthcare providers or customers is so important to us because I think that's the best way to change habit is face-to-face visit, sharing clinical data and information. So hopefully that helps.

Tim Chiang -- Northland Securities -- Analyst

I mean, Scott, do you see anything that the new government can do in terms of increasing awareness of non-opioid alternatives to treating pain?

Scott Plesha -- President and Chief Commercial Officer

Well, we've seen things come out, for example, the HHS Task Force obviously issued some different guidance, chronic pain guidance a while back, but they really haven't mandated anything. I think we always view policy is being something that could be additive. But we don't want to count on it to grow our business. It has to be us executing at a high level. So I don't know that we've ever seen the government very often come in and just dictate or practice medicine. So, I think it's challenging to rely on that to drive our business. We have to kind of own our destiny going forward.

Tim Chiang -- Northland Securities -- Analyst

Got it. Thanks.

Scott Plesha -- President and Chief Commercial Officer

You're welcome. Thanks for the questions.

Operator

Thank you. At this time, I'd like to -- floor back over to Mr. Bailey for closing comments.

Jeffrey A. Bailey -- Chief Executive Officer

Thank you very much. And so just real quickly, just today, very much appreciated by participating on the call. Hopefully, we gave you a pretty good snapshot about why we're so pleased about the fourth quarter, very strong results, also really to our employees and the team work that's going on as far as really pleased with the record 2020 results that we just -- we're able to review with you.

And also just to reinforce that we are very excited about the road in front of us. We're really keyed up well here with a lot of great things for the market dynamics and also with our balance sheet that we've really worked hard to really grow that, improve it over the last year or two, and some really good stuff happening for the Company, that's in front of us. And so, we're really poised for some great growth.

And just as we wrap up, just thanks everybody for the time participating today and look forward to some of the follow-up and really focused on delivering a very strong year in 2021. Thanks all. And that's all we have on our end.

Operator

[Operator Closing Remarks]

Duration: 58 minutes

Call participants:

Terry Coelho -- Executive Vice President and Chief Financial Officer

Jeffrey A. Bailey -- Chief Executive Officer

Scott Plesha -- President and Chief Commercial Officer

Brandon Folkes -- Cantor Fitzgerald -- Analyst

Gregg Gilbert -- Truist Securities -- Analyst

David Amsellem -- Piper Sandler -- Analyst

Scott Henry -- ROTH Capital Partners -- Analyst

Tim Lugo -- William Blair -- Analyst

Tim Chiang -- Northland Securities -- Analyst

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