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Healthcare - Medical - Devices - NASDAQ - US
$ 7.085
-1.62 %
$ 52.6 M
Market Cap
-4.75
P/E
EARNINGS CALL TRANSCRIPT
EARNINGS CALL TRANSCRIPT 2020 - Q4
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Operator

Greetings, ladies and gentlemen and welcome to the electroCore's Fourth Quarter 2020 Earnings Conference Call. Currently at this time, all participants are in a listen-only mode. Later we'll conduct the question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded.

At this time, I'd like to turn the call over to your host, Hans Vitzthum, of LifeSci Advisors. Please go ahead. Sir..

Hans Vitzthum

Thank you, operator. And thank you all for participating in today's call. Joining me are Dan Goldberger, Chief Executive Officer; and Brian Posner, Chief Financial Officer and Dr. Peter Staats, electroCore's Chief Medical Officer. Earlier today, electroCore released results for the quarter ended December 31, 2020.

A copy of the press release is available on the company's website.

Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.

Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements. All forward-looking statements, including, without limitation, our examination of operating trends and our future financial expectations are based upon the company's current estimates and various assumptions.

These statements involve material risks and uncertainties that could cause actual results or events to differ materially from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements.

For a list and description of the risks and uncertainties associated with the company's business, please see the company's filings with the Securities and Exchange Commission.

electroCore disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time-sensitive information that is accurate only as of the live broadcast today, March 11, 2021.

And with that, I'll turn the call over to Dan..

Dan Goldberger Chief Executive Officer & Director

Thank you, Hans. Hello, everybody, and thank you for joining us today. Full-year 2020 revenue was $3.5 million, the upper end of our previously provided guidance range of $3.3 million to $3.5 million. Furthermore, net cash used for the full-year decreased 55% to $20.2 million for the full-year 2020 from $44.5 million for the full year 2019.

Brian will cover the financials in detail, but I want to begin with a few highlights. For the full-year year 2020, total revenue of $3.5 million increased approximately 46% as compared to $2.4 million for the full-year 2019.

We're pleased that the aggressive restructuring activities in 2019 and 2020 drove growth across our key revenue generating channels in spite of COVID-19 pandemic headwinds. During the fourth quarter of 2020 2,647, total paid months of therapy were utilized across our three revenue generating channels, resulting in net sales of $928,000.

The sequential decline from 2881 paid months of therapy in the third quarter of 2020, largely due to the third wave of COVID. The Federal Supply Schedule or FSS, which encompasses the VA, DoD and other government and military agencies continues to be our most important revenue channel.

During the fourth quarter of 2020, 71 Department of Veterans Affairs and Department of Defense Military Treatment Facilities purchased gammaCore products, as compared to 68 during the third quarter of 2020, and 54 during the fourth quarter of 2019.

Also, during the fourth quarter of 2020, the company shipped approximately 1232 paid months of therapy pursuant to VA and DoD originating prescriptions compared to 1571 paid months of therapy during the third quarter of 2020 and 829 during the fourth quarter of 2019.

Fourth quarter sales and paid months of therapy to VA and DoD facilities continue to be impacted by the ongoing COVID-19 pandemic, which saw case count surge in many parts of the country in Q4 2020.

Our sales and marketing function continues to leverage telehealth and other virtual capabilities and management believes that the company remains well positioned to resume normalized outreach activities as the pandemic subsides. Turning now to the United Kingdom, and other O-U.S. territories.

During the fourth quarter of 2020, electroCore shipped approximately 1143 paid months of therapy outside of the United States, as compared to 1020 paid months of therapy during the third quarter of 2020 and 961 during the fourth quarter of 2019. Revenue generated outside the U.S.

was $311,000 in the fourth quarter of 2020, as compared to $278,000 in the third quarter of 2020 and $294,000 in the fourth quarter of 2019. We were pleased to see a sequential increase in paid months of therapy driven mostly by the UK which has been and continues to be hit very hard by the pandemic.

During the fourth quarter of 2020, we announced that gammaCore would continue to be reimbursed in England under the NHS Innovation and Technology Payment Program, ITPP for the treatment of cluster headache in adults for an additional six months through March 2021.

With the January notification that gammaCore was selected for inclusion in a new long-term reimbursement policy called NHS Improvement MedTech Funding Mandate Policy '21, '22, we are confident that broad NHS England coverage will remain as our team works with NHS England to transition from the ITPP to the MedTech Funding Mandate Policy.

In short, the policy supports commissioners and providers in the use of selected National Institute for Health and Care Excellence NICE approved, clinically effective and cost saving medical devices diagnostic and digital technologies that will improve patient outcomes.

A projection by NICE concludes that more widespread adoption of gammaCore as an adult cluster headache therapy could deliver cost savings to NHS of as much as £4.6 million over the next five years. We're grateful to NHS for their ongoing support of cutting-edge therapies such as gammaCore.

Similarly, we learned in January that Health Improvement in Scotland or HIS has published a Scottish Health Technology Group, SHTG adaptation for NHS Scotland on the use of gammaCore for cluster headache. The SHTG adaptation is now being disseminated across NHS Scotland health boards to inform the use of gammaCore for cluster headache.

In February 2021, we also learned the gammaCore listing in the NHS supply chain catalog has been extended for an additional two years through June 3, 2023. The NHS supply chain helps NHS deliver clinically assured quality products at the best value to its patients.

And the inclusion of gammaCore in the catalog allows hospitals to purchase gammaCore Sapphire for their primary headache patients taking into account their own budgetary restrictions.

The listing of gammaCore Sapphire as an e-direct product marks an important milestone in the company's provision of its medical technologies to UK patients in an easier cost-effective way. In recent months, we took meaningful steps to expand gammaCore's global availability.

In December, we announced an exclusive distribution agreement with Pro Medical Baltic to distribute gammaCore in Eastern Europe, including with Lithuania, Latvia, Belarus, Kazakhstan, and Ukraine. In January, we entered into a similar agreement with RSK Medical in Canada.

And most recently in March, we announced an agreement with Medistar, who will serve as the exclusive distributor for non-invasive vagus nerve stimulation in Australia. We expect to expand our global network with leading medical technology distribution partners to make gammaCore more broadly available outside the USA.

We continue to make measured investments in our commercial channel in the United States. Most notably, through negotiations with national and regional insurers and pharmacy benefit managers for the purpose of expanding the population of gammaCore covered lives.

In January 2021, we announced that CMS published its most recent Level 2 Healthcare Common Procedure Coding System, commonly known as HCPCS, establishing a unique code K1020 for non-invasive vagus nerve stimulator.

The coding decision covers the gammaCore Sapphire D and is in response to the application that we submitted during CMS 2nd Biannual 2020 Coding Cycle for non-drug and non-biological items and services. That application focused on the clinical and economic advantages of gammaCore therapy.

All final coding decisions for the second biannual 2020 coding cycle for non-drug and non-biological items and services will go into effect on April 1, 2021.

We view the establishment of unique HCPCS code for non-invasive vagus nerve stimulation as an important differentiator from other nerve stimulator technologies and a potentially significant driver of additional coverage within the medical benefit pathway.

We still have a lot of market access work to do and remain optimistic that the unique code will contribute to meaningful commercial reimbursement wins in the future.

On the topic of the COVID-19 pandemic, our employees in Rockaway, New Jersey and in the field continue to implement best practices for preserving the safety and health of all of our stakeholders.

The FDA emergency use authorization or EUA, that was granted to us in July 2020 for the use of gammaCore Sapphire CV at home or in a healthcare setting for the acute treatment of adult patients with known or suspected COVID-19, continues to generate clinician interest.

gammaCore Sapphire CV is available throughout our VA DoD channels to hospitals, directly from the company, through a premier specialty pharmacy by obtaining the prescription from a patient's healthcare provider, or through telehealth consult, powered by our telehealth partner Upscript LLC.

We have also set up an online portal for patients to use, www.getgammacore.com. While prescriptions generated through the EUA were not a meaningful source of revenue during the fourth quarter, we continue to be pleased with the interest that it is generating in NVNS as a viable therapy. At this point, I want to ask our Chief Medical Officer, Dr.

Peter Staats, to provide an update on our various clinical initiatives..

Peter Staats Chief Medical Officer

Thanks, Dan. You will recall, that gammaCore Sapphire CV is currently being evaluated in two investigator initiated clinical trials or IITs in hospitalized COVID patients. One in Valencia Spain, and the other in Pittsburg Pennsylvania.

These studies known as SAVIOR 1 and SAVIOR 2 respectively are measure the safety and efficacy of gammaCore Sapphire CV plus standard of care versus standard of care alone in patients hospitalized with COVID-19 across a broad range of clinical and laboratory endpoints.

SAVIOR 1 enrollment completed at a 110 subjects and our SAVIOR 2 trial which aims to enroll 60 hospitalized COVID-19 patients is ongoing. We look forward to seeing pulmonary data for SAVIOR 1 later this year.

In December of 2020, we announced that gammaCore have been selected by the National Institute of Drug Abus for a NIDA sponsored randomized control study in opioid use disorders.

The study will assess the ability of nVNS to decrease opioid cravings in subjects with history of opioid use disorder, who are stable on that occasion, as well as examine the possible mechanisms that might facilitated this clinical effect.

The study is being run by Douglas Bremner, our leading Researcher in this field, who you may recall, is also leading a VA sponsored study at gammaCore in PTSD. Just a few weeks ago, we announced that full enrollment have been achieved in the TR-VENUS Study which is evaluating the utility of nVNS for the acute treatment of stroke.

TR-VENUS is a Phase 2 double blind randomized, sham-controlled multi-center clinical trial, conducted at nine major centers across Turkey, supported by the Turkish Neurological Society and partially funded through an unrestricted research grant from electroCore.

There is a strong scientific hypothesis supporting this study, as preclinical evidence suggest that vagus nerve stimulation can provide a measurable improvement outcome after ischemic brain injury. We look forward to reporting data from the TR-VENUS trial later this year as well.

In December of 2020, we announced positive topline results from our PREMIUM 2 study at gammaCore in migraine prevention. Recall, that this study was terminated early in April of 2020, due to the COVID-19 pandemic.

However, an analysis of the data demonstrated that all study endpoints including several patients assess quality of life measures showed benefit from non-invasive vagus nerve stimulation, with many endpoints showing a statistically significant improvement within nVNS compared to sham stimulation.

The positive results of PREMIUM 2 add to the significant body of evidence demonstrating that nVNS is among the most effective, safe and flexible treatments available to help patients looking for a way to take control of their headache treatment. We look forward to a peer reviewed publication of the data later this year.

In another positive development on the migraine front, just a few weeks ago, FDA cleared our 510(k) submission to expand gammaCore label to include the acute and preventive treatment of migraine and adolescents between 12 and 17 years of age.

It's estimated that 10% of all school aged children and up to 28% of teens between the ages of 15 and 19 live with migraine. And we believe that a non-drug treatment option will resonate with this patient population. With this expansion, gammaCore is now clear for most forms of primary headache.

Finally, in February 2021, we announced the publication of a study in the Journal Colorectal Disease, that further demonstrates the broad potential than nVNS. The study evaluated the effectiveness of nVNS in preventing post-operative ileus following elective major colorectal surgery.

Post-operative ileus is a serious condition that can result in complications from surgery and extended hospital stay. Well, only a pilot study, the group using nVNS showed a greater improvement in several clinically important endpoints, such as decreasing the amount of all morphine equivalent used in post-surgery compared to the sham group.

The results detailed in this paper strongly suggests continued development in this indication, and a larger study funded by the National Institute for Health Research in England is ongoing.

We are thrilled that the ongoing clinical studies of nVNS and headache, PTSD, COVID, opioid use disorders, stroke, post-op ileus and other indications may ultimately improve the lives of our patients everywhere.

We are also optimistic that the foundation of clinical work will increase the total addressable market for nVNS as evidenced by the label expansion to adolescent migraine last month. At this point, I'll turn the call over to Brian for a review of our financials and other guidance items.

Brian?.

Brian Posner Consultant

Thanks, Peter. For the quarter ended December 31, 2020 electroCore reported net sales of $928,000 as compared to net sales of $1,081,000 in the third quarter. The sequential decrease in revenue was due to the ongoing effect of COVID-19, particularly in our VA and DoD channels. Revenue for the quarter ended December 31, 2019 was $675,000.

Paid months of therapy ship to the VA and DoD declined 22% sequentially to 1232 in the fourth quarter of 2020 from 1571 in the third quarter. Revenue from the VA and DoD also declined sequentially to $509,000 in the fourth quarter 2020 from $646,000 in the third quarter. Revenue from the VA and DoD was 378,000 during the fourth quarter of 2019.

Paid months of therapy shipped outside the U.S. increased 12% to 1143 in the fourth quarter of 2020 from 1020 in the third quarter. Revenue from outside the U.S. increased sequentially to $311,000 in the fourth quarter of 2020 from $278,000 in the third quarter. O-U.S. revenue was $293,000 during the fourth quarter of 2019.

Net revenue from the commercial channel was $54,000 for the fourth quarter of 2020 as compared to $112,000 for third quarter. Gross profit for the fourth quarter of 2020 was $109,000, inclusive of an increase of $434,000 in inventory reserves as compared to $284,000 for the fourth quarter of 2019.

Gross margin for the fourth quarter, excluding the increase in inventory reserves was 59% compared to 42% in the fourth quarter of 2019. Total operating expenses for the fourth quarter 2020 were approximately $6.4 million as compared to $8.9 million for the comparable period in 2019.

SG&A expenses declined approximately 26% to $5.4 million in the fourth quarter of 2020 from approximately $7.3 million for the comparable period in 2019. Research and development expenses decreased by approximately $600,000 or 37% to $1 million in the fourth quarter of 2020 from $1.6 million in the year ago period.

This reduction is consistent with the company's strategy of significantly reducing its near-term investment in research and development, as well as early termination of the PREMIUM 2 study in March of last year. GAAP net loss for the fourth quarter 2020 was $6.3 million compared to a GAAP net loss of $8.5 million in the fourth quarter of 2019.

Adjusted EBITDA net loss for the fourth quarter 2020 was a loss of $4.3 million as compared to an adjusted EBITDA net loss of $6.7 million for the same period in 2019.

The company defines adjusted EBITDA net loss as GAAP net loss, excluding income tax expense or benefit, depreciation and amortization, stock compensation expense, write-off of right of use operating lease, increase in inventory reserves, restructuring and other severance related charges, legal fees associated with stockholders litigation and total other income and expense.

A reconciliation of GAAP net loss to non-GAAP adjusted EBITDA net loss has been provided in the financial statement tables included in this afternoon's press release. Now looking at the full year. For the full year 2020, we generated total revenue of $3.5 million as compared to $2.4 million for the full year of 2019.

The gross profit for the full year 2020 was $1.8 million inclusive of an increase of $234,000 in inventory reserves, as compared to $1.2 million for the full year 2019. Gross margin for the full year 2020 was 50% as compared to 52% for the full year of 2019. Excluding the increase in inventory reserves, gross margin for the 2020 was 63%.

Total operating expenses were $26.5 million for the full year 2020 as compared to $47.3 million for the full year 2019.

The decrease in full year operating expenses was due to significant reductions in our cost structure, implemented during 2019 and 2020, as well as the elimination of costs related to our PREMIUM 2 trial which terminated early due to COVID.

GAAP net loss from operations for the full year 2020 was $23.5 million as compared to $45.1 million for the full year 2019. Our adjusted EBITDA net loss for the full year 2020 was $18.4 million as compared to $39 million for the full year 2019.

Cash, cash equivalents and marketable securities at December 31, 2020 totaled $22.6 million as compared to $24.1 million at December 31, 2019.

Subsequent to the end of the fourth quarter of 2020, the company raised approximately $6.9 million due to company's previous announced stock purchase agreement, resulting in a proforma cash balance of $29.5 million as of December 31, 2020.

For the fourth quarter of 2020, our net cash usage was $3.7 million, representing a decline as compared to both the third quarter 2020 net cash usage of $4.1 million as well as fourth quarter 2019 net cash usage of $9.4 million.

Looking ahead, for the first quarter of 2021, we expect net revenue to be approximately $1 million and net cash usage to be in a range of approximately $4.5 to $4.8 million, the increase in expected net cash usage in the first quarter of 2021 compared to the fourth quarter of 2020 is largely due to seasonal factors affecting working capital.

And now I'll turn the call back over to Dan..

Dan Goldberger Chief Executive Officer & Director

Thank you, Brian. We are pleased with our performance during the quarter and the year, as we achieved several important milestones related to commercialization of our headache indications and ongoing clinical work.

I also want to point out, that we believe we are in a very healthy financial position with proforma cash of $29.5 million on the balance sheet as of December 31, 2020 including the subsequent $6.9 million raise mentioned earlier and substantial success in reducing our burn rate.

As the pandemic recedes, I am excited about the prospects of returning to sequential revenue growth in our VA DoD headache market, and achieving accelerated growth in our UK subsidiary, as the MedTech Funding Mandate takes effects later this year. Our unique HCPCS code will become effective in April 2021.

And I'm optimistic that the regional max and other national and regional payers will become increasingly receptive to reimbursement of nVNS therapy as we go through 2021. We've recently announced three new international distributors and I look forward to continued expansion of that channel throughout the year.

Longer term, label expansions beyond cluster and migraine supported by the exciting ongoing clinical developments that Dr. Staats discussed, could dramatically increase the total addressable market for nVNS therapy. Finally, I want to again recognize our dedicated staff for working steadfastly through the pandemic disruptions.

And to thank the healthcare professionals that prescribed gammaCore and their patients for their loyal support of gammaCore therapy. At this point, we'll ask the operator to open the line for questions..

Operator

Thank you. Ladies and gentlemen, we'll now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Ryan Zimmerman with BTIG. Please proceed with your question..

Ryan Zimmerman

Great, thank you. And good afternoon, everyone. And, Brian, appreciate the guidance for the first quarter, it's helpful. Maybe Dan, for you, you guys have, you recognized a little bit of sales in the commercial channel this quarter. I'm just wondering if you could kind of give us some flavor on the tenor of the conversations in the commercial channel.

It's poised to be a good opportunity for you going forward kind of, where are they at today and how would you characterize kind of the requirements you have, given the coding updates you've gotten and kind of where you're at? So, let's maybe start there and then and then I can turn to one other question..

Dan Goldberger Chief Executive Officer & Director

Yeah, so Thanks, Ryan. We've said previously, we have - on the commercial side, we have roughly 12 million covered lives through CVS and through Express Scripts. And those patients are paying $25 up to as much as $75 per month as a copay. So, there is an out-of-pocket component to that.

The challenge is that that's not critical mass, we really need to get to a much larger number of covered lives in order to make the e-commercial channel an efficient call point. The new, the hicks picks code that goes live in April is a huge step forward.

Right now, all of our prescriptions get coded to miscellaneous, once we have a unique code that sets the stage for us to negotiate with the regional max about Medicare coverage.

But even more importantly, it streamlines the process for the national and regional private insurers to do the same, to establish unique coverage, to add us to more and more of the benefit plan.

So, all that work is going to be kicking off really in earnest in April once the code goes live, and we can run test scripts, and we can have specific conversations with different insurance companies around their benefit plans. So, a lot of work yet to do over the course of 2021.

Look for additional announcements about coverage decisions as we go through this year. But the revenue list is really going to come in 2022 as we can take advantage of those coverage [ph] Willington back half of the year..

Ryan Zimmerman

Okay. I appreciate that color Dan. Helpful. And then on the O-U.S. side, the NHS continues to be a solid area for you as a commercial channel, but you now have added Australia, Canada, some Eastern European countries, as far East as Kazakhstan.

So, I think there's some sales minimums associated with those agreements and just want to understand how to think about that incrementally relative to say the NHS and can we see a much broader and diverse I guess, revenue contribution internationally this year as we move through the year and maybe as COVID subsides?.

Dan Goldberger Chief Executive Officer & Director

Yes, you're absolutely right. Ian Strickland is our General Manager of our UK business and he's got the broad scope to build up our business around the world. Using our success in the UK under a national health care system as a template, we're becoming more and more attractive to stocking distributors around the world.

And to your point, not only to those are agreements have some obligations for sales, but they also come with some upfront commitments to buy product from us at a fair transfer price to be used in launching.

So, you'll definitely see a revenue lift not so much in the current quarter, but as we roll through the year and you're also going to see additional distributor announcements as we go through 2021..

Ryan Zimmerman

Okay, thanks for taking the questions guys..

Operator

Thank you. Our next question comes from the line of David Turkaly with JMP Securities. Please proceed with your question..

Daniel Stauder

Yes, hi. This is actually Danny on for Dave. Thanks for taking the questions. My first one, so you guys have taken steps to mitigate spending in 2020 and I appreciate the color as far as guidance for the first quarter.

But I was just curious how should we think about operating expenses and cash burn for 2021, you mentioned should as more normalized outreach once COVID subside, so are there any costs that will comeback online post COVID, that we should be keeping in mind or any other color that would be really helpful. Thanks..

Dan Goldberger Chief Executive Officer & Director

Brian, do you want to take that one?.

Brian Posner Consultant

Yeah, sure, Dan. Yeah, basically, I think the way you look at it, we've done a significant reduction in costs over '19 and 2020. I think we're going to make targeted investments where it makes sense in sales and marketing. We have made some additional investments in the government channels that we announced late in 2020.

And the cash burn going forward is going to be largely dependent on our revenue growth. And as I've said in the past, we have a lot of inventory. We just reported our $5.7 million of inventory on our balance sheet. But the good news is, after all that use of cash to acquire that inventory, that will be a source of cash as we sell it.

So that'll be where cash is more favorable than GAAP results as we start ramping up revenue going forward in 2021 and beyond..

Daniel Stauder

Great, then I had one follow up, in the past, you had talked about the benefits that came of course, to bring to an adolescent audience and given avoid systemic impacts of pharmaceuticals.

So, could you give us any color on how significant of a market this could be if you look at it here in the short term as well as in the mid and long term? And what next steps in this indication, what could those look like? Would it be, marketing, campaign, patient outreach? Anything along those lines would be great. Thanks..

Dan Goldberger Chief Executive Officer & Director

Yeah, thank you for noticing. It's been a long time coming, and you're absolutely right, getting the label extension to adolescent is a significant business opportunity for the company over the long haul. Step one is for us to because it's brand new, step one is for us to educate the prescribers, primarily headache specialists.

But as you know, adolescent migraine is managed by more than just the neurology headache specialist. So, we have a substantial awareness opportunity ahead of us working with our small but nimble direct sales force, but really trying to leverage that with the awareness campaigns through social media and other media outlets.

So, for this year, it's going to be building awareness. There are some headache specialists that we've been in contact with who specialize in adolescents, so we expect to be able to talk about to brag about some early clinical successes in the adolescent population anecdotally.

So, again, not a whole lot of lift in 2021, but really setting the stage for a substantial increase in our total addressable market in 2022..

Daniel Stauder

Great. Thank you, guys..

Operator

Our next question comes from the line of Sean Kang with H.C. Wainwright. Please proceed with your question..

Sean Kang

Hi, thank you for taking my question. Regarding ex-U.S. distributorship. Do you have any ongoing additional discussions for additional distributors in the ex-U.S.

region?.

Dan Goldberger Chief Executive Officer & Director

Yes, absolutely. And you can look forward to a few more announcements later in 2021 as we successfully conclude or launch some additional international distributors..

Sean Kang

I see. And I am not sure if you already mentioned, but regarding study data.

Do you expect to see or relate any data from the stroke study by Turkish Neurological Society?.

Dan Goldberger Chief Executive Officer & Director

Yes, so the enrolment concluded one of the endpoints is reading CT scans and that's going to take some time, but we should be able to we should see topline results from that trial in the second half of 2021..

Sean Kang

Second half 2021, okay. Sounds good. Thank you..

Operator

Thank you. Our next question comes from the line of Anthony Vendetti with Maxim Group. Please proceed with your question..

Anthony Vendetti

Thank you, Yeah, just a follow up on the commercial payer. Well, I know the new code, just taking some of that strategy [technical difficulty]..

Dan Goldberger Chief Executive Officer & Director

So, the line was a little stacky, but I think you are asking for timing of additional commercial payer announcements. And the 12 million covered lives that we have today are on, are skew towards that very high end what you would consider platinum benefit claims.

There are several payers that have signals their intention to cover once the code goes live through their medical benefit pathways and so we'll have to run those test scripts in April to validate all of that.

So, you may see some announcements as early as May or June through those benefit claims that have previously signaled that they are going to cover the therapy. But that would be an upside.

The heavy lifting is going to be negotiations with the regional max which never go quickly and various national healthcare plans to see what we can do to gammaCore therapy covered on a wider range of the benefit claims..

Anthony Vendetti

So, on the regional max just to clarify little further. There's about 20 of them if I recall..

Dan Goldberger Chief Executive Officer & Director

No, four. There's only four..

Anthony Vendetti

The regional ones, right. Okay. So, these four regionals, if you cover the full regionals is that as deep as you need to go or is there negotiations that have to go on within each regional map or is the regional that you need..

Dan Goldberger Chief Executive Officer & Director

Our understanding is that, the four regional max would cover Medicare throughout the United States. Now, the doubles in the details, right.

Are we going to be satisfied with the limitations that they're going to try and put on the therapy, so it's really too early to tell how much of the Medicare population we're going to have access to at a price that we're comfortable with?.

Anthony Vendetti

Okay. And then if we look next, I know stroke is one indication.

Is that what you would think is next in line and then if you could maybe if you or Peter could talk about sort of the pipeline where you believe gammaCore could be used in addition to migraines and stroke?.

Dan Goldberger Chief Executive Officer & Director

So, let me take the first half of that and I'll hand it over to Peter. Actually, first of all, adolescence is a very big deal for us and we're thrilled that we were able to make that announcement here few weeks ago. I think you're next going to see us look for label expansions into secondary headache, so things like post traumatic headache.

From there, as Peter mentioned, there is work going on in other neurological conditions like traumatic brain injury and ultimately CSD. I think you'll see us moving in terms of commercialization moving in those directions first.

Peter, do you want to talk about the pipeline in more generally in longer term?.

Peter Staats Chief Medical Officer

Sure. Look, I think one of the great advantages of this therapy is that it's an almost untapped therapy. That's also one of the disadvantages that we have. And we've seated studies - initial studies in a variety of areas. Some of the areas that I personally am most excited about is PTSD.

And this is an area of great unmet medical need without much competition and our military folks and others, desperately need a therapy here. Dan just mentioned, post traumatic headache and that's kind of feeds into CTE and other broad areas of interest for us, that is starting to get seated.

Opioid use disorder I mentioned, Doug Bremner is doing some work there. And there's a lot of signals that should work. But one of the really very exciting things is, again, we're going to follow the data is our first TR-VENUS, our first stroke study.

And when we see the data on, can we modify the course of the disease? Can we decrease the size of an infarct? I think that's going to also help direct our path. It's not all a foregone conclusion of which way we're going to go. It's really going to take the data from the numerous IITs that are ongoing.

And then really double down and invest in the right areas. But the good news is, we have a lot of different opportunities, with a lot of data coming in, over the coming months of the year..

Anthony Vendetti

Okay, thank you. That's very helpful. I'll jump back in the queue. Thanks..

Operator

Thank you. [Operator Instructions] Our next question comes from line of John Vandermosten with Zacks SCR. Please proceed with your questions..

John Vandermosten

Good afternoon, everyone. And congratulations on distribution agreements and improvement in penetration at NHS. I want to ask about any possible further expansion in the British Isles, I guess, Northern Ireland, perhaps is that is that something you can expand into? I'm not sure how the NHS works.

But that seems like maybe another area you could go into? Is that possible?.

Dan Goldberger Chief Executive Officer & Director

Yeah, absolutely. Here, you'll see Wales, you'll see Ireland. And you'll also see some other European entities in coming months..

John Vandermosten

Okay, great.

And will the distribution be with a partner for Western Europe? Because I feel like that's kind of the next place you're going to go? Or will you run it through the current, the same channel as it goes to NHS?.

Dan Goldberger Chief Executive Officer & Director

In the UK, we have a small direct organization, it's been very successful working with NHS to gain robust coverage that we have. But we really don't have the resources to go direct in any of the large European countries.

So right now, we're leaning towards more traditional stopping distributors, leveraging what we've learned, leveraging the healthcare economics, healthcare economic data that came in an ICE publication last year.

And there's going to be some new data coming out in the form of post market surveillance of our large cohort of UK patients, that's going to be very compelling for [Indiscernible].

John Vandermosten

Okay. And also, you mentioned a bit about the distribution agreements, Canada, Australia, Eastern Europe.

Should we see contributions from all of these areas before the end of the year?.

Dan Goldberger Chief Executive Officer & Director

Yes, absolutely..

John Vandermosten

Okay. And then, moving on to the studies, you mentioned a bit about this, just want to extend a little bit. So, if we see some success and some of the VA studies or the stroke or opioid abuse.

Do you anticipate getting external money to fund those? Because it seems like there's a lot of external interest? Or do you think that's going to have to be something that's funded internally?.

Dan Goldberger Chief Executive Officer & Director

We'll - we assess the business case for each opportunity to extend the label separately, some of them like post-traumatic headache, secondary headache, those are initiatives that we believe we can find ourselves and fit very, very nicely into our existing channels.

There is like acute treatment of stroke we'll have a more involved development process may or may not require pivotal trial and so we may look for commercialization partner for something like acute treatment of stroke.

And so, what I would like to convey is that we have this pipeline of [Indiscernible] platform therapy as Pete mentioned and so we have this great wealth of opportunities ahead of us and but given limited resources we have [Indiscernible]..

John Vandermosten

Great. Alright, thank you, Dan..

Operator

Ladies and gentlemen, at this time there are no further question. I would like to turn the conference back to Dan Goldberger, for closing comments..

Dan Goldberger Chief Executive Officer & Director

Thank you, operator and thank you to all of you that spent the time to dial-in. We've had a very challenging 2020, between restructuring our business and a mid-pandemic. We're really very, very fortunate to have the support of the investment community of our employees and most importantly of our prescribing physicians and patients.

And so, thank you all and hope to see you all again in a few months, for our first quarter call. Bye-bye..

Operator

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation..

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