OptiNose, Inc. (OPTN) Q3 2020 Earnings Call Transcript

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OptiNose, Inc. (NASDAQ:OPTN)
Q3 2020 Earnings Call
Nov 7, 2020, 8:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the OptiNose’s Q3 2020 Earnings Call. [Operator Instructions] I would now like to hand the conference over to Jonathan Neely, VP Investor Relations. Thank you. Please go ahead, sir.

Jonathan NeelyVice President, Investor Relations and Business Operations

Good morning, and thank you for joining us today as we review OptiNose’s third quarter 2020 performance and our plans for the remainder of the year. I’m joined today by our CEO, Peter Miller; our President and Chief Operating Officer, Ramy Mahmoud; our Chief Commercial Officer, Vic Clavelli; our CFO, Keith Goldan. The slides that will be presented on this call can be viewed on our website, optinose.com in the Investors section.

Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements. All statements that are not historical facts are hereby identified as forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated by such statements. Additional information regarding these factors and forward-looking statements is discussed under the cautionary note on Forward-Looking Statements section of the earnings release that we issued today, as well as under the Risk Factors section and elsewhere of OptiNose’s most recent Form 10-Q and Form 10-K that are filed with the SEC and available at their website sec.gov and on our website at optinose.com. You are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements during this conference call speak only as of the original date of this call or any earlier date indicated in such statement, and we undertake no obligation to update or revise any of these statements.

We will now make prepared remarks, and then we will move to a question-and-answer session.

With that, I will now turn the call over to Peter Miller. Peter?

Peter K. MillerChief Executive Officer, Board of Directors

Thanks very much, Jonathan, and good morning everybody. We appreciate you joining us for our third quarter update. To start, I’d like to commend and thank everybody on the OptiNose team for a strong quarter in which we continued to grow our business in the face of challenges presented by the coronavirus pandemic.

While there will likely be continued challenges related to COVID-19, our performance this quarter reinforces my strong belief that with XHANCE, we have a great product and the right team to deliver on its potential to become part of standard of care treatment for a large underserved market.

Starting on Slide 3. We’ll go into more detail in a moment, but I’d like to start by providing five key takeaways from today’s presentation. First new prescriptions of XHANCE achieved an all-time high in third quarter after experiencing a challenging environment in the second quarter due to a significant decline in patient volumes in ENT and allergy offices caused by the global pandemic.

With increasing patient volumes and in-person promotional activity in the third quarter, new prescriptions increased 23% over second quarter 2020 and are up 29% compared to third quarter 2019. Second, our co-promotion with kaleo was under way. Kaleo sales representatives completed XHANCE training in the third quarter and commenced in-person detailing on October 1 leveraging the strong pre-existing relationships that they have with physicians.

As a reminder, kaleo is promoting XHANCE to a large audience of office-based healthcare professionals of up to 6,000 prescribers, about half of whom are incremental to the current OptiNose called-on universe. As a result, kaleo sales representatives are both — are increasing both promotional reach and frequency for XHANCE, which historically is correlated with new prescription demand.

Having attended a launch meeting alongside Spencer Williamson, the CEO of kaleo, I’m excited by the energy and product enthusiasm the kaleo brings to our partnership and look forward to a productive relationship. Third, we are lowering our financial guidance for operating expenses and we continue to expect initial results from chronic sinusitis clinical development programs in the second half of 2021. We believe the opportunity for growth that would come from successful development of the CS indication continues to be under-appreciated. Given this [Phonetic] perspective, expansion of our label with an indication that has never been achieved by any other drug product could triple the potential on label patient population for the product and potentially open up the door to reach the substantial number of CS patients that are not seeking treatment by our physician today due to frustration with the largely ineffective treatments that were available historically.

Fourth, we continues to believe that XHANCE has enormous headroom for additional growth. Both our partnership with Kaleo and the potential to add the CS indication represent potential new growth drivers. In addition, while our business is performing solidly in the current environment, market conditions have yet to recover. At a high level, total INS market prescription volumes are still below historical levels. At a granular level, the number of face-to-face details our reps are completing with physicians are still below pre-pandemic norms. As face-to-face interactions increase, we believe that will support future growth acceleration.

We’re also encouraged by the publication of new peer-reviewed data by lead author, Dr. Brent Senior, Chief of Rhinology at the University of North Carolina at Chapel Hill and others, encouraging healthcare providers to consider nasal polyps and prescribe XHANCE in patients who remain inadequately controlled by conventional inhaled nasal steroids. This population of patients fall squarely in our target. Concurrently, there is increasing public recognition by thought leaders and specialty societies of XHANCE as a distinct and important step in treatment for patients with chronic rhinosinusitis with nasal polyps after they try conventional nasal steroids.

And fifth, we have a strong balance sheet with $143 million of cash as of September 30. In addition, we now have the option to draw an additional $20 million from our debt facility as a result of exceeding the $14.5 million XHANCE net sales threshold for the third quarter 2020.

Turning to Slide 5. In third quarter 2020, there were 23,000 new prescriptions for XHANCE, a 23% increase in new prescriptions compared to second quarter 2020 and 29% increase compared to third quarter of 2019 and the best quarter for XHANCE since launch. After a strong start for XHANCE in the first quarter of 2020, the COVID-19 related collapse and patient flow through our target physician offices negatively affected new treatment initiations in the early part of second quarter.

Following that reset, new prescriptions returned to strong growth trend which continued in the third quarter. We are encouraged by this performance because new prescriptions drive the refills which currently make up approximately two-thirds of the XHANCE business. As kaleo details begin to have impact and the volume of in-person interactions between our own sales team and physicians continues to increase, we remain confident in our ability to drive growth in new prescriptions.

Turning to Slide 6. Refill prescriptions continue to continued to increase year-over-year and quarter-over-quarter to 46,100 in third quarter 2020. Pulling together the new and refill prescriptions, the total number of XHANCE prescriptions in the third quarter of 2020 was approximately 69,000. This represents 61% growth over the third quarter of 2019. Very encouragingly, the number of prescriptions per patient per year is continuing to increase and is now solidly over four. We believe this is good news for the business and reflective of the clinical benefit that patients who are offered the product are experiencing.

Turning to Slide 7. XHANCE market share continued to increase in third quarter of 2020. Shares expressed as a proportion of all intranasal steroid prescriptions written by the roughly 10,000 physicians in our target audience. You can see that shares nearly doubled from 3% in third quarter of 2019 to 5.7% in third quarter of 2020 with much of the increase earned despite disruptive flows of both patients and territory manager access to physician offices during the pandemic period. As these market conditions improve, we are well positioned to build off the strength and base.

As we move into 2021, we expect to increase the number of physicians included in our definition of the market when we describe our market share. This will reflect the addition of physicians kaleo details for us, plus additional physicians we are reaching for OptiNose sales team. This will increase the total from approximately 10,000 physicians to approximately 15,000 physicians. We believe this expanded target audience will help to drive XHANCE growth. However, in the short term, this larger denominator of prescribers will result in a lower stated share.

Turning to Slide 8. Breadth and depth of physician prescribing as measured by the total number of physicians who have patients filling XHANCE prescriptions continued to grow as well. Regarding breadth, in third quarter 2020, approximately 6,400 physicians had a patient fill at least one prescription of XHANCE, an increase of 27% compared to third quarter 2019. Regarding depth, the number of physicians who had more than 15 XHANCE prescriptions filled by their patients in the quarter has grown even faster with that number increasing by 73% from third quarter of 2019 to third quarter of 2020 with more than 1,100 physicians now in this segment. While the strong growth trend in breadth and depth was blunted by the pandemic environment, we believe that as market conditions improve, we will see continued growth in both breadth and depth.

In a few moments, I’ll provide some closing remarks. But I will first turn the call over to our CFO, Keith Goldan for comments regarding third quarter 2020 results and perspectives regarding our corporate guidance. Keith?

Keith GoldanChief Financial Officer

Thank you, Peter, and thank you to everybody joining today. Turning to Slide 10. As we reported, OptiNose recognized $15.4 million of XHANCE net revenue in the third quarter of 2020. As noted on prior calls, one of the metrics that we track is XHANCE average net revenue per prescription, which is calculated by dividing net revenue for the quarter by the estimated number of XHANCE prescriptions dispensed during the quarter. We continue to believe this is a useful metric to evaluate the net revenues generated per prescription. However, we remind you that this metric is subject to variability. That variability is a result of factors that do not necessarily reflect a change in the price of this paid for an individual unit of XHANCE including ordering patterns, inventory levels for our wholesale customers and pharmacies that we sell to directly, utilization rates of patient affordability programs, the proportion of patients acquiring XHANCE through an insurance benefit and other factors.

Based on available prescription data purchased from third-parties and also on data we received directly from our preferred pharmacy network, XHANCE average net revenue per prescription for the third quarter of 2020 was $224, a $60 increase compared to $164 in the second quarter of 2020 and consistent with the expectations we communicated previously.

For the nine months ended September 30, XHANCE average net revenue per prescription is $175. Moving to Slide 11. This morning, we are lowering previous guidance for operating expenses and maintaining previous guidance regarding clinical trial timing. First, for the full-year 2020, we are lowering our guidance for operating expenses. We now expect those to be in a range from $127 million to $132 million, of which approximately $10 million is expected to be non-cash stock-based compensation. Total operating expenses, excluding stock-based compensation are therefore expected to be in a range from $117 million to $122 million. Previously, operating expenses were expected to be in the range from $131 million to $136 million, of which approximately $11 million was expected to be non-cash stock-based compensation.

Second, regarding our clinical trials with XHANCE in pursuit of a new potential indication for the treatment of chronic sinusitis, while we acknowledge that the worldwide COVID-19 related challenges to trial conduct remained fluid and add some uncertainty, we continue to expect top line results from both trials in the second half of 2021.

Third, and this is new, third quarter 2020 XHANCE net revenue exceeded the $14.5 million threshold in our debt facility. And as a result, we are now eligible to draw an additional $20 million at our discretion between now and February 15 of next year. We expect to draw the $20 million by early 2021 subject to meeting continuing eligibility requirements. In addition, as a reminder, there is a final $20 million tranche from the debt facility that is available subject to the achievement of XHANCE net revenue of at least $26 million in the second quarter of 2021. I will now turn the call back over to Peter to give brief closing remarks. Peter?

Peter K. MillerChief Executive Officer, Board of Directors

Thanks, Keith. Before some closing remarks on XHANCE, I’d like to take a moment to discuss the OPN-019 program that we announced at the end of June. We have initiated this new program to address an area of great need during this pandemic by using our proprietary nasal exhalation delivery system to target delivery of a proven antiviral antiseptic throughout the deep surface areas of the nasal cavity that are subject to coronavirus infection. As a reminder, the active ingredient of the broad spectrum antiseptic formulation we are developing has already been shown in published peer review literature to kill the SARS-CoV-2 virus in vitro and multiple other pathogens.

As we all know now, COVID is caused by respiratory type of virus that often infects people through the upper airways, which is why we use masks and physical distancing to reduce transmission. We believe that by being able to coat the entire high and deep surface area of the nasal cavity, including a factory area that is so often affected by this virus is important, but it’s also a major barrier to using otherwise promising and local active ingredients to kill the virus. Fortunately, we believe our EDS may enable a solution for the problem in a way that standard approaches like nasal sprays do not. Our approach — our prior research suggested EDS drug delivery technology is well suited to spreading medicine throughout deep areas of the nasal cavity, including difficult to reach regions where the novel coronavirus appears to be multiplying and shedding.

We think that the combination of a known powerful antiseptic with this unique delivery technology has potential to be a winning combination in the fight against the coronavirus. More specifically, we believe that a safe and effective product, especially one that is easy to use at home aimed at early treatment of people who test positive or for high-risk prophylaxis, could be a valuable addition to the anti-COVID armamentarium both before and after the availability of potential vaccines.

The planned components of this drug device combination product candidate include both the active — including both the active drug and delivery device are currently commercially available in the US and there is a wealth of prior data separately supporting both the drug and device. Because of that and because of the pressing societal need for an intervention that fills the role that OPN-019 is intended to fill, we anticipate streamlined and accelerated development.

Subsequent to a pre-IND submission, we have engaged with FDA regarding an IND and clinical development pathway. In addition, we have performed in vitro testing against SARS-CoV-2 with a candidate formulation in which a four-log reduction in virus count was produced, which, to be candid, is the result that we expected. In addition, we are performing tests against other pathogens and expect results in November.

We are committed to supporting the inexpensive initial stages of development within our current operating expense plan and are seeking grants partnerships and/or other sources of capital to support further development. To be clear, while we and other parties are excited by the potential of this new drug device combination to help combat both the current pandemic and future public health crisis, our focus remains on growing XHANCE and building a leading ENT and allergy company.

Turning to Slide 13. 2020 has certainly not been a year than any of us expected it to be when the calendar turned in January. However, this team has made the most of opportunities that presented themselves and more importantly created opportunities when it appeared that options were limited. I’m incredibly proud of the effort and results that this team has produced so far, but I’m very focused on plans to continue to accelerate growth. The next time we catch up with all of you on the call today will be 2021 and I’m very fired up about the potential for what next year can be for this company.

Most immediately, we just launched our co-promotion with kaleo to expand the breadth and depth of physician details. Their audience includes nearly 6,000 prescribers, about half of whom are outside the approximately 10,000 healthcare professionals in the current called-on universe for OptiNose territory managers. We look forward to sharing updates regarding their progress in 2021. Further out in 2021, we expect top line data from the chronic sinusitis trials. We believe we are building a nice business with a nasal polyp indication and that we can build a great business if we had the CS indication.

CS also creates potential for partnership and productive expansion of commercial efforts well beyond the specialty physician audience. In the near term, we believe there is an emerging clinical expert consensus that a stepwise care pathway for patients with chronic rhinosinusitis and nasal polyps can optimize medical therapy. In that pathway, conventional nasal steroids will often be considered first but XHANCE should be considered for those patients for whom conventional treatments are not adequate. Knowing what we know about the number of patients treated and current physician and patient dissatisfaction with conventional nasal steroids, a broader embrace of this emerging consensus, it could provide significant tailwind for XHANCE growth in 2021. Thank you. And now I’d like to open up the call for Q&A.

Questions and Answers:

Operator

[Operator Instructions] First question comes from the line of Stacy Ku with Cowen. Your line is open.

Stacy KuCowen — Analyst

Hi, thanks for taking my questions and congrats on a nice quarter. And so, a few questions from me. Hoping you could talk about your expectations for Q4 in terms of the price per script, it is really strong 30% sequential increase for Q3, so we’re hoping you could — if you could provide a range that you’re comfortable sharing for Q4. And then the second question, I know we have not discussed guidance in terms of revenue, but it looks like consensus numbers are a touch above $50 million for the year. This is really achievable to us, but wondering if you could discuss your thoughts about how the current quarter is ongoing?

Peter K. MillerChief Executive Officer, Board of Directors

Keith, I’ll let Keith take both of those.

Keith GoldanChief Financial Officer

Stacy, good morning, thanks for the question. So with respect to your question on average net revenue per script for the fourth quarter, thanks for the comment on our 3Q performance. I’d just say that the performance was as expected and as we’ve guided. Going back to 2018, when we launched XHANCE, we’ve seen gradual increases as the years progressed and for the reasons that we’ve noted, the underlying market access that we have a strong — it’s remain pretty consistent around 75% and the way we have our co-pay assistance program structured as you know the — what we call the 0-30-50 program as patients continue to meet either out of pocket maximums or deductibles throughout the year, the amount of money that we contribute to the co-pay assistance decreases thereby increasing our average net revenue per prescription.

This year, I would say the one thing that’s been different is in reaction to the — in response to the pandemic, we did put in place what we’ve talked about publicly is the — what we call the assist program, which provided up to three prescriptions at no cost to new commercial patients. Again that was put in place in response to the pandemic. It really helped us achieve record market share in the second and third quarter, and was very well received and we expect that the benefits of getting those patients on board to continue but it did cost us some average net revenue per prescription in the second quarter. For the fourth quarter, I’ll just, we’re not going to give specific guidance, but I’ll comment that if you look historically, we’ve been above $200 per average net revenue per prescription every third quarter and fourth quarter from launch. And, our guidance remains the same that we continue to expect the yearly average net revenue per prescription to increase throughout the year because of the reasons I mentioned earlier.

With respect to revenue, we had, if you recall, we had revenue guidance out pre-COVID. We did withdraw that guidance as many companies did in response to the pandemic when we had our 2Q call, I believe, in May. And at this point, we’re not comfortable putting new guidance out there for the full year. And I’ll just — I will point though to the prescription growth that we’ve continued to see in spite of the pandemic, I think 11% Q2 to Q3 in TRx growth and the continued strength of the average net revenue per script, which I just talked about. So would keep both of those in mind as you’re thinking about what 4Q would look like.

Stacy KuCowen — Analyst

Thank you so much.

Operator

Next question, David Steinberg with Jefferies.

David SteinbergJefferies — Analyst

Thanks and good morning. I have three questions. So first one is, can you give us more color on the kaleo collaboration, and in fact are they actually starting to help generate script or will that be until next year? Update on refills, what’s the current thinking in terms of what you’re seeing in terms of average patient refills per year and then finally, and just thinking a few years, what’s your latest thinking Peter on — what kind of revenues you need for XHANCE to breakeven? Thanks.

Peter K. MillerChief Executive Officer, Board of Directors

Thanks, David. I appreciate the questions. As I said in my remarks, David, I’m really excited about kaleo. They just — their team has built a very strong business with our acute [Phonetic] product. So they know how to bid a business, they have pre-existing relationships already with roughly 3,000 prescribers they are going to call incrementally in addition to the other audience if it’s going to be overlapped with our territory managers. So I’m very, very excited about it. I think it’s going to take some time, David, to really see the impact of kaleo. We’re hearing it anecdotally already, for sure, we trained them literally, they really went out on their first calls in early October. So I think as the fourth quarter progresses, I think you’ll start to see impact and I think when you will really see impact is across 2021, is my expectation.

Regarding refills, again, I’m really encouraged David that, as a reminder, typical refills in the intranasal steroid category about two per year. So with typical INS, it’s about two refills per year. We came in believing that four was a reasonable target for the product and we have in fact gotten before and we’re still growing in refills. We’re currently between four and 4.5 [Phonetic] on a monthly basis and I expect at some point that’s going to start to top out David because there just isn’t — there is only so many months in a year, candidly, but it’s a really good clear indication that patients are really well satisfied with the product and understand the importance of using it every day, and that’s part of the messaging that we work on trying to deliver to patients about proper use of the product.

In terms of revenue, looking forward, and to breakeven, it’s probably better if I pass that to Keith. So Keith, I’ll let you sort of address that.

Keith GoldanChief Financial Officer

Yes, David, I’d just, I’ll make a comment that we’ve said before, we have a pretty robust infrastructure here. If you just look at our OpEx for last year, which was $125 million, our latest guidance right now is the updated guidance that we gave today is $127 million to $132 million for this year. So we have two years of basically flat OpEx. We’ve — obviously we’re going to be able to grow revenue quite substantially. That infrastructure, we are going to continue to get leverage on as we continue to grow XHANCE. So I’ll let you guys do the math, but we have robust gross profit margins, historically have been in the mid ’80s [Phonetic], and with an expense base that I think I’m not going to give guidance, but I think you can expect it to grow modestly, but not incrementally. Again we have a lot of leverage to get on our fixed cost base. So with that in mind, I think you can do the math in terms of where XHANCE needs to be to turn the corner. And finally, one of the comment, I’m making this again obvious, and you guys can do the math, but I’m glad you asked the questions on refills David because — we made the comment in the remarks that as we continue to build new prescription, that’s sort of — you caught the [Phonetic] top of the funnel that then turns into significant number of refills downstream. So as we have the combination of continuing to grow NRx and very high refill rate now and even continue to increase, it’s why we just feel really good about the business right now.

Peter K. MillerChief Executive Officer, Board of Directors

And the last thing I’ll add, David, is that, we have a pretty heavy investment in R&D, really on the D side this year and next year as we’re kind of full all in on the two Phase 3 trials exploring XHANCE for the treatment of chronic sinusitis with — per our guidance, we expect top line data in both of those trials next year. So after that, we have R&D optionality, I’ll say, so we can either choose to invest in new programs or the expectation should be our development costs in the R&D line should decrease in ’22 and beyond as those trials complete.

David SteinbergJefferies — Analyst

Okay, thanks.

Peter K. MillerChief Executive Officer, Board of Directors

Thanks for the question, David.

Operator

Next question, Brandon Folkes from Cantor Fitzgerald.

Brandon FolkesCantor Fitzgerald — Analyst

Hi, thanks for taking my questions and congratulations on the results in the quarter. And maybe just drilling down on the results in the quarter, can you just comment in terms of, do you think there is any benefit from a bolus of patients in terms of return to in-person visits in the ENT space? I think, maybe just commentary in terms of what you’re seeing in that in-person ENT space versus telemedicine post the end of the quarter and how we should think about that going forward? And secondly, maybe, and maybe you can into revisit [Phonetic] that intranasal steroid market, I see it continues to decline. Is that just COVID or are there other factors we should consider? And then lastly on CS, there is a competitor running a trial quite of ways behind you. Do you [Indecipherable] advantage is going to be significant in that space? Do you think in terms of, which products kind of used first is all going to come down to comparative data when they’re both [Phonetic] on the market.

Peter K. MillerChief Executive Officer, Board of Directors

I’ll take the majority it and then Keith you can jump in if you’d like on a couple of questions. Relative to a benefit from a bolus of patients in 3Q, I do not think that was the case at all Brandon. There was a little — on the surgical side you did see a pretty healthy return on the ENT surgery cases. But clinically, it was not a bolus of patients that you sort of immediately sort of showed back up in 3Q. We’re encouraged by the way that from anecdotal comments from physicians, there are clinical days and we obviously benefit — we get prescribed on a clinical day obviously as opposed with surgical days, that’s why I drew that distinction. But the physicians we talk with, on average, I’d say the patient volume on a clinical day is not quite back to where it was pre-pandemic, but probably in the 90% range. And I just had a dinner last night with leading physicians in the world and they’re seeing they believe by the way that they’re going to continue to see a reasonable return of patients. But it was not a bolus. It’s not something that really affected.

Relative to your question on telemedicine or in-person, certainly in the ENT space, they really don’t do a lot of telemedicine, because so much of the value that an ENT provides is an actual examination, endoscopically a visualization of what’s happening in the nasal cavity. So there is really minimal telemedicine in that space, and I don’t think there will be. Regarding allergy telemedicine, there is more telemedicine in the allergy space, but again because so much of the allergists do shots and do things that require an actual visit in an office, that specialty is another special that’s not quite embraced telemedicine. But the good news is, as I said, patients appear to be returning to reasonably close to where they’ve been historically.

Relative to the INS market, we have noticed Brandon that there has been a — the market has not quite back to where it was a year ago. It’s sort of approached it in the summer months. But as we head into the fall, the INS category is not quite back to where it was. I think the majority of that Brandon is COVID-related. Despite what I just said, we’re not quite back to the patient volumes that we were pre-pandemic. So I think that’s an impact. You do have an OTC option for the broader category of INS that can cause some of the decline in that category. But our best guess, if you will, is that the majority of it is probably COVID-related in terms of year-on-year comparison. Vic, I don’t know if you have anything to add.

Victor ClavelliChief Commercial Officer

Peter, I think you summarized that really nicely. I think the nice thing about XHANCE is that there are both clinical reasons why you would choose XHANCE and why you would diagnose the nasal polyps. And we’ve certainly been focused on helping physicians understand how they could do that through telemedicine or how they can do that in an office visit. And that’s sort of our approach.

Peter K. MillerChief Executive Officer, Board of Directors

Regarding the CS, I mean, I think we have two huge advantages in the CS area, Brandon. I think it’s based on current timelines assuming that things go well in our trials, we are going to be first, and we will be the first product that we’re aware of to ever get that indication. And as a reminder, by the way, you guys know this data, but the physician audience that we’re calling on only treats about 2.5 million to 3 million of the CRS patients that are being cared for, there are 7 million patients roughly being treated in a broader physician audience. And we believe the CS indication will enable a broadening to that audience. We think ideally via partnership, it also presents an opportunity to get back into the market to roughly 20 million people who are lapsed from physician care.

So we think the opportunity for CS just generally is a very, very big opportunity. I think if things progress the way they are progressing, we will be first and candidly Brandon, I just think we are a really optimal treatment for that population that we’re going to — we’ve established how well we work in chronic rhinosinusitis with nasal polyps is getting more and more and more recognized by physicians and the very simple idea of we have an inflammatory condition that is very difficult to reach behind the nasal cavity, we’re reaching it really effectively with our device. It’s a very simple compelling story. So I think we have advantage of being first and in my view, obviously a more compelling message.

Brandon FolkesCantor Fitzgerald — Analyst

Great, thank you very much. It’s very helpful.

Operator

Next question, Gary Nachman with BMO.

Rafay SardarBMO — Analyst

Hi, good morning. It’s Rafay on for Gary. I was hoping you could provide an update on XHANCE payer coverage and whether you anticipate any changes heading into 2021?

Peter K. MillerChief Executive Officer, Board of Directors

Thanks for the question. I always like to remind people, we really have good payer coverage as we sit here today. It’s a-I made this several times, Vic Clavelli has joined us from Pfizer, where Vic was running a very big business at Pfizer, and one of the things that impressed him was the coverage that we’ve achieved on the product. So, as a reminder, we have 75% to 80% of commercial lives have XHANCE as a covered benefit. Having said that, we were — we see wins on the horizon to actually increase that. I think I can talk about some wins we had just recently, right, Keith? So Blue Cross Blue Shield of Florida, we just picked up coverage in October of this year. Florida is a very big market for our business. So that’s a great win, that the team just very recently achieved and in some of the conversations that we’re having with payers, as I mentioned in the call, we’re really encouraged by the thought leader community in Rhinology, really more and more and more recognizing how XHANCE fits in the treatment paradigm for this disease.

And as that more and more gets recognized, there had been publicly — some of the societies have talked about a consensus algorithm in their meetings and we believe if that becomes more and more public, that gives us really good ammunition to go talk to the payers because it’s recognition by the thought leaders in the community of how to treat this disease, and we have line of sight to continue to grow that 75% to 80% commercial coverage and continue to expand coverage in Medicare and Medicaid.

So we feel — we do see improvement in that across next year.

Rafay SardarBMO — Analyst

Thanks. And then I was hoping you could talk a bit more about your explore program that you’ve mentioned in the past. What’s the expected duration of that program and how effective has it been potentially reaching new prescribers?

Peter K. MillerChief Executive Officer, Board of Directors

It’s been really effective. We had two waves of it. Unfortunately, it got interrupted by the pandemic. So we had couple of hundred physicians that we got into the program in the first quarter of this year and we now have several hundred more that we enrolled in the program in the third quarter of this year as we sort of got back post pandemic, and I’m really encouraged by, in terms of — it’s a little bit too early to read the real impact, but as a reminder of that program, we specifically targeted physicians we call dabblers. So, these are physicians who are writing the product. They’re just not writing it in the group that we want to get people into of that 15 or more XHANCE prescriptions in a quarter. So the goal is to move physicians from dabbling not being committed users to be being committed users and the real sort of ammunition we have on that is that we have an opt-in on the patient side on a survey of how they’re doing post-treatment of XHANCE. And that data is data that we are able to share with physicians obviously HIPAA-protected and confidential and we’re hoping that may have a real impact on physicians seeing the efficacy and the results in their own patients in addition to all the efficacy data that we share from our pivotal trials.

So it’s a little bit early to honestly read it, because the way we’re reading it is not how many prescriptions were written during the timeframe, we’re looking at, does it increase prescribing once the explorer patients have completed the roughly three months to six months. Early indications in the several hundred they’ve started running in the third quarter, it looks like it’s having impact. So — but it’s a little bit too early to tell.

Operator

Last question. David Amsellem from Piper Sandler.

ZackPiper Sandler — Analyst

Hi, this is Zack [Phonetic] on for David. Thank you for taking my questions. Just a couple of quick ones from me. First, could you provide an update on the current split between prescriptions written for patients with nasal polyps and those with chronic sinusitis? And then also just following up on the reimbursement front, could you just remind us of where you are on the Medicare Part D side? I think I remember you mentioned previously that you were working the asset [Phonetic] update on that front would be helpful. Thank you.

Peter K. MillerChief Executive Officer, Board of Directors

Sure. We haven’t really seen change relative to your — thanks for the question. Relative to the share of business if you will, that is in nasal polyps versus outside of nasal polyps, we haven’t seen any dramatic changes in that for the past year, year and a half, as a reminder, roughly about a third of the business. By the way in the dataset that we have, and I want to remind you that the dataset we have, it’s not a really perfect data set because physicians don’t have a great incentive to actually say whether it’s nasal polyps or chronic rhinosinusitis or allergic rhinitis. And as a reminder, they can code for chronic rhinosinusitis, and they may, in fact, be a nasal polyp patient. So the data is not a terrific data source, but in that data source roughly a third of prescribing is in nasal polyps, roughly two-thirds is outside nasal polyps. Relative to Medicare Part D, we actually have reasonable coverage there in terms of the number — more than the majority of prescriptions in Medicare Part D currently are getting covered.

And so, but we’d like to improve that. And as we think about improvement there, I think it’s — I don’t think we’re going to see real improvement in Medicare Part D in the early parts of 2021. I think we’ll see the real impact of Medicare Part D probably in 2022. But I want to remind you that is not a very significant part of the overall business for intranasal steroids and for our business specifically. It’s really a commercial business.

ZackPiper Sandler — Analyst

Okay, great. Thank you.

Peter K. MillerChief Executive Officer, Board of Directors

Okay. With that I want to thank everybody for joining us on the call. And as I said, we’re really excited about sort of what lies ahead for the company and we look forward to talking to you next year.

Operator

[Operator Closing Remarks]

Duration: 42 minutes

Call participants:

Jonathan NeelyVice President, Investor Relations and Business Operations

Peter K. MillerChief Executive Officer, Board of Directors

Keith GoldanChief Financial Officer

Victor ClavelliChief Commercial Officer

Stacy KuCowen — Analyst

David SteinbergJefferies — Analyst

Brandon FolkesCantor Fitzgerald — Analyst

Rafay SardarBMO — Analyst

ZackPiper Sandler — Analyst

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