Earnings Call Transcript - BHVN Q4 2020

Operator, Operator

Good morning, welcome to Biohaven Pharmaceutical's Fourth Quarter 2020 and Full Year Results Call. At this time all participants' lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference call may be recorded. I would now like to hand the conference over to Biohaven's Chief Operating Officer, Clifford Bechtold. Thank you, and you may now begin.

Cliff Bechtold, Chief Operating Officer

Good morning, and thank you, and welcome to the Biohaven fourth quarter 2020 earnings call. Speaking on today's call are Dr. Vlad Coric, our Chief Executive Officer; Jim Engelhart, Chief Financial Officer; BJ Jones, Chief Commercial Officer; and Dr. Elyse Stock, our Chief Medical Officer. Earlier this morning, we issued a press release announcing the fourth quarter 2020 highlights and a summary of our year-end results. A copy of this press release can be found on our website at biohavenpharma.com and will be on file with the 10-Q later filed today. Before we begin, let me remind everybody that today's discussion contains forward-looking statements based on the environment as we currently see it and includes risks and uncertainties. A list and description of the risks and uncertainties associated with an investment in Biohaven can be found in the company's filings with the US Securities and Exchange Commission. Please be aware that you should not place undue reliance on the forward-looking statements we make today. For this call, we will focus on non-GAAP financial measures with detailed descriptions of GAAP and non-GAAP analysis in our filings. An archive of today's call will be posted on the Biohaven's website in the Investors section. And with that, I will now turn the call over to our CEO, Dr. Vlad Coric.

Vlad Coric, Chief Executive Officer

Thank you, Cliff. Good morning to our investors and thank you for joining the fourth quarter earnings call representing our third full quarter of earnings since our launch of Nurtec ODT. I am pleased to report the company continues to excel in delivering a paradigm shift in treatment for migraine, and more broadly achieving our strategic goals across multiple areas to grow value for patients and investors in years to come. Our 2020 performance was simply outstanding, and we exceeded expectations across multiple fronts. Nurtec ODT was approved approximately one year ago today and despite facing what was perhaps the greatest challenge of any new drug launch with the emergence of the pandemic, the Biohaven team effectively and safely delivered our new migraine medication to patients. To date, we have achieved over 450,000 prescriptions of Nurtec, and access for patients is broad with greater than 89% commercial coverage. The progress of Nurtec has been exceptional with fourth quarter net revenues of approximately $35 million representing an increase of over 98% from the third quarter, certainly a testament to our strong commercial team and the entire organization that fulfilled our responsibility to patients to ensure the drug supply chain remains strong during the pandemic, and together we alleviated suffering by delivering this novel migraine therapy to patients. I'm also pleased to report this morning that our Nurtec regulatory submission in Europe was recently accepted for review by the European Medicines Agency and is currently under review. We are excited about the potential of bringing Nurtec to patients around the globe and the European filing leverages the acute and prevention data packages from our FDA filings. The EMA package is the first European filing for a dual-acting migraine therapy for both acute and preventative treatment in one regulatory submission. We believe that Biohaven has the most broad and differentiated CGRP antagonist platform in the pharmaceutical industry. Our strategic goals are straightforward: first, maximize patient and shareholder value by continuing to execute on our Nurtec launch. Migraine is a common and disabling disorder. We must efficiently deliver this new drug to patients and its differentiated profile to help them better treat their illness. We believe that our one-dose efficacy for returning patients to normal by 60 minutes and long-lasting efficacy for two days after a single dose will ultimately win the oral CGRP class. Third, we will grow the market in acute, but we will also expand this important drug to patients with other indications through disciplined lifecycle management including the pursuit of indications such as prevention of migraine, pediatric migraine, post-traumatic headache, and other pain-related disorders. Finally, we are leading the way by establishing new treatment paradigms and approaches. This starts with our strategy to establish Nurtec as the first and only dual-acting migraine therapy for both acute and preventive therapy in one pill. Never before has migraine been treated with one medication across the spectrum of acute to prevention. Additionally, we're following the science of CGRP antagonism by expanding into several non-migraine indications, including psoriasis and asthma. Nurtec is certainly the tip of the arrow when it comes to the Biohaven CGRP franchise. And we wanted to update you regarding its market growth on this slide. We continue to see robust and linear growth in the launch of Nurtec. Although we were second to market by a couple of months, our differentiated profile continues to drive demand from patients and the new-to-brand Rx market share continues to almost be evenly split between the two approved oral CGRP antagonists. I'd like to thank our entire commercial organization for their dedication and delivering such strong market performance in 2020. For much of 2020, we heard directly from patients and their experience on Nurtec was quite different from past experiences with other standard care medications. We believe that Nurtec has the potential to become the first-line standard of care therapy for migraine given its efficacy and safe profile. This slide shows that we are just at the very beginning of our market penetration compared to the triptans. Over the last year, there were approximately 16 million prescriptions for triptans, and this slide shows that the oral CGRPs are steadily making progress by increasing market share compared to the triptans, and this is mainly due to our differentiated profile. This slide does not include the separate large population of patients who can't take triptans due to contraindications or patients who fail triptans. We believe that there is significant growth ahead for the oral CGRPs as the leading class of drugs for migraine. When we look at the CGRP targeting agents as a whole, it remains evident that oral CGRP antagonist has driven the lion's share of the overall CGRP market growth in 2020. This slide suggests that more effective acute therapy results in diminished need for injectable preventative agents. We believe oral CGRP antagonist for the acute treatment of migraine will ultimately grow into a $4 billion to $5 billion annual market in the US alone. And that’s for the acute indication only. Given the projected size of the overall market, we remain focused on investing in the long-term success of Nurtec in growing the overall CGRP market. As we look to the future of our CGRP franchise, one of the biggest limitations of migraine therapy to date has been the bifurcated treatment paradigm. Since no single migraine therapy could previously treat acute episodes and also prevent the next attack, patients have had to historically use one medication to treat acute episodes and a separate medication to prevent migraines. This has resulted in polypharmacy, which, of course, is complicated by different side effect profiles of each additional therapy, drug interactions, and added costs for payers and patients. We hope to bring an end to this treatment mechanism. As we look towards our upcoming sNDA with prevention in the US, and our recently submitted dual therapy filing in Europe, we want to empower patients and doctors to treat migraine across its spectrum. We want to get rid of these two different categories of acute and prevention and think of one. We believe the future state can be a single drug that treats acute episodes and that same drug at the same dose can simply be used more frequently to prevent migraines. If approved for prevention in 2021, Nurtec will represent a great advancement for millions of patients as we bring forward the first dual therapy oral CGRP antagonist for both the acute and preventive management of migraines. Patients deserve a unified treatment of migraine across its entire disease spectrum and Biohaven hopes to deliver on that vision this next year. Think about the value proposition and simplicity that this will bring to patients suffering from migraine: the one treatment that adds fast, lasts, and prevents future migraines; one drug, one dose. The patient and physicians simply change their frequency of use to meet each individual patient's need. Our vision is that Nurtec will become the one treatment that can deliver relief across the migraine spectrum from acute to prevention. And Nurtec is going to continue to be a key growth driver for our company this next year and beyond, but we have many other value inflection points for 2021 and future years. While the commercial organization continues to focus on driving sales of Nurtec, the rest of the organization will be equally focused on driving new value inflection milestones in the future. This slide summarizes the breadth of our pipeline and lifecycle management opportunities for Biohaven. Outside of the US, we expect to see global approvals of Nurtec beginning in 2021 and have already established distributor agreements in certain geographic regions. While we await our EMA approval for dual-acting, we will advance discussions regarding ex-US partnering of Nurtec in Europe and other major markets. In addition to our lifecycle management of Nurtec, we expect to have top-line data from intranasal zavegepant by the end of the year, and if positive, we'll be ready to file zavegepant as the first intranasal CGRP antagonist for the ultra-rapid treatment of migraine. In the oral version, zavegepant is also set to begin clinical testing shortly in both migraine and non-migraine indications. Outside of the CGRP antagonist franchise, we also have important Phase 3 study readouts in our myeloperoxidase inhibitor and glutamate modulation platform. Verdiperstat, a drug thought to decrease brain inflammatory pathways, is expected to have top-line results in both MSA and ALS later this year. Troriluzole, our glutamate modulator, is expected to have top-line data in the FDA by the end of the year or early next year. We are also excited that our wholly-owned Asia Pacific subsidiary BioShin is driving to file a public offering in either the Hong Kong or Shanghai Exchange by the end of the year. Nurtec will be an important new treatment for the over 80 million Chinese suffering from migraine. Biohaven's robust pipeline is poised to continue to deliver value for patients and investors for the long term. Our R&D team has delivered on past milestones and has an exciting late-stage portfolio that we believe will continue to create value over the next year and beyond. To summarize, we have a strong portfolio of product opportunities that will deliver value for patients. Our goal is to continue to work hard to improve the lives of the patients suffering from neurologic and neuropsychiatric disorders and continue to deliver best-in-class therapies from our promising pipeline for patients. With the establishment of the new bio-specific platform and Biohaven labs, you will hear a lot more about our antibody enhancers and extracellular degraders in future years that will enable us to branch out further beyond neuroscience, build additional partnerships and deliver more medicines across multiple areas of serious unmet need. I will now turn it over to Jim Engelhart, our CFO, to review the detailed results of our financial performance in the fourth quarter and the year-end. Jim?

Jim Engelhart, Chief Financial Officer

Thank you, Vlad. Good morning, everyone, and thank you all for joining today. Nurtec ODT sales achieved sales of $35 million demonstrating another strong performance versus the prior quarter increasing 98% to $35 million versus Q3 2020 driven by strong prescription volumes. As we previously communicated, these results were not impacted by changes in inventory levels. Looking ahead to 2021, while we will not be providing guidance regarding sales, spending, or earnings, we do expect our first quarter sales to be impacted by the seasonality of patient deductibles and prescription re-authorizations typically experienced in our business. Continuing down the P&L for SG&A, SG&A expense in the quarter on a non-GAAP basis was $114 million compared to $66.8 million over the prior-year quarter, representing an increase of $47.2 million. Most of our SG&A cost reflects our commercial investment in Nurtec ODT and the increase represents the investments in the launch of Nurtec this year. SG&A also includes general and administrative costs including finance and legal as well as other administrative functions. R&D investment in the quarter on a non-GAAP basis was $57.8 million, which was flat to the prior year quarter. On EPS, we reported a non-GAAP adjusted net loss for the three months ended December 31, 2020 of $161.7 million or $2.69 per share loss compared to $124.4 million or $2.38 per share loss for the same period in 2019. Turning to our balance sheet, we continue to be well-capitalized with $357.4 million in cash, marketable securities, and restricted cash as of December 31st, 2020. In addition, we have immediate access to $225 million from our debt facility as Sixth Street agreed to eliminate the minimum sales threshold clause in our prior agreement as a result of our strong fourth quarter 2020 sales performance. Finally, we anticipate $300 million of additional capital from our Series B preferred zavegepant development funding financing with Royalty Pharma last year. With that let me turn it over to BJ Jones, our Chief Commercial Officer. BJ?

BJ Jones, Chief Commercial Officer

Thank you, Jim, and good morning, everyone. 2020 has been a pivotal year for Biohaven in many respects. We successfully established our commercial organization in the first quarter last year and swiftly launched Nurtec ODT following its approval. We recognize the market challenges ahead, but we are optimistic about our capabilities, driven by Nurtec's distinct profile and valuable benefits for patients with significant unmet needs. Reflecting on the full-year results for 2020, which encompass about nine months of market activity, we are thrilled with Nurtec ODT's achievement so far and the positive difference we’ve made in the lives of numerous migraine patients and their families. We anticipated launching Nurtec in a highly competitive environment filled with well-established pharmaceutical companies in neuroscience and migraine. However, we did not foresee launching during a global pandemic. As we concluded our fourth quarter, the Nurtec story continues to gain momentum in the marketplace. The oral CGRP class is rapidly expanding due to the considerable unmet needs among migraine patients, fueled by two successful oral CGRP launches in 2020. Nurtec ODT is well-positioned for significant growth and leadership in what will become a sizable market. Our fourth quarter results were robust, with Nurtec net sales rising by 98% compared to the previous quarter, benefitting from consistent week-over-week volume growth despite the holiday-induced fluctuations. We are performing strongly across all launch metrics as both prescriber and patient engagement continue to rise. We are optimistic about growth trends and ongoing research that indicate significant potential in this market, aligning with our goal to lead the CGRP class and expand the acute market. Recent Spherix market research indicates an upward trend in neurologists' self-reported and projected shares for oral CGRPs over time, accompanied by a decrease in triptan use. We plan to invest strategically to capture a substantial share of the forthcoming growth, as we foresee oral CGRPs becoming the preferred acute migraine treatment in the mid- to long-term. Additional data shows that around 96% of neurologists view Nurtec ODT as an improvement over triptans, with nearly half of these specialists expressing an intention to choose Nurtec as their preferred acute migraine treatment over other oral options. Although this feedback comes from specialists, we expect Nurtec's preferred status to resonate with the broader primary care community as well. There are many examples of this specialist to primary care provider dynamic across various disease states, including cardiovascular, metabolic, and major depressive disorders. We attribute our success to the unique perception of Nurtec not only to its groundbreaking product profile but also to our execution excellence. As a developing company launching our first approved product, we have prioritized working more efficiently and effectively than our competitors. Our ongoing commitment to a clear and compelling strategy allows for optimized brand promotion through a mix of innovative and traditional channels. We have been prudent with our resources to ensure we are targeting both current high volume areas and key clinical influencers who will shape the larger primary care market in the future. While this approach is novel, it requires tremendous discipline, especially during a global pandemic when face-to-face time with physicians has been limited. Since May, as physician offices have started reopening, Biohaven has effectively matched AbbVie’s share voice with much fewer sales representatives—under 60% of our competitor's sales force. Achieving promotional activity share is crucial, but impact comes from engaging the right customers adequately with the correct messaging. In a challenging year for physician accessibility, our sales specialists partnered with over 27,000 prescribers, resulting in over 450,000 prescriptions for Nurtec ODT to date, gradually narrowing the gap in total prescribers relative to our competitor, which had a two-month head start with non-COVID-related launches. It's also worth noting that Nurtec prescribers are more productive, writing more prescriptions per doctor than Ubrelvy prescribers. We employ a similar strategy with our direct-to-consumer investments, leveraging a targeted and efficient media plan that has given us a leading competitive voice while spending about half of our competitor's budget. With continuous monitoring of consumer engagement and feedback, we refine and optimize our evolving engagement platforms to attract and enroll patients. Perhaps the most significant metric is the feedback from people suffering from migraines. With increased brand visibility and trial since launch, we have seen a widening gap in patient satisfaction between Nurtec and Ubrelvy. This growing preference, paralleling that of neurologists, is a strong indicator that Nurtec is on track to achieve market leadership in this rapidly evolving space, potentially surpassing triptans as the standard acute migraine treatment. Our dedication and commitment are driven by our patients and their pressing unmet needs. The over 1,000 weekly social mentions of Nurtec ODT and the powerful testimonials we receive are incredibly motivating. We are especially amazed that around 80% of Nurtec’s social mentions reflect a positive emotional response. So what’s next? Vlad mentioned at the start that we expect an FDA decision regarding our preventive indication approval by the end of Q2, and we have filed our regulatory package for dual therapy in Europe as we focus on globalizing our CGRP antagonist franchise. We are preparing to revolutionize migraine treatment with a first-in-class, paradigm-shifting solution that meets patient needs across the migraine continuum with just one pill and a consistent dose shown to be safe and effective for both acute and preventive migraine therapy. In closing, we remain enthusiastic about the short- and long-term prospects for Nurtec ODT in this rapidly expanding oral CGRP market. We are optimistic that as COVID infection rates, hospitalizations, and deaths decrease, access for physicians will improve and stabilize in the summer months, significantly enhancing patient access to innovative treatments. If we can achieve these results during a pandemic, just imagine our potential in a more favorable environment. In the meantime, we are committed to forging innovative partnerships with our customers to meet their patients' needs. With that, I’ll turn it over to my partner, Elyse.

Elyse Stock, Chief Medical Officer

Thank you, BJ. I'm pleased to report the significant progress made this quarter in our research and development efforts to deliver new therapies to patients. We are advancing across several programs, particularly in our CGRP franchise, myeloperoxidase inhibitor platform, and glutamate modulating agents, and we're also making strides with other innovative targets for serious neurologic disorders. We’re excited to have expanded our CGRP platform this year. Nurtec ODT remains our key product for the acute treatment of migraine, with an evaluation for prevention underway by the FDA. The zavegepant is also moving forward with an intranasal formulation currently in clinical trials and an oral formulation set to begin clinical studies soon. We've enriched our portfolio with new, next-generation CGRP antagonists through our collaboration with Sosei Heptares, and I will share key updates on our progress. Our selection of small-molecule CGRP inhibitors provides us with significant opportunities and the potential for major commercial success. As mentioned by Vlad and BJ, Nurtec has achieved notable commercial success in the U.S. The R&D team has completed our supplemental NDA for Nurtec ODT for migraine prevention and recently filed for a dual-acting indication in Europe. The ability to use a single medication for migraine treatment is set to enhance the treatment model and positively impact many individuals living with this condition. We are diligently focusing on lifecycle management to broaden Nurtec's indications and expand its availability to various regions worldwide. Extending our lifecycle management beyond geographical boundaries and dual-acting status is critical for Biohaven, as it will provide essential information for patients, healthcare providers, and payers. We plan to explore Nurtec in several areas similar to migraine. In terms of non-migraine applications, we’ve initiated a preliminary study in plaque psoriasis and have plans for a study in asthma this year. We will continue to push forward with other previously undisclosed indications next year and aim to broaden our trials involving multiple CGRP antagonists. As we pursue the zavegepant program, which includes both intranasal and oral formulations, an acute treatment Phase 3 study with intranasal zavegepant commenced in October after positive Phase 2 results. This formulation could offer a quicker effect onset. We are preparing to initiate the oral formulation in a Phase 3 study in the first half of this year and will also evaluate zavegepant in various undisclosed migraine and non-migraine areas. The newest assets in our CGRP antagonist portfolio are those acquired through our recent collaboration with Sosei Heptares, which provide numerous possibilities for expanding our CGRP platform and allow for customization of each structurally unique compound. Our extensive experience with this mechanism of action and our diverse assets will support optimization for different applications. CGRP is a crucial pathway linking the immune system and central nervous system. We’re actively engaged in the CGRP franchise and will explore multiple non-migraine applications over the next few years. Biohaven's pipeline includes both stable opportunities in CGRP lifecycle management as well as riskier, high-reward investments in our glutamate and myeloperoxidase inhibitor platforms. Our glutamate modulating platform represents one of the high-risk, high-reward ventures. Troriluzole has recently completed enrollment for a Phase 3 study in spinal-cerebellar ataxia, with top-line results expected between late 2021 and early next year. The Phase 3 program for OCD started last year, with enrollment in the first of two planned studies, and the second study commenced earlier this quarter. These studies are informed by significant insights from previous proof of concept OCD studies we conducted. Glutamate, being the most prevalent excitatory neurotransmitter in the brain, is crucial, and we believe that troriluzole has the potential to advance the field in several areas which may lead to expansions. Concerning our MPO platform, the myeloperoxidase inhibitor trial targeting multiple system atrophy—a rare and fast-progressing disease with FDA Fast Track designation—is set to release top-line data by year-end. The ongoing Mass General Healey study testing this agent in ALS is also expected to produce results by the end of the year. Biohaven is targeting three severe diseases: multiple system atrophy, amyotrophic lateral sclerosis, and spinocerebellar ataxia, with two Phase 3 readouts anticipated by year-end and the potential for three global orphan drug approvals by 2023. This year, we acquired a series of novel assets from Biohaven labs to further enhance our translational discovery platform. Our early pipeline is robust and includes antibody recruiter molecules, multimodal antibody therapy enhancers known as MATEs, and molecular degraders of extracellular proteins. Our degrader platform uses the body's own mechanisms to target and eliminate certain circulating protein pathogens implicated in numerous diseases. We aim to advance two key assets from Biohaven labs to IND status later this year. I'll share one significant near-to-clinic opportunity from Biohaven labs: our COVID-19 MATE program, which received funding from the Bill and Melinda Gates Foundation to expedite development. The MATE technology uses a peptide that attaches to IVIG and targets the COVID-19 spike protein to achieve three objectives: neutralizing the virus, inducing immune cell-mediated clearance of the virus, and providing long-term vaccination effects. Our preclinical studies show that our asset binds to viral material and promotes antibody-mediated cellular clearance of the viral material, similar to convalescent plasma, and exhibits viral inhibition. We are eager to advance this program in vivo. You will hear more about these innovative bi-specific platforms in the coming years. We expect our early pipeline to introduce exciting compounds across various domains in the future. We are enthusiastic about the significant opportunities presented by these platforms and will continue to make strategic decisions throughout our portfolio, encompassing both external partnerships and internal projects. Our pipeline is promising, and we are dedicated to advancing these strong platforms and programs. We are very active and remain committed to following the science while keeping patient care at the forefront of our efforts. It is a privilege to share this with you, and I will now turn the call back to Vlad. Thank you.

Vlad Coric, Chief Executive Officer

Thank you, Elyse, BJ, and Jim. In closing, Biohaven has demonstrated robust growth in terms of the commercialization of Nurtec, an important maturation of our late-stage neuro innovation pipeline. We expect continued market expansion of Nurtec in migraine and anticipate at least four pivotal trial readouts over the next year. We have the potential for multiple NDAs over the next couple of years and important growth as a company ahead. Before opening up to Q&A, I'd like to end by thanking the entire Biohaven team for the relentless commitment and value creation for patients and investors. I'd also like to thank all the patients, their family members, and investigators who participated in our clinical trials and help advance clinical care in the area of neuroscience. We must continue to work hard to bring novel treatments to patients suffering from diseases. Finally, thank you to our visionary investors who have helped fund our studies and bring Nurtec to patients. We'd now like to open it up to questions. Operator?

Operator, Operator

Thank you. We'll now be conducting a question-and-answer session. Thank you. And our first question is from the line of Charles Duncan with Cantor Fitzgerald. Please proceed with your question.

Charles Duncan, Analyst

Okay, thank you for taking my question. Vlad and team, congratulations on a very good year execution. I had a quick question regarding the current situation with Nurtec in terms of persistence. On slide 25, you shared some data on patient satisfaction. And I guess I'm wondering if you can provide any color on the current persistency that you see in terms of patients and perhaps provide a little bit more information on what that slide tells us?

Vlad Coric, Chief Executive Officer

Yes. Thanks, Charles. I appreciate the question. If you recall back to that open label one-year study we did in 1800 patients that looked at the frequency of use, and it’s exactly what we expected. That was a very large study, and it basically shows that their use of Nurtec mirrored the number of migraines you had per month up to a certain point. That is, if you had more than 14, you didn't need Nurtec more than every other day, and that was the genesis of our prevention strategy as well as our 8-packs, right? We know that eight pills will cover the vast majority of patients' acute needs. And that's exactly what we're seeing in our refill rates reflecting that. So if you have four migraines per month, you typically need four pills, and an 8-pack lasts you more than a month. If you have eight, you typically need eight, and that's a month’s supply. Without getting into particulars, since we don’t disclose the exact refill rate, it’s right in line with what we thought, Charles.

Charles Duncan, Analyst

Okay, that’s helpful. And then regarding the sNDA for prevention and recent filing to the EMEA. I guess, I'm wondering if there is any color you can provide on the interactions with the agency regarding that sNDA or any new observations or trigger points that caused you to file the EMEA for the dual filing or dual use recently.

Vlad Coric, Chief Executive Officer

Yes. What I can say, just like we were in a similar spot last year with our acute, we're in the same kind of spot in prevention. We're past our mid-cycle review and have not received any comments past mid-cycle, so we'll take that as a very encouraging sign. And the US package really forms the whole basis of the European dual-acting. In Europe, we wanted a new special indication, and we waited for the prevention data in the US filing to be complete before submitting that in Europe where we think the dual-acting filing will be very important to differentiate us. So right off the bat, we would like to come out with the first dual-acting in Europe. And by then, hopefully, we will have that indication in the US as well.

Charles Duncan, Analyst

Okay, very good. Thank you for taking the questions.

Operator, Operator

Our next question is from the line of Paul Choi with Goldman Sachs. Please proceed with your question.

Paul Choi, Analyst

Hi. Thank you. Good morning, everyone. And let me also offer my congratulations, not only on the quarter but a great 2020 as well. I want to maybe start with one commercial question and just, can you maybe just comment on recent trends and what is the sales force hearing on the field? Is the reopening increasing the level of engagements or are authorizations and co-pays still sort of normal trend here?

Vlad Coric, Chief Executive Officer

Yes, thanks Paul, and I'm going to turn it over to BJ to answer that question.

BJ Jones, Chief Commercial Officer

Yes, Paul, thank you for the question. And it's a good one. Obviously, we know there has been kind of this impact from what was the COVID surge. There is the general Q1 seasonality, but at this point because of the decline, frankly, in numbers, offices are opening up. Clinicians are starting to see certainly more patients, and we're actually very bullish about that. I mean the hope obviously is it accelerates; that’s what we're pushing to see, but we like the trend we're seeing currently and don't expect to really see anything go sideways in the coming weeks.

Vlad Coric, Chief Executive Officer

Yes, I just want to add to that, that when you look at last year's performance, which really was remarkable for any launch here, that was done in a very difficult environment, and so the team has demonstrated that we can launch and do well in the most difficult environments. BJ said, we're seeing things finally start to open up with rates decreasing with COVID, and we think that's only going to increase our outlook. When we were back in early fall, I think we actually expected even higher net revenues by the fourth quarter, but we were really in the country that was hit hard by a surge in COVID late fall, early winter, and that did decrease access to physician's offices despite the fact we did very well. We think we would have done better if it wasn't for COVID. And now as we're loosening up from COVID, we're seeing the increase in access again. So I think those are all really exciting and optimistic signs that we should continue to do well as COVID relents.

Paul Choi, Analyst

Okay, great. That's very helpful color. And then as my follow-up, I want to ask a regulatory question on the M&A filings specifically with how you guys are thinking about sort of book-ending the stop and starts. What sort of the review cycle might be like with the EMA, and if they have questions on one of the indications, does that put the other one at risk potentially even if it's clean?

Vlad Coric, Chief Executive Officer

Yes, great question, Paul. Appreciate it. So we had previous discussions with EMA before submission, so we had an ability to assess the dual-acting indication and that’s where we landed on. So we're confident that that package is independent of the US if I understand your question correctly. So they'll view it according to the regulatory guidance in our interactions with them independent of what happens in the US. And timelines, we're not going to go into specifics, obviously, because of the competitive nature of others knowing exactly when we might launch in Europe. I think today we disclosed for the first time that we have been through the validation process, our filing has been accepted, and we can't give specific guidance on approval dates just yet, but thanks.

Paul Choi, Analyst

Okay.

Vlad Coric, Chief Executive Officer

Thank you, Paul.

Operator, Operator

Thank you. The next question is from the line of Tyler Van Buren with Piper Sandler. Please proceed with your questions.

Tyler Van Buren, Analyst

Hey, guys. Good morning. Congratulations on all the progress. Just wanted to ask about a couple of topics. The first one is just a follow-up on Jim's comments about patient deductibles and prescription re-authorizations in Q1, which could potentially affect gross net quarter over quarter. Is that pretty standard impacts that you see with other drugs or is there anything specific to Nurtec maybe with respect to the re-authorizations? And then the second topic is on once prevention becomes available, hopefully, with an approval here relatively soon, how does the sales message change? And does winning contracts become that much easier now that you guys are approved for two indications relative to Ubrelvy?

Jim Engelhart, Chief Financial Officer

Yes. Good morning, Tyler, and thanks for the question. So as it relates to gross to net in the first quarter, so as we said it really is just the nature of our business, and these are things like deductibles, patient deductibles and prior authorizations, it’s really a reset. When you start out the new year, deductibles start over and prior auths have to be collected again and that's really what's driving that at this quarter.

Vlad Coric, Chief Executive Officer

Thank you, Jim. Tyler, regarding the messaging on the dual-acting and prevention aspects, you might have caught the initial insights in today's slides. We intend to be disruptive in this area, as we have for years with this strategic approach. Our goal is not to separate acute treatment from prevention after the approval but to discuss the comprehensive treatment of migraines. This is what sets us apart, and it’s a strategy that others currently lack. Even if competitors shift to this approach in the future, we will maintain a significant advantage. Tyler, you have expressed your personal experiences with migraines, and you likely understand how impactful it is for patients to have a single pill that can effectively manage their migraine, allowing control over how often they need it for acute treatment. For those with infrequent migraines, it may only be necessary a couple of times a month, while those with frequent migraines can increase their use accordingly. The empowerment from having one drug that serves both purposes is a key benefit for patients. There are also notable advantages for payers since they won't need to cover multiple medications, and this will be our focus moving forward. In terms of the payer and market access landscape, we believe that having approval for acute treatment provides a competitive edge, as illustrated by our data on monoclonal antibodies. We are confident that effective acute treatment reduces the risk of chronic migraines. Thus, an essential aspect of prevention approval is ensuring that patients first effectively manage their acute episodes, with only those who truly need it utilizing the every-other-day treatment approach. We are eager to challenge the existing norms in migraine treatment across the board and to position our product as first-line therapy. Conversations with patients reveal significant contrasts in their experiences with triptans and CGRPs. There is no subtle difference in their feedback; our weekly social media interactions showcase how our product has transformed patient lives. This represents a fundamental shift, and it seems more people are beginning to recognize that. Thank you, Tyler.

Operator, Operator

Our next question comes from the line of Laura Chico with Wedbush. Please proceed with your questions.

Laura Chico, Analyst

Good morning, and thank you for taking my question. I just, you know, one question we keep getting is with respect to the Q1 trends. Just out of curiosity, could you talk a little bit about perhaps your current sampling efforts? And I know you mentioned a couple broader dynamics that could be potentially impacting gross net in the first quarter, but kind of curious how you might have been shifting your strategy in recent weeks? And then second clarification question, just on the term loan with Sixth Street. You mentioned the revenue provision was dropped; any additional color you can provide there. I think you mentioned in the 4Q trends but curious if there was anything about the first quarter that's being observed that contributed there? Thanks.

Vlad Coric, Chief Executive Officer

Yes. Thanks so much, Laura. Just on that second piece right off the bat, due to the strong fourth quarter performance, Sixth Street believed we were already on our trajectory to have the revenue requirement, and so it was a pretty straightforward discussion to get it removed, and so we'd like to thank Sixth Street for being proactive in working with us to remove that, so that was accomplished pretty easily. Jim, do you want to add anything to that?

Jim Engelhart, Chief Financial Officer

No, I think you summed it up. They saw it as we did in derisking the situation, and we moved forward with them on that.

Vlad Coric, Chief Executive Officer

Yes. If you look at the first quarter, as we told folks previously, look, you can expect some turbulence around these GTNs, but overall, you're going to see improvement over time, right? The first quarter is no stranger to the headwinds of every single launch, and every single company talks about this, right? First quarter projections always take a little bit of a head because of the need to start the calendar year over with new deductible, new prior offs, and there are programs that we institute to make sure access continues despite those headwinds. Then typically leads up the rest of the year. There is nothing more than the normal dynamic around that, that we expect for this year. BJ, anything else to add to that?

BJ Jones, Chief Commercial Officer

No. The other thing I'd say just to support that is the sampling strategy is the same. We've continued to make samples available near to our primary customers, and we also see a bit right, especially in the last couple of weeks, a bit of a hit to overall prescriptions, not just within our own area but across the industry as a whole because of holiday and severe weather, right? There's a different impact there. We expect that to bounce back, frankly, this coming week.

Vlad Coric, Chief Executive Officer

And so that's a good point that whether it's COVID or if it's severe weather in Texas closing out big markets, access will always impact your RXs, and we see that across therapeutic areas. Again, I think looking forward to the coming weeks and quarters as those things relent, we should see a nice spike up in scripts. So, thanks, Laura.

Operator, Operator

Our next question comes from the line of Marc Goodman with SVB Leerink. Please proceed with your questions.

Marc Goodman, Analyst

Jim, I know you don't want to give spending guidance, but can you just give us a sense of how we should be thinking about spending this year? Just any comments you can make, and then Vlad, the lifecycle extension indications for Nurtec. I was curious if you could help us understand a few of these? And how big they are like pediatrics which I would think would be pretty interesting, just given there's no pediatric with triptans, I don't think there is and, but also a couple of the others just help size them and how fast do these ramp up, and are we seeing off-label on them now or are they really that much additive? Thank you.

Jim Engelhart, Chief Financial Officer

Yes, yes. Thanks, Marc. Yes, so as it relates to spending, you're right as we don’t give guidance. I can't go into any type of detail here, but I think as we've said before, our commercial organization that we have in place is fully staffed, and as far as our overall commercial spending, we will continue to invest in the brand. As we move through 2021, you've seen the success that we've had and the success of the program that we've been running, so we will continue to invest, but we can't go into details on the level.

Vlad Coric, Chief Executive Officer

And Marc, yes, we're particularly excited about the lifecycle management of Nurtec, and we have an amazing team here at Biohaven that's done it with other large brands. What's really important in this lifecycle management is that you have some very low-risk ventures that should quickly lead to sNDAs and approvals and expansion, and then some higher risk, which gives you even further upside. That’s important as an organization because as you know that most analysts and investors focused just on acute in the US; that kind of total $4 billion to $5 billion in projected sales just on acute does not even layer in these other indications. You can significantly increase your upside revenue just by expanding your label. In a very disciplined way, we've started with the low-risk ventures that are kind of migraine-related and then go into some non-migraine indications that provide even larger upside; some might say, could be even bigger than migraine itself, right? None of that's been factored into I think our valuation. So prevention is one aspect of lifecycle management in unifying the treatment of migraine. We’ve already begun and are well underway in enrollment for this pediatric effort. We get called by so many individuals in the pediatric age range who want access, and as you pointed out, triptans haven't been successful in this area and the side effects in the profile for adolescents who are school-aged are really important that they are not burdened by that. So that's another major priority in a very important lifecycle expansion for patient need but also future revenue. We have also important indications like post-traumatic headache, and when you think of mild concussions in this country, and the number of individuals who suffer headaches in the ensuing weeks and time period, that will be a very large and important indication to pursue. There are other pain disorders including things like trigeminal neuralgia, there's cluster headache; there's a whole host of them, and many of them have either begun or are about to begin. We think we will substantially increase the upside of Nurtec, and then outside of migraine, we have robust science about this mechanism, expanding into non-migraine indications for diseases like psoriasis and asthma. We've already started our proof-of-concept research in plaque psoriasis and we expect that trial to begin in asthma this year. There are several others that I think likewise, people will be happy with the size of the market. When you’re looking at lifecycle management, we want to deliver it so BJ and team can call on all these other indications and really grow the size of this market. So, thanks, Marc.

Operator, Operator

Our next question comes from the line of Vamil Divan with Mizuho. Please proceed with your questions.

Vamil Divan, Analyst

Yes. Thanks so much for taking the question. Following up on a couple of those, the one question we get is just around this prevention approval here in the US, and is there any sort of off-label use that you sense from that or is there any sign of potential approval? Do you see a big sort of catalyst to prescription trends based on that approval or is it something that's going to take a little bit more time to kind of really come through in the prescription data? And then on the spending side, and Jim, I appreciate you can't get into too much detail, but just trying to maybe better understand just how this past year went because of COVID and not having as much of the in-person interactions. So, I guess, was there a lot of you sort of stayed in 2020 that we should now assume you're going to be spending as you go into more in-person sort of activities in 2021 or did you pretty much spend what you thought you would have spent so you're kind of already on the normal sort of trajectory we should forecast going forward? Thanks.

Vlad Coric, Chief Executive Officer

Thanks so much, Vamil. We really appreciate the questions. So on the prevention fronts, I think when we, part of this, and they're appropriately conservative thing that look at, many of them are saying that they're waiting for the formal indication. We don't see a lot of off-label use, and any off-label use, we think, is pretty minimal at this point. From the slide of the triptans, this is a huge common disease market in acute. You're just seeing the very beginning of the acute story here, and we don't think there is much in prevention right now. Upon approval, there are two dynamics that I think as we get rid of these two categories; we like to see acute grow in prevention because people with more effective acute treatment should have less need for preventative agents. Those who need to increase the frequency are those that we already know have such high frequency they need it every other day. Obviously in the label, we'll be able to compete for those patients. We're excited about that approval that’s coming up. And, Jim, I’ll let you comment on the second half.

Jim Engelhart, Chief Financial Officer

Yes, sure, Vamil. Yes, the way I would answer that is the COVID in fact did not result in cutting back on program spending. It's just really a reallocation of programs. We didn't have the in-persons as we had hoped, but we reinvested those funds in other programs that gave us visibility and access.

Vlad Coric, Chief Executive Officer

Thanks, Vamil. All right, take care.

Operator, Operator

The next question comes from the line of Tim Lugo with William Blair. Please proceed with your questions.

Tim Lugo, Analyst

Thanks for the question. You mentioned a potential European partner for Nurtec, and obviously, with your filing now in place, it seems like you would want to sign one this year. Is that a goal for the team? What does your ideal partner look like? And is there a chance to do a launch in the region yourself?

Vlad Coric, Chief Executive Officer

Yes, thank you. Regarding our operations in different regions, aside from areas where we have distributors capable of handling things effectively, it would be more advantageous to have a partner. We aim to avoid increasing our global infrastructure costs. We believe partnering with the right company is more efficient. Although we cannot share too much detail, we have identified two types of potential partners: one being strong regional players and the other being global multinationals that could serve as a single partner. We need to act in the best interest of our investors, so we will carefully evaluate both types of partners. While having one global partner offers certain efficiencies, there are also robust regional partners in Europe and other locations. We will aim to strike a balance between these two options. Thank you, Tim. I appreciate your input.

Operator, Operator

Our next question comes from the line of Sumant Kulkarni with Canaccord. Please proceed with your questions.

Sumant Kulkarni, Analyst

Good morning. Thanks for taking my questions and nice to see all the progress of the company. I have a couple of questions; first, as the company prepares to blur the lines between prevention and acute treatment of migraine, how should we think about the potential of the sales per prescription metric to stabilize? At what point might the discretionary contribution to the gross to net difference go away? And second, conceptually, what is the company thinking about the potential to use antibody tweaking strategies to have applications in spreading monoclonal antibodies across the blood-brain barrier in a more efficient way? I'm asking this because of what opportunities and valuation potential might get unlocked especially relative to neurodegenerative diseases.

Vlad Coric, Chief Executive Officer

Thanks, Sumant. I really appreciate that. BJ, do you want to add something or Jim, I don't think you want to.

BJ Jones, Chief Commercial Officer

So I'll start, if I can, Sumant. So we're, again, we're very excited as it relates to the opportunity with what will be the preventive indication in this dual strategy that we talked about. As we get to coverage perspective and then maybe Jim can speak to the gross to net side, but we're confident that that dual therapy strategy will facilitate broad access for patients with the indication, and we expect to continue to maintain what is excellent coverage that we secured for acute. Our strategy will make sure that we're aligned from a gross to net, that’s gold standpoint if you will. The method is proprietary at this time, but we'll certainly execute against that.

Jim Engelhart, Chief Financial Officer

Yes, we expect GTNs to improve throughout the year, but we won't provide more details. Biohaven Lab is very excited about this platform. It’s not just about entering the brand; there are different approaches to achieve that. This also shows our interest in other indications beyond CNS-based ones. There are various methods to bioengineer antibodies across different therapeutic areas to enhance them. When considering biosimilars, view this as a superior approach. Existing antibodies can be bioengineered to improve their effectiveness or reduce side effects. Additionally, this advanced technology allows the body to use the liver to break down disease-causing extracellular proteins uniquely. While there are many intracellular degrader technologies, this one operates extracellularly and could be complementary. Thank you. I believe we have one more question before we conclude.

Operator, Operator

As you said, the last question is coming from Douglas Tsao with HC Wainwright.

Douglas Tsao, Analyst

Hi, good morning. Thanks for taking the questions. I appreciate you sneaking me in. So you just, Vlad, on the CGRP program, obviously you have a lot of sort of life cycle management or programs in development, I'm just curious in terms of the profile that you're looking to get with the oral formulation of the zavegepant, do you think that could be faster than the intranasal or what would sort of be the target for that? And then also with the Heptares program, I'm just curious if you could provide us any color in terms of what you're looking to do with that program as well? Just obviously a lot of, it's a great target, CGRP is a great target that you've got a lot of sort of irons in the fire.

Vlad Coric, Chief Executive Officer

Thanks, Doug. I really appreciate the question. The whole CGRP franchise represents multiple assets with different PK profiles that could suit these different disorders. The zavegepant will be important from a lot of the non-migraine indications because when you think about acute migraine speed of onset is important, but you'd want a different perhaps profile for other indications. So think of asthma, it's more chronically treated, or even psoriasis, right? Your profile would be different. That information will give us maximum flexibility. The Heptares assets that we brought in partnership with Heptares don't have. We're going to one alternate formulations, and the Heptares molecule is unique and has some attributes that the zavegepant and Nurtec don't have. So without disclosing those this morning, we have our eyes set on some other indications for that compound. What you're going to see is following the science across all these different disorders, and we're one of the few companies that have so many of these late-stage CGRP assets that we can use different ones for different indications and optimize its use. So thank you, Doug. And thank you everyone for joining us today. We deeply appreciate the support of our employees and investors as we move forward to deliver life-changing therapies to patients, and I can't wait to speak to you soon on the next quarterly report. Have a good day everyone.

Operator, Operator

This concludes today's conference. Thank you for your participation.