Ironwood Pharmaceuticals Inc Q1 FY2020 Earnings Call

Thank you for joining us for the Ironwood Pharmaceuticals First Quarter 2020 Investor Update Conference Call. I would like to turn the call over to one of our speakers today, Meredith Kaya. You may begin.

Good afternoon and thanks for joining us for our first quarter 2020 investor update. Our press release crossed the wire this afternoon and can be found on our website, www.ironwoodpharma.com. Today's call and accompanying slides include forward-looking statements. Such statements involve risks and uncertainties that may cause actual results to differ materially. A discussion of these statements and risk factors is available on the current safe harbor statement slide as well as under the heading Risk Factors in our annual report on Form 10-K for the year ended December 31, 2019 and in our future SEC filings. All forward-looking statements speak as of the date of this presentation and we undertake no obligation to update such statements. Also included are non-GAAP financial measures, which should be considered only as a supplement to and not a substitute for or superior to GAAP measures. To the extent applicable, please refer to the tables at the end of our press release for reconciliations of these measures to the most directly comparable GAAP measures. During today's call, Mark Mallon will begin with an overview of the quarter, Tom McCourt will review our commercial and pipeline performance and Gina Consylman will review our financial results and guidance. Mike Shetzline will be available during the Q&A portion of the call. We will be referring to slides via the webcast. For those of you dialing in, please go to the Events section of our website to access the webcast slides. With that, I'll turn the call over to Mark.

Thanks, Meredith and thanks, everyone, for joining us today. We hope you and your families are safe and healthy in these challenging and uncertain times. The Ironwood team is all in different locations today as we continue to work remotely. It has been just over one year since Ironwood was launched as a GI-focused healthcare company. We've made significant progress towards achieving our mission of advancing GI treatments and redefining the standard of care for millions of patients in need. We entered 2020 with a strong foundation and continued this momentum in the first quarter, highlighted by double-digit LINZESS prescription demand growth, the advancement of our 3718 Phase III program for refractory GERD, the completion of patient dosing in our 7246 Phase II trial for abdominal pain associated with IBS-D, and our fourth consecutive quarter of delivering profits. However, the first quarter was also marked by the beginning of an unprecedented time in the U.S. and around the world. The COVID-19 pandemic has caused substantial disruption to our lives, the healthcare system, and the economy. Navigating this pandemic is a primary focus for all of us right now, and so we plan to spend a good portion of today's call discussing the impact that it's having on our business, the actions we're taking in response, and our unwavering focus, especially during these times, to deliver on Ironwood's vision and mission. First and foremost, the health and well-being of Ironwood teammates and their families, as well as patients, healthcare providers, and our broader communities, is our primary focus. Both our headquarters and customer-facing employees have been working remotely since March 16. We've developed comprehensive plans for employees to resume in-person work practices and expect to begin implementing those plans as we determine it to be safe to do so and pending relevant health authority guidance. As demonstrated by our strong fourth quarter performance, we believe Ironwood is well positioned to face these challenging times, and we remain steadfast in our vision to become the leading U.S. GI healthcare company. We are announcing today that we continue to expect to generate greater than $105 million in adjusted EBITDA in 2020 as we previously announced as part of our 2020 financial guidance. We've decided to withdraw the remainder of our 2020 guidance until we have greater clarity on the impact that COVID-19 may have on our business. Before turning it over to Tom, I'll close by saying that I remain confident in Ironwood, both today and in its future. GI diseases affect an estimated 70 million Americans in the U.S. or 1 in every 5 Americans. Nearly two-thirds of Americans report being burdened by GI symptoms at least once per week. New innovative therapeutic approaches to treat GI diseases are needed, and Ironwood is ready to lead in this important space. As we look ahead, we're focused on building sustainable, profitable growth and enhanced value creation. We are investing thoughtfully into our growing business, and our capital allocation strategy is aligned with our three strategic priorities. We continue to deploy our capital towards driving LINZESS growth, advancing our late-stage pipeline, and delivering sustainable profits. As we mentioned when we provided our full-year results, we are also exploring inorganic opportunities that we believe fit well within our strategy and can deliver significant patient and shareholder value. We remain disciplined and rigorous in our approach in this current environment and beyond. With that, I'll now turn it over to Tom.

Thanks, Mark, and good afternoon, everyone. LINZESS prescription demand increased by 11% year-over-year in the first quarter, reflecting strong growth in our eighth year since launch, especially given the typical first-quarter challenges related to high deductible plan resets. We observed a spike in LINZESS demand during the first two weeks of the quarter, likely due to patients stocking up because of COVID-19. There was also a notable rise in the number of 90-day prescriptions filled, which we believe will support patient compliance. Although it's early and there are uncertainties surrounding COVID-19's impact, we are encouraged by the ongoing growth in the second quarter, which reinforces our confidence in the brand. LINZESS has gained significant market leadership in its category and remains well-regarded among physicians. Research indicates that patients with chronic symptomatic disorders, such as IBS-C, are more likely to refill their prescriptions since their symptoms serve as a constant reminder to take their medication. For many, refilling their LINZESS prescription is as simple as contacting their healthcare professional. Approximately half of all LINZESS prescriptions are refills, indicating that they are coming from patients already taking LINZESS, and most new prescriptions are being filled by patients with prior experience with the brand. It is estimated that only around 10% to 14% of LINZESS patients are new to the brand. This particular group is experiencing the most significant negative effects from COVID-19 so far. Since mid-March, there has been a marked decline in patient visits to doctors' offices due to the pandemic, which disproportionately affects new patients who typically need to visit their physicians to get a prescription. We anticipate that as local markets open up and patient visits increase, along with the return of in-person promotion by our field team, growth in new patient starts will improve over time. Overall, the brand has continued to grow its market share despite these challenging conditions. From mid-March to mid-April, LINZESS outperformed its competitors in the IBS-C and chronic constipation prescription market across key demand metrics, including total volume growth, prescription size, and market share, which is now approaching 40%. This reinforces LINZESS's leadership in prescription market share. Both we and Allergan have initiated several initiatives to facilitate continued engagement with healthcare providers and patients during this time. We believe these changes will be crucial now and in the future as we adapt our communication strategies with customers. First, we have launched a comprehensive telemedicine initiative following a successful pilot in 2019. We believe LINZESS is well-suited for telemedicine due to its market leadership position, demonstrated efficacy and safety, broad payer access, and physician confidence in virtually diagnosing and treating patients. Secondly, our direct-to-consumer campaign, Get Real, was launched in early April. We are utilizing both television and radio to urge patients to realize they may be experiencing IBS-C, a chronic disorder rather than just occasional constipation. We hope this awareness will encourage more patients to seek care and request LINZESS. Third, we have provided new tools to our field team to enable virtual detailing. While these efforts cannot replace face-to-face interactions, I have been impressed with the engagement levels we've achieved through virtual details. Regarding LINZESS supply, we and Allergan are focused on maintaining availability for patients. We have not experienced any significant disruption to our manufacturing and supply capabilities in the U.S. so far and are closely monitoring the situation. We currently believe we have enough LINZESS supply to meet U.S. demand at this time. Additionally, we announced last week that the U.S. PTO issued notices of allowance for two patent applications related to the 72-microgram dose of LINZESS. If these patents are granted, they are expected to be issued in 2020 and will expire in 2031. We believe these developments underscore the strength of the innovation surrounding LINZESS. Moving on to our partnership with Alnylam regarding GIVLAARI, approved in November for treating acute hepatic porphyria, we are seeing encouraging early results from our gastrointestinal-focused initiatives aimed at helping physicians identify AHP patients and recognize GIVLAARI as a treatment option. Even during these uncertain times, we continue to collaborate with Alnylam to find opportunities to support patient identification and treatment for porphyria patients with GIVLAARI. Regarding our GI pipeline, products 3718 and 7246 are crucial for our long-term value creation. We believe each has the potential to address the unmet needs of millions of patients. Beginning with 3718, our gastric-retentive bile acid sequestrant currently in Phase III trials for refractory GERD, we have enrolled about 70% of patients across two trials, most of whom have completed the study. However, over 90% of the clinical sites for 3718 have paused patient screening due to COVID-19, significantly affecting our ability to enroll new patients. The sites will continue to monitor currently enrolled patients remotely, as their safety is our top priority. Despite current challenges, we remain committed to completing the Phase III program. We no longer expect to report top-line data in the second half of 2020 but are now aiming to achieve that as soon as possible in 2021. We will provide more updates as we gain clarity. The unmet medical need in refractory GERD is substantial, and we believe that 3718 can effectively alleviate both heartburn and regurgitation symptoms, which are not fully resolved by PPIs and other treatment options. Now, regarding 7246, our delayed-release formulation of linaclotide currently in a Phase II trial for abdominal pain related to IBS-D, we now anticipate presenting top-line results in the second quarter of 2020, earlier than our previous guidance of mid-2020. We believe that 7246 could serve as a non-opioid pain relief option for patients experiencing abdominal pain associated with certain GI disorders. The positive Phase II results for IBS-D with 7246 support this belief, revealing that it reduced abdominal pain similarly to 290 micrograms of LINZESS while minimally impacting bowel function. Furthermore, a Phase I dose-escalating study indicated that 7246 did not affect bowel function in healthy volunteers taking up to 3,000 micrograms once daily. If the Phase II data for IBS-D are positive, we plan to conduct an end-of-Phase II meeting with the FDA with the intent of initiating a Phase III program in IBS-D in early 2021. With that, I will now hand it over to Gina.

Thanks, Tom. Over the next few minutes, I will highlight our first quarter financial performance, discuss some of the financial impacts we might see as a result of COVID-19, and share our expectations for the remainder of the year. Please refer to our press release for detailed financial information. Starting with our first quarter results. In the first quarter of 2020, total Ironwood revenues were $80 million, a 16% increase year-over-year. Revenues were driven primarily by $71 million in U.S. collaboration revenue combined with $5 million in sales of API as we complete the transition of manufacturing responsibilities over to our ex-U.S. partners. LINZESS net sales were $172 million during the first quarter, a 7% increase year-over-year. The difference between net sales growth and prescription demand growth is primarily due to a decrease in inventory, partially offset by net price improvement. LINZESS commercial margin was 73% in the first quarter. The higher commercial margin for the brand in Q1 2020 compared to the first quarter last year was driven by higher LINZESS net sales and some cost savings resulting from the sales force being remote during the last two weeks of the quarter. The remote selling activities conducted by both Ironwood and Allergan are excluded from the U.S. LINZESS commercial collaboration. We expect a larger decrease in sales force spend in the second quarter due to the amount of time the field has already been resolved during the quarter. The total impact remains uncertain until we have more clarity around when we and Allergan will reactivate in-person promotion broadly. Now turning to earnings. GAAP net income was $3 million for the quarter. Non-GAAP net income was $7 million, and adjusted EBITDA was $14 million during the first quarter of 2020. We recorded a net loss across each of these metrics during the first quarter of 2019 as we had yet to complete the separation from Cyclerion. And lastly, a few quick remarks on cash. We generated $44 million in cash from operations, ending the quarter with a cash balance of $231 million. We believe this is a very strong position to be in, providing us with the capital to support our core business without the need to raise additional funds during these highly uncertain times. This, combined with the actions we took in 2019 to reduce our expenses, simplify our business, and spread out our debt obligations, further increases our confidence in our financial position during this time. We did not see any major disruptions to our financials as a result of COVID-19 in the first quarter. The two key areas that we believe could most meaningfully impact our financial performance for the remainder of 2020 are LINZESS and 3718. On LINZESS, as Tom highlighted, we are encouraged by the demand growth we are continuing to see. However, we are monitoring for any impacts of COVID-19 on demand, including due to reduced in-person promotion or potential changes in patient access to healthcare and reimbursement. With millions of Americans losing their jobs and going on unemployment, we believe this could shift the patient mix away from commercial insurance, which currently represents approximately half of our business, toward Medicaid, which comes at a much higher rebate to us. We have not seen much of this to date, but we are monitoring it closely. This, combined with any pressure on demand due to lower new-to-brand growth or otherwise may result in lower U.S. net sales in 2020 than originally expected. With that said, we are confident in the long-term growth potential for the brand. On 3718, the delay in enrollment is expected to result in lower R&D spend in 2020 as some of these costs are now expected to be delayed into 2021. Note that we do expect aggregate clinical trial expenses for 3718 to increase over the duration of these trials. The potentially lower 3718 spend combined with expected cost savings associated with the remote sales force could result in favorability to Ironwood's P&L in 2020. Taking all of this into consideration, we are maintaining our full-year 2020 guidance of expected adjusted EBITDA of greater than $105 million. We are focused on delivering profits and, based on our preliminary estimates, believe the potential impact of COVID-19 on LINZESS U.S. net sales may be partially offset by the cost savings from the sales force being remote and the cost delays due to the impact on 3718 enrollment, which gives us confidence in our original guidance of greater than $105 million in 2020 adjusted EBITDA. We are withdrawing the remainder of our 2020 financial guidance at this time due to the continued uncertainties around the potential for and magnitude of any COVID-19 related impacts. In closing, we want to reiterate that due to the actions completed over the past year and the LINZESS performance seen to date, we believe Ironwood is in a position of strength as we weather the storm and strive to continue to grow our business and deliver shareholder value. With that, I'll turn it back to Mark for some closing comments.

Thanks, Gina. Before we open the floor for questions, I want to acknowledge the team here at Ironwood. I am truly impressed and proud of how the organization has stayed focused during these challenging times. It’s not easy to maintain a high level of execution on our business priorities, but the Ironwood team has done just that. I want to express my gratitude to everyone at Ironwood and the Ironwood community for their hard work and commitment to our vision of becoming a leading GI-focused healthcare company. Now, I think we're ready for questions. Tanesha, do we have any questions?

We do have a question from the line of Raghuram Selvaraju.

This is Blair calling for Ram. I have a few questions for you. Do you believe prescriber patterns have changed significantly due to the pandemic? If so, in what way?

Tom, do you want to take that one?

Sure. I mean, no question. There have been significant changes, particularly with the reduction in office business, which has been down almost 70% based on the data we've seen so far. What we have been seeing is a migration to a telehealth, telemedicine model which a number of both primary care and GI physicians are embracing. And thus, we have been actively looking at that capability for some time. We've implemented a telemedicine program that is driven off our consumer campaign. And we have been talking and working with healthcare professionals to see how we can help them and better enable this kind of capability. And I think moving forward, in talking to a number of these physicians, they've recognized how much more efficient managing some of these patients can be through a telemedicine platform, even as patients become more comfortable coming back to the office. So I do think things will change. I think we've got to continue to adapt and overcome and serve patients in the most effective way. I think one of the things that I mentioned is with IBS-C and LINZESS, it’s well poised to be able to be leveraged in that kind of remote consult. And we're seeing more and more of it. I think it's largely helping us sustain the ongoing growth of the brand.

Awesome. And do you think the launch of GIVLAARI is going to be affected by COVID-19?

Go ahead, Tom, you can take that, too.

Okay, sure. Thanks, Mark. I can't comment on that specifically. What I can tell you is, one, as you know, this is a horrendous disease, and this is an incredible breakthrough, which got us excited about playing a role in helping Alnylam bring this to patients. And, of course, our presence in the GI offices was a natural fit because this is where most of these patients are managed. That being said, we've identified a number of patients that are being actively pulled through the system. I think there may be some short-term impact, but everything I'm hearing from the pull-through side is we're continuing to pull patients through. We're getting patients on drug. I think we need to continue to stay the course. It's still early to interpret that. But I think certainly, the Alnylam team would be better equipped to more specifically answer kind of the question on actual demand.

Sure. And then going to the Phase III program for 3718, do you see that trial panning out as originally planned? Do you think any of the data or results could be compromised because of the delay?

Mike, can you take that?

Sure. Yes, we are dedicated to completing the Phase III program, which is a substantial development effort. We have enrolled over 660 patients in the two clinical trials. As you mentioned, our screening efforts have been affected by COVID-19, which has hindered our ability to enroll at our desired pace to meet the 2020 timeline. However, we are using a very safe product, colesevelam with gastric retentive, in this program. This allows us to conduct procedures remotely once patients are enrolled. While screening has slowed down and affected enrollment, we believe we can continue to advance patients through the study due to the safety of the product and the scheduled visits. We are committed to finishing the Phase III program and will explore all possible options to achieve that. We are also actively collaborating with sites to better understand how to restart screening and how we can proceed effectively, which will help us refine the expected timeline to return to pre-COVID recruitment levels and ultimately define the end of the study timeline. We will keep you updated as we receive more information on our path forward.

Perfect. And last question for me. How critical do you think the allowance of claims is for that 72 dose?

We are very encouraged by this. A large percentage of these are expected to be issued. We remain confident in our IP and will be monitoring the process as it continues.

And our next question comes from the line of Jacob Hughes.

With respect to the guidance, so knowing that this environment is highly uncertain, but could you provide any additional color on these comps underlying your adjusted EBITDA guidance? And any additional color on the revenue trends early in the second quarter?

Gina, would you give some additional thoughts?

Sure, Mark, I'm happy to. Thanks for the question. So I can start with maybe just talking about why we are comfortable providing the greater than $105 million EBITDA guidance while we were no longer reiterating the previous guidance line items. And one is that LINZESS is just off to a strong start in 2020, not just in Q1, but through Q2 as well. And this is probably what you're getting in your question. We certainly have some uncertainty related to the 3718 trial enrollment and the reduced in-person promotion. We've seen some favorability there. And while we certainly don't prefer it, it is adding to our P&L. And based on when states actually start to enroll, it will be determined when we are back in the field and when hopefully, we can increase our trial enrollment as well. There's obvious uncertainty as to the severity and the duration of the COVID-19 impact. But any negative offset from LINZESS demand and to be more specific on that, on the demand side, we are potentially monitoring changes from unemployment, just less disposable income for Americans. But we're also looking at it as potential price compression as well. So if you're thinking about it from a commercial side and the patients move to Medicaid, for instance, it includes a much higher rebate for us. And obviously, it's a lower net price. And given the uncertainty on that, it is one of the reasons that we're not guiding to the LINZESS top line and then obviously our Ironwood revenue. However, I will say that while we have some favorability and some negative offsets, we conducted or ran a range of models. And in the majority of those, we are still expected to result in a minimum adjusted EBITDA of $105 million for the year. We will, of course, continue to monitor the update and provide regular updates to you at least each quarter.

Okay. That's very helpful. As you approach the completion of the transaction with AbbVie, could you share any interactions you've had with their team and any potential changes to that relationship, particularly regarding marketing or other aspects?

So I'll say a couple of words. And, Tom, you can also add thoughts. So first thing I want to say, the Allergan team has continued to stay really very focused and our always strong collaboration has continued. I think it certainly comes through with the execution and the results in the first quarter and even into the second quarter. So the majority of the people have been in place and they're staying very engaged and we keep working on that. As we also said, we've had very preliminary discussions with AbbVie because they've been sensitive to closing. We're still not quite close, although we're getting very close now. I don't really have any updates on that. Our interactions have been positive. We expect that they will be working to keep the momentum going and that we'll be working to keep everything moving forward smoothly. As we said before, the parameters of the arrangement, our partnership, basically continue largely as is. The key decision-making bodies of the joint development community and commercial committee and the rules that are governing those basically stay the same. And so we're ready to go full steam ahead. I don't know, Tom, if you have anything else to add to that?

Yes. Just a couple of things. First, as you know, it's been a terrific partnership with Forest as well as Allergan and now, AbbVie. And as we move forward, as I know Bill Meury is working closely with AbbVie on the integration, he's keeping us well informed. A good portion of the team will stay intact, particularly on the sales, sales management side, the number of people on the brand teams will be intact, which I think will aid in a smooth transition. We also agree on an overall brand plan at the beginning of every year, which obviously will stay intact, which really identifies the investment that we made in the plan and certainly the overall strategies that support the brand, both from a commercial side as well as the development side in 7246. As Mark mentioned, we've had some initial interactions with AbbVie, which have been very, very encouraging. I'm very excited about the opportunity to work with them. They have some very remarkable capabilities, particularly in the area of patient support and GI disease with Humira that I think we can learn a lot from and I think will further enable us to better serve our patients.

And our next question comes from the line of Eric Joseph.

Just a couple from me. First, on the patient stocking pattern that you noted and you think you're seeing some benefit in the first quarter there. So can you quantify that for us a bit? Is that sort of a reflection of an increase in the number of 90-day prescriptions compared to prior quarters? And are you anticipating any shifts in channel inventory in second quarter or going forward in order to meet that pattern? And then I have a follow-up.

Tom, do you want to take that?

Yes. Sure. As far as the increase that we saw, we saw a bit of a surge for a couple of weeks in total RXs, which came back down, but we're still tracking double-digit growth year-on-year, but there was a pretty significant jump over a period of time. We did also see this corresponding increase in 90-day prescriptions. A larger percentage of the patients are requesting 90 days to make sure they have their medication for an extended period of time. I think the overall trend line looks pretty stable from what we saw finishing last year into this year. And as you recall, we generally see a pretty significant dip in the first quarter and in spite of all that, the brand is just holding up remarkably well, particularly with the rate of refills, which has been very encouraging. As far as the channel, it tends to fluctuate quarter-to-quarter. Obviously, that's being closely monitored to make sure that we don't have any stock outs. But I don't think we certainly don't see any risk to the brand there, but we certainly do see quarter-to-quarter fluctuations in the overall inventory. But we haven't seen anything dramatic over the last quarter or two that we haven't seen before.

I'm curious to know if you have identified the biggest factors influencing LINZESS demand due to the reduced in-person promotion efforts. I understand it's challenging to predict the new normal beyond the pandemic, but I'm interested in whether you are noticing any efficiencies in commercial spending while still growing prescription volumes, or if we should anticipate a return to increased commercial spending as we move past the pandemic.

Tom, you can take a stab at that. I might have a comment to add as well.

Absolutely. First of all, I think this is a very promotionally sensitive market. And there's no replacement for personal promotion. I think we're doing a yeoman's effort in supporting patients and also our customers remotely and virtually. And I think we're putting a number of innovative plans such as the telemedicine in place. But as far as personal promotion, we pushed it hard in the first quarter to get out of the gate strong and the sales force did an absolutely terrific job in driving and continuing to drive double-digit growth. I think the other thing to keep in mind is we constantly evaluate and refine the overall selling model with regard to our reach, with regard to our frequency, and who's going to make the calls. And we're in constant assessment of that. And as you know, we've changed it quite a bit over time, both with regard to the number of targets and the frequency of calls as the sales force has become increasingly more efficient. I do not see a replacement for in-office promotion, personal promotion. I think we're itching to get back into the office to continue to drive demand and broaden physicians' view of who the appropriate patient is. So, but I don't see any dramatic change of our overall selling effort as we kind of reengage with customers. So, Mark, if you have a couple of additional comments?

I wanted to emphasize that I've always been impressed with how quickly and intelligently both Allergan and Ironwood have approached continuous improvement in their commercial strategies. They consistently evaluate how they can adapt resources based on what we learn about physicians, whether at the representative, district, or overall market level. This includes balancing physician promotion with consumer promotion. The team is very accustomed to optimizing these efforts, and they will maintain this focus. I'm also pleased with how the team has embraced new technology and how receptive physicians and patients are to using telemedicine for healthcare needs. I've interacted with various teams and salespeople, and they are all effectively using virtual selling tools and remote meeting capabilities. As Tom mentioned, we have scaled up our telemedicine program nationally, and we are committed to fully exploring these changes to benefit both patients and the business. I'm encouraged by the team's response, and we will continue to prioritize driving LINZESS' growth while doing so as efficiently as possible.

Got it. Maybe just one last question on 7246. You've adjusted timelines a bit with data expected this quarter. Could you provide any insights regarding the impact of the pandemic on gathering the last bits of patient data and follow-ups? Is there anything that may affect the integrity or reliability of that data set as we prepare to examine the intended population this quarter?

Mike, you're going to take that, please?

Sure. Yes, we're pretty good opportunity in IBS-D, I think, which speaks to the medical need within that patient population and clear need for pain therapeutic for patients suffering with abdominal pain. So the ability to enroll that, I think, really speaks, obviously, to the testament for the patients and the patient need, but also the team did a great job to accelerate that. So we weren't really impacted on the recruitment side by COVID. We were able to get patients in and dose and actually get patients out sort of before COVID really took over much of the recruitment in clinical trials. And then much of what we did after that is data cleaning, data management, data validation, and all that. So we've been on track and we remain on track and we're committed to delivering it this quarter, as you mentioned.

And we do have a question from Boris Peaker.

Great. So the first question is for Gina, though I'm not sure who else might want to answer it. You mentioned that revenue per patient is lower for Medicaid compared to private insurers. Could you provide some figures on that? Additionally, is there an option for 90-day prescriptions for Medicaid similar to what is available for private payers? I’d like to understand that dynamic better.

Gina, why don't you start with any perspective? And then Tom, also, if you have something to add, please do.

It's a great question. Approximately 50% of our business is commercial. With the high unemployment, we are concerned that this could lead to lower demand or potential shifts of patients from commercial to Medicaid, which would entail a higher rebate. We have not quantified this, and we do not break down the gross to net figures between commercial and Medicaid, but I can confidently say there is a significant difference between the two, as you might expect.

And can Medicaid patients fill 90-day scripts just as easily as commercial? Or do they have any restrictions?

Mark, why don't I take that? Currently, they can only access, I believe they can only access 30-day supply, similar to Medicare patients as a similar restriction with regard to the quantity that they can actually access. But I think it's important to underscore the fact that we have over 50% or nearly 50% of our business is actually in Medicare Part D, which has been very stable. And the patients that we are at risk are commercial patients. But it's something we are monitoring very closely. But from what we've seen so far, the demand is holding up very well. But obviously, it's something that certainly poses a risk to the price and volume of the brand.

Great. And my last question is on the 3718. I just want to know what percentage of total enrollment have you already enrolled in these Phase III studies? And in that context, I just want to understand in terms of data quality, what happens if a significant number of patients miss follow-up appointments? Is there some point where you just take them out of the study? Or you just kind of accept the missing data? How does that work?

Mike, could you take that?

Sure. We have, as Tom mentioned, greater than 72% of patients enrolled in the studies. And you're right. I mean we do have to closely monitor all our studies, which we do regardless of COVID-19 or not. But your point is valid in the setting of COVID-19 and some of the monitoring that takes place in the clinical program. It's important to make sure we can do that remotely. And again, it's an 8-week treatment course, so we do have the opportunity to schedule things and plan things and to get things done remotely. The team has made a great effort to achieve all that to ensure data integrity, trial integrity, and patient safety. Clearly, patient safety is the most critical item on that list and we work diligently to ensure that with all our patients in all our studies. So we have had a very good success in maintaining that aspect of data integrity and trial safety. So we're really happy to be able to continue that in the 3718 program.

And we have no further questions. I will turn the call back over to Mark for closing. And we have no other questions at this time. And this does conclude today's conference call. You may now disconnect your lines.