Earnings Call Transcript - OPTN Q1 2020

Operator, Operator

Ladies and gentlemen, thank you for standing by and welcome to the OptiNose Q1 2020 Earnings Call. At this time, all participant 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 is being recorded. I would now like to hand the conference over to your speaker today, Jonathan Neely. Thank you, sir. Please go ahead.

Jonathan Neely, Speaker

Good afternoon, and thank you for joining us today as we review OptiNose's first quarter 2020 performance and our plans for the year ahead. I'm joined today by our CEO, Peter Miller; President and Chief Operating Officer, Ramy Mahmoud; our Chief Commercial Officer, Vic Clavelli; and 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-K and Form 10-Q that is 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. The 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 Miller, CEO

Thanks very much, Jonathan, and good afternoon, everybody. We appreciate you joining us for our first quarter update. I hope everyone is safe and well in these challenging times. Before we get started with our business update, I'd like to begin by thanking all of my colleagues at OptiNose for the incredible job they have done in rising to the challenges presented by operating in an environment completely reshaped by the coronavirus pandemic. I'm proud of what they've accomplished in such a short period of time, finding completely new ways to support our commercial partners, our physician customers, the patients they treat, and the clinical researchers engaged with us in the development of XHANCE as a treatment for chronic sinusitis. In true one mission fashion, this team has risen to the occasion. Our view of the road ahead for OptiNose starts with the necessary nod to the heroes who stand at the epicenter of the global response to COVID-19, our healthcare professionals. The healthcare professionals we serve saw unprecedented disruption to their practices and faced the necessary task of finding new ways to care for their patients while protecting themselves and their staff. Today, we'll provide an update on our business, discuss how we've mobilized the organization in response to today's environment, and discuss the important role that XHANCE will fill in the context of the emerging marketplace. 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, since our last earnings update, we primarily focused on adapting our business to drive performance in the COVID-19 environment, and we'd dive into the details of actions we have taken and how our business has performed during the initial weeks of entry into this new environment. Second, we're taking actions to reduce operating expenses and preserve cash, given the economic uncertainties while protecting our investment in our commercial model and clinical programs so that we emerge stronger and more prepared to realize the full potential of OptiNose. Third, we are updating our guidance to reflect the reductions in operating expenses I just mentioned, near-term uncertainty for revenues and expectation for substantial improvement in XHANCE's average net revenue per prescription for the remainder of the year. Fourth, we'll review first quarter XHANCE performance, which provides continuing evidence that we have an effective commercial strategy and are driving sustained growth. And fifth, we continue to believe there remains substantial room for long-term growth in XHANCE prescriptions and believe that the actions we have taken in response to the current environment are strengthening our ability to win in the emerging marketplace. Turning to slide 5. Since our last earnings update, we have mobilized to drive performance in the COVID-19 environment in which we now operate. In March, many of our physician customers began to experience significant reductions in patient volume relative to pre COVID-19 norms. Many also moved to offer some remote visits as a means of seeing patients. In the case of ENT surgeons, many were restricted by the local authorities from performing elective surgery, one of the key drivers of the patient flow. While this dynamic clearly presents challenges, particularly for seeing and initiating therapy for new patients, the COVID-19 pandemic has not reduced the significant number of patients who suffer from chronic nasal disease, and certain dynamics may even create new opportunities for XHANCE. Although medical management and surgical care are generally complementary, the short-term restrictions on elective surgeries increase reliance on treatment with medications such as XHANCE. In the midterm, backlogs of patient care during lockdowns may continue to focus fixed surgical capacity on the most urgent or severe cases, with continued increases in the use of medications for other patients. In the longer run, an increased volume of positive treatment experiences with XHANCE should support our goals of broadening adoption and help disrupt ingrained treatment habits. We're adapting our commercial plans accordingly so that we emerge strong as this crisis resolves. The health and safety of the communities we live and work in is foremost among our concerns, and we implemented a work from home model for all employees if their job functions allowed, starting in mid-March. Importantly, our virtual model includes tools that enable our territory managers to engage in many of the types of promotional activities they have in the past, albeit virtually rather than face to face. They can detail physicians, provide samples, and host educational programs. Our territory managers have gained increasing comfort with the new suite of digital engagement solutions, but we've also prepared plans that will enable them to stay protected and productive as they re-engage in person with their practitioners as offices scale up to meet the backlog of deferred patients. As I just mentioned, despite the clear negative influences of the crisis environment, we've also identified certain environmental factors that we believe may favor trial and adoption of XHANCE in this evolving period. Increased virtual care, the reluctance of patients to make in-person visits to offices and pharmacies, concern over potential for disease transmission risk with nasal procedures, constrained elective surgery, and other factors all may contribute to dynamics like the ones I discussed a moment ago. We are working to identify these emerging opportunities and respond by partnering with physicians to improve care in new ways. One early response, launched on March 25, is the XHANCE Assist program to offer an option with potential to help physicians and patients faced with postponement of elective surgical procedures and reduced office visits. Assist offers a full three months of XHANCE to new commercially insured patients, delivered to the home at zero out-of-pocket cost. Based on the recent strength in our retail business, we believe this program is a worthwhile investment for our business, our customers, and ultimately for our patients. Longer-term, we expect this program will accelerate new patient initiations. Feedback from physicians on the assist program has been quite positive. Our clinical trials investigating XHANCE as a potential treatment for chronic sinusitis have had to adapt to the COVID-19 environment as well. In response, all global trial sites have temporarily paused new patient enrollment. Sites in different regions are adopting safe practices and adhering to varying regional guidance for resuming medical care during the pandemic. We expect enrollment to gradually begin to restart during May. For subjects that were already enrolled, procedures to facilitate ongoing treatment and capture of data have been put in place. While the COVID-19 environment adds some uncertainty, we are maintaining our previous guidance related to the expected timing of top-line results, which are expected in the second half of 2021. Finally, given the economic uncertainties created by the global pandemic, we have taken actions to reduce our full year 2020 operating expenses by approximately $17 million compared to the previous guidance. Importantly, we have planned reductions that we believe will protect our ability to continue to fully execute our growth strategy for XHANCE and allow us to reaccelerate growth as the environment stabilizes and doctors' offices scale back up to manage the backlog of patient visits. As we discussed on our last call, we've learned that the XHANCE business has been highly sensitive to promotional efforts, and we believe it's important to protect our ability to drive growth and evolve the standard of care for the 10 million patients suffering from nasal polyps. Keith will have more details in his remarks. Turning to slide 6. Before I move to the first quarter commercial review, I'd like to call out the performance of XHANCE during the initial COVID-19 crisis period. XHANCE prescriptions increased by 8% for the six-week period ended April 24, compared to the prior six-week period ended March 13. The six-week period ended April 24 is notable for two reasons. First, it is the first six-week period when our territory managers transition to our virtual model, and second, because it coincides with the nationwide COVID-related environmental shifts that led to substantially reduced patient volumes for our target physician audience. Anecdotally, some of these physicians or practice groups have relayed to us that during this time they experienced patient visit decreases in the range of 50% to 90%. Given that environment, we are encouraged by the resilience of XHANCE prescription volumes. At a time when many businesses are reporting decreased growth rates and decreasing volumes, we believe XHANCE as a proven treatment for a chronic condition has under-appreciated relative strength. Turning to slide 8. Turning to our first quarter results. We continue to be very encouraged by the growth in total prescription volume for XHANCE and what was largely a pre COVID-19 environment. In our last call, we discussed factors common to chronic disease products with high refill representation such as co-pay resets and insurance re-authorizations for ongoing prescriptions which we believe influence refills and average net revenue per prescription early in the year. Late in the first quarter, in the last couple of weeks in March, we began to see the impact of the pandemic, though from a starting point of a strong trajectory in late February and in the first weeks of March. As we did on the last call, in addition to overall TRx performance, we will now dive a bit deeper into details that help describe the performance of the business. In the first quarter 2020, there were 22,300 new prescriptions for XHANCE, a 75% increase in new prescriptions compared to the first quarter 2019. We believe continuing to generate strong new prescription growth at this point in the launch is a very good sign of the health of the business and contributes to our confidence in strong long-term future growth. Refills, supported by reminder programs managed by our preferred pharmacy network partners, are a true strength of our business. In first quarter 2020, there were 33,700 refill prescriptions of XHANCE, a 246% increase compared to first quarter 2019. Turning to Slide 9; pulling the new and refill prescriptions together, the total number of XHANCE prescriptions in the first quarter of 2020 was approximately 56,100. This represents 149% growth over the first quarter of 2019. It's not shown here, but I believe it's important to note that prescription growth rates within the first quarter improved as the quarter progressed up until the point where COVID-19 restrictions started to put some pressure on growth, as previously noted. On our last earnings call, we discussed in depth the concept that for medications, particularly chronic disease medications, early in the year there was a downward pressure on refills related to patients who change insurance. This change of insurance can drive the need out a new claim approved before refilling for the first time in the new year. In line with our expectations, refill growth started to recover in mid-February and continued to improve up until the point where COVID-19 began to put pressure on growth. Notably, this first quarter effect, which we expect to be a recurring phenomenon, was much less pronounced for XHANCE last year due to a much smaller proportion of prescriptions coming from refills in the first quarter of 2019 compared to 2020. This emphasizes the tremendous growth in refills during 2019 and increases our confidence in future prospects based on the underlying engine of our new prescription trend. I believe it's important to highlight this dynamic with refills because they are now approximately 60% of XHANCE prescriptions, a major driver of value over the long run, and after a blended start in the first weeks of 2020, rebounded as forecasted. Turning to slide 10. We believe there is a large market for XHANCE and therefore believe that there is tremendous upside that remains for us in the current target audience of physicians. XHANCE's share expressed as a proportion of all intranasal steroid prescriptions written by physicians in our target physician audience increased from 1.5% in the first quarter of 2019 to 3.8% in the first quarter of 2020. This is a great increase, but the numbers also illustrate the magnitude of potential for continued growth. Overall, we are confident that our continued execution against our current commercial model can continue to increase share in 2020 and convert physicians from early experimenters to more substantial writers. Notably, we've continued to see share growth in recent weeks in the COVID-19 environment and believe we will continue to be able to produce share growth, especially as returning to more traditional promotion across the balance of the year. Turning to Slide 11. Another measure of performance that we monitor is the number of physicians who have patients filling a certain number of prescriptions per quarter. What you can see is that both breadth and depth of prescribing has increased over the last year. Regarding breadth, in the first quarter 2020, more than 6,300 physicians had a patient fill at least one prescription of XHANCE, an increase of 71% compared to first quarter 2019. Regarding depth, the number of physicians with patients filling more than 15 prescriptions in a quarter has grown even faster, with the number of physicians with patients filling greater than 15 increasing by more than 200% from the first quarter 2019 to first quarter 2020. We believe this sustained trend is indicative of one key mechanism supporting continued growth of the product and the future product potential as we see an increasing number of hold-on physicians becoming full-scale adopters. This top group of physicians is important to our business, and we believe that this growing subset who adopted XHANCE as a part of their treatment paradigm due to results they are seeing in their own patients and because their experience is that access and affordability are generally not a barrier. Growing the size of this group is a strategic priority for the Company. 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 our first quarter 2020 results and perspectives regarding our corporate guidance.

Keith Goldan, CFO

Thank you, Peter, and thank you to everybody for joining today. As we reported, OptiNose recognized $7.1 million of XHANCE net revenue in the first quarter of 2020. As noted on prior calls, one of the metrics that we track is XHANCE's average net revenue per prescription, which is calculated by dividing net revenue for the quarter by the estimated number of XHANCE prescriptions dispensed during that quarter. We continue to believe that this is a useful metric to evaluate net revenue 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 that is paid for an individual unit of XHANCE, including ordering patterns and 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 XHANCE prescription data from third parties and also on data we receive directly from preferred pharmacy network partners, our average net revenue per prescription for the first quarter of 2020 was $126, which was within our guided range of $120 to $140. Moving to Slide 14; this afternoon, we are revising our corporate guidance to reflect the effects of the coronavirus pandemic on our business and actions we are taking to reduce operating expense. First, we are withdrawing full-year 2020 XHANCE net revenue guidance, and we'll evaluate providing guidance once there is more clarity regarding when public health efforts to mitigate the spread of COVID-19 will relax in a way that permits a broad return to the in-person model for XHANCE promotions. Previously, we expected XHANCE net revenue to more than double compared to 2019 net revenue of $30.4 million. Second, we remain confident that XHANCE's net revenue per prescription will improve for the remainder of 2020 because the major factors that influence our gross-to-net deductions have not experienced structural change relative to where they stood in 2019. Overall market access, which drives rebates, is generally consistent, and the terms of our base co-pay assistance program are unchanged. The expected increase in XHANCE's average net revenue per prescription from the first quarter of 2020 to subsequent quarters is primarily driven by two effects that we have discussed when we set expectations in our last call and that we believe are common for chronic treatments in our industry. First, because of patient insurance deductible resets that occur in January, we expect co-pay support provided by us under our assistance programs to mitigate out-of-pocket expense effects of deductible resets on patients to be highest in the early part of the year and then decrease as the year progresses. The second factor contributing to this increase is the recapture of refill prescriptions by patients whose insurance coverage change with the new year. We feel prescriptions are relatively more profitable than other prescriptions because a higher proportion of these patients have insurance that covers XHANCE. Patients whose insurance coverage change with the new year, for example, to a different insurer can experience delays in refilling their prescription if a new claim needs to be processed before a refill can be provided. We believe XHANCE's refill prescriptions experienced some of this effect in early 2020 which created downward pressure on both XHANCE net revenue and XHANCE net revenue per prescription in the first quarter. We predicted, and in fact observed, increasing number of refill prescriptions as the quarter progressed, and as a result, believe that as the year progresses, this dynamic should support improvement in average net revenue per prescription. As mentioned earlier, given the economic uncertainties presented by the global pandemic, we are reducing expenses and expect an overall reduction in 2020 operating expenses of approximately $17 million compared to our previous guidance. These expense reductions include the re-prioritization of project spending, a reduction in payroll costs, and lower 2020 clinical trial expenses as a result of pauses in new patient enrollment. As a growth stage company, we are oriented towards building for a promising future. To get there, though, we are always mindful that we need to be judicious with capital and focused on optimally deploying it against our growth objectives. Consequently, the extraordinary circumstances of the pandemic require some changes to our plans. Importantly, as we look forward to relative normalization of business conditions, we believe that we have maintained the capabilities necessary to both reaccelerate XHANCE's growth and pursue our development objectives for XHANCE as a treatment for chronic sinusitis. For the full year 2020, we expect total operating expenses to be in the range of $131 million to $136 million, of which approximately $11 million is expected to be non-cash stock-based compensation. Total operating expenses, excluding the stock-based compensation, are expected to be in the range of $120 million to $125 million. Finally, regarding our clinical trials evaluating XHANCE as a potential treatment for chronic sinusitis, while COVID-19 restrictions add some uncertainty, we are maintaining our guidance related to the expected timing of results.

Peter Miller, CEO

Thanks, Keith. In closing, the COVID-19 environment has created real challenges for most businesses, including ours, the full impact of which is not yet fully known. We remain confident we have a business capable of continued strong growth but are mindful of the areas where we need to focus to produce that growth. This begins with maximizing results in the currently constrained promotional environment, but even more importantly, means understanding how the market is likely to evolve and develop plans to capitalize on opportunities as regions of the country begin to reopen. In many geographies, physicians are telling us that they are already beginning to take actions to give patients the confidence to return to their offices for care. We know that many regions of the country are reducing restrictions on elective surgery, which will potentially facilitate ENT efforts, but we are watching carefully how patients will react. We're working closely with physicians to continue to play our role in assisting them and aggressively working on plans to produce an acceleration of our business as the market evolves. As we look further out, we remain excited by the potential for XHANCE, especially given our growing yet still modest share penetration and the significant opportunities that could be created by the addition of chronic sinusitis indications. Thank you. And now I'd like to open up the call for Q&A.

Operator, Operator

Our first question comes from the line of Randall Stanicky.

Jonathan Neely, Speaker

Randall, you may be on mute if you're trying to ask the question right now. Operator, could you just to move to the next question, please?

Peter Miller, CEO

He can come back later.

Operator, Operator

Our next question comes from the line of Gary Nachman.

Unidentified Analyst, Analyst

Hi, good afternoon. It's Raffaello on for Gary.

Peter Miller, CEO

Good afternoon.

Unidentified Analyst, Analyst

Hi. How much pressure are you anticipating on net revenue per prescription over the course of the year? Just some patients may migrate to government pay from commercial given some of the broader macroeconomic trends.

Peter Miller, CEO

We don't think that's going to have an enormous impact on the business. There is no doubt there is going to be some migration. But we are largely a commercial business, and as we look across the balance of the year, we continue to be confident, as Keith said, we're going to see, as we expected and as we've talked, a nice rising increase of average net revenue per prescription. Obviously, there is going to be some impact of people who are displaced because of their jobs, but I do not think it's anything that's going to be that significant at this point.

Unidentified Analyst, Analyst

Got it. And then, do you have any visibility on the extent to which ENTs are leveraging telemedicine and how comfortable they are potentially starting new patients on XHANCE virtually?

Peter Miller, CEO

Over the past six weeks, physician practices have significantly seen a decline in in-person patient visits, with anecdotal reports indicating reductions of 50% to 90%. Both ENTs and allergists have attempted to implement virtual care, but ENTs, who primarily conduct physical exams including endoscopic evaluations, reported seeing far fewer patients during virtual visits. However, we were encouraged by an increase in market share for our business during the six weeks following the pandemic. This suggests that there is growing comfort among patients in using XHANCE. We believe XHANCE is well-positioned, especially as patients are likely to experience delays in surgeries and care, which may lead to a greater use of medical treatments. We think this trend will allow XHANCE to benefit significantly.

Unidentified Analyst, Analyst

Great. Thank you so much.

Operator, Operator

Our next question comes from the line of Ken Cacciatore.

Ken Cacciatore, Analyst

Hey, guys. I just had a couple of questions. I know the most recent data that we all have is from April 24, and this is such a fluid situation. But I was wondering, can you take us all the way up kind of as close to the up-to-the-minute as you can? Seeing that we were seeing a little bit of an inflection on the 24th, can you just talk about what you're seeing even more recent than that? Is the trend still moving in the right direction? And then on XHANCE Assist, it sounds like a really interesting program. Can you just give us a little bit more detail, just wrapped up, kind of in short, are you having someone execute this for you? It looks like a good way of kind of capturing patients and getting even more intimate with them once you get them? And then lastly, could you just base us on where coverage stands as we exited last year and where we stand real-time? And I know there are some moving parts with all the high levels of unemployment, but can you give us a sense of the covered lives, where we were, where we are, that'd be great. Thank you so much.

Peter Miller, CEO

Thank you, Ken. The data from the 24th is quite current. We do monitor leading indicators, and so far, the trends have remained consistent with what we observed over the past six weeks. The business shows a commendable level of resilience, which we've noted in both the six-week reporting period and in the week and a half since. We maintain a belief in the resilience of our business. A significant factor is that our refill business is stable, and the new prescription business is actually performing better than anticipated despite a notable decline in patient volume. This week, around half of our 100 territory managers were in the field. Their productivity and how busy the offices are is still to be determined, but there are some encouraging signs. Physicians appear eager to return to their practices. Regarding our assist program, it effectively utilizes the existing patient support program we had. Physicians continue to write prescriptions as they traditionally would to our preferred pharmacy network, with only the addition of offering three months free instead of the usual one month due to the pandemic. This streamlined approach has not required significant changes for physicians. We’ve received very positive feedback regarding this, which has been vital in helping smooth our business during the pandemic and even expand our market share at this time. While we cannot predict precisely, the feedback has been quite favorable. As for coverage, Vic Clavelli, our Chief Commercial Officer, has been a fantastic addition to the team. Currently, we are at around 75% to 80% coverage, which has remained relatively stable. We see a pathway to reach closer to 80%, and potentially 85%. While I cannot guarantee it will occur this year, we are actively engaging with payers and are optimistic about getting to those coverage levels in the near future. Vic, would you like to add anything?

Vic Clavelli, CCO

Peter, the only thing I'd add to that is, as we approached this pandemic, we really looked at it from three perspectives. First, how do we keep our employees safe so they can return to the field when they could; secondly, we wanted to enable them with tools that would make them more effective when they did return to the field, and you spoke to that a little bit. And you know the third part of it is, we looked at a program like assist to see if we could expand the patient opportunity, the number of patients that each physician would consider us for. And we're pleased with the way that's worked out.

Ken Cacciatore, Analyst

And I know guys, you're looking to save a little bit of money here. And it makes a lot of sense. But any thoughts on when we could turn on DTC with the kind of coverage that you're talking about, at some point, getting closer over the 80%? Any kind of updated thinking around that?

Peter Miller, CEO

We're still in the testing phase for direct-to-consumer marketing, Ken. As I mentioned in the previous call, we are fairly certain from our pilot program that we can engage patients. However, we need to ensure that there is widespread physician awareness of the product, as directing patients to ENT and allergists has proven to be challenging. This is an area we need to focus on before we can proceed with a broader rollout.

Ken Cacciatore, Analyst

Got it. Thank you.

Operator, Operator

Our next question comes from the line of David Amsellem.

David Amsellem, Analyst

Thanks. So, I just had a couple. First, just a clarification on the net revenues per Rx. So I know with the launch of the XHANCE assist program, you're ostensibly providing more free products. I'm wondering how that impacts net revenue per Rx. And I realize that you're providing just directionality but can you talk to how that would impact that metric? That's number one. And then number two is, as you think about the promotional landscape, what's your sense regarding how much of this whole virtual model is going to endure post-pandemic and what that might mean for your overall level of spend, longer-term? Thanks.

Peter Miller, CEO

Keith, I'll ask you to talk about impact on average revenue per and then we'll have Vic talk about the virtual model.

Keith Goldan, CFO

Thank you for your questions, Dave. You're correct about the difference between the assist program and the 0-30-50 program; the assist program offers three prescriptions at zero copay, while the 0-30-50 program provides one. We expect that the assist program will have a negative effect on the average net revenue per prescription. We might have observed some of that at the end of the first quarter, but it didn't significantly affect the average net revenue per prescription. In the second quarter, we anticipate a more noticeable impact. However, from a full-year perspective, we do not expect it to have a major effect on average net revenue per prescription. As I mentioned earlier, we expect this year's increase to be quite similar to last year's, mainly because the base copay assistance program, which remains widely used, is similar to what we had last year. Additionally, our commercial coverage is largely in line with last year's figures.

Peter Miller, CEO

Yes, David, I want to clarify that the program is only running until the end of May and applies only to new prescriptions. If you consider it in terms of the entire year, it's just a few months and pertains solely to the retail business. As we mentioned earlier, refills now account for over 60% of our business, so it isn't significantly impactful.

Keith Goldan, CFO

Really intended for those patients that hadn't been on XHANCE before, that were perhaps waiting for surgery because their surgery got delayed.

Peter Miller, CEO

Vic, I'll let you handle the promotional question on virtual.

Vic Clavelli, CCO

Yes. So we leveraged a suite of virtual tools to help the representative engage with the physician and perhaps in the connection to the question around assist. Assist actually ended up being a very valuable catalyst to encourage physicians to engage with those virtually so they can learn about the program. We were really pleased with the number of physicians who engaged with us and frankly the number of times we could engage with those physicians. Clearly, face to face is the more effective way for us to communicate our message but we believe that there'll be a continued place for virtual engagement moving forward. We've learned a lot about it, and we see how it can help our model be even stronger.

Peter Miller, CEO

The interesting thing is because Vic and the team were sharing some data with me this morning. If we can get really a true virtual engagement with a live detail virtually, if you will, it's actually really pretty effective. So, obviously, phone calls and emails are not as effective, but a true virtual engagement with AVEVA Engage platform which we have enabled to our sales team actually has proven to be pretty effective; not quite as effective as face to face, but it's something, as Vic said, I think it's something for sure over the next few months, we're going to continue to use and it might become part of how we work with physicians on an ongoing basis.

David Amsellem, Analyst

And that's helpful. Thanks.

Operator, Operator

Our next question comes from David Steinberg.

David Steinberg, Analyst

Thanks. I have a couple of questions. First, I noticed you suspended the revenue guidance for the year. Does that mean you don't expect revenues to at least double, or are you unsure? Secondly, you mentioned you've cut expenses, including payroll. Did you let go of any sales representatives or other significant personnel in the Company? Lastly, I might have missed this. Can you confirm whether the average selling prices from last year, which were $198, will remain at that level or change for 2020? Thanks.

Keith Goldan, CFO

Hey David, thanks for the questions. This is Keith. I'll start with your last question first, with respect to the ASP. Peter made some comments upfront, but again, we're not going to provide at this point average net revenue per TRx for the full year, largely related to the economic uncertainty going forward. And we commented a little bit on the changing dynamic of the patient base. It's unclear today if or how increased unemployment is going to affect average net revenue per script. It could affect our payer mix, it could affect overall healthcare benefit utilization; we just don't know. So, not trying to do a dance around it, but the honest answer is, we're not going to provide guidance at this point. We don't feel confident in projecting that.

Peter Miller, CEO

Keith mentioned that there hasn't been any significant change from last year regarding payer contracts, rebates, or coverage. As a result, we expect a continued increase, and while I can't guarantee it will be the same as last year, the fundamental factors remain quite similar.

Keith Goldan, CFO

So working backwards, your second question was about the operating expense reductions, and specifically with respect to payroll. As I commented in my remarks, the objective here was balancing the preservation of balance sheet strength with the maintenance of the ability to drive XHANCE growth coming out of the back end of this uncertain period. And we need the sales force to accomplish that. So, if we were able to get the $17 million of savings while still preserving the commercial structure as it stands. And then, going to your first question on revenue guidance. If visibility improves, we are going to evaluate reissuing guidance for the year, but at this point, for the reasons I commented earlier, just don't have the visibility in these uncertain economic times to provide better guidance right now.

Peter Miller, CEO

I think that's going to come down to patient flow. What we need to see is that physicians want to reopen their practices for two main reasons. They want to care for sick patients and they also have a financial motivation to do so. Physicians are very eager to get their practices open, which is encouraging. We had 50% of our reps in the field this week. However, we are uncertain about how patients will respond. Therefore, we need to observe how the market dynamics develop over the next several weeks and months.

David Steinberg, Analyst

All right. Actually one more thing. Some of the companies that we've been speaking to indicate that because a lot of these doctors have less than full days, that they actually are making inroads in the relationships and also doctors are learning the materials better and working more closely with the companies. And I was just curious, since you're still kind of in launch mode and you're still a relatively new company to these doctors, has this kind of hiatus with the doctors have afforded your sales reps or the management team to build better relationships with the key clinicians and also educate them more about your product which, once we get to the other side of COVID, could actually be helpful to the Company?

Peter Miller, CEO

I'll start and I'll pass it to Vic, David. Yes, I mean, I think in many cases, this has enabled a different kind of dialog. We actually sponsored two events that the American Rhinological Society put on, CME type events, that had very broad attendance back in, I guess right when the pandemic sort of started. And as a result of that, we just had some very good interactions with some of the real key opinion leaders. And as you said, there was some time for our rep having good interaction. So it certainly could help. The other thing it did, by the way, too, David, is our reps got a lot of practice with each other virtually. So where we had downtime, we also sharpened the messaging and the skills and the tools of our sales team, and I was really excited by that. And, Vic, I don't know if you have anything to add.

Vic Clavelli, CCO

No. I mean, I think that's right. We definitely saw it strengthen our relationships. I think the physician prescribing community was very grateful for the assist program. They appreciated that we stepped up to help them during this time period. We also rolled out some new data and there was good engagement with that data through the virtual platforms. And we definitely took it as an opportunity to find new ways to engage customers and I think we've gotten great feedback on that.

Peter Miller, CEO

I’ll conclude by stating that I believe XHANCE presents a genuine opportunity for us due to the current market situation where patients are still quite unwell. However, we anticipate a backlog and delays in surgical procedures over the coming weeks and months, which gives us a chance to take advantage of this situation.

David Steinberg, Analyst

Great. Thanks a lot.

Peter Miller, CEO

Thanks, David.

Operator, Operator

At this time we have no further questions.

Peter Miller, CEO

Thank you very much for your questions, and we look forward to our second quarter update. Thank you very much.

Operator, Operator

This concludes today's conference call. You may now disconnect.