Earnings Call Transcript - OPTN Q3 2022

Operator, Operator

Third quarter 2022 performance and our plans for the remainder of the year. I’m joined today by our CEO, Peter Miller; our President and Chief Operating Officer, Dr. Ramy Mahmoud; and our Chief Commercial Officer, Victor Clavelli. 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 are filed with the SEC and available at their website, sec.gov, and on our website at optinose.com. You are cautioned not to place undue reliance on forward-looking statements. 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, Jonathan, and good morning. We appreciate you joining us today. Starting on Slide 4. We'll go into more detail in a moment, but I'd like to highlight five key takeaways from today's presentation. First, consistent with the expectations set in our last call, we met with the FDA in September to discuss our supplemental NDA submission for XHANCE as a treatment for chronic sinusitis. Ramy will cover this further during his prepared remarks in a moment. In summary, we believe it was a positive meeting. Our second key takeaway for today is that following the discussion with FDA, we now expect to submit our supplemental NDA in early 2023. Third, we remain enthusiastic about the potential addition of an indication to treat chronic sinusitis. Chronic sinusitis is diagnosed approximately 10 times more frequently than nasal polyps, and in the current health care environment where off-label use is increasingly constrained by payers, we believe the new indication will allow us to access a significantly larger physician and patient audience to drive growth. Fourth, we plan to materially reduce our use of cash in 2023 while continuing to position XHANCE for a successful launch for the first-ever chronic sinusitis indication, a launch that we believe can enable tremendous future success for our company. Fifth, I'd like to note that XHANCE reached a milestone in the third quarter when the one millionth prescription was filled. I would like to thank my colleagues at OptiNose for the efforts that made it possible to achieve this level of scale as an approved treatment for nasal polyps. Importantly, given the significantly larger population diagnosed with chronic sinusitis, it makes us excited for what may come next. I'll now turn the call over to Ramy to discuss the results of the ReOpen program and next steps.

Ramy Mahmoud, President and COO

Thank you, Peter. Turning to Slide 6. On our last earnings call, we shared with you our development roadmap for the remainder of 2022, which included a pre-NDA meeting with FDA that was planned for the end of September. That meeting was conducted as planned, and the feedback we received will help guide us as we prepare our submission. Based on our current expectations for the scope of content to include in the submission, we now anticipate submission of the sNDA in early 2023. Previously, we expected that to occur by the end of 2022. The additional time has enabled us to incorporate the feedback we received in September into the preparation of the submission. We continue to anticipate that the standard FDA review period for this type of application would be 10 months, and therefore, we continue to expect the FDA action date to fall in the fourth quarter of 2023. Overall, we were pleased with the outcome of the pre-NDA meeting and look forward to the possibility of XHANCE being the first drug approved to treat the common disease of chronic sinusitis. The meeting reinforced our belief that our clinical safety and efficacy database is sufficient to support the filing of the supplemental NDA for this novel indication. Turning to the trials for a moment. I'd like to remind you that we have previously reported that both ReOpen trials were positive, showing statistically significant improvement on both co-primary endpoints for patients treated with XHANCE compared to those receiving the placebo comparator. We continue to believe that outcome measures of clinical importance are of particular interest to all stakeholders, including prescribers and patients. Therefore, we are pleased to report that ReOpen is the first Phase III program that we are aware of ever to show that a nasal therapy can significantly reduce the number of acute exacerbations of chronic rhinosinusitis. For context, exacerbations are a major source of disability for chronic rhinosinusitis patients. Data suggests that there are approximately 10 million physician office visits for chronic rhinosinusitis annually, and that approximately 70% of patients who visit a doctor for chronic rhinosinusitis receive an antibiotic, making this a top driver of all adult ambulatory care antibiotic use in the United States. As you're aware, acute exacerbations not only mediate loss of quality of life for chronic rhinosinusitis patients but frequent antibiotic use can pose risks to both individuals such as changes to the nasal or gut microbiome and to society, such as the emergence of antibiotic-resistant organisms. It's comparatively easy to convey to all stakeholders the clinical importance of the finding that in pooled data from the ReOpen trials treatment with XHANCE produced up to a 66% reduction in acute exacerbations of chronic rhinosinusitis. Turning to Slide 7. The successful ReOpen program is creating multiple opportunities for presentation of new and compelling data on XHANCE at scientific meetings. In September, the results from the first of our two Phase III trials ReOpen1 were presented at the American Rhinologic Society Annual Meeting during the top-rated abstract and Clinical Rhinology section. In October, we presented a late-breaking abstract podium presentation at IDWeek 2022. IDWeek is a major conference for specialists in infectious disease. The significant reduction in acute exacerbations and associated antibiotic use in chronic rhinosinusitis is important information for a range of stakeholders beyond our current targets of ENT and allergy specialty physicians, and this was an opportunity to begin to engage with that larger audience. Finally, we look forward to presenting the results from the second of our two Phase III trials, ReOpen2 on November 12 at the American College of Asthma, Allergy and Immunology Annual Scientific Meeting. In addition, we look forward, of course, to publishing the results of ReOpen1 and ReOpen2 in the peer-reviewed scientific literature. We're working actively with our distinguished scientific steering committee and look forward to sharing an update when a primary report of findings manuscript is published. I'll now turn the call over to Peter to discuss our third-quarter commercial performance.

Peter Miller, CEO

Thanks, Ramy. Turning to Slide 9. Before reviewing performance for the third quarter of 2022 and a revised guidance for full year 2022, I'd like to take a moment to remind everybody that we continue to believe there are multiple factors to support future growth of XHANCE. First and foremost, we believe approval of XHANCE as the first and only FDA-approved treatment for chronic sinusitis, should we achieve that, will create a tenfold opportunity based on the number of patients diagnosed and treated for nasal polyps versus those diagnosed and treated for chronic sinusitis. We believe we can access one-third of that opportunity within our current commercial footprint and create an attractive opportunity for a partner in primary care. We are encouraged by what has been achieved with a nasal polyp indication to date. In the third quarter of 2022, the one millionth prescription of XHANCE was filled. This supports our belief that we can achieve a significant magnitude of product adoption in the much more commonly diagnosed condition of chronic sinusitis. Importantly, we are also encouraged that with growing experience using XHANCE, both by physicians and patients, the product has become recognized as offering benefits in real-world practice. In addition to the large number of patients, physicians have chosen to treat both the comparatively high refill rate and our market research on physician and patient perceptions all suggest that both physicians and patients are finding that XHANCE offers meaningful treatment benefits. Among physicians, we have seen XHANCE recognized as having a distinct place in stepwise care for chronic rhinosinusitis with nasal polyps as reported in a publication by leading independent experts from both the ENT and Allergy Thought Leader communities and a shared decision tool at sinushealth.com. On the payer side, today approximately 80% of commercial lives are in a plan that covers XHANCE for the approved indication. Given the clinical and economic value proposition XHANCE offers compared to multiple alternatives, we believe there is potential to increase coverage in the future and obviously see significant opportunity if there is an expansion of the approved indications to include chronic sinusitis. Those factors support our belief that an XHANCE approval in chronic sinusitis has potential to drive the long-term success of our business. As a reminder, there are approximately 10 million patient visits to a physician for nasal polyps or chronic sinusitis annually. Of those, up to approximately 3 million patients are treated by physicians in the specialties that are the focus of our current commercial deployment. Based on our experience in nasal polyps, we believe the compelling clinical data from the Phase III ReOpen program may lead to not only a new indication in late 2023, but also ultimately to recognition by physicians, payers and patients of the clinical and economic value of using XHANCE to treat the large population with these serious chronic nasal inflammatory diseases. Turning to Slide 10. That said, let me now discuss our expectations for the full year 2022 and then review the results for the third quarter. On our last call, we noted that June and July were challenging months for new prescriptions based on factors, including fewer physicians and offices and representatives calling on physicians due to what we believe to be greater-than-expected summer seasonality. In addition, we had a greater-than-typical vacancy rate in our sales territories. At that time, we believed that the fall allergy season would drive a market rebound and the new promotional materials, including exacerbation data from the ReOpen program, filling vacant sales territories and other initiatives would enable us to increase market share and deliver the prescriptions necessary to achieve $85 million to $92 million of XHANCE net revenues for the full year 2022. In August and September, we observed a rebound in the INS market, but not the anticipated share gains for XHANCE. And based on the partial data available for October, both trends appear to be continuing. Although we believe that physician interest in prescribing XHANCE and actual writing of XHANCE continues to grow, we believe payer constraints, especially for off-label indications, are decreasing the proportion of written prescriptions being filled. In addition, the other programs expected to support share gains have not yet delivered their expected growth in the volume of filled prescriptions. Because of these factors, we no longer expect market share gains for the remainder of the year and now expect revenues between $74 million and $78 million for full year 2022. In the third quarter of 2022, there were approximately 28,000 new prescriptions for XHANCE, a modest increase compared to third quarter 2021, while the market which includes INS prescriptions written by any physician for any condition, a large component of which our prescriptions for allergic rhinitis increased 1% over the same period. For the first nine months of 2022, there were approximately 85,400 new prescriptions, a 3% increase compared to the first nine months of 2021, while the INS market increased 8% over the same period. Turning to Slide 11. In the third quarter of 2022, there were approximately 86,600 total prescriptions for XHANCE, which is flat compared to the third quarter of 2021, while the market increased 1% over the same period. For the first nine months of 2022, there were approximately 255,000 total prescriptions for XHANCE, a 5% increase compared to the first nine months of 2021, while the market increased 4% over the same period. Turning to Slide 12. XHANCE's market share of 5.7% in the third quarter of 2022 was unchanged compared to the prior year. The breadth and depth of physician prescribing, as measured by the total number of physicians who have patients filling XHANCE prescriptions did increase from the third quarter of 2021 to the third quarter of 2022. Regarding breadth, in the third quarter of 2022, 7,892 physicians had a patient fill at least one prescription for XHANCE, an increase of 10% compared to the third quarter of 2021. Regarding depth, the number of physicians who had more than 15 XHANCE prescriptions filled by the patients in the quarter grew as well, with that number increasing by 2% from the third quarter of 2021 to third quarter 2022 with approximately 1,500 physicians in this segment. I'll now turn the call over to Jonathan to discuss third quarter financial performance.

Jonathan Neely, CFO

Thank you, Peter. Turning to Slide 14. As we reported, OptiNose recognized $20.1 million of XHANCE net revenue in the third quarter of 2022, a decrease of 8% compared to the third quarter 2021 net revenues of $21.8 million. The primary driver of the year-over-year decrease is a one-time refund of disputed rebates of approximately $1.6 million in the third quarter of 2021 that did not repeat this year. For that reason, year-to-date results may be a better measure of performance. XHANCE net revenue for the nine months ended September 30, 2022, stands at $55.4 million, an increase of 8% compared to the prior year. Turning to Slide 15. Based on available prescription data purchased from third parties and on data we received directly from our preferred pharmacy network, XHANCE average net revenue per prescription for the third quarter of 2022 was $232, a decrease of 8% compared to $253 of revenue per prescription in the third quarter of 2021. As I just mentioned, the primary driver of this difference is the one-time refund of disputed rebates in the third quarter of 2021 that did not repeat this quarter. Net revenue per prescription would have been approximately $20 lower in the third quarter of 2021 without that refund. The growth of year-to-date net revenue per prescription is less influenced by one-time items than individual quarters are and thus may be more informative to some. Year-to-date, 2022 average net revenue per prescription stands at $218, an increase of 3% compared to $211 for the nine months ended September 30, 2021. As we discussed on our second quarter call, we made a change to our co-pay assistance program at the start of 2022 that was intended to increase net revenue and average net revenue per prescription by reducing the number and proportion of prescription fills by commercially insured patients and plans that have a high deductible. We believe this change had the intended effect and increased revenues per prescription in the early part of the year. We believe the increase in revenue per prescription due to the change in co-pay assistance helped offset the effects of increasing volumes through government plans and increases to contract rebate rates and commercial plans, both of which have the effect of decreasing net revenue per prescription. Turning to Slide 16. We have revised our financial guidance for full year 2022 for both net revenues and operating expenses. For the reasons Peter discussed earlier, we now expect XHANCE net revenue to be between $74 million to $78 million for the full year 2022. Previously, we expected net revenue to be between $85 million to $92 million. Second, we now expect average net revenue per prescription to be approximately $220 for the full year of 2022. Previously, we expected average net revenue per prescription to exceed $220 for the full year 2022. For the full year 2022, we now expect operating expenses to be in the range from $127 million to $131 million, of which approximately $9 million is stock-based compensation. That's down from prior expectations of operating expenses in the range from $129 million to $134 million, again, of which approximately $9 million was stock-based compensation. With respect to operating expenses, as Peter alluded to in his opening comments, we expect operating expenses in 2023 to decrease materially compared to 2022, both because of the natural reductions related to the conclusion of our chronic sinusitis research program and because of operational and promotional efficiencies that will reduce cash use while continuing to position XHANCE for a successful chronic sinusitis launch. Finally, as noted in the press release this morning, we amended our agreement with Pharmakon to eliminate the September 30, 2022, and December 31, 2022, trailing 12-month revenue covenants. I will now turn the call back over to Peter for closing remarks.

Peter Miller, CEO

Thanks, Jonathan. Before moving to Q&A, I'd like to take a moment to reiterate that overall, we are pleased with the progress we made in the third quarter of 2022 towards submission of our supplemental NDA for XHANCE. Chronic sinusitis is an enormous opportunity relative to nasal polyps. And while our nasal polyp business is facing some headwinds, it is a clinically important product that has achieved a scale that we believe creates an excellent launch pad for achieving the business potential that would be created by the first-ever approval in chronic sinusitis. Now I'd like to open the call up for Q&A.

Operator, Operator

Our first question comes from Glenn Santangelo with Jefferies.

Glenn Santangelo, Analyst

I just want to follow up on some of the comments related to the revenue shortfall this quarter. It kind of sounds like you're making the case that you're not really seeing a prescribing problem, but really more related to a decrease in the number of prescriptions being billed. I was wondering if you could elaborate on that point, maybe unclear to me. And then as it relates to the sort of the fourth quarter guidance, it kind of assumes no improvement again in the fourth quarter. And I just want to confirm if you're seeing any sort of change in the pattern at all in the fourth quarter?

Peter Miller, CEO

Well, Glen, thanks for the question. You understand it the way we've communicated it, Glen, which is what we are seeing based on pretty good data sources, and we believe to be true, is that physician interest in prescribing actually is growing, so in our view this really isn't an issue of physician interest. And I think that's proven, Glen. The product really works. That's the one thing we know for sure. And patients know that, and I think physicians know that. You're correct that what we're seeing is the number of prescriptions that are actually being filled is not as high a proportion as it was historically, especially with the payers focusing on limiting the product to the nasal polyp indication. So, as I said, it makes us feel encouraged that the physicians continue to write it. We clearly have to find ways to address the payer constraints such that we can get an improvement in that area. Regarding fourth quarter, Glen, we just have to look at the trends that we saw in September and into early October. We just, at this point in time, have to believe those trends are going to continue, and that's what led to the guidance in fourth quarter. Jonathan, do you have anything to add there?

Jonathan Neely, CFO

No, I think that's well said.

Glenn Santangelo, Analyst

Maybe I just want to ask one other quick question on the expense side of the equation. In the release, you said you expect expenses to decrease materially in 2023. And I can understand why that's the case, but I would also assume that there may be some incremental expenses around the commercial launch. And I know you plan on doing this via partnerships, so maybe there won't be that much. But sort of given the current burn rate, right, you pushed the supplemental NDA filing out into first quarter if you get the standard 10-month review, now you're kind of almost at the end of next year. And when we look at the cash on the balance sheet, could you maybe talk about the balance sheet and sort of how you see that playing out? And do you feel confident based on the reduction in expenses next year that you have enough cash to make it through to some type of an approval?

Peter Miller, CEO

Glen, I'll start with the first part, and then I'll let Jonathan take most of it. One unique aspect of our opportunity is the label expansion for chronic sinusitis. We've already established the necessary deployment to leverage a significant portion of that opportunity. Our territory managers are already working with physicians who not only prescribe for the nasal polyp market but are also the top prescribers for chronic sinusitis. Therefore, we don't anticipate needing significant additional expenses to prepare for the launch, which contrasts with many other launches. With that, Jonathan, I'll turn it over to you for the other questions.

Jonathan Neely, CFO

Yes. Glen, regarding our operating expense plan for next year, we anticipate natural reductions in expenses due to the conclusion of the clinical trial program, which will significantly decrease R&D costs. Additionally, in terms of SG&A, particularly sales and marketing, we aim to be more efficient in how we allocate resources to support the business for the nasal polyp indication while conserving capital to position XHANCE for its launch in chronic sinusitis, which we believe will be a major value driver for us in the future. I also wanted to ask Ramy to comment on the timing of the sNDA filing. Initially, we expected this to occur at the end of 2022, but we have now communicated an expectation for early 2023. Ramy, could you share your insights on what the expected action date from the FDA should be?

Ramy Mahmoud, President and COO

Thank you, Jonathan. Glen, I think you understood correctly. We're not expecting a significant delay. We still anticipate that this filing and the associated 10-month timeline will set the FDA action date in the fourth quarter. So we’re only looking at a few weeks, not an extended timeframe. The goal here is to optimize the filing itself and adjust the content based on the feedback we received from the FDA during the pre-NDA meeting in September. That meeting's purpose was to help us understand the FDA's requirements and ensure that we incorporate everything into the filing. I would also like to reiterate what Peter mentioned: for the launch, many elements typically required for a drug launch are already established for our product. The product is in distribution channels, the managed care contracts are secured, and our commercial organization is already covering the range of doctors we expect to be the most effective in prescribing the new indication. So, many of the usual components of a launch are already in place.

Peter Miller, CEO

My final comment, Glen, is that it is quite rare to have such an extensive label expansion for the specific audience that is already familiar with the product and its potential. While we are not providing any guidance in this area, there is a possibility for a fairly quick uptake and growth due to these factors.

Operator, Operator

Our next question comes from David Amsellem with Piper Sandler.

Isaac Somekh, Analyst

This is Isaac on for David. I have a few questions regarding the commercial side. How do the payer constraints we've encountered this year affect your thinking or strategy related to volume growth for the product in 2023? Do you believe there's a need to revamp the sales force or your efforts? Also, can you share how penetrated you are in your current call universe? Additionally, I noticed that volume growth for the overall category was somewhat sluggish this quarter compared to last year. Any insights on this would be greatly appreciated. Lastly, I saw that you adjusted the sales covenants of Pharmakon for this quarter and the next. How do you view the covenant requirements in 2023, and what is your plan if you are unable to meet them? Any insights on this would be helpful.

Peter Miller, CEO

Thank you, Isaac. I'll start with the first few points, and Vic can jump in if I overlook anything. Regarding our strategy adjustments, we're encouraged by our data indicating a sustained interest in prescribing, particularly in the number of written prescriptions. However, we're seeing that the fill rate is being affected by certain payer constraints, specifically the limitation of our product to patients with nasal polyps. This has had a larger dampening effect than we anticipated, which has influenced our projections for the year. We believe our sales force is strong and has effectively generated interest in prescribing, but we need to shift some focus to improving our pull-through efforts. This means providing our salesforce and doctors with the necessary tools to ensure that written prescriptions are ultimately filled. Our data shows that a significant number of physicians, particularly within our believer group of 1,500 doctors, are successfully writing prescriptions for a large patient base while managing payer issues. Our goal is to apply this successful management strategy to a wider range of physician groups. In addition to maintaining the interest in our product based on its efficacy, we need to enhance our pull-through efforts. There is evidence showing that many doctors are achieving good outcomes; we simply need to find ways to extend this success to a broader audience. We continue to believe that there is growth potential within the nasal polyp market. While we are generating interest on the prescription side, we need to ensure this interest translates into successful filling of prescriptions. Jonathan, I'll let you respond to the question about covenants.

Jonathan Neely, CFO

Yes. I'll also take on Isaac, your question about the category growth on a year-over-year basis. One thing to remind you is that what we pointed to for summer months, June, July and kind of into August, both July and August are part of Q3. And I think what we saw over this summer was maybe a deeper trough than what has been historically seen in the category. What we did see is that in the fall, which includes September, there was a good return to volumes inside of that market. But obviously, the net of 1% growth on a year-over-year basis has to capture the summer trough as well as kind of the return to what may look more like a typical fall. On the covenant side, as we noted in the press release in the Q this morning, we entered into the fourth amendment of the Pharmakon agreement. Pharmakon waived the Q3 and Q4 trailing 12-month revenue covenants. I think what you've seen historically is that as we've come into points where we needed relief on that agreement, that was the point in time that we addressed those things. And I'll just leave it at that.

Operator, Operator

Our next question comes from Gary Nachman with BMO Capital Markets.

Gary Nachman, Analyst

Okay. Great. First, Ramy, maybe you could elaborate more. What was the feedback from FDA causing the slight delay to the chronic sinusitis filing? What are some of the things you're specifically looking for when considering the much broader indication? Were there any surprises there? You said you needed more content, so maybe you could just give a little bit more color on that. So that's number one. And then two, Peter, have you been able to accelerate any of the partnership discussions for primary care? What's a reasonable time frame to get that done? And how much of a possibility is it that you'll be able to get that deal done? It also sounds like maybe you're planning more to do chronic sinusitis on your own, but I'm assuming that would just be in the specialty area. Is there even a possibility that you would do primary care on your own as well?

Ramy Mahmoud, President and COO

Okay. Gary, thank you very much for that question. So, as we said, the pre-NDA meeting was at the end of September. Just as a quick reminder, the primary purpose of a pre-NDA meeting is to have a discussion with the FDA that helps to clarify the content of the planned submission. So you go through all the different kinds of things that they would like to see presented to facilitate their review and as a consequence of that conversation, we identified a number of incremental tables and figures that would be helpful to them in the review. It took a little time to generate those additional tables and figures, which is complete by the way. And that takes a few weeks to do that kind of work, and that's the reason why rather than the end of 2022, we expect the submission to be in the early part of 2023. Peter, I’ll turn the other question over to you.

Peter Miller, CEO

Yes, Gary, I'll start by addressing the significant opportunity in primary care that we've mentioned frequently. There are 7 million patients currently receiving treatment in this area, and it's important to note that patients with chronic sinusitis have limited treatment options, primarily being referred to ENT or allergy specialists. Based on our extensive interactions with primary care doctors, we truly believe there is a substantial opportunity here. Regarding partnerships, as we've reiterated, I remain confident we will find a partner interested in this opportunity; it's just a matter of timing. Historically, partnerships have occurred at various stages, both preapproval and post-approval. Our main focus is enhancing value with the partnership. I believe we will establish a partnership to leverage the primary care opportunity effectively. As for pursuing this independently, that is not part of our current strategy. However, we do believe there is a significant number of primary care doctors we could target, about 2,000, who treat as many chronic sinusitis patients as larger ENT and allergy practices. Our current thinking is that we could strategically redirect some of our sales efforts towards these doctors to capitalize on this promising opportunity with our existing sales team. Nonetheless, we do not plan to significantly expand our sales team at this time to pursue the primary care opportunity.

Gary Nachman, Analyst

Okay. Great. And maybe just a follow-up. When you guys say that 2023 expenses will decrease materially, just what's the order of magnitude there, if you could quantify that in any way? And are you doing any real restructuring? So will you be modifying the sales team at all or just not backfilling vacancies? And if you do that, how will you be able to grow next year in nasal polyps like you said you think you'll be able to?

Peter Miller, CEO

Yes. On the sales side of it, we feel really good about our sales team, Gary. As we’ve said, we know that that team is driving real interest in the product, especially on, as we said, on the written side. We have to get more focused with that team, giving them all the tools in order to get the pull-through on the back end because of the payer constraints. So our belief is the sales team can really continue to grow this business even in the nasal polyp indication. So right now, that's our view. And Jonathan, I’ll let you sort of handle the rest.

Jonathan Neely, CFO

Yes. And so, Gary, in terms of a precise number for 2023 operating expenses, our typical practice has been to provide a specific operating expense guidance in connection with our fourth quarter earnings call. So we’re not here today with a specific target for operating expenses for 2023. But I think if you were to look at our current expectation for 2022, if you were to remove a significant component of the R&D expenses, that’s going to create good momentum towards a $100 million operating expense level. But we’ll come back and be more specific about what our expectation would be for 2023 at some point in the future. But that’s probably one way to start thinking about the order of magnitude of change.

Operator, Operator

Our next question comes from Stacy Ku with Cowen.

Stacy Ku, Analyst

We have a few. So first, for 2023, thank you for describing in detail all the dynamics underlying average net revenue per prescription. So for next year, what are your expectations for net pricing per prescription? Any additional color would be appreciated. And then a follow-up, kind of as you think about your updated thoughts on strategic discussions, what options are you considering and the potential avenues to maximize value creation? We followed up with this question as recently we saw another company that was acquired outright by Atres. They had noted the initial conversations were for ex-U.S. rights. So Peter, we appreciate any updated commentary.

Jonathan Neely, CFO

Yes. So I think, Stacy, again, in terms of our expectations for 2023, I think what we’ve done historically is we’ve talked about expectations for revenue, full-year operating expenses, and revenue per prescription, more in connection with our Q4 earnings call. So again, I don’t think we have an expectation to set today in terms of revenue per prescription for next year. And I’ll turn it back over to Peter to talk about the rest of the questions.

Peter Miller, CEO

Yes. And Stacy, we’ve been very clear on value creation front that our really singular focus is on optimizing shareholder value, and within that frame we are going to consider all opportunities that could accomplish that. And I’ll stop there.

Operator, Operator

Our next question comes from Brandon Folkes with Cantor.

Brandon Folkes, Analyst

I want to revisit the challenges we are facing with insurers. Is there a way to interpret the current data on chronic sinusitis negatively, particularly regarding the decline in off-label prescriptions this year? Could you explain what is driving this situation? Also, is this just a challenge with off-label chronic sinusitis prescriptions, or are there more requirements at the stations affecting the approval of nasal polyps prescriptions as well? Lastly, could you remind us of the percentage of XHANCE prescriptions that have been off-label year-to-date over the years?

Peter Miller, CEO

Thank you for the question, Brandon. You've grasped it quite well. The main limitation we face is due to our indication for nasal polyps. We've essentially tightened enforcement regarding plans that require doctors to confirm that patients have nasal polyps. This situation is impacting our ability to reach patients outside of this indication. Our data shows that most physicians are restricted to prescribing for nasal polyps because of the payer environment, rather than a lack of belief in the product’s effectiveness. This limits us to a smaller group compared to the larger population that suffers from chronic sinusitis. However, among the nasal polyp approvals, we are seeing high approval rates. If a physician diagnoses a patient correctly and uses the appropriate diagnosis code, approval rates for nasal polyps are very high. This is why we believe that by working with our sales team to enhance our pull-through strategies, we can continue to grow this business. We aim to ensure that our sales team equips offices and doctors with the necessary tools for securing approvals. Regarding chronic sinusitis, we anticipate a substantial opportunity in this area as the patient population is significantly larger, and many of our payer contracts already accommodate this indication. Once we obtain approval for chronic sinusitis, it will be included in our contracts, which could lead to a significant increase in business once we secure that indication. There is currently a notable amount of off-label writing, driven by approximately 1,500 doctors prescribing more broadly. While most physicians do not prescribe outside of nasal polyps, those who do typically achieve a reasonable approval rate, although this rate for off-label prescriptions is lower compared to nasal polyps. Nevertheless, all these factors lead us to believe that if we secure the chronic sinusitis indication, we could see a much larger business. While we face challenges with nasal polyps, we believe we can better focus our sales team on maximizing pull-through, and with the chronic sinusitis label, we expect to significantly increase our business potential.

Operator, Operator

I am showing no further questions at this time. I would now like to turn the conference back to Peter Miller for closing remarks.

Peter Miller, CEO

Yes. Well, thanks, everybody, for joining us this morning. We appreciate the interest and look forward to being in touch.

Operator, Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.