Pear Therapeutics, Inc. (PEAR) on Q1 2022 Results - Earnings Call Transcript
Operator: Good afternoon, everyone. Welcome to the Pear Therapeutics First Quarter 2022 Earnings Conference Call. My name is Justin, and I'll be your operator today. All lines have been placed on mute to prevent background noise. This call is being recorded. A replay of the webcast will be available in the Investors section of the company's website approximately two hours after completion of the call and will be archived for 30 days. I'll now turn the call over to your host, Meara Murphy, Senior Director of Corporate Communications.
Meara Murphy: Thank you, Justin. Welcome to our first quarter earnings call, and thank you for joining us today. With me today, are Corey McCann, our President and CEO; Chris Guiffre, our Chief Financial Officer and Chief Operating Officer; Erin Brenner, our Chief Product Development Officer; Yuri Maricich, our Chief Medical Officer; Ronan O'Brien, our General Counsel and Chief Compliance Officer; and Julia Strandberg, our Chief Commercial Officer. To start the call, I'll turn it over to Ronan for the Safe Harbor statement.
Ronan O'Brien: Good afternoon. Some of the statements we make in today's call may constitute forward-looking statements. This includes statements concerning our future business, operating results, management's intentions, beliefs and expectations about future results, events, strategies, operating plans, performance or financial condition, all of which are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended. Actual results may differ materially from those indicated by these forward-looking statements due to a variety of important factors. Additional information regarding these factors is included in our Annual Report on Form 10-K and quarterly report on Form 10-Q, filed with the SEC. Except as required by law, Pear assumes no obligation to update or revise these forward-looking statements, even if actual results or future expectations change materially. With that, it's my pleasure to turn the call over to Corey.
Corey McCann: Thanks, Ronan. And thanks everyone for joining us today as we discuss Pear's first quarter 2022 results. Pear's goal is to transform healthcare by pioneering software as a mainstream medical treatment. We're making meaningful progress toward achieving that goal. Today, our commercial products have demonstrated value to patients, clinicians and payers. Including robust patient engagement, strong clinical outcomes, enhanced access for underserved and marginalized patients, billing and coding infrastructure for clinicians, and real world cost savings for payers. The future is bright for PDTs, the present looks good too. We're off to a solid start in 2022. Building on the momentum we saw last year, revenue grew 108% quarter-over-quarter. We saw growing demand with more than 9,200 total prescriptions this quarter, we moved closer to making PDT as a mainstream medical treatment, with HCPCS codes from CMS and integration into Epic's Electronic Health Record. We also broadened our reach to underserved patients with the launch of reset and reSET-O in Spanish. This momentum continues into the second quarter and one great example is how our payer value proposition continues to advance with our first 12-months and 24-month data demonstrating durability of clinical outcomes and reduction in healthcare resource utilization. Those are just the headlines. Julia and Yuri will provide details in just a moment, then, Chris will share financial and operating results and update you on the work we've done to simplify how we report our progress. Finally, all of us will wrap up by answering your questions. Julia, please take it away.
Julia Strandberg: Thanks, Corey. I'd like to underscore our commercial momentum by highlighting a few market moving events. First, let's talk about our progress expanding demand. We are seeing both, more prescriptions from existing customers, as well as new customers coming on board. We see demand growing in the future through our engagement with large addiction clinics, health systems and (ph) where we're creating access. We believe our progress is fueled by our product optimization for clinicians. This includes, streamlining workflows via integration into EMRs like Epic. It also includes clinicians gaining opportunities for reimbursement via newly granted PDT codes. Second, let's talk about our progress with states. Last year we initiated access for reSET and reSET-O in Indiana, Kentucky and Ohio, followed by Massachusetts becoming the first state to cover our PDTs for all Medicaid station. Already this year, we announced Michigan and Oklahoma to our growing list of states focused on addressing the worsening addiction epidemic by providing patients in recovery access to reSET and reSET-O. All of these states provide references for coverage of our PDT. I'm also pleased to share there is a growing number of states like Delaware, Kentucky, Michigan, Minnesota and New York with proposed or passed legislation supporting access to PDTs. Third, let's talk about our activities at the federal level. We convened a bipartisan, bicameral lead sponsor to introduce the access to Prescription Digital Therapeutics Act of 2022 in March. If the bill is enacted, it would have a significant impact on Pear because it creates a benefit category for our products by Medicare, Medicaid and commercial payers. It would also mandate coverage under Medicare. Additionally, the White House released its National Drug Control Strategy, which specifically mentions FDA-cleared digital tools to treat addiction and deliver contingency management. We believe reSET and reSET-O remain the only options fitting these criteria. And finally, we worked to make PDTs mainstream through our continued effort to establish simple and consistent product coding. Effective April 1, CMS has made a HCPCS code available for all three of our commercial products. CMS has stated that only FDA-cleared prescription digital behavioral therapies can be built using these codes. The new HCPCS code provides a clear pathway to code cover and build PDTs across major payers. Now there is an option for PDTs to be reimbursed through pharmacy or durable medical equipment benefit. This benefit type optionality increases the number of payers who are able to cover PDTs and ultimately our impact on patients. Now I'll turn the call over to Yuri, who will walk you through the continuum of data for all three of our commercial products.
Yuri Maricich: Thank you, Julia. Our PDTs are supported by a growing body of data and evidence, including robust randomized controlled trials, real world clinical data, and real world health economic data. The combination of these types of evidence enables Pear to show value to key stakeholders. And we believe this has accelerated our progress with clinicians and payers. I will now walk through the topline summary and look forward to taking a deep dive into our data at our Investor Day that we will host on June 6. Let's start with our product reSET, for substance use disorder or SUD. ReSET is indicated to treat patients with SUD related to alcohol, stimulants, cannabis and cocaine. For reSET, we have two successful randomized controlled trials in more than 1,000 SUD patients. Top line results from the pivotal trial showed that reSET doubled rates of abstinence for SUD patients. We expect to soon publish the first real world engagement and clinical outcomes data for reSET. We are also proud to share that our first real world health economic data for reSET has been accepted for publication. We expect to announce results of this six-month data prior to our Investor Day. Now let's move to our product reSET-O. reSET-O is indicated for use in combination with medication assisted therapy to treat opioid use disorder or OUD. We have three successful randomized controlled trials in more than 450 OUD patients, including two with reSET-O plus buprenorphine and one with reSET-O plus Methadone. These studies evaluate outcomes out to 12-months. We published real world clinical data in two peer-reviewed manuscripts, each with over 3,000 patients who are prescribed reSET-O across the US. These analysis found a positive association between product use and clinical outcomes. Furthermore, these results demonstrate that reSET-O is readily and broadly used by patients with OUD with 85% of patients retained in reSET-O treatment at 12 weeks. We have new 12-month real world health economic data for reSET-O, building on prior publications of encouraging results at six-months and nine-months, that is being presented today at the Professional Society for Health Economics and Outcomes Research Annual Conference known as ISPOR. This study has also been accepted for publication in a peer-reviewed journal. Here we followed more than 900 patients with OUD for at least 12-months after initiation of reSET-O. The study showed a durable treatment effect with sustained reductions of inpatient hospitalization and emergency visits among other findings of importance and cost savings data, which we look forward to sharing upon publication. Our evidence suggests long term durable clinical outcomes for those with SUD and OUD treated with reSET and reSET-O respectively, while also reducing the need for many of the more costly consequences of addiction, we are eager to share cost savings data in the coming weeks, which suggests the payers who are not providing access to reSET and reSET-O are not only denying patients effective treatments, but are also failing to realize cost savings that are meaningful to their business and the communities they serve. Finally, Somryst has been evaluated in more than 3,000 chronic insomnia patients across 29 completed or ongoing studies. Data showed a reduction in insomnia severity symptoms and durable effect on insomnia, depression and anxiety, up to 18-months. A real world clinical evaluation of more than 7,000 patients was recently published, which demonstrated consistent outcomes when compared to rigorous clinical trials. We will present 24-month real world health economic data for Somryst at ISPOR tomorrow. These data show, in a real world cohort of 252 patients with chronic insomnia, treatment with Somryst was associated with clinically meaningful improvements and insomnia symptoms, as well as reductions in the use of health care services through 24-months. Additional results, including cost savings will be presented at ISPOR tomorrow and the full results of the analysis have been accepted for publication in a peer-reviewed journal. Our products work, as demonstrated by RCT data, real world clinical data and real world health economic data. And because PDTs data with every treated patient, our data sets continue to grow. Stay tuned for a deeper dive at our Investor Day on June 6. With that, I will hand it off to Chris.
Chris Guiffre: Thanks, Yuri. Corey, Julia and Yuri shared some value creating highlights from the quarter. Now, I'll talk about financial results and operating metrics. Then, we'll open the call up for Q&A. We reported $2.7 million of revenue in Q1, up 108% over the prior quarter and roughly 7 times Q1 of last year. This growth was driven by progress in our most important operating metrics. One, total prescriptions; Two, fulfillment rate; Three, payment rate; and four average selling price or ASP. Because of the importance of these four operating metrics, we now will provide guidance and quarterly updates on all four of them going forward. You can see the definitions for these metrics in our earnings release and in the MD&A section of our 10-Q, which will be filed tonight. Now let's walk through each of the four metrics. First, total prescriptions. We had more than 9,200 total prescriptions in Q1, in line with our expectations. Because of the solid start to the year we feel good about the rest of 2022. Second, fulfillment rate. In Q1, we had a 57% fulfillment rate, also in line with our expectations. That fulfillment rate is another reason to feel good about the rest of 2022. Third, payment rate. We received payments for 50% of the filled prescriptions in Q1. We are adding payment rate as an operating metrics for which we provide guidance and quarterly updates because of its importance to forecasting our commercial progress. We previously used covered lives as a proxy metrics for payment rate. Payment rate, however, is the actual metric and it reflects the rate at which we convert fulfilled prescriptions into paid prescriptions. We forecast payment rate for fulfilled prescriptions for this year to be in a range of 50% to 65%. Finally, ASP. Our ASP in Q1 was $1,353. ASP is another important operating metrics for which we will provide guidance and quarterly updates going forward. We forecast full year ASP per paid prescription to be in a range of $1,150 to $1,350. We see these four operating metrics as useful in understanding our commercial model and in estimating future product revenue growth. So I'll spend a minute making sure you understand how they relate to one and another. First, total prescriptions times fulfillment rate equals fulfilled prescriptions. Again, total prescriptions times fulfillment rate equals fulfilled prescriptions. Second, fulfilled prescriptions times payment rate equals paid prescriptions. Let me say that once again too. Fulfilled prescriptions times payment rate equals paid prescriptions. And third, paid prescriptions times ASP is an indicator of potential total product revenue which, of course, is not the same as GAAP net revenue, which we think should help to those of you who are trying to model our product revenue growth. Further financial results to note, on March 31, we had $137.8 million of cash, cash equivalents and short-term investments on the balance sheet. That will take us well into 2023. Our operating expenses were $37.5 million in the first quarter, which is higher than expected primarily due to investments to build infrastructure for the PDT category and stock compensation charges associated with annual equity grants. We expect a small decline in quarterly expenses for the remaining three quarters of this year. With that, Justin, let's open the call for questions.
Operator: And thank you. And our first question comes from Michael Cherny from Bank of America. Your line is now open.
Michael Cherny: Good afternoon, and thank you for the detail so far. Maybe, I don't know if this is a question for Cory or if anyone wants to jump in, but I would like to know a little bit more as we learn more about your business and to what you are playing PDTs on how you think about the evolution of marketing spend? And in terms of the channels, what have been the most successful opportunities that you've had, where do you continue to focus your spend? Are you working with the likes of some of the physician organizations like Doximity, Medscape, et cetera? I'd love just to know a little bit more about where you're seeing the best returns as you continue to work on increasing both the fulfillment and payment rate?
Corey McCann: Michael, thank you so much for your question. We appreciate you dialing in. As we think about the business, really, we see a world where software is a mainstream medical treatment and is ultimately applied across most of these conditions. What we are working to build at Pear is really a company which has both the deepest pipeline of PDTs and all of those PDTs roll up to the same infrastructure, again, we use something called PearCreate to build our PDTs and PearConnect to house them all in the same infrastructure. As we think about the economies of scale inherent in that infrastructure, we believe that there is a tremendous opportunity for cross prescribing. And what I mean by that is, we see what are quite high rates of clinician engagement with our back-end clinician dashboard. Those are engagement rates before the CPT codes, which we mentioned today, came online and we see opportunities really, where clinicians are able to cross detail our PDTs to many, if not all of the patients that they might see. And so, as we previously articulated, our next stop from a pipeline and portfolio perspective is the build out of all things mental and behavioral health that includes assets like major depression, as well as alcohol use disorder. And to that end, we see the ability to continue to reduce what is marketing spend and ultimately, marketing spend per unit patient really, as we're able to develop scale and efficiencies across multiple products.
Michael Cherny: Got it. Helpful. And then I guess on the real world evidence data, clearly, a couple of important milestones as you present that data, how quick -- who is looking for the data most, I guess? How quickly does this get communicated through to your Pear partners, to your state partners in terms of how they think about the approach to further supporting your expansion?
Corey McCann: Thanks, Mike, for that question. Also, certainly we view our real World Health Economic Data as really a fundamental pillar of the value that we're able to create for payers. And we've seen both commercial payers as well as state payers. We are highly receptive to that data. We saw that receptivity really come through as we released our first data set for reSET-O which were our reSET-O six-month data and we've really seen a continued audience for the nine-month data and we believe that 12-months is an important milestone within this space. And so that's a very long-winded way of saying, one of our fundamental advantages is our data collection. We will continue to collect data per unit commercial patient treated and that is data at the patient reported outcome level, its data at the clinician reported outcome level and it's data that rolls up to claims and health economic outcomes, really will continue to push this data and published this data in order to help us bring on additional covered lives and open up market access for additional patients.
Michael Cherny: Awesome. Thank you so much.
Corey McCann: Thanks, Mike.
Operator: And thank you. And our next question comes from Charles Rhyee from Cowen. Your line is now open.
Charles Rhyee: Great, thanks for taking the questions. I wanted to talk about, obviously, the agreement which you have with Michigan and Oklahoma that you signed. You talked about last quarter as well. I think, Massachusetts is the only one where you -- from a state Medicaid perspective is on the formula and is covered. Can you talk about the other states where you are in terms of getting full coverage, because the way I understand it right now, with these states, they kind of buy bulk licenses and make it available to physicians. I just want to understand how that process works for patients to get access to the prescriptions in those states. And maybe talk about sort of the uptake that you're seeing as a difference when you kind of get full coverage in Massachusetts versus the models that you're having so far in these other states? Thanks.
Corey McCann: Charles, thanks for the question. And as you rightly point out, we have a number of different arrangements with different states including Indiana, Ohio, Kentucky, Michigan, Oklahoma and Massachusetts. The majority of those arrangements provide access to a subset of patients in a given state. We're very excited about the steps forward that the state of Massachusetts has taken. And Massachusetts is in fact the first state where all Medicaid patients in the state have access to reSET and reSET-O. I think agnostic of the type of access agreement, it is our goal to then pull through in these given access agreements and what that means is really very much something that resembles an enterprise software sale, where we're educating large health systems and large groups of providers in order to help them to understand the benefits of prescribing our PDTs, but also to understand the mechanics of prescribing our PDTs and I think as you rightfully point out, as we move forward, we'll continue to operate under a number of these different types of access agreements. And that's why we've really tried to simplify the modeling by focusing on payment rate here, which is something that we believe is very material both to our business, as well as to revenue generation going forward.
Charles Rhyee: Yeah. I appreciate that, Corey, and certainly, the guidance you gave and the reiteration, it's all positive, just I guess what I'm trying to get at is like, how close are we with these other states to move from subsets to give you a broad coverage. Are they seeing -- I'd imagine they're seeing the value in their patient population and their costs, namely, right, in their outcomes, given what Yuri talked about in terms of what you're already seeing in the real world evidence studies. Is that a focus for you guys to push to get more broader access to the way Massachusetts has? And I guess the question is, do you see a material difference in when you have brought access versus the way the other state is doing, because if not, then maybe it doesn't really matter I guess is my point?
Corey McCann: Charles, I think it's probably a little bit beyond the scope of what I can speak to today to speculate on the positions of individual state or individual payers in determining their access status. I think that said, it's very fair to think about this as a story which is very deeply based in real world clinical data. And as you've seen us continue to do quarter-over-quarter. As I mentioned, each patient who utilizes the products in the real world adds to our dossier of data, allows us to look at, particularly, efficacious and effective subsets of patients and ultimately continue to demonstrate our health economic value to payers. So I think the influence that you made is an apt one, where in many of these arrangements we have the opportunity to demonstrate not just what particular state that we're able to bend the cost curve and generate real world health economic outcomes, but those projects become demonstration projects, which really help us to then radiate more broadly into additional base.
Charles Rhyee: That's helpful. And maybe just one follow-up for Chris. You said that, obviously, we take fulfillment rate times payment rate, times ASP and that gives you a good approximation of net revenue. What would be the delta? What could be different that would affect net revenue from just found that formula?
Chris Guiffre: Sure. So if I could just one sort of bit of set up. When you think about multiplying of those four metrics, each of them is an important part, together they get you an estimate of revenue. And as you point out, there is a difference between estimating forward-looking revenue and calculating revenue looking back under GAAP. The biggest drivers, of course, are number one, our revenue recognition policy under ASC 606 requires us to defer some of the revenue that we earn in any quarter. And then number two, there are gross to net adjustments, which I won't discuss here, because we don't provide non-GAAP financial measures. But that is the other main category of delta between the number you would get by multiplying the four of those things together and what you see us actually reports is GAAP net revenue.
Charles Rhyee: Great, that's helpful. Appreciate that.
Chris Guiffre: Thanks, Charles.
Operator: And thank you. And our next question comes from Neena Bitritto-Garg from Citi. Your line is now open.
Neena Bitritto-Garg: Hey guys, thanks for taking my question. I was just wondering if you could talk a little bit more about the kind of demand metrics during the quarter? And what you think really drove the strength to get to 9,200 scripts, were there any sort of one-time events or anything like that that we should be aware of as we think about kind of the cadence of scripts moving forward through the rest of the year? Thanks.
Corey McCann: Neena, thank you for your question. And I'd like to turn it over to Julia Strandberg, our Chief Commercial Officer to speak to us a little bit more about volume and demand generation.
Julia Strandberg: Thanks, Corey. So as I mentioned, our demand efforts are certainly maturing. We are seeing expansion in two ways, so more scripts from existing customer with large potential and as well as bringing new customers on board. And when we think about our strong integration and our scale through the year, our focus is on large addiction health clinics that span Interstate as well as multiple states. Second is engaging in large health system, where there are multiple states, multiple locations and multiple disease states within those large systems. And then third is, deeply engaging in states where we've already created access and as we spoke earlier both with (ph) in Oklahoma. So, we continue to make progress and largely that progress is fueled and that growth is fueled in demand by simplifying or optimizing our integration and ease of use with our clinicians. So that is integration into EMRs like Epic. It is current and future state as clinicians have opportunities to be reimbursed through CPT code. And then, of course, that is further emphasize as we continue to layer on a growing body of evidence and data that suggests value for our PDTs. So garnering access in key locations, continuing to grow within current customers, expand to new customers, continue to create optimization pathways for prescribing, layering on data and evidence that support further prescribing behaviors.
Neena Bitritto-Garg: Got it. That's helpful. Thank you.
Operator: Thank you. And our next question comes from Eric Percher, Nephron Research. Your line is now open.
Eric Percher: Thank you. I have question on the operating metrics. The new metric of payment rate now at 50%, do you expect that payment rate increases over the course of the year given guidance, simply with more coverage? And then with ASP, the guidance suggests it comes down over the year. Is that also related to the type of coverage that you just mentioned, addiction verse health system, state and commercial. What are the dynamics underneath those two?
Corey McCann: Thanks Eric, for the question. Chris, would you be willing to speak to that one?
Chris Guiffre: Sure thanks. So Eric, I am going to take ASP second and try and knock off your question about payment rate first. But before I do that, since this is new to everyone. If you'll indulge me, I just want to do some multiplication just to make sure that everyone has got how this works. So, assume we have 100 total prescriptions and a 50% fulfillment rate, that means we have 50 fulfilled prescriptions. Then we have a 50% payment rate, that means, we have 25 paid prescriptions. It is the paid prescriptions that you would multiply by ASPs to make that rough estimate of total product revenue looking forward. So just to make sure that that sort of foundation is set, let's talk about payment rate. Payment rate is the percentage of billed prescriptions that are paid. So the way that we can drive the payment rate up to the middle or hopefully the high end of the range that we forecast is in a number of ways. Number one, we can continue to drive progress with traditional payers in the way that we've been doing since we took over the launch of these products. And as you heard, I think both Corey and Julia have mentioned, we do that through a number of mechanisms, the largest of which we tried to highlight on this call, which is this remarkable body of evidence we have with RCT data, plus real world clinical data, plus real world health economic data. And that real world health economic data we have found to be quite powerful. But in addition to driving payment rate up with traditional third-party payers, we also have had some success with these access agreements that you've heard us talk about. That is a situation in which a state, typically, it can be a commercial organization too, but for the most part we've seen it with states, prepay for a certain number of scripts. They buy scripts from us and then they allow doctors in their state to provide those scripts to patients. Obviously, the payment rate there is quite good because of the fact that the scripts are prepaid. So I want to make sure the payment rate explanation makes sense before I jump to ASP.
Eric Percher: I'm with you. Thank you.
Chris Guiffre: Okay. So let's talk about ASP. ASP truly is a function of leverage, when we need to give larger discounts and rebates, it drives ASP down, and when we don't need to do that, it drives ASP up. As we do larger and larger deals to achieve our revenue forecast, we expect ASP to go down slightly as you know, that's why you will see that our current ASP for Q1 is at the high end of the range that we forecasted for this year. Put another way, I think it would be a good thing if our ASP goes down a bit over the course of the year, because that would be consistent with the size deals we think we need to hit our $22 million in guidance. Even though we want bigger deals that have the potential to drive down ASP, we're focused on continuing to generate additional real world health economic data, as well as enhancing our products, both of those things should help us to enhance pricing power, which of course would help push up ASP. To reiterate, our guidance is $1,150 to $1,350 for ASP this year, which means we expect to see ASP impacted positively by additional data and product features and negatively by doing commercial deals of increasing SaaS, does that help?
Chris Guiffre: Yeah, appreciate the math, Chris. One follow-up, which is, we now have payment rate, are you withdrawing covered lives, or are you saying you will give it annually, but not quarterly?
Corey McCann: You want to take that Corey?
Corey McCann: So we are withdrawing covered lives, covered lives is a proxy metrics for payment rate, payment rate is the actual metric. So we'll be reporting the actual metric going forward as opposed to the proxy metric, because the actual metric is what really matters as we begin to unlock the true revenue potential of Pear. Since you asked though, I'll share what I can about covered lives as we know it today. Managed Markets Insight in Technology or MMIT reported at the Asembia conference last week that Pear has approximately 80 million covered lives. We thought that number sounded high and we let MMIT know that. Since we are no longer reporting on the proxy metric, we have not attempted to confirm MMIT's number. I think it's important to note that calculating covered lives is a tricky business, we know of covered lives under contract when we signed with payers. But we don't typically know if covered lives in payers put us on formulary without having us a sign a contract. Moreover, the whole thing just got more complicated now that we don't just have pharmacy covered lives and we're adding DME covered lives. We will continue to put out press releases announcing coverage decisions when we are permitted to do so. But I think you know that many payers prohibit companies from disclosing coverage decisions, so we can't promise you that you will learn of every coverage decision will last. I guess maybe to try and sum all that up, we believe covered lives serves us well as we were going from zero covered lives to 10s of millions of covered lives, but we're not going to continue to attempt to provide accurate reports on the proxy metric, and instead, we've started to report on the actual metric, which is payment rate and that is a very important metric for our future revenue growth. I think maybe the last thing I'd say is, it is fair to say that we are satisfied with the progress we're making on payment rate, but we understand that we will need to get that payment rate up significantly over time if we're going to unlock Pear's full revenue potential.
Eric Percher: And so that was where I was going to go. So what is your feel for where payment rate should be given mature products, understanding you always be introducing additional products?
Corey McCann: All right. I think it's a great question. But I think the way I'd like to answer it may be just a smidge dissatisfying to you, because I don't want to speculate. I think we are confident in putting out our guidance for this year of 50% to 65%, and you saw that we came in at the bottom of that range this quarter, we do intend to push the number up over the course of the year and we believe we'll be able to do that. But the only way I could accurately answer your question about where it lands when we mature is to say that, we certainly hope and expect it will be north of the range that we provided for 2022, but we won't get all the way there in this calendar year.
Eric Percher: All right, thank you for the detail.
Corey McCann: My pleasure. Thanks, Eric.
Operator: And thank you. And our next question comes from Keay Nakae from Chardan. Your line is now open.
Keay Nakae: Yeah, thanks, Keay from Chardan. I know it's a small number, but we did see cost of sales decline slightly sequentially on much higher script. So I know there's some rewards with what we said, so help us kind of put all this into perspective to model this out forward.
Corey McCann: Keay, thanks for the question. Chris, would you mind taking that one?
Chris Guiffre: Sure. Hi, Keay. I think you're right, that it's a small number. We did have modest improvements, but there is nothing notable enough to highlight for you on this call. I think you're going to see a little bit of that bounce up and down over time, because we're still relatively early in our launches and in the maturation of these products in this market segments, but I don't have anything that I can point to you to say this is an important driver of that slight improvement.
Keay Nakae: Okay. And then specifically for OpEx going forward, maybe just $13 million in R&D. How do we think about that specific line item going forward?
Corey McCann: I'm sorry, I didn't quite hear that, I have to admit. Would you mind saying it again, please?
Keay Nakae: R&D expense within our OpEx, how do we think about that going forward?
Corey McCann: Sure. I'm sorry, I didn't understand the question initially. So we do not, as you know, provide overall expense guidance and we therefore don't provide it by segments. But what I think we have said previously in public settings and what I'd be happy to say in this public setting is that, while we have significant aspirations to use PearCreate to drive additional product candidates through the development process, through the regulatory process and onto the market, we are also being careful stewards of our cash in what are, let's call it, sub-optimal conditions to raise money right now. So I think what we should expect to see us do is continue to move the pipeline forward, but in a very cautious way for now, because we think that managing cash burn in this environment is an important endeavor and we're trying to balance that with our fervor for getting more of our candidates across the goal line with FDA.
Keay Nakae: Okay, great. And then finally, on the telehealth side, you've announced some recent activity there. I'm just wondering on the margin how much is this going to help in terms of adding to prescriptions?
Corey McCann: Yeah. I think this is a place where we probably won't be able to provide any sort of firm guidance. That said, I think one of the unique attributes of prescription digital therapeutics is that, they're uniquely suited for both face-to-face i.e. brick and mortar encounters as well as telemedicine encounters. And I think if there is one thing that the COVID pandemic showed us is that, telemedicine does not address the supply chain issues inherent in our healthcare system. And so, whereas many patients are currently able to see a telemedicine visit once a month, once a quarter, PDTs really nicely fit in the gaps between those telemedicine visits and give them both remote and asynchronous care as opposed telemedicine, which is remote and synchronous. So that's the sort of long winded way of saying that we won't be able to project exactly what sort of contributions the different remote access forms may provide. But we do believe that there is a tremendous opportunity for telemedicine and PDTs to go hand in hand.
Keay Nakae: Okay. Thanks.
Corey McCann: Thank you for your questions.
Operator: And thank you. And our next question comes from Judah Frommer from Credit Suisse. Your line is now open.
Judah Frommer: Yeah. Hi guys. Thanks for taking the question. Maybe just first to follow-up on the telehealth and ramping in the Spanish-language versions of reSET and reSET-O, are there any early learnings on what the patient and prescriber profiles look like, kind of in those channels? Does it make you think any differently about how docs and patients may utilize the services?
Corey McCann: Judah, thank you for the question. I think preliminarily, we're not seeing what I would characterize as fundamental differences between the Spanish-language utilization and the English utilization. I think what we are seeing is a tremendous hunger both on the part of providers as well as payers to be able to operate toward health equity and inclusion criteria. And really, that is one of the principal strengths of prescription digital therapeutics is to be able to extend care across socioeconomic boundaries, across racial boundaries, across ethnic boundaries and across geographic boundaries. And we are seeing that value proposition resonates strongly with payers as this is a high point on the payer and provider agenda and we're able to frankly be able to collect data to support that value proposition.
Judah Frommer: Okay. That's really helpful. And then, apologies if I missed this, but just as we look toward 12-month data for reSET-O and 24-month data for Somryst, is there any color you can provide on conversations with payers and how they're thinking about this longer duration data that is coming out? Are there kind of benchmarks for them that they'd like to see in terms of durability of effect for your products, or is it just kind of more is better and eventually we'll get to that ?
Corey McCann: Judah, thank you for the question. And we certainly believe in the power of the real world health economic data. I'd love to tag in Yuri, our Chief Medical Officer, who can speak to this a bit further.
Yuri Maricich: Yeah. Thanks, Corey. And thanks for the question. I mean I think what we're seeing from our discussions with payers is that, the sooner a value or cost savings is realizes that's important, but they want to also see that durability. Right? And so we had previously published the six-month data for reSET-O, we added on the nine-month data. But then the question is, does this persist? And for many payers, the time horizon is of a couple or two, maybe a little bit more years. And so this is where the 12 month data and now the 24-month data really I think fit in nicely. So they see -- we get our return from a health economic perspective, particularly around reduced in patient and reduced ER visits very quickly, based on what we've already published with the six and nine months, but then that data continues to be durable and persists at the type of time horizons that they're typically looking at. And so, then I think what's really nice as we continue to do this forward is, to do this not only on a national data, but then to provide this for their specific patient populations and allow them to see how they are doing relative to their peers.
Judah Frommer: Got it. Thank you.
Corey McCann: And Judah, if I can maybe just very briefly add on to Yuri comments and piece. Just a brief trailer, we'll be speaking about this data as well as some of our other real world and health economic data at our June 6, Investor Day and we'll be releasing more information on that event.
Judah Frommer: Great. Thanks, Corey.
Corey McCann: Thanks, Judah.
Operator: Thank you. And our next question comes from Marie Thibault from BTIG. Your line is now open.
Marie Thibault: Hi, good evening and congrats on a strong Q1. Thanks for sitting me and I had some phone disconnection issues. Wanted to start here with sort of a basic question and see if I could get any detail kind of on run rate throughout the quarter or just any trends you saw throughout Q1? Certainly, your guidance looks reasonable to us, but I would love to hear kind of where you exited the quarter in terms of prescription volumes or any ramping trends throughout the quarter?
Chris Guiffre: Marie, I always love it when you keep me on my toes with your questions. And I hate to disappoint. But I think what we'd like to do is report on the very strong quarter we had, and I appreciate you acknowledging that, provide the guidance that we provided for the rest of the year. And I think you can read into the guidance what you want to read into it, but we are confident in the guidance. So we would not have put it out there, but providing any intra-quarter or end of quarter trending guidance I think is beyond the scope of what I'm prepared to do today.
Marie Thibault: Okay, fair enough. Chris, I had to try. I will ask your question on your pipeline. I wanted to hear if there are any sort of brief update in terms of development milestones on any of the pipeline products, things like AUD, MDD, the SoftBank collaboration, the pain candidate. Certainly, a lot going on there, so if there is one or two highlights you could hit on that for us? Thank you.
Corey McCann: Marie, thanks for the question. And I'd love to again tag in Yuri.
Yuri Maricich: Yeah. Thanks so much, Corey. So on our pipeline, which as Corey highlighted earlier, is driven by PearCreate. I think one thing just to draw people's attention to was that, in Q1 we were pleased to have received the safer technologies program or the STEP designation from the FDA for our product candidate Pear-010, which is designed for the treatment of acute and chronic pain. And what is exciting about that is that, the candidates within the neurology category of our pipeline and we believe it is well suited for treatment with the PDT because there is currently more than 50 million patients that are left to choose between pain and treatment by opioids. Also, as you mentioned, in March we executed a services agreement with SoftBank Corp to develop a digital therapeutics for the treatment of sleep-wake disorders for the Japanese market as a part of our strategy to commercialize digital therapeutics in international markets. And as you know, in late 2021 we announced the FDA breakthrough designation for alcohol use disorder and that we acquired those two clinically validated assets targeting major depressive disorder for the development of our own PDT candidate there. At this time, we're not able to share timelines at that point for these three product candidates, but I do just want to highlight and Chris referenced this also earlier, that we really believe that these assets when developed on our PearCreate platform begets development scale. And then as Corey talked about around the use of the dashboard that the commercial delivery of these assets via PearConnect platform generates commercial scale. So really appreciate the question. We're looking forward to sharing more as we progress.
Marie Thibault: Very good. Thanks so much.
Corey McCann: Thanks, Marie.
Operator: Thank You. And I'm showing no further questions. I would now like to turn the call back over to Dr. McCann for closing remarks.
Corey McCann: Thanks everyone for the questions and thank you, Justin. Today, we highlighted our commercial launches, as well as the growing evidence base demonstrating the value of our commercial products. In the first quarter, we grew script volume, fulfillment rate, payment rate and ASP. Correspondingly, we also significantly grew our revenue. In parallel, we continue to march toward making PDT as mainstream medicine by building the critical discovery, development and commercial infrastructure we call PearCreate and PearConnect. We look forward to hosting our first virtual Investor Day on June 6 at 10:00 AM Eastern Time. We will provide more details about the event in the coming days. Thanks for your time. As always please reach out to Meara Murphy, our Head of Corporate Communications if you have any questions.
Operator: That concludes today's call. Thank you for joining.
