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Good morning, and welcome to the Q1 Fiscal 2022 Financial Results Conference Call for HLS Therapeutics. On this morning's call, we have Gilbert Godin, Chief Executive Officer; and Tim Hendrickson, Chief Financial Officer. [Operator Instructions]
Earlier this morning, HLS issued a news release announcing its financial results for the 3-month period ended March 31, 2022. This news release, along with the company's MD&A and financial statements, will be available on HLS's website and on SEDAR. Please note that slides accompanying today's call can be viewed via the webcast, a link of which is available in the company's earnings press release and at its website on the Events page.
Certain matters discussed in today's conference call or answers that may be given to questions could constitute forward-looking statements. Actual results could differ materially from those anticipated. Risk factors that could affect results are detailed in the company's annual information form, which has been filed on SEDAR at www.sedar.com. During this conference call, HLS will refer to adjusted EBITDA. Adjusted EBITDA does not have any standardized meaning prescribed by IFRS. Adjusted EBITDA is defined in the company's press release and annual filings that are available on SEDAR and on the company's website. Please note that all financial information provided is in U.S. dollars unless otherwise specified.
And I would like to turn the conference over to Mr. Godin. Please go ahead, sir.
Thank you, operator. Good morning, everyone, and thank you for joining us. On our call today, I will start off with a review of recent highlights. Tim will follow with a more detailed look at our financial results and then we will hold a Q&A.
Q1 was a tale of 2 quarters with January and February characterized by strict pandemic lockdowns in Canada's largest provinces and limited physician access, while March opened up and saw a resumption of more typical detailing and prescription activity. The net result for the period was sequential and year-over-year growth for Vascepa along with solid cash flow from our foundational products.
Subsequent to quarter end, we announced the completion of a letter of intent with the pCPA, which establishes the terms and conditions for Vascepa to gain access to public payer plans across Canada. I will get into that into more detail shortly, but first, a look at the quarter.
On the first slide is a chart showing the level of Vascepa call activity with physicians over the past 7 months. It begins last September, which was the month where the co-promotion agreement with Pfizer took hold and their first few calls were made towards the end of the month. Note this chart includes all calls made by both companies.
What this graph shows is that, first, following the co-promotion taking effect, the number of live calls with physicians increased significantly through November when we trended towards our target number of monthly calls for the partnership. Second, with the onset of Omicron in December and the resultant lockdowns, the number of calls was curtailed significantly with a 40% decrease in January and February from more typical volumes. A second blow from those restrictions was that only 13% of live calls in January and February were in person or face-to-face.
Finally, as pandemic restrictions were lifted in March, the number of live calls increased significantly achieving a record high, surpassing even that of November. As an additional benefit, more than 80% of those calls in March were in person. The rebound in activity we achieved in March continued in April, and provided we stay clear of further lockdown measures, we expect this higher pace of activity to continue for what would be, in terms of restrictions, a first full, what I would call, a COVID-free quarter in more than 2 years.
This next slide is a great slide that shows exactly what we are battling with and how well we are doing in the circumstances. This chart shows the impact that the most recent surge, the Omicron surge had on the broader cardiovascular market as well as specifically on Vascepa. The chart on the slide shows prescription volumes in the larger cardiovascular markets in the first quarter of 2022 relative to the fourth quarter of 2021. I want all of us to look really closely at this slide because it is revealing. It tells us that lockdown conditions in January and February led to a decrease of anywhere from 2% to 8% for these important cardiovascular treatments such as statins, PCSK9 and the likes. Despite a rebound in March, the Q1 script volumes were still down about 5% collectively versus Q4 of 2021 for those cardiovascular classes of drugs.
While Vascepa was also impacted by the same conditions and the same headwinds in January and February, we still grew prescription 12% sequentially from Q4 to Q1 while all of the cardiovascular classes of drug were regressing. This is a testament to the effect of the collective commercial team effort and a reflection of a very strong March, where we generated more than 45% of the quarter's volume.
The whole picture is rounded up when we look at the next slide, which is a familiar curve of the weekly prescription, reflecting the steady growth since inception, but also showing the sensitivity of that growth rate.
In relation to the field promotional activity over time. Exceptionally this time, we have extended the curve to the third week of April, and that was the latest for which we have data. To give you a greater sense for how the momentum from March has continued into the second quarter with new peak and TRx correlated with the heightened field activity.
During the month of March, general practitioners accounted for 44% of new prescriptions and 34% of total prescriptions, which are both all-time highs. These are early indicators of the positive impact being realized from the expansion of our commercial footprint. Promotional efforts right now are focused on continuing to expand the base of potential prescribers with an initial call on Vascepa and increasing the frequency of interactions with them to make them familiar enough with all aspects of the product to start prescribing it. Reach and frequency is the key to product trial and adoption.
Overall, the number of prescriptions in the quarter was up 12% sequentially and 111% year-over-year, while the number of patients was just below 7,000. I think the number was 6,975. And the number of prescribers was 2,025, up 14% and 18% respectively versus previous quarter.
On the right-hand side of the slide are those familiar catalysts that we have spoken of previously. As you know, the big development here is that last week, we announced we had signed a letter of intent with the pCPA, which establishes the terms and conditions for Vascepa to gain public market access. While all these catalysts shown here are necessary to achieve the product's full potential. Public market access is the most significant development to drive growth of the product and it will galvanize and amplify the impact of those other milestones.
The next step is in the process is to work with all provinces and territories to add Vascepa to their respective plans, a process that is expected to occur province by province or territory over the next few months. We will provide updates along the way as the product is added to the respective provincial and territorial public formularies. We believe this will be a transformational development for the business, and we have updated our peak year estimates for Vascepa to CAD 250 million to CAD 300 million in revenues with a 30% adjusted EBITDA margin.
We're very pleased to have completed the negotiation process with the pCPA. We're excited and energized by this latest development as gaining public market access will make Vascepa available to a large segment of Canadians who are at risk of cardiovascular disease, and it increases our conviction in achieving our peak year sales estimate.
With that, I would like to now look at Clozaril. Clozaril, again, contributed to solid cash flows in the quarter. And at quarter end, our number of patients was 2% higher than last year at this time. That said, revenues was down year-over-year, which we attribute to a couple of factors.
First, the market is flat year-over-year with virtually no growth in volume nor patient initiation. So we're still managing to grow our share minimally, but growing nonetheless, in a subdued market.
Secondly, each lockdown or other COVID restriction have posed a significant and fairly unique challenge for the mental health setting of care, and this was evident again during the first quarter. The schizophrenic patient population is often afflicted with the additional burden of social exclusion, homelessness, incarceration and comorbidities such as addiction or contagious diseases, and as such, is at greater risk for COVID-19. For all those reasons, in-person access to physicians is much more limited during lockdown, reducing treatment initiation as we saw with the cardiovascular data, but even more so as it relates to the high-touch factor involved with treatment-resistant schizophrenic patients. We think this type of environment will reverse itself as restrictions ease because the need simply doesn't go away.
And thirdly, the pandemic disruption has introduced greater fluctuation in monthly and quarterly result for Clozaril resulting from changes in customer order pattern. There's usually a dip, call it, a seasonal dip from Q1 -- from Q4 to Q1 due to this normal seasonal purchasing patterns of the [ trade ] but you recall that Q4 2021 was a particularly strong quarter for Clozaril where we saw a high level of orders come in at the end of the year, likely in anticipation of lockdown measures introduced in December, extending into Q1, which ended up being the case very similar to the first quarter of the pandemic in 2020.
We think that as the reopening continues, purchasing patterns will normalize, provided we are successful avoiding other disruptions. Importantly, we continue to grow our patient numbers at the same pace in the market, if not greater. And hence, we are gaining market share, and we are doing so during a challenging period. We believe this growth reflects a strong competitive position of the product, our CSAN support network and to a certain degree the rollout of CSAN Pronto.
As in-person interactions increase, we expect new patient access to the treatment should improve and that the market could trend back towards historical growth rate of 2% to 3% to 4%.
CSAN Pronto, our point-of-care safety blood monitoring device, continues to progress. 69 CSAN Pronto devices, up from 56 at year-end have now been deployed and are being used by more than 800 patients and prescribed by more than 280 physicians. Our deployment strategy in the coming quarters is to continue focusing on large institution, getting the devices implemented and user is trained.
With that, I will turn it over to Tim for a closer look at our first quarter financials. Tim?
Thank you, Gilbert, and good morning, everyone. I will start with revenues and product sales. Q1 revenue was $14.6 million, up 2% year-over-year. The company's product sales in Canada were up 7% due to growth in Vascepa and offset in part by a 7% decline in Clozaril sales for the many reasons Gilbert discussed earlier. In this quarter, we also saw a decrease in Clozaril net sales in the U.S. market that also reflected in trade inventory dynamics.
In the challenging Q1 2022 market conditions that Gilbert described, Vascepa net sales for the quarter were up by 111% over Q1 last year, with that growth supported by reimbursement for more than 90% of privately insured patients in label, the addition of Vascepa to the guidelines for 3 of Canada's prominent medical societies and the promotion agreement with Pfizer to expand physician coverage. As we gain access to the various provincial and territorial public drug plan formularies, we expect that the sequential and annual growth rates for Vascepa will accelerate.
Royalty revenue was $2.7 million in Q1, up 6% from Q1 last year. Growth reflected underlying strength in the marketed products in the portfolio. The fourth product in the portfolio, Sanofi's olipudase alfa has yet to be commercialized, but was recently approved in Japan. They have shared that the target date for an FDA response to the filing for this product is in the third quarter of this year with the European regulatory response expected to follow shortly thereafter.
Operating expenses in Q1 increased 8% from Q1 2021. The increase in cost of product sales was driven by the year-over-year increase in Vascepa sales, while within SG&A the increased selling and marketing activities reflect additional marketing and selling support costs for Vascepa and initial introductory spending related to MyCare. These higher costs were partially offset by modest reductions in medical, regulatory and patient support activities and G&A expenses.
On a sequential quarterly basis, selling and marketing expenses declined in response to pandemic conditions that curtailed activities, particularly in-person activities. These activities and the related spending should revert to prior levels as those lockdown conditions have been removed.
Adjusted EBITDA in Q1 was $6.3 million, just 5% lower year-over-year as there were increased cost of sales for Vascepa as well as expanded selling and marketing expenses, again, particularly for Vascepa. We have kept a close eye on costs through the pandemic, while still making the necessary investments to support the growth and potential of Vascepa. This prudent approach was again reflected in the solid Q1's adjusted EBITDA results as well as in our cash from operations.
In Q1 2022, HLS generated cash from operations of $5.8 million, growing cash and cash equivalents to $22.7 million at March 31, 2022, compared to $21.2 million at December 31, 2021 year-end. That growth in the quarter was net of $1.3 million in dividend payments to common shareholders and $3 million amortization of our senior secured loan.
With solid fundamentals in place, increasingly diversified revenue, sustained adjusted EBITDA and reliable cash from operations, we continue to deleverage the business, the outstanding balance on our senior secured loan is now $94.1 million, down from $97.1 million at year-end and over $180 million at the company's inception. Accordingly, our net debt position at the end of the quarter was $71.3 million.
Overall, we continue to have a strong financial position with $22.7 million of cash, a $35 million revolving facility that remains undrawn as of today. And under the terms of our existing credit agreement, we are also able to request incremental loans up to a maximum of $70 million to support acquisitions and other growth opportunities. In addition, in 2020, we filed a preliminary short-form base shelf prospectus to raise up to CAD 250 million that remains available to us should the appropriate strategic opportunity emerge.
We also have a normal course issuer bid in place to allow us to repurchase shares. In the first quarter of 2022, we purchased a small number of shares. And since the end of the quarter, there have been more purchases under this program. While there is no guarantee we will continue to be active on the buyback going forward, we view this as an appropriate use of capital in the current circumstances.
And finally, yesterday, the Board of Directors declared that the subsequent quarterly dividend of CAD 0.05 per outstanding common share is to be paid on September 15, 2022, to shareholders of record as of July 29, 2022.
And with that, I'll pass it back to Gilbert for his closing comments.
Thank you, Tim. In summary, we're very enthused right now with the growth opportunity in front of us. With the path to gaining public access now visible and close at hand, the key catalysts are in place for Vascepa to accelerate its growth curve. And hopefully, we'll do so in an unimpeded path forward.
Vascepa has strong clinical data supporting yet this included in treatment guidelines of Canadians and renowned international medical societies and it is gaining growing support by Canadian physicians. We believe that gaining public market access is a key outcome for patients and physicians looking to get access to this life-saving medication. And for HLS, we believe it provides a potential for a nearly fourfold increase in the company's revenue and adjusted EBITDA over just a 5-year time horizon.
That concludes my prepared remarks. At this point, I will ask the operator to please provide instructions for asking questions. Operator?
[Operator Instructions] And your first question will be from Noel Atkinson at Clarus Securities.
It was really nice to see sequential subscription growth in the quarter. That's great. Just on Vascepa. So you noted that the live call volume expanded substantially in March. Did that hit your target level for live calls? And then as a follow-on, do your target call volume -- live call volumes ramp up now that you've got the public plan reimbursements likely to come online in the next few months?
Yes. I would say that March was not only the highest call volume we did and also the proportion of those being in face-to-face situation with doctors was very high. I think we said north of 80% or 85%. In terms of the actual call volume, it is getting and trending very close to what we intended in terms of weekly frequency and depending on any given month where it would take us in aggregate. So I think that we're starting to see the efficiency of that deployment taking shape, the reach of that deployment certainly taking shape.
And most -- I think the most exciting part is that in the coming months, we will make a solid dent in the frequency needed. So those calls that we're now doing jointly on 2 separate audiences, that frequency on the new physicians that have been reached for the first time over the last 4 to 6 months will start to increase. That's usually the segue to better product knowledge and understanding, the brand name becoming top of mind and most importantly, the identification of the patient profile that could benefit from the drug.
So when these 3 things coalesce, doctors will try the product. And eventually, if it's good for 1 patient, it's good for all of their patients and their practice that present similar risks. And that really truly is the phase of product adoption. So as we say in many circumstances, it's a process. We're making strong headway in that process. The volume of those calls is essential. We saw the direct correlation of activity translating into new prescriptions and total prescriptions. We just need to have a clear way forward. And that's why I alluded to Q2 convening high hope for us. If indeed it remains a COVID-free quarter with no interruptions, we'll see how much punch this configuration will pack. And I think that, that correlation would translate quite nicely in terms of script progression.
Okay. Great. And then just one more for me. I know it's been a very short period of time since you got that LOI done with the pCPA, but you had any listing agreements accomplished yet for Vascepa with any public drug plans?
What we have done, I would say that the day that followed the announcement was a systematic outreach to all the concerned provinces and territories, and I can say that some of those processes are well engaged, and we will, as you can expect, we will be the first 1 to announce when one or many of those agreements will fall into place.
It will serve 2 purposes. First of all, demonstrate the actual progress but also it would converge with the message that will be delivered in those regions by our sales force, that really is the starting point, the starting gun shot that will now allow our sales representatives to clearly communicate to doctors that they can put that concern of reimbursement behind and that they can act very freely with all patients without having to have that concern of whether or not a patient will be confronted to refuse of their script. So stay tuned. That's coming. It will happen in sequential fashion province by province. And I think, as I said before, from the empirical evidence that we've reviewed over the last 12 to 18 months under the COVID era, some of those agreements can start to percolate anywhere between 30 days and could go up to 90 or 120 days. So a period of 1 to 4 months is a time frame over we should see many of those emerge. We're working hard to make them happen as early as possible. This is longer overdue. So that's what we're employing ourselves to do.
Next question will be from Rahul Sarugaser at Raymond James.
Congratulations on driving a strong bottom line given the top line headwind. So you sort of answered my first question, speaking about what would be the time line for the -- essentially the hockey stick in Vascepa prescriptions, given public reimbursement.
So talk a little bit about the results you saw out of Amarin yesterday, where the stock dropped 40% on news that of growing generics competition in the U.S., we recognize, of course, that there's significant exclusivity with HLS and Vascepa in Canada. But could you perhaps reiterate or re-outline for us, how long that is -- how long do you expect to be able to extend that sort of beyond potentially 2027 when that [ 8 ] time line expires?
Certainly, Rahul, thank you for your question. Happy that you brought that question because, of course, we observed what happened with Amarin yesterday there. They're at a completely different place in that. They're now making a foray in developing the European market. It means the blocking and the tackling to get products approved, reimbursed and launched. And at the same time, there is -- what's expected at some point, there's a progress of the generic competition in U.S. that is happening at the same time. So it's a fairly distinct situation.
I want to be very clear here see that our position in terms of exclusivity is distinct and independent from the situation that existed in the -- in the U.S.A., and that developed actually for a period of about 10 years when they first introduced the product in 2012. As you know, we introduced a product in 2020 with the sole indication of cardiovascular risk reduction using the findings of the REDUCE-IT trial to gain this approval, but also to file a number of specific patents in our state of patent.
At the end of 2019, we were granted 8 years of data exclusivity by Health Canada. That would preclude the introduction of any generic product before the end of 2027 by virtue of that exclusivity. However, we also have an estate of up to 15 patents, 10 or 11 of which have issued that will be on that point, prolong our exclusivity as we defend those patents against potential generic entrants.
And we believe that those patents will take us well into the 2030 time frame, early to mid-2030 and there's also possibilities of some of those patents, the longest patent could take us as late as 2039. So it's a pretty, I would say, pretty comfortable situation for us to see such a long runway and to be so well equipped to push back against possible generic followers. We think that our patents are, of course very strong because they relate to the demonstration of the efficacy of Vascepa to prevent cardiovascular disease. I will not cite all those clinical outcomes that they were quite impressive. They were at the origin of the expeditious priority review that we got from Health Canada and the approval that we got subsequently.
And now just turning to Clozaril. We recognize that looking at your numbers that really the weakness this quarter was almost exclusively attributable to Clozaril and Omicron. So at least looking into Q2, are you seeing a real return to for Clozaril? And I know you don't really provide guidance, but how should we be looking at the second half of the year for Clozaril as well?
Yes. We expect -- the rebound and the shortcomings are sometimes become of, I would say, smaller element that add up. We, I think Tim alluded to some of the elements that led to a weaker, call it, X factor and eventually revenue reported month for Clozaril. Some of that was the typical seasonality, you can go back 10 years, all the way you see that the first quarter in the Canadian trade is always the smaller seasonal month. But in that case, the effect of Omicron compounded the whole thing. This setting of care, as I said, is extremely sensitive to a situation where contagious disease could spread. Those patients have a vulnerability and a risk of exposure that's even greater and conversely, great treatment, large treatment center, think of KMH in Toronto or Lachine or the Douglas in Montreal, there's a high concentration of patients that could be sensitive and vulnerable or contagious themselves. So we've observed that right from the beginning of the pandemic, the rates of initiations went down pretty rapidly some peaks and valleys, but overall lower than anticipated. And that's why the market went down since the inception of the pandemic. There's been simply been fewer patients initiated on treatment because it's more complicated because the restrictions are raising -- all kind of situation.
So we think there will be a resumption of that. At what point in time and with what kind of lag is very hard to predict. We're good operators. We're not crystal ball people, but our understanding, and I would say, our antennas are showing that those patients will eventually get their turn. And those treatments will be initiated. How much of that will be caught up over time, that remains to be seen. But in the meanwhile, of course, it was a bit disappointing to see this flattish picture. But when you look at it on a granular level, we continue to prevail in that market. We continue to lead, and that makes us really poised for that [indiscernible] and to continue to take the lion's share of that market [indiscernible] growth.
And just one quick last question. You have provided guidance for 2026 EBITDA margin around 30% on Vascepa, recognizing, however, of course, there's going to be revenue and current margins associated with the royalties as well as Clozaril. Perhaps for you, Tim, how should we be thinking about a blended EBITDA margin sort of at peak sales around 2026?
Thanks, Rahul. Great question. I think in your question itself, you've kind of sort of set it up. We did give guidance around where we would expect to see sort of a brand or a branded contribution from Vascepa, sort of the adjusted EBITDA on a brand basis. As you know that we have very strong contribution from Clozaril, and there's not a lot in the way of operating expenses related to the royalties those contribute quite directly to adjusted EBITDA. So the blended of the 2 will be better than Vascepa on its own. However, the significance of Vascepa within the portfolio at that time will also be a significant factor, but you should expect that the total corporate number would be ahead of that Vascepa number.
Good. I will only add that we're in growth mode here. We've had assets that were either, what we would call legacy type assets or royalties that are -- have a high profit content. The growth will clearly augment in very material fashion, what I would call our overall contribution, and that would translate with an EBITDA number that will grow pretty dramatically.
In percentage term, well, it's expected that it will not be to the quality level of what we have today. There are sources of revenues that have a completely different complexion. One of them will be a well-supported, well-promoted product, and it will be large, while the others, of course, will grow more modestly but we'll continue to procure high levels of gross margin. So I think Tim's vantage point here to essentially do a weighted calculation of the existing plus the future, well should get you pretty close to the answer you're looking for.
Next question will be from Justin Keywood at Stifel GMP.
Good to see that Q1 was well navigated given some headwinds. Just on the approach to the market strategy with Pfizer. How I understood it was Pfizer was going to be targeting primary care and HLS' direct sales force was going to target specialty care. Is that still the case? And if so, is there any additional head count that will be added on HLS' side for the specialty care area?
In essence, what you said -- what you said is correct. We are, I would say, primarily or mostly HLS sales reps are engaging with specialists and those would be cardiologists and endocrinologists and might be a few other specialties in there, and Pfizer is devoting their resources to general practitioners.
Having said that, if someone is in the specific part of Northern Ontario and there happens to be in their territory a specialist that may not be covered, those kind of exceptions will be taken care of so that we cater to the need of all physicians that we think are important and could be concerned with the benefit of Vascepa. But the general rule is pretty much what you laid out here.
With respect to the future, we're not developing Vascepa to optimize. We're developing to maximize. And therefore, we will continue to look at every point in time in the way that we can further accelerate or further augment the output. In order to make some of those decisions that are, of course, not without cost, we want to make sure that we gather proper information and make proper analysis so that any kind of additional resources we would devote would be as productive as it can be.
And my other question is in regards to the NCIB. Obviously, the stock price may not be reflecting the future value of Vascepa. If you can, what would be the parameters to initiate that NCIB? And what's the strategy going forward?
Thank you, Justin. Well, first of all, our share price has been subject to many gyrations that have also negatively impacted the biopharma segment almost as a whole, including our peer group and the various index, specifically over the last 3 months. So we're not pleased with our share price. We think that some of the undervaluation is transient and related to the whole market, we believe that in our case, having been in the context of a launch, when the COVID struck, I want to say repeatedly, it may have resulted in more of a wait-and-see attitude towards our performance in our stock. We're now at a point where the fifth and final catalyst, the public access is within reach. That, plus a stable environment, i.e., no more surges and no more lockdowns, will accentuate the uptake for the product and visible fashion there will be fewer doubt in the mind of some of the folks that have remained on the sidelines.
But to come back to the NCIB, it's a tool that is in place to allow us to repurchase shares when our share price is undervalued. And of course, has been the case, and that's why we -- it has been enacted from time to time since -- a little bit in the previous quarter and since the end of the quarter. NCIBs are regulated by a number of rules that define how and when it can be done and what it shouldn't do. So we're always in respect of, I would say, the parameters that we are providing, those parameters are -- can be iterated unless we're in a blackout. So for long periods of time, those instructions are in the hands of our providers and they're acted upon. And when we get out in the blackout, out of blackout we can reassess and modify them always within the context of some of the limitations.
So I would say that the kind of tool that is smart to have, we're happy to have it when circumstances are justifying its use. Hopefully, we will work through this transient situation, as I said before, and we'll get a better recognition in the coming weeks and months. But for the time being, that's where we stand and that's how it has been enacted as a result of instructions that we've been providing.
[Operator Instructions] Your next question will be from David Martin at Bloom Burton.
First question, the public coverage as it rolls out, do you expect that will have more of an impact on the specialist market or the primary care market?
David, thank you for your question. In preparing for the introduction of a product, we define what we call market segments, we try to identify where the patients are and who treats them and how they're covered, so that we can act on those segments. That's the whole purpose of market segmentation is to be able to define strategies, to inform, motivate or help the uptick. In the case of Vascepa, we do have an indication that is actually defining 2 patient groups. The 2 patient groups are covered by the public -- the private plans that have started to cover the product more than a year ago and now represent more than 90% of that population. So if you have an established cardiovascular disease, you're covered by private plan. If you are a diabetic with risk factor, all of them, of course, using a statin and having elevated triglycerides, you're covered by your private plans.
The public coverage that we will get and it was somewhat [ pulsed ] and announced by CADTH the recommendation more than 1.5 years ago will only apply to the, what we call, secondary prevention, which means all those patients that have what we call an established cardiovascular disease, so a documented dividends of an established cardiovascular disease, that could be someone that had a stroke or a heart attack or the need for a stent or bypass, it could also mean patients that have blocked arteries that are well established, documented and unquestionable.
So all of this to say that secondary patient population are usually more at risk. They are closer to the center of the target. And as we go off from the center towards a periphery, the level of risk is high, but not as high as those that are maybe on the verge of having a heart attack or having a second one. And therefore, they're more likely to be treated by a specialist at this point in time. The patients that are at the periphery can be treated by a specialist but also more likely to be treated by general practitioner. And therefore, the public coverage in the first hands will certainly allow us to treat a greater number of people that are in that secondary audience.
I think that's where the eagerness was, the anticipation of seeing those patients be covered by the specialists to whom we talk day in and day out was pretty high. And that's why we expect that there could be a bulge of patients that will be released by virtue of their access. And I don't want to say that it will mainly come from the specialists, but proportionally speaking, it could come more from the specialist on a per doctor average. But over time, general practitioners will be, like it's the case for the statin, will be generating the majority of the prescription of Vascepa. We're talking here steady state in 4, 5, 6 years and beyond. It will follow the same pattern as they did with the statins. Statins were specialist drugs early on and became broadly used by generalists and now more than 80% of the scripts are written by GPs.
I know Justin asked you if you've made adjustments to your sales force post the pCPA LOI or in anticipation of provincial coverage. What about Pfizer and their sales effort? Is there going to be any changes going forward as a result of public coverage?
Actually, there are times where we act. Sometimes, we proact. Sometimes we react. The expansion of our footprint was proactive in anticipation of the public reimbursement. So that's why we are ready to take that news forward as it will start to happen territories by territories, region by region, province by province. So it's kind of the other way around.
Now this will still leave some room for us to assess if what we're doing here can be further enhanced or augmented, but it was in anticipation of public coverage. And as opposed to now looking at it and saying, "Okay, now we have this, what do we do next?"
Okay. Last question, so our assumption has been that your market split about 50-50 private pay public pay. So public coverage should double the number of eligible patients. I think there are also some doctors who hold back prescribing Vascepa for any of their patients until all of their patients recovered and those doctors should now be in a position to start prescribing. Do you know roughly the percent of specialists and GPs that weren't prescribing Vascepa for any of their patients, because coverage is only private and now we should see them start de novo to prescribe?
Yes. We don't have, I would say, quantitative data on that. It's generally accepted because we experienced it through different product launches over time that the inhibition of the lack of universal access is real, right? Some doctors will go out of their way and as their patients that they are covered then, if so, by whom, and then they will prescribe accordingly, many doctors will not. Many doctors will simply wait, and that's sometimes because they've been burdened before starting using a drug, being enthused about it, having sold on the concept of principle, the mode of action only to get the blowback of a patient returning without a prescription for reasons of cost or lack of reimbursement.
So these are -- again, if we look and then we try to categorize the kind of behaviors we're encountering in the physician population to always have early adopters, and they will -- they will do and take all the steps to make sure that their prescription will be filled, others will be more hesitant and simply wait. And by waiting, they are also gaining comfort through their personal experience and what they're coming across, extending to health care conferences, seeing guidelines emerge, seeing patients referred to specialists come back to them with Vascepa now, all these elements kind of happen in additive fashion and the opening of the public market does more than just open the public market.
Is the hesitancy prior to public coverage more on the primary care side or the specialist side? Or is it roughly similar?
Here, again, I don't know that I could comment on the difference between one and the other. There, I would say, professional behaviors that are rooted in their own belief systems and their personal experiences. I would think that general practitioners usually on the time continuum will come later into the picture.
Specialist products are often introduced with the specialists because they're more at the forefront, they're dealing with harder clinical cases and they're more likely to, I would say, take something in their hands and trial it for the first time. But that would be more my, I would say, my understanding, my opinion than something that's heavily documented. I think specialist usually, I think we're well can relate to that, right? We'll be more at the forefront of the innovation and probably more likely to try it. Having said that, within that group, you can still find really doctors and others that are more deliberate in changing the way they practice.
Your next question will be from Tania Armstrong-Whitworth at Canaccord Genuity.
So a few from me in terms of that physician engagement, you talked about the frequency of engagement being key to driving adoption. I'm wondering if you can stratify where your targeted physicians are in that pipeline? So for instance, what proportion or in what you believe to be that final meeting stage? So maybe they need 1 or 2 more meetings, and they're on the verge of hopefully starting patients on Vascepa. Wondering kind of that mid-stage and then how many have you not contacted yet at all?
Okay. Tania, thank you for the question. It's a -- we're really getting here to the heart of how sometimes those processes, we see how the sausage is made. Notwithstanding all the impediments that are sometimes emerging for periods of a 1 month, 2 or 3, like we just did with the Omicron, let's call it, a paint a picture of a perfect world here. If we're trying to -- the task is to get, let's say, 10,000 physicians acquainted with a new medication and get all the facts and all their objections handled before they finally try it and hopefully eventually adopted the experience is conclusive and the patient doesn't have any problem with the drug. It's generally accepted that this will take 4 to 5 calls, right, to [ generate ] trial. So if we're talking a population of 10,000 physicians, I call -- well, basic math would say 50,000 calls, you will have seen then anywhere between 1 and maybe more than 5x on certain cases because it's not only our willingness to call on them. It's their willingness and their availability to be seen. So we have a, let's call it, a population of physicians that we're targeting and some of them will rapidly get to that stage because of their availability and because where they are and in terms of the receptivity, but -- so that's 1 kind of -- 1 simple element of the math here, how many total calls we need to be up along so many doctors so that we get them to a place where knowledge understanding objections has been reached.
Today in a, I would say, fairly disjointed fashion because you saw the chart, right? We presented those charts because this is a reality of what we had to live with and we had to be reactive to the situation and had to pull back. We -- if we are to do, I don't know, 5,000, 6,000 or 7,000 calls per month, that's the second element in the equation, right? So now we have a total number of calls. How many calls we can do per month? In a perfect world, they're perfectly divided among to all the people. And in the end, everybody has been provided with the same kind of attention, details, information and so on.
So to say where we are now, we think that we'll start -- because of those disruptions, we should start now to ramp up and get into those second, third, fourth, fifth visit in the second and third quarter of this year. So some of them will get there earlier. That's why there's going to be some movement and others will eventually be reached to -- in as much as they allow for that for happen.
The imperfect picture and the reality is that some doctors will be seen much more and some doctors will be seen much less and sometimes they're not reachable. So even if we want to meet with them, if we want to target them, it could be related to their institution, the condition of their practice or whether or not they're open to receive a call. Now it doesn't mean that we'll never be able to do anything in reaching those patients. There are other means, as you know, advertising. We devote a lot of effort to be present on Congress, seminars where we sponsor a lot of medical education, all of which revolves around the treatment of lipid disorders and innovation in that field, which inevitably brings Vascepa at the forefront.
Okay. Excellent. And then it seems like you kind of answered my next question. I was going to ask whether it's beneficial to hold off on some of those engagements until after you actually have a product listing agreement in the provinces so that you can, I guess, drive home the value-add of Vascepa, when it's both public and privately covered to get them engaged right away. But it sounds like you can do those engagements prior to actually having Vascepa on the provincial formularies, is that fair?
That's correct. That's the proactive part. We're always listening to what the doctor wants to do and is willing to hear. And in the end, they're the ones deciding that they will use a product before, during or only after it's been reimbursed. But the transmission of information and the engagement with them starts well before the reimbursement, but it expands at a faster rate and that's what we did with the collaboration we have now and the sales force expansion was to broaden from the initial 2,000 doctors to an additional 7,000 or 8,000 to get to 10,000, and this started in September in preparation for what we're on the verge of seeing now. And otherwise, we defer everything getting again by another 6, 7, 8, 9 months because we start only -- we would start only when the reimbursement is in place.
So in order to gain time and be more productive, we started earlier. The message will now change in those territories that -- and the message about access will now change in those territories that will finally see the product emerge on the formulary. The medical scientific communication, the evidence of the benefit of the treatment and, I would say, any other clinical, scientific or medical questions can still be transmitted. In the meanwhile, by the proper type of personnel, right? Sometimes those are happening with our people in their medical group, and when they are all in label communications, they're delivered by our sales personnel.
Excellent. And just one more for me. I think coming out of -- I hope knock on more hopefully coming out of this pandemic, there are a large portion of patient physician interactions that I think have remained in digital formats via telehealth. Is it still possible to -- or I guess, how often do you think it occurs where physicians will start a patient on a new medication like platform like Vascepa via a platform like telehealth instead of in person? And with that, are there any kind of in-person tests that would be required before starting them on Vascepa? Like would we need to do a triglyceride check or any kind of blood test or other in-person tests before they can sign off and write that prescription?
Good question here, and we've experienced some of those elements, right. I'll site by memory what the data that was generated over the course of the pandemic, especially in the first year or 1.5 years. It will show that while telemedicine is a great substitute in those circumstances, it resulted in less willingness from a doctor and from a patient to convert on a prescription or to deliver a prescription, right? So it was attenuating what a doctor would have done otherwise in a face-to-face setting. So I call that slippage, right? It's still useful. It's the best you can do. It's a virtual. You do it virtual, but the outcome of the virtual may not be as productive as a face-to-face visit between a doctor and their patients. So there was an element here that may remain. Those statistics may evolve and improve over time as people get more comfortable and more fluent and more trustworthy. But I would say that, that was one of the element. Second aspect of your question, remind me, Tania.
Are there any kind of in-person tests that are required to do - before a doctor can sign off?
Yes. Well, the Vascepa's label requires that a doctor is prescribing in secondary. There would be a diagnostic of established cardiovascular disease. That's usually on record in the patient file. Lot of plans will have the leeway to ask for triglyceride, a reason their triglyceride that could be and should be a technicality because anyone getting an annual physical, especially if you had a cardiac situation, you will get a full lipid panel and triglyceride will be included in there. But yes, it could be required and could need to be documented.
In the case of the primary prevention, we're talking of diabetes -- diabetics that have, first of all, atorvastatin and have elevated triglycerides here again. It's quite conceivable that triglycerides are measured as part of their annual checkups. In addition, there would be substantiation of at least 1 of 7 or 8 different risk factors such as age is a risk factor. When you're a diabetic, body mass index, and the number of other metrics related to kidney function and/or typical diabetic marker of disease.
So that leaves a question to what do we need for a script to be delivered? Well, in some cases, those will need to be documented. It will be the payer's decision to determine what needs to be provided by the physician before a script is delivered. But I would say that nowadays, in 2022, many scripts, especially for drug innovations, will require that certain elements be supplemented under the form of either a prior authorization or just basic standard checklist.
Next question will be from Chelsea Stellick at IA Capital Markets.
I know that we're at the top of the hour here, so I'll make a question and my 1-year old is going to start yelling at me, too. So just a quick question. How can we think about the efficiency that you achieved in G&A and medical or regulatory patient support costs as Vascepa ramps up over the rest of the year sort of as a percentage of revenue? Can those costs continue to decline?
I will ask Tim to comment on not only Q1 run rate, but I guess the run rate we expect in terms of SG&A in particular as it relates to Vascepa.
Chelsea, I'll try to be quick. I don't want to hold you up here. I think I'd look at a lot of it, the lower cost in Q1 as kind of being reflective of the environment. I think a rebound and a reversion to more normal levels of activity, probably would see those costs also returning to where they were. So I think probably in a lot of respects, sort of Q4 of last year is probably a more representative example of where kind of that full activity level looks like rather than what we saw in this very unusual set of circumstances, I think, Gilbert described it a tale of 2 quarters within a quarter. Q1 is not so much a representative look that way. But I think looking back to Q4, would give you a good idea.
And actually, just one other question. I might have missed this. For CSAN Pronto devices, was it 69 that has been deployed at year-end?
That's correct. 69, up 13 from the end of the fourth quarter.
And how many patients and doctors prescribing?
I think 800 patients and let's see, 280-ish.
It's just sigh of 300, 280...
280-ish physician, I think. 279 to be precise.
Perfect. I mean, that's a nice growth from last quarter.
Thank you. And at this time, Mr. Godin, we have no further questions. Please proceed.
Well, thank you very much. I want to thank you all for participating. We're keeping our fingers crossed for that COVID-free quarter that we've now engaged in. I think that we came out of the a first quarter that was atypical, but we came out of it. Very poised to perform with a number of good news now that may accelerate things. We look forward to speaking again with you in the near future with subsequent development as it relates in particular to market access into various provinces. Thank you very much. Have a good day. Bye-bye.
Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.