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Good morning, and welcome to the Q2 2020 Financial Results Conference Call for HLS Therapeutics. On this morning's call, we have Greg Gubitz, Chief Executive Officer; Gilbert Godin, President and Chief Operating Officer; and Tim Hendrickson, Chief Financial Officer. [Operator Instructions]Earlier this morning, HLS issued a news release announcing its financial results for the 3 and 6 months period ended June 30, 2020. This news release, along with the company's MD&A and financial statements, will be available on HLS' website and on SEDAR. Certain matters discussed in today's conference call or answers that may be given to questions could constitute a forward-looking statement. 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 and can be accessed 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.I would now like to turn the meeting over to Mr. Gubitz. Please go ahead, sir.
Thank you, operator. Good morning, everyone, and thank you for joining us. On our call today, I'll start off with a look at recent operational developments. Gilbert will review activity within our product portfolio. And Tim will take a more detailed look at our financial results. Following Tim, I'll provide some closing remarks, then we'll hold the Q&A session.Q2 results again demonstrate the resiliency of Clozaril, our foundational product, which continues to perform well during the COVID-19 pandemic. Clozaril's patient count and sales level in Canada were up in Q2, reflecting the essential nature of this medication and the significant difference it can make in the lives of those suffering from treatment-resistant schizophrenia, or TRS, a chronic and serious condition. This is a true foundational asset for the business and one that we believe has further upside potential primarily associated with our CSAN Pronto point-of-care blood testing device, which we have just started to deploy.With a quick look at the headline numbers, Q2 revenue was $12.6 million, adjusted EBITDA was $4.8 million, cash used in operations was $4.2 million, and at quarter end, cash on the balance sheet was $33.7 million. The use of cash in operations was primarily due to changes in working capital balances. A significant portion of which relates to purchase of Vascepa inventory in advance of the product's launch.This has been a year of significant investment in Vascepa, which we expect will generate substantial rewards for the business for years to come. Operationally, in Q2, we continued to press forward and made good progress on our Vascepa launch. And in recent weeks, we have begun to reengage in face-to-face meetings with practitioners.We are also making good progress expanding our private payer coverage for Vascepa and now have full label coverage with 40% of the lives covered by private drug plans in Canada, which is up approximately 20% from our last call. Just over 2 weeks ago, we received 2 favorable developments from Vascepa -- or with Vascepa. One, CADTH's recommendation to reimburse Vascepa for patients with established cardiovascular disease; and two, PMPRB's positive notification on introductory pricing for Vascepa.Based on further analysis since announcing these positive developments, and aided by the significant clinical value of Vascepa and our overall confidence in the product and its prospects, we are pleased to be increasing our peak year's sales estimate for Vascepa to CAD 275 million to CAD 325 million from CAD 200 million to CAD 300 million. This is the second time we have increased it this year and reflects our continued and growing confidence as we continue to remove uncertainties related to its commercial deployment. Gilbert will discuss this development in more detail in his section.On the business development front, in Q2, we became the exclusive Canadian distributor for the MyCare Insite point-of-care device and its related line of diagnostic tests from Saladax Biomedical. MyCare Insite is a point-of-care device that is intended to measure the blood levels for 6 of the most common antipsychotic drugs, including clozapine.Using a point-of-care device to measure blood levels for common antipsychotic drugs could provide information to help health care practitioners determine if the patient is taking their medication, if optimum drug concentrations are being achieved, and ultimately, whether the proper therapy is being pursued. This product fits well within our CNS franchise and reflects our commitment to bringing highly valuable clinical tools to practitioners to help them make informed decisions and enhance their level of patient care.Our BD pipeline remains active. And we are in regular discussions with company on in-licensing, commercial stage product, royalty opportunities and M&A. But as we've said in the past, our #1 priority now and into the near future is the successful launch of Vascepa, which we believe is progressing well.Before I hand it over to Gilbert, I'd like to make a few comments on the announcement we made this morning regarding the CEO transition. In conjunction with the release of our Q2 results, we announced that I will be retiring and that Gilbert has been named to succeed me as CEO. This change will formally take place at the beginning of October, allowing for an orderly transition period. I will remain an active Board member of HLS, and Gilbert will also become a member of our Board of Directors. Although this may appear sudden to some, let me assure you that Gilbert and I, together with the Board, have been working to develop a thoughtful and orderly succession plan for some time. The company is exceptionally well positioned for the future. It is in great hands with Gilbert. And I strongly believe that this is the right time for both me and the company for this succession to occur.While I am retiring and planning to focus more of my time on personal pursuits, I will remain on the Board of HLS and remain committed to building the company into one of Canada's leading specialty pharmaceutical companies. I hope you will join me in congratulating Gilbert. He's, without a doubt, the right person for the job and brings exceptional experience and proven leadership skills to his new role.With that, I'll turn it over to Gilbert. Gilbert?
Good morning, everyone, and thank you, Greg, for those kind words. This is a very exciting time for our business, and I'm thrilled to be moving into the CEO role. I believe we have built a strong foundation at HLS with respect to our people, therapeutic areas, technologies and North American reach. By any measure, we are well positioned to capitalize on the opportunities ahead of us.Greg and I have fostered a disciplined capital allocation philosophy that rest assured will continue in the future. I'm looking forward to working with the entire team to execute on our strategy. First and foremost, our focus will be to materialize the significant opportunity that Vascepa represents. To bring such a novel and effective treatment to Canadian is truly an honorable experience. And of course, through a successful execution, we have the potential to deliver substantial growth and value for our shareholders.I'm also deeply committed to maintain the continuous dialogue that for many years now, Greg and I have nurtured with our shareholders as well as with other stakeholders in the investment community.But back to business. Throughout the second quarter, like most in our industry, our cardiovascular franchise and the ongoing launch of Vascepa were significantly impacted by the COVID-19 pandemic. I'm pleased to report that we continued to make very good progress given the constraint and the shift in tools we were able to use during the period.We continue to maintain and support our team of more than 30 dedicated staff who are working to create awareness and inform cardiologists, endocrinologists and other health care professionals of the benefits of Vascepa and how it can make an important difference in the lives of their patients at risk of a cardiac event. Our focus at this early stage of Vascepa's launch remains on establishing the fundamental basis of the products benefit with those key opinion leaders and early adopters, cardiologists and endocrinologists, on creating a clear picture of the patient profile, benefiting from Vascepa's risk reduction and on seeding the basis of private and public formulary coverage.For much of the quarter, we pursued a largely digital outreach plan which, among other things, included audiovisual media that we're all familiar with and other digital and print communications. However, in recent weeks, as the provinces have progressively begun to open up, we have been able to resume face-to-face interactions. This is being done on a limited basis, but is still very encouraging.All things considered, our launch is still in the initial phase and earlier still are the provincial reopenings. But we are very encouraged from what we see, both in terms of the engagement and response from practitioners and in terms of the trends for prescribers and patient uptake.Also providing great satisfaction, as Greg pointed out, is that a few weeks ago, we announced favorable developments from CADTH and PMPRB regarding Vascepa. These developments reflect the passing of a critical stage of our journey. One that will result in the market opening up, allowing for the possibility to execute fully our launch strategy.In the days following this announcement, we landed a positive reimbursement recommendation from one of the big 5 private insurers in Canada. As a result, 40% of all privately covered lives now have full label coverage for Vascepa, which has been achieved effectively in a mere few months.Since that announcement, we have had a chance to do further market analysis based on the responses from CADTH and PMPRB, the current data and outlook for Vascepa patient and script numbers and the broader market opportunity criteria for Vascepa. As a result of this work, we have increased and narrowed our peak year sales target for Vascepa to CAD 275 million to CAD 325 million.As described at length on our July 20 call, to arrive at our estimate, we look at patient population, penetration rate and pricing. We reiterated recently that we estimate the Vascepa target patient population to be between 1.2 million and 1.9 million, with the midpoint around 1.5 million being a reasonable number to focus on.Approximately half of that patient population is active and covered by private drug plans, and the other half is falling under public drug formularies. CADTH's recommendation to reimburse patients with established cardiovascular disease should enable coverage of up to 1.2 million of the 1.9 million Canadians who fit the criteria of the label approved by Health Canada. The remaining 700,000 patients are high-risk diabetics, in other words, diabetics on a statin with elevated triglycerides and at least 1 cardiovascular risk factor for half of whom CADTH withheld their recommendation to reimburse for now.We're confident that the other half of the 700,000 high-risk diabetic market will be covered by private drug plans. In fact, with 40% of the privately insured lives in Canada now covered in label for Vascepa, the pace of these listings, along with broader script trends that we are seeing gives us confidence in an aggregate target population of up to 1.5 million.Regarding the penetration rate of that 1.5 million patient population, we believe a conservative number in the range of 8% to 10% remains appropriate for now, but it certainly has the potential to be higher down the road. As a point of reference, statins have achieved a market penetration of 40% to 50% of their addressable market over the course of 25 to 30 years. Third, on the pricing front. We have spoken in the past of a range of CAD 180 to CAD 200 per month of therapy. And we now believe that at steady state, during peak years, at least the upper part of that range, CAD 200 is likely. Bringing these 3 factors together, a 1.5 million patient market and 8% to 10% penetration of that market and a monthly price of CAD 200 at steady state, comfortably gets us to the peak year range we've indicated today.In terms of our outlook for scrips in 2020, we're excited to report that at the end of the second quarter, we had more than 500 patients already on Vascepa and 200 prescribers that have initiated at least 1 patient.Let me put the significance of this number into perspective for you. We launched Vascepa during the last week of February. Our sales force spent a mere 25 days in the field before the pandemic hit, and we withdraw our sales force on March 13. For 3 months, working from home, we navigated new conditions, but still managed to post promising numbers in spite of nascent levels of coverage.During that period, we abundantly commented on the Vascepa curve shifting to the right. Looking back at the preceding 4.5 months, we now estimate that the pandemic resulted in a shift of about 2.5 to 3 months. If we account for this lost time, our patient and prescriber levels are right where we would have expected them to be at the end of April, had the pandemic not occurred.While we can't predict how COVID-19 may impact our collective environment in the coming months, we're very pleased with that set results as it is consistent with our long-term view. The important point to remember is that these initial results show that given sufficient interaction with the prescribers, the products benefit results in usage that is consistent with the life-saving cardiovascular breakthrough product.Our launch is still in its infancy, and you know that we prefer to report rather than forecast. Both those numbers compare quite favorably to recent cardiovascular analog and provide additional support for a revised peak year forecast.Overall, let's not lose track of the fact that COVID-19 has done nothing to diminish the current and the long-term potential for a product like Vascepa. Cardiovascular disease remains the #1 killer worldwide, and Vascepa has been proven to significantly reduce the risk of a cardiac event as the only drug in its class, it has the potential to improve the lives of thousands of Canadians.I would like to switch gears now and speak to Clozaril and CSAN Pronto. The second quarter gave us further evidence of Clozaril being a steady and reliable foundational product as sales and patients numbers were stable in Canada, despite the broader challenges of maintaining normal day-to-day routines in a pandemic.The rate of new patient initiation is currently subdued, but should pick up as mental health centers resume their activity progressively. Clozaril is the last line of defense and the only proven drug therapy for patients with treatment-resistant schizophrenia. Dropping up treatment will inevitably result in a relapse. And as such, we would expect patients to continue to seek treatment even in a pandemic.We're still at the early rollout stage for CSAN Pronto, our point-of-care safety blood monitoring device. But as with Vascepa, the response from practitioners remain enthusiastic and points to a promising future for the product. Understandably, in light of COVID-19, many of the mental health care institutions that are our primary initial targets for CSAN Pronto have paused on new device implementations, protocols and certifications. But here again, the need remains and our favorable long-term view of the opportunity remains unchanged. Having said that, we have completed the 3 CSAN Pronto point-of-care implementation in July and are planning to complete 2 or 3 more in August.As in Canada, in the U.S., COVID-19 is impacting the pace with which we can deploy the RSAP program that we pilot tested for more than 6 months in 2019. We believe the point-of-care opportunity remains there in the U.S., and we will build on the positive outcome from the trial to ramp up our activity in selected market segments where -- when the circumstances are appropriate to do so. Longer term, we still believe that this strategy could help us offset the natural erosion of our U.S. Clozaril franchise.During the second quarter, we announced that HLS will become the exclusive distributor of the MyCare Insite point-of-care device, along with a line of lab-based test, measuring antipsychotic drug concentrations in the blood.Our technological partner, Saladax, will proceed with the first of a number of filings during the third quarter, which could result in a first launchable lab-based clozapine test in the early days of 2021, that will be followed by the filing of the point-of-care device license during the course of 2021. Saladax is responsible for getting the product approved by Health Canada.With that, I will turn it over to Tim for a closer look at the numbers. Tim?
Thank you, Gilbert, and good morning, everyone. Starting with revenue. As we noted last call, we saw additional Canadian Clozaril sales prior to the end of Q1 due to stockpiling as work and travel restrictions related to the COVID-19 pandemic were widely instituted. While we expected some of this increase in Q1 to have impacted sales in Q2, instead, we saw these trade levels maintained, resulting in a small increase year-over-year in Canadian Clozaril sales for the second quarter in Canadian dollar terms. Sales were basically flat when reported in U.S. dollars due to currency fluctuations as the Canadian dollar declined 3% versus the same period last year.For the year-to-date period, Clozaril sales in Canada are up over 8% in reported currency, reflecting a very good start to the year, especially when you consider that 4 of those 6 months fell during a pandemic.Canadian product sales also include Vascepa. At this stage of the launch, those sales are not yet material. However, as Gilbert said earlier, we are seeing favorable scrip trends, and we are also seeing initial trade replenishment orders.Clozaril product sales in the U.S. market for Q2 2020 were down 13% and 8% for the year-to-date period. The RSAP program mentioned earlier by Gilbert could help to mitigate the decrease once conditions are appropriate, to resume more active expansion of this program.Absorica royalty revenue was down 19% in Q2 2020 and 14% year-to-date. Due to the potential impact from COVID-19 on royalty revenue, we secured an amendment from the vendor that effectively reduces our purchase price by up to $3.7 million based on Absorica sales in the U.S. market for the period from April to December 2020. Overall, this transaction has served us very well. And looking forward, we still expect our economic benefit from Absorica to terminate at the end of 2020 as planned.Operating expenses for the Q2 2020 and year-to-date 2020 periods have increased primarily due to the investments in the launch of Vascepa and associated activities related to sales and marketing of the product as well as medical, regulatory and patient support. For both periods, general and administrative expenses were relatively flat compared to the same periods in the prior year. Of note, cost of product sales for the second quarter of 2020 also include the costs associated with the initial replenishment orders for Vascepa in Canada, including sales royalties.As expected, adjusted EBITDA for Q2 2020 and the year-to-date period is lower and primarily reflects the investment in the launch for Vascepa as well as lower royalty revenue from Absorica and lower product sales for Clozaril in the U.S.Interest on the senior secured term loan in Q2 2020 was 22% lower, and interest was 23% lower for the 2020 year-to-date period when compared to the same periods last year. The reduction is due to both a lower principal balance as well as a lower interest rate in fiscal 2020.We continue to pay down principal on our debt as well. As at June 30, 2020, the principal debt balance outstanding under the new senior secured term facility was $91.1 million compared to $93.8 million at December 31, 2019, and less than half of the $185 million of debt at the company's inception.Cash used in operations was $4.2 million in Q2 2020 compared to cash generated from operations of $9 million in Q2 2019. The change year-over-year reflects the investment in the Vascepa launch and working capital adjustments. In the same period last year, working capital changes contributed $1.8 million to cash from operations compared with a $7.6 million increase in working capital in Q2 of this year. A significant portion of this working capital increase this year is related to onetime inventory that was delivered in Q1 and subsequently paid for in Q2.As at June 30, 2020, we had cash and cash equivalents of $33.7 million compared to $47.1 million at December 31, 2019. Notable factors impacting the change in cash balance since the end of 2019 include a $3.75 million milestone payment made to Amarin when Vascepa received 8 years of data protection in Canada, increased selling and marketing costs related to Vascepa's launch and initial inventory stocking for the product. Overall, we continue to have a very strong financial position with $33.7 million of cash and cash equivalents, a $25 million revolving facility that remains undrawn as of today. And as part of our credit agreement, we are also able to request incremental loans up to a maximum amount of $100 million to support acquisitions and other growth opportunities.In addition, earlier this year, we filed a short-form base shelf prospectus to raise up to CAD 250 million that will remain in effect and available to us over a 25-month period, should the appropriate strategic opportunity emerge.And finally, the next quarterly dividend will be paid on September 15 to shareholders of record on July 31. And yesterday, the Board of Directors declared that a subsequent quarterly dividend of CAD 0.05 per outstanding common share is to be paid on December 15 to shareholders of record as of October 30.And with that, I'll pass it back to Greg for his closing comments.
Thank you, Tim. In closing, we are managing well through the COVID-19 pandemic, which is a testament to the skills and commitment of the broader team at HLS. Positive developments continue with Vascepa, which include recent CADTH and PMPRB recommendations, favorable scrip trends and the measured reopening of the Canadian economy. Supported by these factors, the significant data results from the landmark REDUCE-IT trial, the endorsement from major medical societies around the world and the prevalence of cardiovascular disease in Canada, we believe strongly in Vascepa's long-term potential to date as we have at any time previously and have accordingly raised our peak year sales forecast. At the same time, we continue to diversify our portfolio. And in the coming quarters, we will look to other products in our stable to begin making an impact, products such as CSAN Pronto, Trinomia, PERSERIS and MyCare Insite.Underpinning our organic growth opportunities, we have our strong foundational asset in Clozaril, which has its own growth accelerator in CSAN Pronto. I can't emphasize enough the importance of a great team, and we are blessed with one at HLS. Since the business was founded, it has been my distinct privilege to lead such a talented group of people. I have been continually inspired by the passion and commitment each member brings to the table each day. I am incredibly proud of what we have achieved together during my time as CEO and eagerly look forward to the next phase of growth under Gilbert's expert leadership. That concludes my prepared remarks. At this point, I would ask the operator to please provide instructions for asking a question. Operator?
[Operator Instructions] Your first question comes from Noel Atkinson from Clarus Securities.
Congratulations to Greg on your upcoming retirements and to Gilbert on his pending appointment as CEO. We look forward to continuing to work with you going forward. I just have a few quick questions here on Vascepa. So it's great that you've been able to start ramping up the in-person marketing since the end of June. Can you give us some insight in terms of how your sales force is doing in terms of being able to access docs? I would imagine the ones that are back at work, the specialists, I imagine they're pretty busy just catching up right now?
Noel, thank you for your question. It's a mottled picture when you look across the country because various regions present different levels of challenges. As you know, in the eastern part of the country, Québec and Ontario, where the pandemic was greater, differs from the western part of the country, for example. So doctors' availability is predicated on, first of all, the level of mobilization that they had to exercise during the pandemic. Some did have a high level of involvement, others didn't. And therefore, you could say that it varies in relation to this historical pattern. The second element relates to -- it's one thing to engage with a physician, we need to make sure also that those physicians are resuming their activities with their patients. So the patients are trickling back, replacing their once canceled annual physical or scheduled visits. So here again, we're facing a variety of situations. What I can say is that we're slowly seeing an increase in terms of the ratio of face-to-face to other types of contact. We're nowhere near a normal situation. But every daily gain is a daily gain. And I can attest to the fact that every one of our representatives in their respective territories are now doing on average on the daily basis are having some face-to-face contacts. The objective is, of course, to respect the physicians and the institutions requirements for those contacts. And -- but to try to -- they multiply them and make up for a period of time where we were a bit of the deficit in terms of the extent of the reach we wanted to have as per our launch plan, and the frequency of interactions with those physicians.
Okay. Great. And congratulations on obtaining a positive recommendation for Vascepa coverage, one of the big insurers. What is your outlook on obtaining the Vascepa coverage at the other large private insurers within the sort of your previously disclosed sort of time frame, the 6, 12 months? And has anything changed since CADTH and the price review?
Yes. I think that our commentary in the past with the effect that within the first 9 to 12 months of following the launch, we would reach at least 80% of all privately covered lives in Canada is still our aim. We are notwithstanding the pandemic here, we're 5.5 months into this, we're at 40%. The remaining large insurers represents close -- themselves close to an additional 35% to 40%. And we're actively involved in discussions with them. They are under the formal negotiations that would allow us to continue to increase at a good clip, our rate of coverage of that specific privately covered population. So we're confident that in the coming months, we can continue to report increases in coverage, and soon enough get to the point where a vast majority of privately covered lives are indeed able to access Vascepa as prescribed.
Okay. On the Absorica deal, I guess, amendments. Can you guys remind us just how much was remaining to be paid for that agreement?
Tim, do you want to comment on that?
Happy to do so. Thanks, Noel. I believe we had about $8 million remaining.
Okay. Great. Then just finally, it's great to hear that you've got a robust BD pipeline. Now that you're going to have a U.S.-based CEO, presuming he's going to stay in the great city of Philadelphia, is that BD pipeline focused on Canada or the U.S. more now?
I don't foresee, Noel, any change in our focus on the BD side. We're still actively looking for in-licensing opportunities for Canada. We're looking at commercial stage products and potentially royalties to provide stable cash flows and M&A. And although our CEO will be based in the U.S., our BD team is primarily up here in Canada.
Yes. And if I may supplement, for all practical purposes, we are a Canadian corporation. We're headquartered in Toronto. I will certainly spend a great share of my time in Toronto, like I did in the past. So I want to assure you that there will be no visible changes from that standpoint.
Your next question comes from Justin Keywood from Stifel GMP Company.
Congratulations to both of you on the upcoming transition. For the Vascepa sales, I was hoping just to get a bit more precision here on how the sales are progressing as the provinces open back up? And what we should expect as far as the Vascepa sales for this year?
Justin, thank you for your question. I'll start with the second part here. With the uncertainty of the pandemic, it is such that we'll hold on any kind of near-term forecast. We've commented -- and as I said in the script, we'd rather report than forecast. I commented on the fact that what we've accomplished so far is quite encouraging and certainly positions us for our longer-term objectives. We are in a launch of an innovative first-in-class product. And typically, in our industry, such products are being launched and their career is best characterized by what we call an S-curve, right? An S-curve presents a first phase, which is a slow start, following -- followed by a high-growth segment until we reach a plateau of sort and then it tapers off, but remains there for long as exclusivity remains. So we're clearly in that first front end. We've been certainly dealing with the impediments introduced by the COVID-19 situation. But I think my point earlier was that the kind of numbers that we are posted and the rate of uptake that we're seeing in relation to our activity towards that target is quite encouraging. In other words, it's kind of proving that the product thesis is accepted in those specialists circle. In other words, the message works. This product's clinical credential and the clarity with which we can talk about the patient profile that can benefit from this treatment is getting some traction. And that's -- I would say that this is the most important part for us in that initial part of the S-curve, right? That's where we manage to convert and rally these innovators, these early adopters, the key opinion leaders, that will subsequently influence the other layer of prescribers and so on and so forth until we get -- and when we get to the high-growth stage, this is when we start to address really the bulk of what we call the soft belly, the numerous prescribers that are broad-based, that are seeing a lot of those patients having been learning from what the KOLs are doing. So that's what I could comment on.The recent past has been unique. In terms of launching a product smack in the middle of pandemic is creating challenges, but we're comforted by the response. And as we align the dots here and put the pieces together, we're comfortable that the message is hitting home. For the rest, it's about broadening the message, increasing the reach and the frequency of the targeted audience and continuing to work through the market access period because that's the one point that also I don't want to leave out here. What we've accomplished so far was in an environment which is virtually no access to the product or no formal coverage. So it's increasing steadily. And the more it increases, the more that barrier, that impediment is going away as well, which is a great enabler.
Understood. And then on the inventory build in the quarter, I believe it was $9 million. Was that mainly related to Vascepa?
Tim?
Justin, yes, it was tied to Vascepa.
Okay. And that's U.S. dollars for that 9 million?
U.S. dollars, and that's the initial inventory build done to support the launch.
Okay. And then just on the public reimbursement with a favorable CADTH and PMPRB reviews behind us. How do you anticipate that time line as far as provinces adding Vascepa for public reimbursement? And should we -- as far as announcements, do you anticipate anything this year? Or would that be more of a 2021 item?
Yes. I think we stated in the past that this is a process that can take 18 months, some cases, up to 24 months. We're hopeful that we're more on the front end part of this. And that's because those processes are actually conducted by an organization, the pCPA, the Pan-Canadian Pharmaceutical Alliance that represents 10 provinces and a variety of publicly funded plans. And therefore, engaging with them is on their terms and the base of their processes. We've launched a request in the days following the CADTH recommendation. We're hopeful to see those discussions start as early as possible. And that's conceivable, considering the fact that we have a drug that can prevent or reduce the risk of major cardiac events. We also have to recognize that the pCPA represents 10 provinces and certainly 4 very large ones that may all have their own personal needs and wants. And that explains also to some extent, why these processes are usually fairly deliberate and they progress at a certain speed. We're confident because we think we have a strong clinical dossier, great value for Canadian, in general Canadian health care system. So our objective is to eventually reach a conclusion -- a favorable conclusion and a coverage at the national level within those time frames. But we think that -- if we were fully listed on those public plans at this time next year, that would be quite consistent with that kind of 18-ish month time frame. Having said that, we'll try to accomplish that in an earlier time frame, and we would certainly report if it was the case. So stay tuned.
Okay. And just one final question for me. On the COVID-19 trial for Vascepa, any update on the timing when the initial results could be disclosed?
Yes. You may recall, we're not sponsoring this trial. We are supporting it following the request of the investigators. What we know I can report is what is in the public domain. The trial has started. Some patients have been enrolled, I don't know the degree of completion of that enrollment. I think that the intent is to be in a position to report on the trial's finding before the end of the year. So here, again, not something that we can comment on. It will be in the earlier part of that last quarter or in the back end of it. But I think that generically or officially they've been stating that the whole process could be wrapped up and results could be communicated before the end of the year. Anything that would happen before that would certainly be interested and welcome.
[Operator Instructions] Your next question comes from David Martin from Bloom Burton.
And congratulations as well. I'm wondering, as your team talks to specialists, how familiar are they with Vascepa already? How familiar are they with the fact that they have some patients that will benefit from the drug? I'm thinking this should be a fairly straightforward sales call, and you probably don't have to educate that much. And I'm wondering if there are any objections that you face commonly? Or is it generally a pretty smooth sales pitch?
David, thank you very much for your question and for your congratulations. Irrespective of what the product is, any new promoted product that is introduced in the field, presents similar, let's call them, generic obstacle. The first one is this create basic awareness. And that means, first of all, understanding what the product is about. Remembering the name as simple as it seems. Sometimes, these doctors are -- have very busy practices and they're bombarded oftentimes with -- the noise level can be pretty high coming from all kinds of concurrent promotional activities, so creating awareness, then comes a point where they raise, what we call, objections, but they're questions. It's curiosity in the making. It's a reflect of -- reflection on why they should use or believe what has been presented to them. Some can be very critical, others less so. It's usually followed by a trial period. And if that trial is conclusive, they tend to adopt the product and use it broadly in their practice for all patients. So these 4 elements, depending on the level of the innovation, depending on the criticality of the need, depending on various aspects, including market access consideration, cost consideration and so on can take more or less time. So we're no different. We're facing these obstacles.I can tell you to the very early part of your question that those that we call the international key opinion leaders, they're often found in teaching institutions or specialized organizations, cardiology institutes and so on are well aware of anything that is coming down in pipeline. Furthermore, when trial results are presented, they're conclusive and eventually a product makes its way to the commercialization steps in a market. These people are the very tip of the pyramid of influence. You could have 10 people in that category in Canada that knew well about the Vascepa and Vascepa results. And they're the ones that often will have the greatest level of influence when they're strong believers and they start using the product early on. We're certainly and have been working with those physicians and providing views for quite some time now. What is more of the essence for us in the months preceding and following an approval is working with the, let's call it, the next layer. People that are permanent at the national or the regional level and are actually instructing their -- all those physicians that through referral patterns are sending them their more critically ill patients. Those are the ones that need to understand fully the extent of what the products benefit are, they're also the most critical ones. They're experts that have an unofficial role in society and in diffusing knowledge. And so we're working through all of these phases. We're encountering sometimes people that are more in the middle of that pyramid of influence that are already aware of Vascepa. But by and large, it's an educative process and awareness-creating process. And the final comment I will make as sort of my long answer is that, this is accomplished through not only through reach but through frequency reach.And it's, again, fairly common engineering knowledge in the industry that you need to visit with a prescriber 5, 6 or 7 times before you go beyond the stage of awareness and the handling of sufficient number of objections for them to put themselves in motion and to try the product. So we're really -- we're in the midst of this. COVID-19 complicates it because it reduces the reach, it reduces the frequency and it attenuates a little bit the impact of the visit. But we've turned some of those constraints around and found ways to still be impactful and reach those physicians at an acceptable level of frequency. We're not just in the normal world quite yet by no mean.
Would you say that the level of knowledge of the drug is higher than your usual drug and the objections to identifying patients that will benefit are generally lower? Or are you right in the mix, no difference in the situation?
Yes. I think in the higher circles, at the top of the pyramid, we're seeing a level of knowledge that is more than the basic cases or basic product launches. And that's because Vascepa was a subject of publications in top journals, was a subject of prime time communication in top health care conferences, pre-COVID. So even if sometimes they can't directly pinpoint the name Vascepa, once they're reminded about the origin, the nature of the product, its clinical path, some of them can indeed connect the dots, but some of that is anecdotal. But overall, I would say that there's a level of recognition that is at least as good, if not better, than the mundane standard launch.
Okay. Next question. You mentioned with the big formulary win since the CADTH recommendation that it covers all the label patients. So I take it the primary and secondary prevention patients. Has that been the general reaction of payers and physicians that they will pay for primary prevention patients if they're high-risk and that physicians will treat? And have you gone back to any of the earlier formulary wins? And have they indicated they may narrow their reimbursement?
Yes. The 40% that we have commented on is covering in-label. The -- and for 80% of that, it's unrestricted. And therefore, for 20% of it, there's a restriction of some sort, and that can be a simple PA confirming that the patient has, indeed, at least 1 risk factor, the patient is diabetic, on a statin and has elevated triglycerides or that the patient has indeed documented established cardiovascular disease.
Okay. Great. One last question. Clozaril in Canada, I know the sales were stable. Did you pick up market share? Did some of the other competitors see decreases in sales?
I would say that for the most part, in the recent past and certainly in the, call it, the COVID quarter, I think stability appears to have been accomplished across the board. There -- I'll give you a little snippet of the under story here. Health Canada, at our request, decided to allow for relaxation of some of the testing time lines so that no patients would be deprived of their essential drug. If for any reasons, they could meet, strictly speaking, there are weekly or monthly testing requirement. So this was conducive to maintaining the cohorts of patients on clozapine at their current level. It is clear that the pandemic has reduced significantly the number of new patient starts. But one and the other, as it is usually the case, a new patient starts, drop-offs and so on have been conducive to a 2% to 4% market growth annually in Canada for the past 5 or 6 years. Right now, I think that the total market growth is probably closer to 0. And therefore, here lies the root of a comment that there is stability in the market and our patient counts have been stable as well. We have no reason to believe that it's any different for any of the competing offerings.
Your last question comes from Tania Gonsalves from Canaccord Genuity.
Congratulations on the announcement of the succession plan. I'm excited to continue working with both of you, and I think it's great news. I have a few questions here. So to start, were any of the Vascepa sales in Q2 to new providers? Or was it mostly just replenishments as I think your MD&A stated?
I can answer front part of that, Tim may be able to -- willing to bring more granularity. When we're looking at a launch, we're trying to focus on anything that we think will be significant and meaningful. And that, of course, scrips and patients are obvious, who prescribes is obvious. But we've also been paying attention to the retail world and can attest to the fact that we're seeing growth in retail outlets, stocking or restocking or dispensing for the first time, the product. So here again, it's a kind of a confirmatory index. When the system works, these things that are logical should happen, and we see that happening at retail as well. Tim, you might have a few other elements you could add to that?
Certainly. Happy to do so. Thanks, Tania, for the question. I think we may have shared some information about this in the quarterly call after the first quarter. Basically, our distribution model is through distributors or through wholesalers. And when we did our initial distribution in February prior to the COVID-19 pandemic, we basically covered the entire market, and we got initial orders from all of the distributors that we are expecting to carry it. So the replenishment orders that we are seeing now are from those same customers. So it's not so much that we would expect to see new customers at this point. It's more that we're starting to see a return to replenishment of orders. And then we're looking at the size and the frequency of those orders as being indicative of the growth. And basically, with those coming in, in June, it's very much consistent with the trajectory that Gilbert described earlier. So it's very encouraging.
Excellent. I appreciate that color, Tim, it's very helpful. Now I don't know if you'll have this level of granularity. But could you comment on Vascepa drop off rates for patients who've begun taking it? I know it's still early days. So this doesn't really mean much. But just wondering if you have any of that data yet?
We do not. We do monitor, what I would call it, kind of a weak surrogate of that. And as you know, when you launch your product, especially in the market access situation that is inexistent, we need to assist patients by means of co-pay support programs. So we do have a co-pay support program. That co-pay support program records first use and subsequent use. And as far as I can tell, the subsequent use have indeed been happening. I think that we're mere -- when you think about it, those patients are anywhere between 1 or maybe up to 3 months on the brand now. And if there were some drop-offs, I wouldn't expect them to happen in such a short time frame. Now drop-offs are a reality with any given drug. With a drug that can reduce your risk of cardiovascular event? We'll have to see. I don't think we're at a point where we can fully comment on it, but we haven't seen any pattern with respect to the use of our support program that would indicate anything of materiality.
Wonderful. And apologies, I missed this in your commentary, but I think you mentioned that about 200 prescribers have initiated at least 1 patient? I think you also provided some detail on patient numbers. Could you repeat that for me? And also give me an idea of how that's changed in Q1 quarter end?
Well, in Q1, we didn't report anything because we launched the product and I think the week was -- officially February 18, but effectively more February 27 and then pulled the sales force off the field, March 13. So I don't think that in Q1, we reported that we had anything of relevance or of informational value. What we reported are the numbers -- today are the numbers at the end of June. And we reported that there are 200 physicians that have prescribed at least once, and we have in excess of 500 patients on the brand. So that's where it stands. We believe that this is reflective of, first of all, a very short period of traditional detailing, a lull of anywhere from 6 to 8 weeks finding our bearings, reviewing our tools in the toolbox and reverting to alternative means, most of which were digital in nature. And hence, I think the impact returns more fully during the course of, let's say, from mid-May to June. So that's why we want to put these numbers into perspective and comment on the significance of having gotten there in spite of all those curves being thrown at us.
Excellent. Now in terms of the sale teams, have you seen any changes? Or have there been any changes in the number of sales people selling Vascepa today, attrition or additions? And could you give us maybe -- I know your original intent was to scale up that sales team when you had broad reimbursement. Do you intend on hiring any incremental individuals as the economy reopens? And now that we have the CADTH and PMPRB reports?
Yes. So we have in the field close to 30 associates, right, between sales associates in given territories, medical scientific liaison and key account managers, and of course, there are regional managers. So 30-some people. No meaningful turnover other than what you would expect, give or take 1 or 2 people, but that's more natural turnover. So no changes to report on that front. Sorry, remind me the second part of your question?
Do you intend to add any incremental people on...
Oh, yes. Yes, yes, yes. The timing for layering an additional, and we said anywhere between 50 to 55 additional sales rep mainly focused on general practitioners is predicated on gaining public formulary access, right? That's kind of the large element that would justify a full-fledged second wave of deployment. And I think the -- right now, we're making sure that scrips are generated in a way that they can be fulfilled, and we can assist with some of that with the private payers. With the public payers, we think that it's warranted to wait to make that push. And once those market access enablers are fully enacted that will certainly signal to us that this is a good time to do so. I think it's not only smart -- nobody -- no doctors like to write a script that gets either revoked, returned or not filled. So I think that's a fairly standard approach. So this could put us at point sometime during the course of 2021 for that second wave to be initiated.
Excellent. That's good color. And I believe you've talked about this before, but I apologize. Could you remind me how many cardiologists, endocrinologists and maybe other KOLs are on that call list of yours?
Yes. I'm sorry, I'm going to shuffle through my papers here because I have that number somewhere. I can follow-up with you specifically. It's in the -- oh, there it is. Okay. So I think endocrinologists in Canada, close to 600; cardiologists, 1,500. We've been talking of an initial target of about 2,500. And this is, in part, including additional physicians that were added subsequent to the pandemic situation. In other words, shifting from face-to-face interactions to less specific, but broader means allowed us to broaden the circle a little bit. So 2,500, 1,500 cardiologists. I'm not -- I don't mean to say that every single one of them is in the target. It all depends on their practice and their level of activity. But these are the raw numbers. And there are 590 endocrinologists in Canada. So target is made by and large of those specialties.
Ladies and gentlemen, this concludes your -- there are no further questions at this time, so Mr. Greg Gubitz, please go ahead.
Thank you, operator, and thank you all for participating on today's call. We hope that you and your loved ones stay healthy and safe. And we look forward to speaking with you and reporting to you in the coming quarters. Bye-bye.
Thank you.
Thank you very much. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.