electroCore - Earnings Call - Q1 2022
May 5, 2022
Transcript
Speaker 0
Greetings, and welcome to Electrocor First Quarter twenty twenty two Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr.
Rich Cockrell. Thank you. You may begin.
Speaker 1
Thank you all for participating in today's electroCore's earnings call. Joining me today are Dan Goldberger, chief executive officer Brian Posner, chief financial officer and doctor Peter Spotts, electroCore's chief medical officer. Earlier today, electroCore released results for the first quarter ended 03/31/2022. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during the call that include forward looking statements within the meaning of the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Any statements contained in this call are not statements of historical facts, should be deemed to be forward looking statements. All forward looking statements, including without limitation, our examination of operating trends and our future financial expectations are based upon the company's current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements. For a list of risks and uncertainties associated with the company's business, please see the company's filings with the Securities and Exchange Commission.
Electrocor disclaims any intention or obligation, except as required by law, update or revise any financial projections or forward looking statements, whether because of new information, future events or otherwise. This conference call contains time sensitive information that is accurate only as of the live broadcast today, 05/05/2022. And with that, I'll turn the call over to Dan. Go ahead, Dan.
Speaker 2
Thank you, Rich. Hello, everybody, and thanks for joining us on today's call. Our U. S. Business performance was solid in the first quarter ended 03/31/2022, more than making up for a slow start in our United Kingdom business.
Revenue for the 2022 hit a record 1,900,000 increasing approximately 58% over the 2021 and approximately 27% sequentially. Gross margins expanded to 81%, and net cash used in operations was about $4,800,000 for the quarter ended 03/31/2022. Our US cash pay commercial headache channels are starting to accelerate, and we expect to continue those initiatives through the rest of 2022. We currently have about 345 active prescribers in our GC Direct program that allows a prescriber to send a prescription directly to our home office for processing by our customer experience team. We work directly with the patient to dispense therapy and collect payment.
We have an additional 52 prescribers in our g concierge program, a physician dispense model where the prescriber purchases inventory from electroCore at a transfer price and provides therapy directly to their patient from their own inventory. Ecommerce channels we established in January 2022 are off to a good start. Consumers can go to our website, fill out a questionnaire that is adjudicated by a telehealth process, obtain a prescription, and then move therapy into a shopping cart to obtain a gammaCore sapphire for their own personal use. Our customer experience team is available to patients in all of these channels, providing training and support for new prescriptions and following up with patients to ensure they are staying in compliance with their therapeutic protocol. We plan to continue investing in our digital awareness campaigns initially through paid search and social media in an effort to drive headache patients to our various channels in The United States and The United Kingdom.
Net revenue from The US commercial headache channel was $277,000 for the quarter ended 03/31/2022, a 90% increase from a $145,000 in the first quarter of twenty twenty one. Approximately $254,000 of our US commercial revenue in the first quarter came from cash pay programs. Net sales from the Department of Veterans Affairs or the VA and Department of Defense or DOD were $1,300,000, an increase of 86% as compared to $679,000 in the first quarter of twenty twenty one. A total of a 105 VA and DOD military treatment facilities have purchased gammaCore products through 03/31/2022 as compared to 79 through the first quarter of twenty twenty one. Note that there are approximately 1,300 VA health care hospitals and clinics and over 400 military hospitals and medical clinics, so we still have plenty of potential growth ahead of us.
Revenue from channels outside The United States decreased 20% to $305,000 in the 2022 as compared to 380,000 for the first quarter of twenty twenty one. Our UK business was affected by the resurgence of COVID, which severely impacted access to headache clinics in January and February. We saw some recovery in March, and April has been encouraging. We look forward to returning to growth in this channel in the second quarter and for the rest of 2022. On 04/05/2022, we announced an exclusive license agreement with Peizen Limited for Japan.
The license covers our proprietary noninvasive vagus nerve stimulation technology for headache and provisions to expand to additional indications and or territories in the future. Taejin will be responsible for the regulatory process in Japan at Taejin's expense with support from electroCore leveraging previously published pivotal data. The initial license fee will be recognized over the next four quarters starting in the current quarter ending 06/30/2022. The agreement provides for additional license payments tied to successful completion of regulatory and commercial milestones in the future. It also requires an annual license fee that will come due every year starting in April.
In addition to the cash consideration, this license agreement further validates the long term commercial opportunities for NVNS therapy around the world. On 04/19/2022, we announced the gammaCore noninvasive vagus nerve stimulation has been selected for additional funding by the Department of Defense Biotech Optimized for Operational Solutions and Tactics or BUST program. The BUST research program, which will be conducted under the leadership of the seven hundred eleventh Human Performance Wing Optimization Branch of the United States Air Force, seeks to optimize and validate the efficacy of NVNS in accelerated training, sustained attention, reduced fatigue, and improved mood among Air Force personnel. Should the boost program confirm previous findings, the project schedule calls for electroCore to supply field ready devices to the Air Force in the second half of twenty twenty three. We're optimistic that the solution we ultimately provide to the Air Force will also find favor among other branches of the active military in the future.
Now turning to our clinical progress. We continue to advance NVNS across several trials. We participated in a presubmission meeting with the FDA on 05/02/2022, where we discussed our plans in post traumatic stress disorder or PTSD, mild traumatic brain injury or concussion, NVNS as a bridge therapy for inpatient substance abuse programs, and acute stroke among other topics. We believe our presentation was well received, and we have several follow-up items to pursue. In February, data was presented at the International Stroke Congress suggesting that NVNS therapy could be an effective acute intervention for ischemic or hemorrhagic stroke.
A subsequent larger trial, Novus, is more than fifty percent enrolled towards a one hundred and fifty patient target. Novus is on track to complete enrollment early next year. Stroke data is exciting as there are relatively few acute interventions approved for treating stroke and none that can be deployed before an ischemic hemorrhagic determination has been made. NVNS could be a very exciting new tool in fighting this debilitating condition. We look forward to the anticipated full publication of the TRVNS study in a peer reviewed journal later this year.
On 01/12/2022, we announced that gammaCore NVNS received breakthrough designation from the US Food and Drug Administration or FDA for the treatment of PTSD, a highly prevalent and disabling disorder with limited approved treatment options. We will schedule a sprint meeting with the agency shortly based on what we learned in our 05/02/2022 presubmission discussion. Now I'd like to turn the call over to Brian for a review of our financials and other guidance items. Brian?
Speaker 3
Thank you, Dan. For the first quarter ended 03/31/2022, electroCore reported net sales of $1,900,000 as compared to $1,200,000 during the same period of 2021. This represents a 58% revenue increase over the same period last year. Gross profit for the 2022 was $1,500,000 as compared to $840,000 for the first quarter of twenty twenty one. Gross margin was 8170% for the periods ended 03/31/2022 and 2021 respectively.
Our evolving commercial strategy has resulted in a launch of cash payment models under which we license certain starter devices. The cost of the licensed starter device is being recognized as cost of goods sold over the estimated useful life of the starter device versus expensing the cost of goods at the time of sale. Moreover, in recent quarters, we have sold an increasing amount of longer duration therapy resulting in a higher average selling price. These factors, along with favorable absorption of labor and overhead costs, contribute to the increase in gross margin. Total operating expenses in the 2022 were approximately $7,100,000 an increase of approximately $896,000 from 6,200,000.0 in the first quarter of two thousand twenty one.
Research and development expense in the 2022 was 934,000 as compared to 499,000 for the same period in 2021. R and D expense for the quarter include investments for our next generation product currently under development. Selling, general and administrative expense in the 2022 was $6,200,000 as compared to 5,700,000.0 for the same period in 02/2021. Total SG and A expenses for the 2022 included increased investment in our sales and marketing efforts to support our cash pay initiatives. GAAP net loss for the 2022 was $5,600,000 as compared to a GAAP net loss of $5,400,000 for the same quarter of 2021.
Adjusted EBITDA net loss in the 2022 was $4,700,000 as compared to a loss of $4,200,000 during the first quarter of twenty twenty one. A reconciliation of GAAP net loss to non GAAP adjusted EBITDA net loss has been provided in the financial statement tables included in today's press release. Net cash used in operating activities during the quarter ended 03/31/2022 was approximately $4,800,000 as compared to $4,200,000 in the first quarter of two thousand twenty one. The increase in net cash usage in the 2022 compared to the 2021 is largely due to seasonal factors and the timing of disbursements affecting working capital and continued investment in sales and marketing activities. Cash and cash equivalents at 03/31/2022 totaled approximately $29,900,000 as compared to approximately $34,700,000 at 12/31/2021.
Looking ahead, for the second quarter of twenty twenty two, we expect net revenue to be in excess of $1,900,000 and net cash usage to be approximately $3,500,000. You may recall that on 12/20/2021, we received a notification from Nasdaq indicating that we are not in compliance with Nasdaq listing rules because the minimum bid price of our common stock on the Nasdaq global select market closed below a dollar per share for thirty consecutive business days. The Nasdaq letter had no immediate effect on the Nasdaq trading or listing of our common stock. Pursuant to the initial Nasdaq notice and Nasdaq listing rules, we have a hundred eighty calendar days from the date of the notice or until 06/20/2022 to regain compliance with the global select rule by achieving a closing bid price for our common stock of at least $1 per share for at least ten consecutive business days. If we do not regain compliance with the Global Select rule by 06/20/2022, we intend to apply to transfer our securities from the Nasdaq Global Select market to the Nasdaq Capital Market, which will require that we satisfy the requirements for initial listing on such market as set forth in Nasdaq listing rules with the exception of the minimum bid price requirement.
If our application for this transfer is approved, we would have an additional one hundred eighty calendar days to achieve the minimum bid price requirement for at least ten consecutive business days in order to comply with the rules of the Nasdaq Capital Market. We believe that the transfer, if required, will not materially affect the Nasdaq trading or listing of our common stock. And now I'll turn the call back over to Dan.
Speaker 2
Thank you, Brian. I'm very excited about our operating results this quarter, and we continue to be in a strong financial position. Longer term, indications beyond primary headaches supported by the ongoing clinical developments discussed earlier could greatly expand the NVNS therapy market. The Cetacean license we announced in April brings in some nondilutive cash and is a huge validation of the commercial appeal of NVNS therapy around the world. The Boost project being financed by the Air Force and the Defense Advanced Research Project Agency, DARPA, could accelerate the adoption of NVNS for a variety of new indications among our active duty military.
We continue to build our intellectual property portfolio, and we are developing a very exciting next generation product platform to leverage it. Our VA DOD channel continues to grow as the pandemic recedes, and our direct to consumer initiatives are showing results in our commercial channels. While our UK business was negatively impacted during the first quarter of twenty twenty two, we look forward to a return to growth as the pandemic recedes. I see many potential growth drivers through 2022 and 2023, including continued penetration of our VA, DOD channel in The United States, continued penetration of The United Kingdom market as the pandemic recedes, growth in our US commercial channel driven by cash pay business models and direct to consumer advertising while we continue our efforts to gain commercial insurance coverage. And fourth, expansion of our international business through our distributor network and added traction within The UK ecommerce store.
Longer term, there are real opportunities for label extensions into PTSD, opioid use disorder, and mild traumatic brain injury. The Air Force Boost program could lead to incremental product sales to the active duty military as soon as next year. Lastly, we're exploring growth opportunities to enhance and leverage distribution channels through acquisitions. We're focused on revenue stage targets that might enhance top line growth and offer other synergies. At this time, I'll turn the call over to the operator.
Operator, please open the line for questions.
Speaker 0
Thank you. We will be conducting a question and answer session. You may press 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions.
Our first question comes from Shwana Pakula with H. C. Wainwright. Please proceed with your question.
Speaker 4
Thank you. This is RK from H. C. Wainwright. Good afternoon, Dan.
Speaker 0
Hi there. How are you? Good afternoon, RK.
Speaker 5
Good. Good.
Speaker 4
Certainly, an exciting quarter, you know, in terms of sales growth and also, obviously, some interesting programs that you're trying to embark on. Regarding the boost program, I I'm sure it's a very exciting opportunity as you work with the Air Force and them trying, you know, trying to assimilate your technology for their needs. In terms of the development cycle itself, you know, how how should we think about this both in terms of you know, is is it is it electroCore that's going to spend initially and then bill them for the expenses, or is it them funding you even before you start your initial work on the project. And then, know, second part of that question is, once you develop the device such that Air Force could use it, do they require any additional regulatory approval to to ensure that they can prescribe it for military personnel?
Speaker 2
So let me try and unpack the questions, RK. Just by coincidence, I'm I'm speaking to you from from Fort Hulbert in Florida where we're having a kickoff meeting for the boost program. So I'm
Speaker 4
Okay. So you you need to go into the secret room. Please go ahead. Right.
Speaker 2
So we're we're we are we're getting our arms around it all. So so the the Air Force has been doing quite a bit of work quietly behind the scenes. They have done a few publications about the use of nerve simulators in general and the gammaCore noninvasive vagus nerve stimulator in particular. The first place that they wanna deploy this technology is in what they call, ISR, which is their, intelligence surveillance And, you know, so these are analysts who work in not an office environment, but a, you know, but a, an an a light industrial environment where they're looking at a lot of monitors, and they have, eight hour, ten hour, twelve hour shifts. The next cohort after the ISRs are the, remote remote, pilots, the the drone operators.
And so, again, the the initial and the the initial deployment is going to be in relatively benign, physical environments. But, you know, they are looking forward over the long haul to to deploy it to the special tactics community and ground tactical operators. So, you know, talking beyond the air force to to the army and special forces command about, deploying this therapy, you know, pretty broadly. As far as how does the money flow, the air force has been buying devices in very small quantities from us, and there are two pieces to this program. They're gonna be buying a few more of our commercial devices to continue their validation, and they're going to be fully funding the development of a hardened, more robust, version of our device that would ultimately be be deployed, you know, first in that analyst and remote pilot environment, and then hopefully longer term into the, you know, boots on the ground opportunities.
So the cash impact on electroCore is is small. You know, we are we're we're gonna be providing our staff and our know how, but the vast majority of the development work for their the Air Force implementation is fully funded. As far as regulatory process, we may or may not file a special five ten k. That'll be up to the up to the Air Force. We're not going to be looking for any additional indications beyond what we are FDA cleared for today.
There will probably be a variety of mil spec testing as far as mechanical ruggedness, electrical interference, you know, those kinds of things that are common certification requirements for deploying to active duty military. So, hopefully, I answered the question, but we're very excited about the program. I think Yeah. The the, you know, deploying revenue units towards the 2023 is achievable, but it may take a little bit longer than that.
Speaker 4
So, no, this is certainly an exciting opportunity. Right? You know? Also, when when you're said and done with this tech with this new version of gammaCore, how freely can you take that even if it is as a protocol of a prototype and work with other military groups, you know, call it, say, like, either IDF in Israel or or the or the Royal Air Force in UK. You know?
Could you do that, or you have certain doc documentation with the with the US Air Force that, you know, you could not, take this elsewhere.
Speaker 2
So, in principle, it's gonna be exclusive to the US Armed Forces, but presumably with the government's permission, we could we could take it more internationally.
Speaker 4
Okay. Great. And then just trying to understand the commercial business, especially in the in the commercial pay business. How is that working out? Because I know as a management team, you are pretty excited about, you know, going that route.
Where do you think that process is at this point, and what should we expect from that segment going forward?
Speaker 2
So, yeah, we've we've been building out our physician dispense model that we call GC Direct and g Concierge
Speaker 6
Mhmm.
Speaker 2
Slowly but surely. And, you know, in the earlier, we talked about some of the numbers of prescribing physicians, and and and that's a starting to accelerate. In January, we launched our ecommerce initiative, and we've been ramping up our spending on on search, paid search, and social media. The ecommerce was relatively small revenue, but, all indications are that it's going to scale with our media spending as we go through the year. And our physician dispense models also get a lift from the direct to consumer awareness spending that we're going to do.
So, I think we're we're trying to be thoughtful and methodical about the timing of ramping up our, consumer spending and, and make sure that we have channels that, you know, as as we spend more on advertising, that consumers have a place to go to acquire the therapy, either through our ecommerce platform or, from our physician dispense partners. So, it's off to a great start, and, and now we gotta prove, that we have what we we're tracking a parameter that we call media efficiency ratio. In other words, how much do we have to spend on advertising to generate a dollar of revenue? And and I'm looking forward to increasing that investment and getting the associated increase in revenue.
Speaker 4
Thank you. And then last question from me is on the Tejin license agreement. What should we expect from there? You know? Is it is this going to turn into commercial revenues anytime soon, or, or, you know, you need to go through the Japanese regulatory agency, which obviously could take a little bit of time.
But I'm just trying to understand, you know, when that could, start flowing through.
Speaker 2
Yeah. That that's a that's an interesting, challenge. As you know, the Japanese Ministry of Health is, is no more expeditious than the FDA. A key determination is going to be later this year as Tejin takes the legacy pivotal data that we use for US and European clearances to the Japanese Ministry of Health. And, ideally, they will be able to use the existing pivotal data, but it's entirely possible that that the the Japanese regulators will say that they needed a small in country cohort of of pivotal data, in which case the timeline will be extended to go execute that trial.
So I'm, I'm gonna dodge that question until we know a little bit more.
Speaker 4
Absolutely fine. Absolutely fine. Thank you very much for taking all my questions. Talk to you soon.
Speaker 0
Our next question comes from Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.
Speaker 7
Oh, hi, Dan, Brian, and Peter. How are you?
Speaker 5
Good. Thank you. How
Speaker 2
are you, sir?
Speaker 7
Just fine. So, I guess, firstly, do you have any commentary on this transitional coverage for Emerging Technologies, the CMS thirty four twenty one? And if that ever goes through, I know it's just been proposed as kind of a MCIT replacement. Any effect upon the company of material nature?
Speaker 2
So not this year. Yeah. We we really have not petitioned for Medicare coverage at this point and have not negotiated with any of the MACs yet. So it's we we don't have any any reimbursed we don't have any CMS reimbursed channels at this point in time. So as to the reimbursement process in the future, not really sure yet.
Speaker 7
Got it. Okay. I think I heard you say was it 5,200 on the g concierge program?
Speaker 2
No. I think we have 52 prescribers that are signed up at this point.
Speaker 7
Got it. Okay. And those are all HCPs
Speaker 6
thus far?
Speaker 2
Absolutely. Yes.
Speaker 7
Okay. And any any color on the on the direct channel to patients directly?
Speaker 2
We're not breaking out that detail just yet. You're asking about the ecommerce channel?
Speaker 7
Yes. Or the Yeah. Correct. The GC Direct.
Speaker 2
Right. Only the all the only detail we've given are the number of prescribers. So roughly 345 GC Direct prescribers and a smaller number of g concierge prescribers.
Speaker 7
Okay. Got it. And then from the standpoint of the the VA channels, right, you were I think at about a 100 end of year and one zero five now. Can you give us a sense of number of new centers that we should expect to come on board during '22, or more importantly, some of the trends you're seeing at existing facilities as far as number of patients as well as any utilization trends?
Speaker 2
Yeah. So we've focused in the short run, we're focusing more on going deeper into our existing accounts. So you're gonna see that total number increase. But as we spend more money on direct to consumer awareness, that also allows us in the VA hospitals to go to other departments. By that, I mean, you know, traditionally, we've been going to the headache specialists and neurologists.
But as we drive consumer awareness, we can go to women's health. We can go to pain management. We can go to psychiatry. All these, you know, more primary care departments within the facility that are seeing headache patients and and maybe getting a little bit of demand pull from our direct to consumer advertising. So we're seeing we're pretty excited about the return we're getting on those efforts of going to our existing customers and opening up additional call points within the hospital campus.
Speaker 7
Okay. Got it. And one more if I may. I know that you've got a lot of readouts coming, both pivotal and pilot studies in the coming quarters. But any commentary specifically on on on migraine and the separation of migraine via your cluster headache indications in that market?
Speaker 2
So, you know, there have been publications now that NVNS therapy should be considered first line therapy in cluster headache, and we're able to make, quite a bit of traction with headache specialists that do see that subset of cluster headache patients. And and we're gonna continue to drive that clinical differentiator. Migraine is far more challenging both because of the heterogeneity of of migraine. Right? It's a it's a large cohort, but there are different phenotypes.
And as well as our direct to consumer promotions are bringing forward patients who would not have heard about the therapy from their primary care physicians. So not diff nothing definitive yet, but we do believe that all these channels are gonna get a lift from the direct to consumer awareness that we're doing.
Speaker 7
Okay. Perfect. That does it, for us. Thanks for taking the questions. Absolutely.
Speaker 0
Our next question comes from John Vandermausen with Zacks. Please proceed with your question.
Speaker 6
Good evening, everyone. I've got some additional questions on on Jason. Hey, Dan. How are you?
Speaker 5
Good. Good.
Speaker 6
What other char I think you mentioned there are some other territories that they might develop for you. What what are those? Is that is that other Asia, I assume? Is there any specific countries that, are identified?
Speaker 2
I I'm I'm sorry. I didn't catch the beginning of the question. Cajun, you mean?
Speaker 6
Yeah. Te Cajun. Yeah. Right. So you you think you had mentioned that there's some other territory.
Speaker 2
Yeah. In our in our negotiations with Tajin, you know, look. They're they are a pretty established international company. They have a substantial footprint in The US and in Europe. More specifically, they're interested in, in the Pacific Rim, and China.
And, but the the real business opportunity in the short run is around Japan. And and internally, if they can get comfortable about the effectiveness of our therapy and the business model for our therapy in Japan, they're probably gonna wanna do something much more substantial with this.
Speaker 6
Okay. So it sounds like there's some opportunities to deepen the relationship there?
Speaker 2
Absolutely.
Speaker 6
Okay. And, on the on the boost program, it it is there any more clinical work that needs to be done? It sounds like that that has already been completed, and the only thing that the Air Force needs to see from you is just the the the higher spec, more durable perhaps, or you said the electronic interference issues regarding the device. Is that is that all that needs to get done, or is any more clinical work? Okay.
Speaker 2
So, you know, the the researchers that have really championed the project want to take it to other cohorts of of air force personnel and and and and personnel beyond the beyond the air force and continue to demonstrate the the various benefits of the therapy in, you know, in sort of other cohorts of end users. So I'm not sure that rises to the level of clinical work, but it's you know, part of it is demonstrating, the, the effectiveness of the therapy in different groups and and and therefore opening up additional groups to purchase.
Speaker 6
I see. And and the does it does it, does the Air Force need FDA clearance to use it for another indication?
Speaker 2
So, you know, they're they're primarily using it for mood and anxiety and then the peripheral benefits of increased attention span and energy levels with the you they're looking at things like, caffeine consumption and reducing caffeine consumption. They're looking at it as as as an alternative to, unfortunately, our our soldiers self medicating with alcohol. So it's these are not FDA indications, per se. These are more wellness indications.
Speaker 5
Mhmm.
Speaker 6
Okay. And then, last one, Brian, this one's for you. On on gross margins, those have continued to be better than our estimate. And Mhmm. You know, how should we think about the different channels and the associated margins?
Or is that is that not the driver? Because I'm thinking some are growing faster than others. You know, should we, you know, use some of those growth rates to help modify our margins going forward, or are there other factors to think about?
Speaker 3
Well, we've been in the mid seventies or better for the past couple of quarters. We've been 80 or better for for the past two quarters. And and so so I think, you know, the margin should be mid seventies to low eighties depend you know, depending on the mix. Obviously, the VA is the biggest part of our business right now. But like Dan said, we're optimistic on some of the other channels.
We'll contribute in an increasing fashion too. So I think right now, again, we've been mid seventies to low eighties since the middle of last year, and I think there's no reason to maybe change your model significantly at this point.
Speaker 6
Okay. And and are there materially different gross margins between the different channels? Or Yeah. Yeah. Are there materially different yeah.
Speaker 3
There there there's differences between the channels, and sometimes there's differences within the channels as well depending on the product mix within a particular channel. And and and if I
Speaker 2
could interrupt, it's also Mhmm. You know, I think, Brian, what you said earlier is duration of therapy, which is Right. Another way of saying, you know, refill prescriptions because of our our fundamental model is is the longer you use the device, the better your clinical results are going to be, and and we base it. We generally get paid on a recurring revenue model.
Speaker 6
Got it. Is is that so which which channel has the the most all of them? Oh, okay. So there there's no material difference between, you know, the number of refills that people get depending on channel
Speaker 2
results yet. Not yet, but we're we are
Speaker 6
It's just minor. Okay. Mhmm. K. Great.
Thank you for taking my questions.
Speaker 5
Thank you.
Speaker 0
Our next question comes from Anthony Vendetti with Maxim Group. Proceed with your question.
Speaker 5
Dan. This is actually Jeremy on the line for Anthony. Couple of quick follow-up So I know you mentioned you said there were three forty five active prescribers and 52 for GC Direct and g Concierge. Is that through the end of
Speaker 0
the first quarter, is that to date?
Speaker 2
That was at March 31.
Speaker 5
That was at March 1. Okay. And then could you maybe give us any any more information, you know, what you've seen in the first month and and second quarter? Has that pace increased, or is it is it really go in tandem to your marketing spend?
Speaker 2
So, April was, was solid, but there's more and more excitement about, signing up to work with us. And I and I think that's not directly driven, but it's in part driven by the direct to consumer awareness that we're spending money on. So we're, we continue to feel like it's accelerating nicely.
Speaker 5
And that's that you mean you're you're referring to signing up physicians to be part of this program?
Speaker 2
Correct.
Speaker 5
Okay. That's that's great. And then just I know you mentioned also one of the prior questions that right now your short term focus is to drive deeper into current accounts.
Speaker 1
But just, let's say, looking a little bit past that, you
Speaker 0
know, I don't know if it's end of
Speaker 5
this year or maybe next year or 2023, what are some initiatives you have planned or that you're, you know, you're you're throwing around that will help to bring in more facilities and expand, not you know, just expand your and broaden your reach as opposed to just driving deeper into the accounts? Any initiatives you could share?
Speaker 2
So the the VA hospital channel is driven by our field sales force to a great degree, supported by our customer experience team in New Jersey. And so we've been selectively adding direct employees to our field sales function, but the bigger cohort is coming from independent distributors that have a a call point in the VA hospitals. And so that cohort of and and so these are folks who are working for straight commission. And, you know, we we always like that because while it's a little bit more expensive on the s g and a line, it's all, it's all variable expense, and and they only get paid if we're generating the revenue, and that that leverages the manpower of our smaller direct employee, force.
Speaker 5
Okay. I understand. And then just last question. I I don't know. Is there any any update for on the commercial coverage side, or you're just still in, you know, negotiations or just still, you know, proceeding at a slow pace?
Speaker 2
Yeah. They you know, we we've got some bright spots, but they're not ripe yet. And I look forward to announcing that later in the year.
Speaker 5
Okay. All right. That's all for me. Thanks for taking my question.
Speaker 6
And Rob, we have time for one more question.
Speaker 0
Our next question comes from John Vitale with Lazarus Fund II. Please proceed with your question.
Speaker 6
Yeah. Hi, Dan. Hi. Trying to understand the PTSD. I know you're you're going back in in front of to to get approval FDA.
Is there a different path, or do you have to wait for the FDA on that to sell PTSD into the into the VA channel?
Speaker 2
So I'm gonna unfortunately, it's a simple question. I'm gonna give you a little bit of a a complicated answer. PTSD is comorbid with headache in in very relatively high percentage. And so, we can talk about headache in PTSD under our current labeling. The idea is to go back to the a FDA and get a stand alone label for PTSD.
The nuance is that within the VA hospital system, PTSD is treated by psychiatry. Headache is treated by neurology. They don't always talk to each other, and that's that's what we're trying to bridge.
Speaker 6
So there's there's nothing really holding it back on the VA, and then it's just a matter of access to the different departments?
Speaker 2
That's it it's, more subtle than that, but that's the gist of it. Yes, sir.
Speaker 7
Gotcha. Gotcha.
Speaker 6
Okay. Thank you. That's all.
Speaker 0
We've reached the end of the question and answer session. I would like to turn the call back over to Dan Goldberger for closing comments.
Speaker 2
Thank you, everybody. Greatly appreciate your time. It's been a difficult day on Wall Street. I know that. I'd like to give a special thanks to all of our employees who work tirelessly to deliver our amazing therapy to patients.
Their hard work and commitment are setting the stage for growth in 2022 and beyond. I also wanna thank our the health care professionals and their patients for their loyal support of of gammaCore therapy. We've made tremendous progress, and it couldn't have been done without your unwavering support. Thank you, everybody, and have a better day.
Speaker 0
This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.