Pear Therapeutics, Inc. (NASDAQ:PEAR) Q2 2022 Earnings Conference Call August 11, 2022 4:30 PM ET
Company Participants
Meara Murphy – Senior Director of Corporate Communications
Ronan O’Brien – General Counsel and Chief Compliance Officer
Corey McCann – President and Chief Executive Officer
Chris Guiffre – Chief Financial Officer and Chief Operating Officer
Yuri Maricich – Chief Medical Officer
Julia Strandberg – Chief Commercial Officer
Conference Call Participants
Judah Frommer – Credit Suisse
Michael Cherny – Bank of America
Neena Garg – Citi
Eric Percher – Nephron Research
Rahul Rakhit – LifeSci Capital
Keay Nakae – Chardan
Marie Thibault – BTIG
Operator
Good afternoon, everyone. Welcome to the Pear Therapeutics Second Quarter 2022 Earnings Conference Call. My name is Bella, and I’ll be your operator today. [Operator Instructions]. A replay of the webcast will be available in the Investors section of the company’s website approximately two hours after completion of the call and will be archived for 30 days.
I’ll now turn the call over to your host, Meara Murphy, Senior Director of Corporate Communications.
Meara Murphy
Thank you, Bella. Welcome to our second quarter earnings call, and thank you for joining us today. With me today, are Corey McCann, our President and CEO; Chris Guiffre, our Chief Financial Officer and Chief Operating Officer; Yuri Maricich, our Chief Medical Officer; Ronan O’Brien, our General Counsel and Julia Strandberg, our Chief Commercial Officer.
I’ll turn it over to Ronan for the Safe Harbor statement.
Ronan O’Brien
Good afternoon. Some of the statements we make in today’s call may constitute forward-looking statements. This includes statements concerning our future business, operating results, management’s intentions, beliefs and expectations about future results, events, strategies, operating plans and performance or financial conditions, and statements regarding proposed federal legislation regarding PTT, all of which are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended. Actual results may differ materially from those indicated by these forward-looking statements due to a variety of important factors. Additional information regarding these factors is included in our Annual Report on Form 10-K, and quarterly report on Form 10-Q, filed with the SEC, except as required by law Pear assumes no obligation to update or revise these forward-looking statements, even if actual results or future expectations change materially. With that, I’ll hand off to Corey.
Corey McCann
Thanks, Ronan. And thanks everyone for joining us today as we discussed Pear’s second quarter 2022 results. In the second quarter, we made important progress in introducing software based medicines called Prescription Digital Therapeutics or PDTs as an innovative class of medicine. Once again, we grew revenue with 20% quarter-over-quarter revenue growth in Q2. Then in July, we cut costs, which extended runway during a period where raising capital could be difficult. As we laid out in our Investor Day in June, we continue to demonstrate to patients, clinicians and payers that our products can improve outcomes, deliver value and increase access. The promise of payer and PDTs is advancing through our three pronged strategy by number one, generating advocacy from clinicians, patients and patient advocacy groups. Number two, generating access for patients by creating coverage density. And finally, number three, generating real world data that demonstrate durable clinical outcomes and cost savings in excess of product price. We continue advancing software as mainstream medicine.
For example, two more states are now providing access to one or more of our FDA authorized PDTs. Another example, 14 Blues plans now offer formulary access to reSET and reSET-O. And finally, reSET-O has been added as a covered benefit by a subsidiary of Intermountain Healthcare. Each of these milestones represents a step toward our long-term goal of coverage density, so that all patients can count on government and commercial payers to pay for PDTs. To share more details on our commercial progress, I’ll turn it over to Julia. Then Yuri will discuss the real world data for our products that are being published in Pear review journals. And finally, Chris will walk through financial and operating results, as well as the steps we’ve taken to extend runway. Julia?
Julia Strandberg
Thanks, Corey. Let’s talk about how we’re working to meet patients and providers where they are. Demand for our products continue to grow in second quarter with more than 11,000 prescriptions. In Q2, we saw more prescriptions from existing customers. And we added new customers like Cove Behavioral Health, Recovery Connection Centers of America and Prisma Health. We continue to make progress across multiple payer channels. I’ll give you four examples. First, Corey mentioned two new states providing access. North Carolina has more than 10 million residents and an estimated 6% are suffering from substance use disorders. We applaud North Carolina’s leadership to allocate opioid settlement funds to create patient access for FDA authorized PDTs for the treatment of OUD. Additionally, we have been awarded an agreement with a Midwestern state that we cannot name yet to provide patients access to reSET and reSET-O. Second Corey also mentioned the Blues adopting our products thanks to our relationship with Prime Therapeutics. Blues plans in Illinois, Florida, Kansas, Minnesota, Montana, Nebraska, New Jersey, New Mexico, North Carolina, North Dakota, Oklahoma, Rhode Island, Texas, and Wyoming. All listed reSET and reSET-O on a subset of their published formularies with coverage under the pharmacy benefit. These additions represent an important step towards coverage density in each of those states. Just as importantly, they may encourage other Blues plans to join their peers in providing access to our products.
Three, Corey mentioned Intermountain Healthcare, which is the 11th largest nonprofit health system in the US. We established coverage with SelectHealth, a Utah based nonprofit health plan that is a wholly owned subsidiary of Intermountain. SelectHealth has added reSET-O as a covered benefit for its members across Utah, Idaho, and Nevada. Finally, on the legislative front, Pear, other PDT companies, advocacy groups and trade groups are securing co-sponsors for the bipartisan, bicameral federal legislation called Access to Prescription Digital Therapeutics Act Of 2022. That would establish a new benefit category at CMS for PDT. If passed, the PDT Act would require both coverage and payment for products in this category. The PDT act now has 18 House and Senate co-sponsors from both sides of the aisle. We continue to work with the lead sponsors to identify the appropriate opportunity to attach our bill to the right legislative vehicle, which would ultimately turn our bill into law. If this bill becomes law, it would be a huge win for Pear and the entire PDT category.
Now, I’ll turn the call over to Yuri who will talk about the real world data that are proving to providers and payers why PDTs should become mainstream medicine.
Yuri Maricich
Thank you, Julia. At our Investor Day in June, we presented our continuum of randomized control trials, real world clinical data, and real world health economic data. We believe that payers want products that are safe, effective, secure, usable, and deliver value. That’s why we are providing them a wealth of Pear reviewed data to help them understand why PDTs are beneficial to patients, providers and payers. Let’s look at the data we are presenting to payers. Our data show reduced inpatient hospitalizations, reduced emergency department use, durable clinical effect and overall cost savings. To highlight a few recent studies, reSET reduced overall hospital encounters including ER visits and inpatient stays by 50%, demonstrating total cost of care savings of more than $3,500 for patient in six months following product initiation. reSET-O reduced overall hospital encounters such as inpatient stays by 28% in the entire cohort in the particularly expensive and hard to treat Medicaid population, reSET-O demonstrated a total cost of care savings of more than $3,800 per patient in 12-months following product initiation.
Somryst reduced overall facilities services by 53% with ER reductions of 21% demonstrating a total cost of care savings of more than $2,000 per patient in 24 months following product initiation. In addition to health economic data, payers are focused on removing or reducing disparities in care across underserved and minority populations. These disparities have many negative consequences for payers. Our data continue to show that our products are effective across different disease states, different geographies, different socioeconomic statuses and different ethnicities. For example, we recently presented study data at the American Psychiatric Association annual meeting that shows similar engagement with reSET-O among patients across a broad range of US geographic regions, including urban and rural. These data highlight the scalability of PDTs to address underserved and minority populations, and to improve health equity for those seeking recovery. As we’ve discussed previously, one of the great advantages of PDTs is that they collect data as they treat patients.
We look forward to utilizing these data to develop larger and longer datasets to strengthen our value proposition and to ultimately provide access to all patients who could benefit from a new class of medicine. With that, I’ll hand it over to Chris.
Chris Guiffre
Thanks Yuri. I’ll start off by sharing financial results and operating metrics. Then I’ll discuss our recent cost cutting measures and the implications for our business. Lastly, I’ll share revisions to our guidance, and then open the call for Q&A. We reported the second quarter revenue of $3.3 million, up 20% over the prior quarter, and up 175% over the same quarter last year. This growth rate was lower than our expectations, primarily due to the difficulty in predicting access agreement timing, and elongated government sales cycles. Nevertheless, it is a strong revenue growth and further validation of our commercial model.
Turning to our four operating metrics, we’ll start with total prescriptions. We had more than 11,000 total prescriptions in Q2, in line with our expectations. Please note, however, that in connection with our restructuring, we’ve begun making changes to narrow the focus of our commercial efforts. These changes de-prioritize collecting data from unpaid scripts and prioritize both revenue and data from paid scripts. We believe this prioritization will help us improve payment rate, but it has consequences for total prescriptions. Therefore, we are revising 2022 total prescription guidance from 50,000 to 60,000 prescriptions to 35,000 to 45,000 prescriptions.
Second, fulfillment rate. In Q2, we have a 56% fulfillment rate also in line with our expectations. The progress we’ve made here is a result of efficiencies from product updates, process improvements at our patients’ services center, and improved integration into clinician were close. Third payment rate, we receive payment for 45% of filled prescriptions in Q2, lower than our expectations. As I mentioned, we are refining our strategy to focus on paid scripts. And we expect payment rate to be within our guidance range for the remainder of the year.
Finally ASP. Our ASP in Q2 was $1,323 per script, again, in line with our expectations. Our strong ASP is indicative of the favorable unit economics associated with our products. Two further financial results to note, one, on June 30, we add $107.6 million of cash, cash equivalents and short-term investments on the balance sheet in line with our expectations, two, our operating expenses were $36.1 million in the second quarter, down $1.4 million from Q1 and in line with our expectations. This result also is in line with our guidance on our last earnings call regarding a small decline in operating expenses each quarter this year. Now let’s turn to the restructuring we announced on July 25. In response to a challenging macroeconomic environment, we’ve taken significant steps to adapt our operations and importantly, reduce our operating expenses in 2022 and 2023. We made these decisions to ensure Pear is well positioned to overcome the challenges to accessing capital that currently face many growth oriented life sciences, and tech companies. Reducing expenses was in the best interests of Pear. But that did not make it any easier to reduce our workforce. The employees who left Pear helped us bring our products to patients, providers and payers. We thank them very much for their contributions to help Pear further its mission.
In addition to reducing our workforce, we substantially reduced work on pipeline candidates, discovery programs, business development, and our dual platforms. We didn’t stop there. We also narrowed our commercial efforts to focus our resources on areas of highest coverage density, while de-prioritizing longer-term opportunities for the time being. As a result of the restructuring, we expect to reduce our operating expenses by approximately $28 million over 18 months. We expect to spend less in Q3 than we did in Q2, and we expect to spend less in Q4 than we did in Q3. We expect quarterly expenses in 2023 to be roughly in line with Q4. We expect to incur a onetime charge of approximately $900,000 in Q3 related to the reduction in force. We expect to extend runway into 2024 in all but the most conservative revenue assumptions.
And finally, we expect the combination of lower burn rate and consistently growing revenue to move us closer to profitability. Our cost reductions extend runway in a meaningful way because of Pear’s attractive unit economics, our unit economics are driven by drug like ASD, and software like contribution margin. In Q2, we delivered revenue growth while reducing costs. And you will see that trend continue. Importantly, these numbers represent a business with very limited coverage density at this stage of our maturation.
Finally, a few words on revenue guides. Based on where we are after Q2, we think it’s prudent to revise 2022 guidance from $22 million to a range of $14 million to $16 million. That assumes roughly 20% quarter-over-quarter growth going forward. It also reflects the nature of our current business, where the vast majority of our revenue comes from access agreements from states, which rarely move as quickly as we do, despite their sincere desire to use our products to fight the growing addiction crisis. As you know, Pear has not provided formal revenue guidance for 2023. We understand that there is interest in 2023 revenue guidance, and we plan to provide that guidance on our November earnings call. This is a change from 2022 revenue guidance, which we provided in March. Our 2023 revenue guidance will be informed by our 2022 results, our quarter-over-quarter growth rate and other factors and information available to us in November.
With that, Bella, let’s open the call for questions.
Question-and-Answer Session
Operator
Operator Instructions]
Our first question comes from the line of Judah Frommer with Credit Suisse.
Judah Frommer
Yes. Hi, guys. Thanks for taking the question, a couple of financial ones. I think maybe there was a plan for directory for ‘23 versus ‘22 at one point, and there were certainly an inflection expected in sales. So can you just remind us of what the key drivers would be to get to some inflection sales between ‘22 and ‘23? It seems like, obviously, CPT codes have been a part of that conversation.
And then secondarily, in terms of the reduced 2022 guidance. Any particular reason you didn’t do that, at the same time, as kind of the reorganization or announcement? Did anything changed since you started implementing steps toward the reduction in force? Thanks.
Corey McCann
Judah, thank you for your question. What I’d like to suggest is we’ll maybe breaking into two parts. Chris, if you wouldn’t mind starting off on guidance. And then I’ll speak to commercial inflection points.
Chris Guiffre
Sure. Thanks. So, Judah, the question was, why didn’t we provide updated guidance when we announced the reduction in force and the restructuring? I think the reason is, there’s two differently different things going on. Number one, is the restructuring was designed as a reaction to the macroeconomic environment and the difficulty that companies like us face today in raising capital and may face for a good part of next year. So that was a decision that was made entirely based on the need to extend runway. And at that point, that’s what we wanted to make the public aware of, we provide guidance, four times a year on this call. And today, we’re talking about guidance. And we’re talking about the different factors driving that which directly relates to the timing of moving our access agreements forward, and has little to nothing to do with the macroeconomic environment that faces or that relates to capital raising for companies like us.
Judah Frommer
Got it.
Corey McCann
And Judah, may be if I can just speak to catalysts for revenue growth, we’re very much focused on a concept that we will refer to as coverage density. And that coverage density is in many ways reflective of payment rate, which is a metric that we report on quarter-on-quarter. As you might imagine, payment rate is really driven by two fundamental levers. One is third party payments via access agreements and payer coverage. And then the second is targeting providers in regions where that coverage exists. Right now, we’re very focused on generating that coverage density. And as a great example, you can now see in the state of Oklahoma, we have a value based agreement with Oklahoma Medicaid. And we also now have a coverage decision from the Blues plan in the state of Oklahoma. And so that’s the way that we plan to go geography by geography, achieve coverage density, and then target within that coverage density. That’s really what drives the ramp into ‘23.
Operator
Your next question comes from the line of Michael Cherny from Bank of America.
Michael Cherny
Good afternoon, and thanks for taking questions. – And wanted to understand the business. Can I ask question about why –
Corey McCann
Michael, we are having a hard time hearing you? Sounds like you’re cutting out on a cell phone possibly.
Michael Cherny
Unfortunately, I am. Can you not hear me?
Corey McCann
It’s a little bit better now. We can give this a second shot.
Michael Cherny
Okay. I mean, I’ll ask the question quickly, as we learn more about your large and complicated customers. How do we get — how do you get more visibility into the timing of adoption? As you noted, some of the components of really working to best penetrate these formularies?
Corey McCann
Mike, thanks for the question. And what I might do is just sort of briefly speak to where we are. And again, our big focus is on states and state Medicaid organizations. Right now we’re engaged with more than 30 of those states. These are conversations that are in various stages of discussions, and some of them are actually quite advanced, to the point where states are reaching out to Massachusetts and Oklahoma to really learn how they’ve turned on coverage. I think what you rightly point out is this is a question of timing. And these are states and organizations that frankly, don’t move quite as quickly as we would like them to. But with all that said, we continue to see really the population of states continue to move forward. And we look forward to being able to produce some coverage wins throughout the balance of the remainder of this year.
Operator
And your next question comes from the line of Neena Bitritto-Garg from Citi.
Neena Garg
Hey, guys, thanks for taking my question. I was just wondering if you could talk a little bit more about the growth rate that was assumed in the updated guidance on scripts. It seems like you did see about a 20% quarter-over-quarter growth rate in scripts in 2Q but that was presumably before the restructure and kind of the strategic update in terms of thinking on how you’re going to refocus the commercial efforts. So just curious if you could talk a little bit about that, and how we kind of get comfortable that 20% growth rate can continue with the update of the strategic update. Thanks.
Corey McCann
Neena, thanks very much for the question. I’d love to tag in Chris, to talk a bit more about script growth and the way that we’re approaching scripts.
Chris Guiffre
Sure. So I’m going to fold a couple of things together in terms of script growth. It is in fact true that we revised our guidance down for script growth, because we are going to focus on driving up that payment rate, even if that means missing out on some unpaid scripts that we previously leveraged quite successfully to generate our large body of real world data that Yuri often talks about. So there is going to be a slowing of the growth rate in scripts. The benefit there, of course, is that excuse me, is the payment rate we expect that should go up. I think the other quiet part of your question relates to sort of revenue guidance, revenue growth, and the 20% growth rate that I mentioned earlier in the call. We saw a 20% growth rate Q1 to Q2, as we acknowledged, that growth rate was not consistent with our expectations. It certainly is a robust growth rate. But it was not as steep as we expected. That is largely because, a, we are unable to make large organizations like payers and state governments move as quickly as we’d like. And b, we’re unable to forecast that with great accuracy, which may go to Mike’s question from just a moment ago. We’re working on that. But we don’t think we have that mastered yet. I’m not sure if we’ll ever be able to master predicting the pace at which various state governments move. But we do think we’re getting better at it. So as we provide guidance for the rest of the year, we want to try and be as transparent as we can be with the information that we have today. And since we just explained that we did not meet our expectations for revenue in Q2, because of the growth rate was not as steep as we anticipated. We are trying to recalibrate expectations based on what we know today. If that growth rate were to slow for any reason, we would let you know that in the next call. If that growth rate picks up for any reason, we will let you know that in the next call. But today on August 11, we think it’s prudent and wise to forecast growth rates consistent with the one we just saw.
Operator
Your next question comes from the line of Eric Percher from Nephron Research.
Eric Percher
Thank you. Coming back to your comment about the elongated government sales cycles is part of the issue here that you’ve invested in states that you thought were going to be up and running and paying revenue and they haven’t gotten there yet. And as you dial that back, does it change the algorithm for how quickly you will extract revenue as states come online?
Corey McCann
Eric, thanks for your question. And I think as I mentioned, we’ve got activities that are ongoing with more than 30 states right now. And so that represents a significant investment on our part. I’d love to again, tagging Chris, just add a bit more color.
Chris Guiffre
Sure. So Eric, it’s a great question. There’s a lot of things going on here. So let me just try and reduce it to a couple sort of simple factors. We need in order to drive our payment right up, we need to get payers pay, government payers and commercial payers, PBM, self-insured employers all the stuff that you know very well. So I won’t go into great detail there, we’ve had some major successes, and we’re proud of the successes we had in Q2. But there’s a lot of work before we can imagine a world where there’s universal coverage for PDTs. And with our small force, we’re working with as many of them to move them as quickly as we can. It just doesn’t go as fast as we’d like, in almost all situations, there is a very similar dynamics that is going on with state government. We are working with many state governments, as Corey just mentioned, both to get Medicaid coverage up and running, and to get bulk purchases through access agreements. That process continues to show progress, we continue to add to our pipeline. But getting these deals closed, is just not moving as quickly as we’d like. So when you put all that together, what we’re seeing is a healthy growth rate, and a continuing improvement of the long-term pipeline, but an inability to turn that into revenue quite as quickly as we had anticipated. That’s what we’re talking about today.
Eric Percher
And as I look at this script number is down less than the revenue growth. But I know you said that you’re going to focus on revenue paying scripts, and the payment rate goes up. So is that in part because of the shortfall this quarter, or how many squares, the revenue being down more than the script number?
Chris Guiffre
Sure. So Corey you want me to just keep going.
Corey McCann
Quite right.
Chris Guiffre
So the script volume is up quarter-over-quarter, revenue is up quarter-over-quarter, they’re in similar neighborhoods, if you will, there is not a simple formula to explain all of that. But I think you’ve seized on the fact that our payment rate was not quite as high as we expected this quarter.
Operator
Your next question comes from the line of Rahul Rakhit from LifeSci Capital.
Rahul Rakhit
Hey, guys, thanks for taking the questions. So I know you’ve kind of touched on a few times. And you noted that payers do seem to be pretty receptive, but I was hoping you could tell us a little bit more about the impact that the clinical and real world data has had on payers willingness to provide access. I guess, in my mind, it’s a pretty extensive portfolio. So I’m just trying to ascertain whether there are any lingering questions on the payers and if so what those questions kind of be focused on that’s data hasn’t already covered.
Corey McCann
Rahul, thanks for your question. And very briefly, I wouldn’t say that there are lingering questions. I think, as we mentioned, our products demonstrate durable cost savings in excess of product price, which is exactly what payers are looking to see. I think with that headline, I’d love to turn it over to Yuri to maybe speak just a bit more to some of the details.
Yuri Maricich
Yes. Thanks, Corey and thanks for the question. I think as highlighted earlier in the call. The evidence and value is a really critical question that providers as well as payers and formulary decision makers are asking about, and as we outlined in the Investor Day, and I just summarized some recent studies, we’re bringing additional data to bear and so as Corey mentioned, we now have not only our randomized clinical trial data, but we also have real world clinical outcomes and real world health economic outcomes across all three products. The thing now is bringing that to bear to those payer conversations. And just as an example, we recently updated our AMCP dossiers, which are standard dossiers used for most drugs for all three of our commercial products, which highlight this expanded evidence of clinical and economic outcomes. And we’ve seen in the past, both payers and providers being highly receptive to our data. So we’re working to use this new data, the six month data for reSET, the 12-month data for reSET-O and the 24 month data for Somryst to open up access for additional patients.
Rahul Rakhit
Got it, okay, no, I really appreciate that. And then sorry just switching gears a little bit, just one on prescribing dynamics. I was wondered if you can touch a little bit on the refill rates that you’re seeing. Do you see patients — are seeing a kind of come to a steady state, or are you seeing certain use cases where patients are using it over and over and really benefiting from it? Are there any trends and key takeaways that you can speak to?
Corey McCann
Rahul, thanks for the question. As you probably know, refill rate is not a metric on which we currently report or provide guidance. That said, as I’m sure you’re aware, we have disclosed some public data, looking at the health economic and clinical outcomes impact of multiple prescriptions, there does seem to be a positive correlation between the number of prescriptions and the aggregate clinical outcome. So we do that all is very positive. And just as a bit of a teaser, that scenario where you could imagine we might be collecting additional data, and putting forth additional publications.
Rahul Rakhit
Got it, yes, I mean, that’s color I was looking for. Really appreciate it. Thank you guys.
Operator
Your next question comes from the line of Keay Nakae from Chardan.
Keay Nakae
Thank you. Within geographies where you have coverage, what sales or marketing efforts are you finding our most successful and getting scripts written?
Corey McCann
Keay, thanks for the question. It’s a good one. I think as we’ve discussed previously, we have a hybrid effort, which includes both boots on the ground who are converting prescribers at a clinic by clinic level. So really coming in and instituting the product in very much the same way that you would expect to see for an enterprise software solution, as opposed to a clinician by clinician detail like you might assume, for a pharma product. In addition to that, we’ve put up what are tele prescribing capabilities, and you saw in Q2, our work with groups like PursueCare and QuickMD, to be able to provide remote and directly targetable scripts going into these different areas of coverage density. And I would just lay the guidance that you should expect us to see us continue to enact that playbook. I think the demand that we’re seeing is strong. And the data that we’re seeing is strong, and we are turning payer coverage on I think as Chris mentioned, it’s just a question of bringing those two things together. And the timing around bringing those two things together.
Keay Nakae
Okay, and separately for Somryst. Qualitatively, can you speak about where you’re at trying to establish coverage for that?
Corey McCann
So, Keay, we haven’t broken out product by product guidance. What we can say is that Somryst is earlier in the process than reSET or reSET-O. So whereas with reSET and reSET-O, we’ve got significant prescribing across most states. We’ve got robust bodies of real world and clinical trial data. You may have seen actually, yesterday, we just put out the first real world and health economic data for Somryst. So we’ve certainly seen that playbook of advocacy, demand and data be effective for reSET and reSET-O. And you can think about Somryst as being much earlier in that playbook. And that essentially will be running the same playbook for Somryst.
Operator
Your next question comes from the line of Marie Thibault from BTIG.
Marie Thibault
Hi, thank you for taking the questions this afternoon. I wanted to follow up here and perhaps I missed it, but I want to hear a little bit more about the strategy. You have to focus on the paid scripts and your confidence in payment rates remaining within that guidance range that you’ve given us. Just want to hear a little bit more about that and whether payment rates have affected prescriber reactions, whether it’s swayed them to continue or not continue prescribing, is that the factor at all for them?
Corey McCann
Marie, thanks for the question. And I tag in Chris to really highlight the transition that we’re making from spend to grow to grow to spend.
Chris Guiffre
Sounds good. And then prescriber reactions maybe I’ll ask Julia to tag in on that. But I’ll handle this strategy to de-emphasize unpaid scripts. So, Marie, we don’t provide all of our competitive playbook on calls like this. But at a high level, what I want to make sure we try and articulate is that last quarter, we introduced a new metric called payment rate, because we thought it was important. And we provided guidance for it that was consistent with our experience in Q1, and that we expected to be consistent with our experience for the rest of the year. As we acknowledged earlier, in this call, we were below our guidance. That is primarily a function of not being able to move access agreements forward as quickly as we had anticipated. So what we’re going to continue to do is focus on moving access agreements forward and focus on moving scripts through in those limited areas that we have moderate coverage density, we are not going to put as much emphasis on trying to bring up new sites where there’s no coverage sensitivity, where we would generate a lot of unpaid scripts, that would be quite useful in terms of continuing to generate more data for years to analyze, but would not bring in revenue. So the point here is we’re at the point now where we have enough scripts, where we can get the data we need from paid scripts, and we don’t need to work so hard to generate unpaid scripts in order to get that data. Does that make sense?
Marie Thibault
Yes, that makes a lot of sense. I would love to hear the prescriber reaction to what you’re hearing from that early days of the strategy.
Julia Strandberg
Thanks so much for the question. Prescriber reaction is positive to make sure that we are focusing on bringing prescriptions to patients that utilize and subsequently we get paid for it. Then it add confidence to the prescriber base as we communicate to them, again, that their patients will be covered for our products. So net positive early days as we continue to facilitate the strategy.
Marie Thibault
Okay, that’s really helpful. Thank you both for that. And then maybe I can use my follow up here on the physician fee schedule proposal. There was mention of creating four new HCPCS G codes, I wanted to hear a little bit about what that means for 2023 Medicare coverage on some of those codes and how it aligns with sort of your expectations or your strategy going forward. Thanks again for taking the questions.
Corey McCann
Yes, Marie, thanks for the question. And I think, in brief, our assumptions for Medicare coverage run through the federal legislation. That’s really a place where the new benefit category is required in order to turn on fee for service Medicare reimbursement. That said, we did provide comments on the HCPCS code. And in our testimony, we reinforce our position that we believe that to screen HCPCS codes should be assigned. And I think this is reflective of the diversity of different PDT modalities and PDTs that are out there, as opposed to just a single PDT modality or PDT. We definitely don’t think that a single HCPCS code is sufficient to cover the array of dissimilar PDTs but it’s a start and we’ll continue to work with CMS to really refine that position.
Marie Thibault
Thank you.
Corey McCann
And more cost savings. We started the third quarter by pausing many projects and reducing our workforce. We’re confident that reducing our burn rate was the right thing to do when these unusual times. And we believe that reducing costs while revenue growth is the right thing for Pear at this point in its evolution. That’s because it accelerates our march toward becoming a sustainable business. We look forward to reporting our progress in November. Thanks everyone for your time today. As always, please reach out to Meara Murphy, Our Head of Corporate Communications, if you have any [Inaudible] is the right thing for Pear Therapeutics, Inc.
That concludes today’s call. Good night.
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