Q3 2022 Avadel Pharmaceuticals PLC Earnings Call
Good morning, My name is Rob and I'll be your conference operator today at this time I would like to welcome everyone to the avid dull pharmaceuticals third quarter 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again press the star one.
Thank you Austin merchant from Abdullah Investor Relations you May begin your conference.
Good morning, and thank you for joining us on our conference call to discuss third quarter 2022 earnings as a reminder, before we begin the following presentation includes several matters that constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 forward looking statements are.
Subject to risks and uncertainties that could cause the actual results to differ materially from those contemplated in such forward looking statements. These risks include risks that products in the development stage may not achieve scientific objectives or milestones or meet stringent regulatory requirements uncertainties regarding market entry and acceptance of products and the impact.
A competitive products and pricing.
These and other risks are described more fully in <unk> public filings under the Exchange Act included in the Form 10-K for the year ended December 31, 2021, which was filed on March 16, 2022, and subsequent SEC filings, except as required by law <unk> undertakes no obligation to update or revise any forward looking.
Also contained in this presentation to reflect new information future events or otherwise on the call today are Greg Davis, Chief Executive Officer, Jennifer Goodman, Vice President of medical and clinical Affairs, Richard Kim Chief Commercial Officer, and Tim Mchugh, Chief Financial Officer at this time I'll turn the call over to Greg.
Thank you Austin good morning, everyone and thank you for joining us this morning to discuss avid <unk> third quarter 2022 results.
Q3 was another important quarter for <unk> and our pursuit to bring little rise to people with narcolepsy. Most importantly, new rise our investigational once at bedtime ASO based therapy for the treatment of cataplexy or excessive daytime sleepiness in adults with narcolepsy was granted tentative approval by the FDA in July .
The F D. A formal decision of granting tentative approval results in three very important developments for EBITDA.
First it validates loom rises safety profile and clinical efficacy and as such has confirmed that loom rights is approvable as a once at bedtime therapy.
We view this as a major regulatory derisking event for Abbott.
Second it enables us to complete work on key launch related activities, including the Buildout of the Rems program and the manufacturer of commercial launch supply.
We've made significant progress in these activities in Q3 and are on track to have both completed before the end of the year.
Lastly, it confirms that the potential latest date, we should receive our final approval decision is after expiry of the Rems patents, which will occur on June 17th 2023, approximately seven months from now.
A final approval will then be followed by a launch that as expected no later than Q3 of 2023 into what we believe is a $3 billion plus market opportunity.
We will continue to take the necessary actions to bring new mines to final approval and more importantly to provide access to people with narcolepsy, who are desperately seeking new treatment options.
Very recent comprehensive market research that Richard will highlight shortly continues to confirm the significant interest in little rise across all patient and physician segments.
All of which is supported further by what we see in the real world data coming from our restore study where 94% of twice nightly switch patients prefer the ones at bedtime dosing of Bloom rice.
The combination of the rearward data of restore along with our extensive market research and data analytics confirms our belief that little rise is well positioned to capture a meaningful share of the projected $3 billion plus once at bedtime oxalate market.
Although our base case assumption is to receive a final approval decision following exploration of the Rems patents in June of 2023, we continue to pursue efforts that could potentially lead to a final approval decisions sooner.
More specifically the Delaware Court has granted our expedited request and has scheduled the hearing on our renewed motion to delist. The rems patents from the Orange book for next week on Tuesday November 15th at 10, a M eastern time.
We look forward to the Delaware Court's decision and the opportunity to potentially accelerate the timeline to a final approval and subsequent launch for them Ross.
With that I'll turn the call over to Jennifer to provide details on our recent data presentations Jennifer.
Thanks, Greg and good morning, as Greg said this was an important quarter as progress wrap it out we continue to add to the robust body of evidence supporting the right. These extensive and positive data will support the launch following potential final FDA approval.
Let's start with the <unk> Congress held a few weeks ago, where we had three posters presented with updated data from our open label study restore.
First we provided further confirmation of long term safety and Tolerability with lean rise among the 180 participants who received at least one dose.
Second for patients not previously taking inactivate most had been efficiently titrated to a stable dose within one month.
Majority of switch patients they remain at once nightly dose of loom rise equivalent to their previous total nightly intake other media are the oxidation.
These more real world data will be instructive for clinicians to consider when we launched commercially.
Understanding the patient perspective and experience is critical to have it all after three months on therapy of zoom right switch patients are asked which dosing regimen may prefer.
As we have seen consistently there is an overwhelming preference for dosing the only room rates will offer with 94%, stating they preferred the once nightly dosing regimen over twice nightly.
Let's look at some of the reason for that preference by understanding the challenges with twice nightly oxalates.
Are those switching from either of the twice nightly octavate, we ask at baseline about their experience with the second dose which revealed several key points.
About two thirds of participants had accidentally missed their second dose in the past three months.
Of the 80% reported feeling worse the next day these.
These data align with what we hear directly from patients as having a negative impact to them frequently missing a dose and feeling worse. The next day.
Next 61% reported taking their second dose more than four hours after the first dose.
Of these 88 per cent confirmed that they experienced next day Grogginess. These data also aligned with what we hear anecdotally from patients.
Lastly, approximately 25% of participants reported the need for someone else to wake them for the second dose.
Now turning toward the <unk> meeting we were very pleased to debut data in partnership with the Mayo clinic and <unk>.
And more than 2000 patients with narcolepsy Dean at mail in the past 20 years.
These were compared to an equivalent number of a matched cohort of patients without narcolepsy.
Identify the top 20 co morbidities increased in the narcolepsy cohort.
Among the top 20 co Morbidities increased Terry we're sleep conditions, three where psychiatric conditions, both are well recognized to be increased in people with narcolepsy.
What generated considerable interest were two additional findings.
First five pain related disorders, where significantly increase in the narcolepsy cohort.
Second the top 20 co Morbidities did not include hypertension or other types of cardiac disease, such as myocardial infarction or stroke.
We have additional real world data from the collaboration with the Mayo clinic that we will be submitting for 2023 medical Congresses.
Typically focused on the cohort that had been treated with sodium acetate.
We and the narcolepsy community are most excited about is when we might be available and real world evidence can be generated cash further validate the transformational impact of new mice for people with narcolepsy.
I will now turn the call over to Richard to provide details on the commercial opportunity and are advancing preparations for lunch Richard.
Thanks, Jennifer and good morning, everyone I.
I will provide updates on our growing market insights and our overall launch readiness, but today I'd like to start with a reminder of why we do what we do.
This fall our team attended a lot of meetings with feed specialists and people with narcolepsy.
To continue to demonstrate <unk> commitment to the narcolepsy community.
At each conference we were asked several times unsolicited.
Winter product will be approved and made available.
These people are well aware of Levi's and have told us they are waiting for it.
Now, let's take a step further I wanted to share a patient family story that has really stuck with me.
A couple of weeks ago, one father told US that every single night. He wakes up at three am to call his time in college.
He does not mistaking the second dose of observation.
And that he just cant wait for the day, where both he Amazon don't have to wake up at three am in the middle of the night for his son to attend classes. The next day.
As much as we focus on people with narcolepsy, we sometimes overlook the impact on family members and caregivers.
It is just one of the many personal stories that we often here and continue to remind us why we cannot relax in our pursuit of bringing once at that time your rights to people with narcolepsy and their families.
Let me now transition to our continued focus on advancing our deep understanding of the narcolepsy market, which continues to inform our launch planning.
We conducted a new quantitative market research project from over 130, Narcoleptic treaters that once again validated our key market assumptions and offer some important new insights about current nonoperating prescribers.
While we asked several questions. One key takeaway is that Octavate use will increase once we rises available across <unk> prescribers and even current non octavate prescribers.
Here are a few key points from this market research.
First all prescribers can identify patients who are eligible for phosphate therapy. However.
Many eligible patients are still not treated.
High volume prescribers state using okta base and about 45% of their Nox narcolepsy patients.
With another 20% eligible, but not being treated with an ox baked.
By comparison low Hawk volume Octavate Prescriber state you can activate and under 10% of all narcolepsy patients with an additional 20% eligible but not being treated with an observation.
Second when shown the numerous product profile current akshay prescribers predict that automate market utilization as measured by market share will grow by at least 50%.
Third.
For narcolepsy prescribers, who do not use OXXO base. These hcp's take that one and four if they are narcolepsy patients are oxalate eligible despite not currently prescribing to twice nightly formulations.
Now the top reasons for not using Octavate are similar with other groups in that the prescribers are concerned with reimbursement challenges and the inability of their patients to comply with twice nightly dosing.
However, when shown the <unk> product profile almost half of these current not prescribing Octavate Acp's stated they would use the rise in the future and that they can already identify eligible patients they would treat.
We also see awareness about Abdel lien rights and once nightly sodium phosphate increasing compared to last year with the greatest awareness increase in high Octavate prescribers.
With this all translates into here is that when <unk> is available across all off to Brian Octavate prescribing segments. These acp's intend to give me rise the highest share scripts and a growing future octavate market.
Now when we look at the occupied market from a patient claims perspective, our analytics suggest that the market potential for our lien rights could be roughly double that of the current twice nightly octavate market with more than 30000 potential eligible patients.
Recall the estimated total patient population consists of three key segments.
First approximately 16000 actively treated twice 90 patients.
Second an estimated 10% to 15000 potential patients previously treated with <unk>, who have discontinued twice nightly therapy within the last three years.
And third roughly 3000, new oxalate patient starts and in this segment, we expect robust <unk> growth of 25% to 50% per year that feature.
All three patient segments have expressed high levels of interest in Levi's and along with <unk> are also right in the belief that once at bedtime dosing is the most important attribute for an octavate therapy when comparing different formulations.
Demonstrating a preference for a loom rise over the current standard of care.
Now turning to our launch readiness efforts Q3 was a busy quarter for our team.
We made significant progress building, our commercial launch supply for <unk> and all of the programs that will enable the fulfillment of a prescription after approval.
Namely the detailed build out other rooms.
Our ongoing patient support services development and Finalization of the contract for our specialty pharmacy network.
The progress we have made will enable us to shorten the time from a final approval decision in June to full launch of <unk> in the third quarter of 2023.
As Jennifer mentioned, we had a strong showing at the chest in anh Congresses, as well as attending and presenting at some of the first line patient organization meetings and a couple of years.
On the payer front our team had several key meetings with the decision makers at the GTS and Pbms that manage over 85% of the commercially insured lives.
We continue to advance our conversations with them around contracts and coverage for <unk> and the feedback continues to be positive.
One more key update on launch readiness.
We just began to build out our launch team knowing that we are now only about seven months away at the latest from a final approval decision.
This first portion of our buildup plan paired with what remains balances our need to be launch ready, while continuing to be thoughtful about how and when we invest our resources.
We look forward to providing more updates on future calls with that I will now turn the call over to Tom for an update on the company's financials.
Tom.
Thank you Richard I will provide a few highlights for the quarter and also note that full financial results are available in the press release and the 10-Q.
I'll start with the balance sheet, where we reported $106 5 million of cash cash equivalents and marketable securities as of September 32022.
The company also had $143 8 million of convertible notes, which includes a $117 4 billion maturing in October of 2023.
Subsequent to September 30, we completed an open market repurchase at a discount to par of $8 $9 million of the $26 4 million of notes that mature in February 2023.
As a result, the amount that matures in February was reduced to $17 5 million.
Excluding restructuring charges total operating expenses in the quarter ended September 32022 were $17 million compared to $25 7 million in the same period in 2021 and $26 3 million in the quarter ended June 32022.
The decrease in operating expenses in the current quarter resulted primarily from cost optimization actions taken by the company and we are on track to reduce quarterly cash operating expenses, excluding inventory purchases to our target range of $12 million to $14 million.
R&D expenses were $2 9 million in the quarter ended September 30 of 2022 compared to $4 4 million for the same period in 2021.
The $1 5 billion decrease is due to lower costs related to the manufacturer a loom rise and lower compensation costs.
SG&A expenses were $14 1 million in the quarter ended September 32022, compared to $21 3 million for the same period in 2021.
The decrease is a result of a number of factors, including lower cost marketing compensation Medical affairs.
<unk> please.
Net loss for the third quarter 2022 was approximately $20 1 million or <unk> 33 per diluted share.
Compared to net loss of approximately $22 million or <unk> 38 cents per diluted share in the same period in 2021.
I will now turn the call back to Gregg for closing remarks.
Thank you Tom to wrap up being approximately seven months away from the backstop date on which we expect to receive a final approval decision for loom rise and potential launch. Shortly thereafter, we are focused on executing the most important priorities that offer us the opportunity to both accelerate our final approval decision.
And shorten the time between approval and launch.
Received tentative approval for whom rice is a significant derisking element to our mission and our overall value proposition as a company, which is further supported by all of our customer insights and stakeholder feedback, which continued to demonstrate the significant opportunity for loom rise to command a meaningful share of the $3 billion plus once it beds.
<unk> occupied market.
We will remain relentless in our efforts to fully realize the value of bloom right for all stakeholders, including patients prescribers and investors. We thank you for your support and we look forward to providing.
Updates on our progress.
With that we will open the call for questions.
Operator.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad and your first question comes from the line of Francois <unk> from Oppenheimer. Your line is open.
Alright, Thanks for taking my questions. Congrats on the progress here so just a.
Quick couple ones here.
In terms of building out the Rems can you just maybe help us understand what challenges can come up when you build that rems why it might be straightforward why it might not be just a little more color around that.
Yeah, Frank it's Greg Thanks.
Describe it and really in two steps, there's a technology component to this and in infrastructure required to actually execute and and do the necessary work to.
To ensure safe use that the Rems program is design from from.
From an it infrastructure of programming and whatnot and then there becomes the second piece of that which is staffing it as you get fully staffing yet as you head toward a final approval and subsequent launch so.
We partnered with a leading very experienced rems provider, who has great experience with controlled substances.
And so from that standpoint, the execution of our build out to date, which again is expected to be completed from an operational standpoint before the end of this calendar year.
<unk> is on track, we will clearly as we head toward a final approval begin to staff up the necessary resources to operationalize it but the underlying if you will components of it will be will be done well in advance.
Okay, Great and then in terms of their store data you guys keep showing some good data on it.
Is there is that data useful or important to the payers from the payer's perspective in terms of reimbursement.
Well, maybe I'll, let <unk>.
Richard comment on that.
Yeah, Hey, Hey, Brian Thanks for the question yet.
The great thing is we're really blessed with a bank a full range of clinical data that Jennifer and her team is actually produced from both from restaurant and out of posters from restore so I would say everything has been very useful with the conversations with payers and as we get into more in depth conversations the fact that 94% of patients when previously.
Being on a twice nightly preferred to be on the once nightly formulation I think bodes well so in short the answer is yes Frank.
We will absolutely leverage that in the appropriate payer settings going forward as well.
Okay, Great and then just sorry last question I feel like I have to just ask about to hear the in terms of the Delaware hearing on the 15th here. So next week can you just kind of maybe walk us through the.
The potential although it's hard to say, but the potential outcomes in terms of timelines or is the decision made do you expect it to be made on the bench and if not if the decision is in your favor what does that mean in terms of next steps here just just to get a better feel for what can happen on the panel.
Yes, I think to describe that situation kind of at large and how we view it as well.
Not going to speak obviously to the specifics of the litigation just not it's not what we do but from a from a process standpoint, yes, we.
We were pleased that after the claim construction hearing that the Delaware Court decided to grant our request for an expedited hearing on this motion to do list.
Which as we noted is next Tuesday.
And what will be what.
What will be argued by both sides will be.
Should this patent be listed in the Orange book that will be a.
A major part of that hearing.
And for.
For reference purposes, all of the documentation all the briefings from both parties work on this specific matter were completed by the end of August . So it's been briefed fully for quite some time. So on Tuesday, we'll be the chance for both sides to issue there.
Argue their size respective respectful respectively.
The outcome of that we would expect to be one of two things.
CT will either agree with us that that patent is.
Not Orange book listed both because of that.
The nature of that patent or won't agree with us.
If he agrees with us that the court agrees with US then we would certainly go down the path of.
I expect it to go down the path of a request to have that patent delisted and we would immediately begin our work to transition.
From a tentative approval to a final approval decision. So in this case there'll be two steps there will be a de listing required and then and then subsequent to that will be the fda's final approval decision. So in terms of timing and how and when that will occur we will judge ruled from the bench or not we have no insight from that.
Perspective.
Just pleased that they granted our expedited request for the hearing and look forward to Tuesday's meeting.
Perfect Alright, thank you very much.
Your next question comes from the line of Amy <unk> from Needham Your line is open.
Hi, Good morning, everyone. Thanks for taking my question.
Firstly I wanted to understand how you're thinking about.
That of course.
Average <unk> in the context.
The possible entry of generic Xyrem on the next tier.
As well as.
How youre thinking about contracting with payers.
Can you give us some color around that dynamic there.
And then how are you thinking about.
What feedback have you received from payers with regards to the potential.
Ah patients from Zion <unk>, taking on directed to one eight in the future. Thanks.
And I have more questions later.
Richard do you want to take that yeah sure.
Question. Thank you.
First it's been just great for the team to be out in front of the payers again, one on one meetings also this fall the <unk> meetings and overall our basic strategy. As we've stated several times has been to really seek parity coverage compared to the branded ox abates as well.
And when we think about our conversations with the payers at well first and foremost we've always assumed generics operation Eric will be in the market by the time, we launch.
And the feedback that we sort of hear from the payers is they are really treating there at least the authorized generic is really more of a brand extension.
Most people are predicting that it will be priced similar to either our authorized generic potentially in about a 15% price discount range compared to the branded but also piece of that keep in mind that Ted Ziram as currently priced about eight 5% more expensive than sideways. So I. So our overall strategy once again, it's really more parity.
So when we think about our sort of contracting sort of philosophy first and foremost we're going to be going through what others haven't which is contracting directly with the <unk> before we launch so we're well under our way with our conversations across the three major GPO loss and what I can sort of say is I think the feedback has been really positive.
They've sort of had octavate they've had really no competition for 20 years. So the fact that Tad theres another branded compound coming to marketplace I think the payers have really enjoyed the conversations.
We're not naive.
Now that they want to leverage us in their conversations but the one thing I will say the team has done an excellent job of is also really conveying our clinical value proposition.
Across the board as well so we feel like we're in a the right pace, where we need to be with the payers right now and we're really sort of impressed with the progress that we've made so far with the GPO and also the pbms around the downstream coverage decisions. As later, so we really think we're sort of right in the right sweet spot right now with where we are.
Should be with the payers today.
Great. Thanks, and my second question is.
Can you help us set expectations for how to think about.
Ron.
Next year, let's just assume for that purpose.
Sometime after June .
So.
In that context.
Wanted to understand better.
How long will this take because they need that the rents up and running.
Given that youll have to wait until approval.
To start to seek.
Physicians to sign up and get familiarized with new processes and then.
Adopt is coming from whether it be.
Thanks.
Okay.
Yes, so I think on the on the first question, we don't view the.
<unk> actual.
Rems build out to be a rate limiter in terms of impacting our timeline post an approval. We certainly will be actively engaging with physicians posted approve we certainly can engage with physicians on rems to register them. So on and so forth till after our final approval for sure, but we don't view.
That as as a as a significant rate limiter relative to our timing from a from an approval to launch but at one point previously was going to be upwards of six months, we've significantly condense that down given the work that's been done to date and will continue to be done prior to a final approval decision.
And I'm sorry your.
Your second question regarding Rems that you had.
Had the question on could you just restate.
The second part on rents.
How long do you think it would take for physicians to.
And then your ice themselves with.
Processes set up the form that needs to be.
To send their patients to your set of patient support hub.
Other question you had was just around whether you see any other opex coming from.
Whether it would be from <unk>.
Yes, Richard do you want to take that.
Question, Yes, so maybe first as far as.
Sort of the timing for the physicians.
Rems certification is really a critical component to make sure that we have the right and appropriate use of our products.
But it's not a really laborious process people in essence really neat familiar familiarize themselves with the Pi and some training on board. So it shouldnt take very long and.
It's not dissimilar to what has been done in the past, but clearly we have our own unique label. So we don't see that it's really a long process omni and as far as.
Sort of where do we see that sources business coming from from a market research that we've just done this latest wave.
We cannot answer is pretty much all segments of <unk>.
Prescribers and types of patients.
Really there is a lot more familiarity with current high occupancy prescribers, but we see from our research that both <unk> and Xyrem patients are are very interested in learning more about <unk> as well.
And we've also sort of seen it.
Bit of a tapering of highway uptake in the marketplace as well so we see great opportunities as highway patients tend to be more motivated earlier doctors as we've done it seems from our market research and for the Xyrem patients our value proposition is probably even more.
He is very clear for them as well so we're going to be focusing our initial efforts really on the high users within the marketplace. We will fully support all users, but at the end of the day, what our research continues to sort of show is we have great opportunities within the current Octavate prescribers there are.
Our high volume the low volume months, and what was really interesting for us to sort of see from this latest wave of market research is for current narcolepsy prescribers, who don't use okta base almost half of them said they would want to prescribe heme rise when it becomes available as well so we'll sort of time those out over the first stages of launch, but we're just really.
Delighted to sort of see that the loom right value proposition comes across very clearly to all of our segments that we're trying to speak to.
Yes, the only thing I would add to Richard's comment Ami is that these 30% to 35000 patients that we've described in these three segments.
They really predominantly fall within that that high highly concentrated source of business.
<unk> hundred physicians that make up 80% of that volume. It's all within that same group from that standpoint, so as Richard references kind of the high oxalate users. It is a very concentrated opportunity for us where the lion's share of our opportunity exists. So thank you.
Got it thank you.
And your next question comes from the line of Chris Howerton from Jefferies. Your line is open.
Hey, good morning. Thank you so much for taking the questions I guess two for me would be with respect to the ongoing restore study could you give us a sense of the durability that youre seeing.
Patients on luminaries and just how that might translate to persistency on the commercial market.
And then I appreciate all the kind of discussion with respect to.
Launch readiness could you give us a little more understanding in terms of what specifically you expect your commercial team to look like.
And.
Maybe a little bit more about the distribution and timing of hiring for that team. Thank you.
Yes, Thanks, Chris Jen you want to start on restore.
Yes, absolutely good morning, Chris Thank you for the question.
So just to level set the restore study began in March 2020, obviously, coinciding with when the pandemic started what we put out. This October is that we've had about 7% of participants discontinue in this study so being open label and the fact that.
The participants are having to travel to the clinical trial site once a month to take up their medications because it is a schedule one until the point of approval, we're not surprised by that rate of discontinuation in fact, I could have understood. If it were higher with the requirement to travel to those <unk>.
On a monthly basis I think what we're most pleased about is that there is a very low rate of discontinuation due to adverse reactions in the October presentation. We had noted that it's about 5%.
This event to the discontinued due to adverse events and we know that tolerability can be one of the biggest challenges with taking any oxidate formulation.
Thanks, Jen really helpful. Yes. Thank you yes.
Richard maybe you can just kind of frame up kind of the commercial team will be building toward yeah Super.
Thanks for the question, Chris So first as we've mentioned previously we retained some of our key skill sets. So that we could obviously keep our momentum going for our launch readiness here over what we sort of stated is our goal is to have somewhere around 50 sales representatives out there.
As Greg mentioned, there's 5000 prescriber 600 make up 80% of the volume. So we know that we can cover all of those prescribers with that sales team and we also will have other key field members such as our field reimbursement team that we will have out there as well.
We have as mentioned we have just begun hiring some folks back into the mix here as well and what we'll be building backwards tour from is sort of debt.
Backstop of that June approval date, but obviously, we're trying to remain flexible depending on where some of the hearings.
<unk> become as well so the buildup has begun in a very targeted way, but we're going to make sure that we're ready to peak at the latest for rigid approval of next year.
Awesome.
Greg do you mind, if I, maybe sneak in one more follow up.
Go ahead, Chris.
Okay, Great and Tom I really happy to see that you purchased some of the notes that were due in February I guess.
Is that still kind of the plan to be potentially opportunistic.
For those notes that are still outstanding or any additional comments you want to make around the strategy there.
Yes, no. It is it is opportunistic in nature, Chris and we had a good opportunity to buy some notes back at a discount.
Our in our commentary last couple of months is that our assumption with regards to cash runway is that the notes that come due in February due to be settled in cash anyway. So.
So we were able to accelerate the purchase of a little bit and save some money along the way.
Okay, well, that's us and like I said nice to see and thanks for taking the question.
Thanks, Chris.
Your next question comes from the line of Adam efforts from lifestyle capital. Your line is open.
Great. Thank you.
One sort of clarification for me on the survey data mentioned by Richard on this call is that a new survey or additional details from from prior surveys and I guess either way do you expect to present those data at a medical meeting or other format in 2023.
Yes. It is a new it's new research, we're constantly updating and refreshing our understanding of the market. So this is.
Some data from a very very recent.
Large quant study that Richard referenced and I don't know if we'll present that specific data in a scientific Congress, but we will certainly continue to provide some of these insights and learnings as we go forward.
Both <unk> and <unk>.
These sorts of events and then potentially at a future kind of prelaunch commercial day.
Great Awesome. Thank you.
Your next question.
Comes from the line of Marc Goodman from SVP. Your line is open.
Greg first.
Just on the legal stuff.
A Delaware Court next week gives you a negative outcome right.
Patent should be lifted then is there anything left I'm trying to remember if there were any other issues that you could do or is that it.
We're waiting until June .
Yes, I think that's the primary depending on the ruling next whenever it occurs after next Tuesday. The base case assumption is June 17th Experian and.
An approval decision post that otherwise whatever happens next week will either give us an opportunity to bring that up a little earlier potentially depending upon timing.
And otherwise as Richard described we're operating towards the base case of June .
Brian I'm, just saying like the administrative process that got thrown out. This is the result of the markman hearing.
So so basically like.
This is it right I mean, if it goes negative.
Okay. We'll just go to that scenario, where its June right. There's nothing else that youre going to do legal yes. There is no. There is no other legal matters. If you will okay pending that could react or result in something sooner correct.
Right. Okay. Good and then just to be clear on the positive outcome.
Unclear if we figure out right then and there next week, if it's a positive view or if it takes what do you think it could be a couple of weeks it could take a month how long do you think this judge is going to take.
It's really too difficult to predict I would say it would be inappropriate from from that standpoint, we're pleased that after the claim construction hearing on October 25th It was only three days later that he decided to grant us R. R. R request for this.
Expedited hearing so again, we believe the court understands the matter quite well and the urgency that we've expressed accordingly.
And.
In our glad the hearing is less than seven days away from them.
Got it okay. Thanks, and then Tom just on managing through.
With the finances.
I guess number one have you tapped the ATM, but also that you have that ability.
Yes, that's right Mark and what is.
As in our 10-Q, we raised about little over $10 million during the third quarter from sales off the ATM.
That is helpful.
That's right.
Alright, and so is that is that included in the $106 five.
It is yes.
Okay, and then I'm, sorry, I, just I didn't catch the date when did you buy the $9 million in the open market for the convert.
It was it was over the course of the third quarter.
So there was no single purchase for us.
He asked the converted was a recent purchase.
Congrats.
Oh no.
My apologies Mark.
We repurchased the notes in the open market.
Just earlier this month actually it was just about a week ago.
I see.
Okay.
How have discussions been with.
The convert holders in general I mean, I would I guess rates are really backed up pretty darn quickly. So.
What.
Whats been the discussions like.
Yes.
So I think.
I would characterize them as constructive we havent done any formal engagement the convertible note holders.
I think they like us are being deliberate in our approach we want to see how this legal next legal proceeding plays out for the hearing next week.
Before making decisions on what to do.
But I would generally characterize the discussions as constructive.
And have you as a management team have also been in discussions potentially with doing some type of royalty deal those discussions started as well as everything kind of hinging on waiting to next week before anything forward.
Yes fair question Mark.
Silver months, we've been really consistent in our in our thinking and our communications that we do want to see how these.
The legal things played out of course, we know how the <unk> played out Delaware coming up next week.
We're looking at all options.
And the time to execute in the form of finance we may pursue.
I wouldn't necessarily say that the legal proceeding as as a gating item to us, but we do want to see how it turns out because of favorable outcome of course, just puts us in a better position and as Greg noted earlier.
Decision thats not in our favor purchase to a base case.
Planning timeline of June of next year towards an approval soon.
Yes, yes.
Mark.
I would just add mark we've been quite.
I would I would say a couple of things one we have been very prescriptive in our thinking about financing the company and the launch and this in a notion in the consideration of a form of committed capital that comes upon the approval and upon the launch for us with over $100 million of cash on hand.
Is every bit as valuable as cash in the balance sheet. Today. So we've had extensive discussions with a number of parties, who do thing who could potentially be sources of.
That sort of committed capital in the future upon.
<unk> and progress of the NDA to our final approval. So again I don't want to send the message that we.
We're just waiting for after the hearing like we've done a lot of work to put ourselves in a position to begin to execute.
Coming out of next week or whenever that ruling is and recognizing that the timelines between.
An approval decision after next week, if it goes in our favor or in June of next year.
<unk> become compressed a little bit have begun to converge on themselves. So we're you know we're actively involved in solving how we fund the company at launch and through the lens of what's in the best interests of our shareholders for sure.
Thanks.
And your next question comes from the line of Matt Kaplan from Ladenburg Thalmann. Your line is open.
Hi, Good morning, and yes, just wanted to zero in on that kind of the.
Sodium ox debate narcolepsy cataplexy.
Market dynamics that youre seeing and hearing out there after attending these meetings recent land discussions with with payers and Pbms.
What's your sense in terms of the impact of and what's going on with the low salt twice nightly product out in the marketplace and I guess secondly, you mentioned kind of the three components.
The 30000 patients what's what's what's your sense in terms of being able to expand the sodium oxidate market.
After after full approval and launch.
Thanks, Matt Richard do you want take that yeah sure. Thanks, Matt So first as far as the payers are concerned.
They're very.
On top of what's been going on in the marketplace and as I mentioned before.
We've had really great conversations with them, maybe one sort of thing I can add today Didnt mentioned before is when when payers are thinking about sort of switch is how to look at Ags one of the benefits that we have coming to this marketplace of that sort of more than 30000 patients that have been treated the vast majority have already been expo.
<unk> two in oxalate, so we're very confident that.
Payers will acknowledged that they've already experienced in Oxford, before which bodes very well for us.
Even in light of an AG or anything coming in the marketplace. So overall as far as the payers are concerned we think we're very well positioned and as we think about where the market will expand.
What we've learned from this market research that we did most recently is theres still quite a few patients that are viewed to be oxidate eligible who are not receiving ox space.
<unk> greatest within low ox abate users currently in non Octavate users Cooley. So we see opportunities there for them to just prescribed to patients they've already identified including the opportunity longer term is to get more de novo patients into the mix here as well, what we sort of see from our research is from this latest round is that the market should.
Grow by at least 50% with the introduction of new models in the marketplace with once again, the largest percentage growth coming from lower users, who probably have really struggled with the proposition of twice nightly octavate in the past so.
The good news is we see growth opportunities within high oxalate user scale, but maybe even a higher percentage of growth opportunity from lower and can we be getting some non prescribers is the mix as well.
Okay. That's helpful. Thanks for the added color.
And again, if you would like to ask a question. Please press Star then the number one on your telephone keypad. Your next question comes from the line of Chase Knickerbocker from Craig Hallum. Your line is open.
Good morning, everyone.
Want to put a finer point on some of the questions. Chris asked around the ramp of your commercial capabilities. What specifically has been added in this first tranche of hiring I guess you mentioned on the call from key field personnel on the MSL side.
Is it some some of the management around.
Sales capabilities and I guess, assuming base case of June approval, how should we think about the ramp of sales personnel hiring.
Richard what what what kind of timeframe do you want most of the reps on board to be able to to really get them trained up in preparation for launch. Thanks.
Okay.
Thanks Chase Richard do you want to start.
Yeah, sure Hey, Jay So yes, just a couple of areas that we have focused in on this initial wave as we have hired a new head of sales so.
So that we can get the framework for the Salesforce going and we've also selectively added some more of our payer resources as well.
Where we are in our conversations with the GPS and the Pbms as well so.
So it will be sort of selectively adding to acute.
Places fully balancing sort of the financial sort of situation with our need to grow but one thing. If you think backwards to June our goal is to really peak at the right time and with the fact that we have now compressed the time from final approval potential decision in June to <unk> launch our goal is to <unk>.
On a lot of our field force before that approval timeline as well because we wanted to make sure that there is familiar day with the territory with their customers and everything as well. So we continue to sort of balance need we're sort of in a position to be able to pull that off but as Greg.
Greg and Tom have mentioned also still balancing sort of where we may wind up with some of the proceedings from both legal and financial raises as well. So I feel right now we're in a really good spot the great news that there's been a lot of interesting people wanted to come join avatar.
With the folks that we've retained and capped here and our plans around building out once again, our goal is to really peak at the right time to sort of be ready for that June backstop date.
Yes, I think chase I would just add to that that we've got a really kind of disciplined approach and a detailed plan of how we build toward a June decision and then a launch thereafter.
And then how do you pull that up if you have any.
In the event there is good news in that decision come sooner right from that standpoint. So again I think it's all mapped out we know we're kind of things that got that are longer kind of poles in the tent that require more work leading up into those days and those are the roles that Richard noted.
That will bring on board so.
The question. Thanks.
Okay.
Yes helpful color. Thanks, and then just one last from me if I could.
Around what potential positive outcome, if we make that assumption being that we're sitting in November now I mean, what does it what does it accelerate youre kind of thinking on potential approval with those extra regulatory matters and getting the patents listed needs to happen.
In your in your thoughts on what does it kind of due to accelerated approval now that we're in November . Thanks.
Yes, again I think there's two there's two steps in that process. The first is getting a decision from the court and then.
That results in the de listing and then and then the FDA, making a final approval decision that we obviously would be working to have done as soon as possible from that standpoint, but any sort of positive momentum that create that moves us in that direction earlier than June .
Upside from our standpoint, recognizing that we're only seven months away. So I think we've noted that the timelines of converged a little bit from that standpoint.
Cases in Delaware.
Have slipped a little bit, but we're certainly pleased that this important hearing has taken place next week.
From that standpoint, I think ultimately it really is a.
A function of.
The difference between launching.
As we've said kind of in Q3, if we go to June and launching before that.
If we.
If a decision and approval come sooner and any launch earlier quite frankly is better.
We put from that standpoint.
Yes understood makes sense, thanks for the questions guys.
Your next question comes from the line of Paul Matteis from Stifel. Your line is open.
Hi, This is James on for Paul Thanks for taking our question.
Maybe just a quick clarifying one on DEA scheduling I guess can you remind us the latest there and is there anything that needs to happen there post full approval and would that be kind of gating to any other kind of prelaunch activities that that need to occur. Thanks. So much.
Yeah. Thanks.
First of all.
Congress has already determined what the scheduling requirement that sodium entre betas are ox debate product is scheduled III. So.
Anything that has to happen administratively.
Whether it be from DEA related or whatnot is it a rate limiter relative to us coming to market from that standpoint, it's not it's all contemplated in our consideration of timing.
We had an approval.
After June 17th and an expectation that we would launch therefore in Q3, it would be ready to certainly be ready to launch in Q3 that contemplates any of those sorts of matters.
Got it thanks that's helpful.
Thanks Jay.
And there are no further questions at this time. This does conclude today's conference call. We thank you for your participation and you may now disconnect.
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Yes.
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Okay.
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