Q2 2023 Avadel Pharmaceuticals PLC Earnings Call
Yes.
[music].
Greetings and welcome to the avid Dell Pharmaceuticals second quarter 2023 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Reminder, this conference is being recorded its now my pleasure to introduce Austin.
Stern Investor Relations. Thank you you may begin.
Good morning, and thank you for joining us on our conference call to discuss second quarter 2023 earnings as a reminder, before you before you 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 <unk>.
Uncertainties that could cause actual results to differ materially from those contemplated in such forward looking statements. These risks include risks regarding the success of our commercialization efforts for goodbyes.
Patients regarding the potential market impacts anticipated market availability and sales opportunities at <unk> and.
And the impact of competitive products and pricing.
These and other risks are described more fully in <unk> public filings under the Exchange Act included in our Form 10-K for the year.
And at December 31, 2022, which was filed on March 29, 2023, and any subsequent SEC filings.
As required by law <unk> undertakes no obligation to update or revise any forward looking statements contained in this presentation to reflect new information future events or otherwise.
Call today are Greg Davis, Chief Executive Officer, Dr. Jennifer Good men senior Vice President of medical and clinical Affairs, Richard Kim Chief Commercial Officer, and Tom 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 today to review our second quarter 2023 results.
2023 continues to be a transformational year for Avenova, which has only accelerated with the significant progress our team has delivered in the second quarter alone.
I'll start with our transition to a commercial stage organization and the launch of Bloom rise or once at bedtime oxygen therapy for the treatment of cataplexy or excessive daytime sleepiness in adults with narcolepsy.
Following memorizes approval in May along with the concurrent receipt of orphan drug exclusivity, we swiftly executed our launch strategy and since launch in June have seen impressive interest and initial uptake from physicians and a broad mix of patients.
We recorded our first sales from them rise in June and based on our initial launch progress we are trending well against our expectations at this very early stage in the launch.
With clear and unwavering focus we are honored to be able to bring forward our transformational what's at bedtime therapy. The narcolepsy community has long been waiting for.
On today's call I'm joined by Richard who will be providing updates on our commercial launch progress.
Following Richard Jen will be discussing our robust clinical presence at the <unk> conference and our recent publications. We will then turn the call over to Tom to update on the financial results and lastly, we will close the call with a question and answer session.
Before commenting on our launch progress I want to take a moment to highlight the receipt of orphan drug exclusivity in may at the <unk>.
Same time, the FDA granted <unk> final approval as this is an important validation of the benefit of numerous.
The FDA found <unk> to be clinically superior to all twice nightly oximetry products in that room rise makes a major contribution to patient care by providing a once nightly dosing regimen that avoids nocturnal arousal, which disrupts sleep architecture texture when required to be forcibly awaken in the middle of the night to take us.
Second dose.
As many of you know at the end of June we held a widely attended numerous commercial bay, where we highlighted the significant opportunity of moonrise.
Demonstrated a history of resilience showcased our talented team reported initial launch metrics and discuss how we are well positioned for future growth.
In addition, we hosted two renounced with specialists, who spoke about their extensive experience with treating narcolepsy patients and how they believe luminaries will positively impact the treatment landscape for people with narcolepsy.
We were also honored to have a person with narcolepsy independents, who gave a firsthand account of her experience living with narcolepsy first generation oxalates and how little lives positively transformed her life.
Today, we are updating initial metrics previously reported specifically the three most important early launched Kpis that we reviewed at our commercial bank and are now reporting data through the first two months of launch with.
The significant progress we have seen across these important kpis. During these early weeks of launch are as follows first rems certifications, which is the first step before prescription can be written are now greater than 1000 targeted prescribers, who are certified that's up from 625 as previously reported.
Second new patient enrollments into write up our patient services Center, which is the first step to a potential future dispersive loom rise are now greater than 400 patient enrollments up from $1 40 as previously reported.
And third progress on the reimbursement front, which is also performing ahead of expectations, which now includes the addition of Bloom rise to the express scripts National formulary and now hot off the press Cvs health has removed the new to market block for loom rise on its commercial formularies and a non preferred position. This.
Decision now allows a pathway to coverage for more than 30 million additional commercial loans.
In summary from a leading kpis perspective, while recognizing we are only in the first full quarter of launch right now with significant work ahead of US. We are pleased with these early indicators of our launch progress.
Looking at future quarters as our loss progresses, we expect the kpis that provide a current picture of launch to evolve and our goal as it always has been is to be transparent as we report metrics that capture our launch progress.
Further we expect to give all bonds J P. I updates on our quarterly earnings calls, where all data provided will be as of quarter end.
Looking towards the future and the continued growth of avid all our strategy is to target opportunities that allow us to expand our patient reach in the rare sweet space with the goal to provide innovative therapies like loom rise to more eligible patients.
In this regard our team is on track to submit a supplemental new drug application for potential FDA approval of <unk> in the pediatric narcolepsy population before the end of the 2023 calendar year.
Additionally, we are progressing the clinical planning to initiate a multi center randomized control trial in idiopathic hypersomnia and lastly, we continue our preclinical stage formulation work of a potential no or low sodium once at bedtime oxidate formulation for the small subset of sodium sensitive octavate eligible patients.
Who could potentially benefit from this type of innovation.
We look forward to providing updates as appropriate as physicians and patients have expressed significant interest in avid out developing these needed treatment option.
Although it's very early with much more to accomplish during the first few full quarters of launch we are very pleased based on our early launch kpis with our initial execution and continued pursuit of greater than the $1 billion peak sales potential opportunity that is there for them right.
I will now turn the call over to Richard to provide an update on our launch progress Richard.
Thanks, Greg and good morning, everyone, our luminaries launches off to a strong start and excited to share our continued progress.
Now for the last 20 years that there has not been any innovation in improving the delivery of OXXO base to people with narcolepsy.
The fundamental problem of forcibly waiting patients, who often already suffer from disturbances and nocturnal sleep existed Intel once at bedtime their rights was approved and launched in June .
With <unk>, we have a simple and compelling proposition and what we are seeing and hearing in the early weeks of our launch is a validation of our brand proposition in the market insights we had prelaunch.
Safe to say, we believe numerous provides a meaningful benefit to the narcolepsy community and of course. This was further validated through the receipt of our orphan drug exclusivity from the FDA.
Turning to the commercial launch itself, we are approximately two months.
We are encouraged by the strong progress thus far and the positive feedback we received from the narcolepsy community.
Many from our leadership team and I have had the privilege of being on the road with members of our field force and speaking with sleep specialist and their teams firsthand.
Considering that collectively we are relatively new team in the sleep field the energy of our team and engagement of sleep specialists has been terrific.
As our launch continues we are focused on continue to drive demand among high volume Octavate prescribers.
Hurting patients to advocate for the use of winterize, securing payer coverage and delivering best in class patient services and reimbursement support.
From our launch team perspective as of the end of July all roles are now filled and trained in August one marked the first month with a fully deployed team.
We continue to see very high interest in levels of engagement from sleep specialist and their staff.
Our sales team impact continues to grow and we have now engaged with a vast majority of the top at 1600 prescribing offices that represent roughly 80% of total octavate prescriptions.
With the completion of our full team, we expect to continue to grow our reach and frequency to high volume Oxidate prescribers.
As a reminder, we see the octane market with three key segments.
Burst 16, 100 patients who are currently treated with twice nightly first generation oxalates.
Second around 16000 patients from the last few years who've tried and discontinued at twice that of the first generation Oxidate and third around 3000 annual new patient starts who are naive to occupy treatment from the greater than 25000, who are eligible for but have not yet been treated with approximate.
We are seeing high interest from our target ACP some people with occupancy from all three patient segments as evidenced by the greater than one type of Rems certifications for ACP and greater than 400 rise up patient enrollments in the first two months of watch.
For Rems, we are pleased to see the majority of certificate certifications are coming from high volume Octavate prescribers. Although we have also had ACP certified who have never previously prescribed in oxalate as well.
Right that patient enrollments have also been impressive as enrollment in this patient services program to get the process for having a <unk> prescription filled and delivered to a person with narcolepsy.
Our data informs us that the majority of the greater than 400 ryzen enrollments are switches from first generation ox abates.
And that we are also getting patients naive to okta base as well as previously discontinued octavate patients.
For rides up all of our processes are similar to what most offices do already to prescribers specialty Rams are controlled substances systems and services can be viewed as different and that is true for us with that.
For example, we did extensive research to determine key services to offer through right like our access and affordability programs, including a zero dollar commercial co pay program for eligible patients.
Our patient and temporary assistance program, along with personalized right that nurse for navigators individually assigned to each person with narcolepsy and their sleep specialists.
It's been a really great to see but people are kept seen acp's take advantage of our services.
And for our nurse navigators seeing them build relationships with people they support.
Before I provide a payer update I'd like to summarize a few themes that from the time I've been in the field and from speaking with the specialists.
First we have yet to me to see specialists, who does not see a need for Liam rise.
In general, it's actually quite the opposite where Acp's are really excited to learn about our whatsapp bedtime sodium ox abate.
Second we encouraged to see some offices, bringing several patients quickly, but we believe that most patients will visit their sleep specialist and their standard follow up period, which is typically every three months to six months.
And third <unk> specialist are getting used to our rights up services and they are trying them out to gain initial familiar area for themselves and their staff.
The other thing that Gilead already has been driven through our field reimbursement team who have been instrumental in educating offices our services.
Let me now transition to the peer front.
We're really pleased with the progress we've made in achieving parity access with the first generation of oxalates.
<unk> payer channel mix has been estimated to be about 80% to 90% commercial and the three GPO is a sentencing MSR collectively represent about 85% of those commercially covered lives.
As a reminder, the loom rights distribution network also includes all three specialty pharmacies from the GPO enterprises.
At commercial date, we announced the first of three GPO contracts have been finalized and signed as we ex secured express scripts coverage on the national preferred formulary effective July one.
We have now been lifted with the majority of that PVM covered lives and as Greg Just mentioned Cvs health has removed the new to market block for low rise on its commercially commercial formulary in a non preferred position.
Having secured the opportunity for commercial reimbursement in major Pbms for two of the three <unk> in the first two months of watch in addition to the others previous announced from Kaiser and many of the Blue Cross Blue Shield plans.
Certainly a leading positive performance indicator and a reflection of the great work done by our market access team.
Up to now the majority of early prescriptions are being processed through medical necessity for which there is using more paperwork and more time required to navigate these prescriptions.
We announced that our commercial day that we're pleasantly surprised that in the first few weeks that we already had some reimbursed patients on the rise.
And since then we have been extremely pleased to see the increasing reimbursement success. Our teams are having with new rates in the first couple of months of watch.
And now with more commercial reimbursement program that has been secured we look forward to even more people with narcolepsy, who will be able to access with price in the future.
I covered a lot of ground today, and we believe that the early launch indicators have us well positioned to have a significant impact and are confident that we will be able to capture a significant portion of that the large octavate market opportunity.
Our research shows that the market opportunity for Liam rise could be much greater than that of current first generation twice nightly octavate market of about 16 type of patients on therapy.
With more than 50000 potential eligible patients for whom rice and a peak sales potential of greater than $1 billion.
Although these are still the first couple months of launch we could not be prouder of the launch execution that our team is delivering and the receptivity. We have received from the narcolepsy community.
We look forward to providing more updates on future calls and with that I'll turn the call over to Jennifer for details on our current our recent scientific data presentations.
<unk>.
Thanks, Richard and good morning, it's been a monumental quarter for us supporting that lean lifelines, along with our strong presence at sleep 2023, and the publication of additional data underscores the need for the price.
Starting with 2023, we were incredibly pleased deliberate meeting clinical presence of 12 posters and fixed oral presentation, which collectively support the strong clinical profile.
In the patient needs.
For example data from a social network study showed that more than 60% of people with narcolepsy consider among their most troubling Kim tons, various sleep disturbances, including core quality suite disrupted nighttime sleep fragmented sleep and insomnia among.
Among all the narcolepsy treatment only mainline did not cause insomnia require chronic middle of the night dosing.
Once again, we presented ongoing data from restore the open label study, which has now been underway for more than three years and continues to bolster the known safety and Tolerability profile as we might.
Most importantly, 94% of those switching from twice nightly octavate preferred the once nightly dosing regimen.
Turning to Q, new peer reviewed publications.
We published in suite, a post talk analysis as Levi rests on data provided by narcolepsy title.
No published data previously existed prospectively evaluating ostomate treatment on <unk>, our narcolepsy without cataplexy.
We have demonstrated consistent efficacy profile for new mines in both in <unk> and in GTO.
These data are important as there is a perception of sunsweet clinicians and patients and activate should be reserved for in Q1 with this publication, we have the clinical study data to show favorable efficacy in <unk> as well.
Lastly, we published a new discrete choice experiment in advances in therapy. As you may recall, we previously published of DTE among patients showing that the number one driver of sodium octavate preference is the dosing regimen with non preference identify for a single bedtime dose.
We followed up with a second GCE. This time among 100 clinicians and included sodium content as an attorney to adopt the <unk>.
Once nightly dosing, which only levi's provides with more than twice as important for overall estimate choice. Then the next Q attribute which were adverse reaction and sodium content respectively.
Our scientific data aligns with what we are now seeing in the real world Levi's is fulfilling a significant unmet need.
I will now turn the call over to Tom for an update on the Companys financial Tom Thank you Jennifer.
We're pleased to announce that we generated our first sales illume rise and reported $1 5 million of net revenue for the quarter ended June 32023, which represents an initial stocking orders from all three of the specialty pharmacies and our distribution network.
And while we're not providing revenue guidance at this time I can share that subsequent to June 30, we generated additional sales from all through the specialty pharmacies at the launch of Numerex has progressed.
We also reported a total of $51 million of GAAP operating expenses. During the quarter ended June 32023, which which is comprised of approximately $47 million of SG&A costs and $4 million of R&D costs.
I want to highlight approximately $18 million of expenses that impacted the quarter that drove opex higher we expect our cash operating expenses will be on a go forward basis.
First there was approximately 9 million of noncash expenses.
Majority of which is tied to stock based compensation, which includes a cumulative catch up adjustment of $6 million for previously granted equity awards.
The $6 million cumulative catch up adjustment was recorded upon reaching the milestone objective of our first commercial sale of <unk>.
Second there was also a cumulative catch up adjustment of approximately $2 million for cash incentive awards that were tied to reaching the same milestone.
Third we incurred approximately $5 million of legal and other professional fees of which $3 million were contingent on receiving FDA approval and launching loom rise.
And finally, we expect approximately $2 million of commercial <unk> inventory through R&D that was purchased prior to receiving FDA approval.
Post FDA approval commercial inventory purchases will be capitalized and expensed through cost of products sold.
After adjusting for these items cash operating expenses in the quarter ended June .
June 32023 were approximately $33 million and we expect the quarterly cash operating expenses for the remainder of 2023 will be in the range of $35 million to $40 million.
Finally, just a few comments on the balance sheet.
During the quarter ended June 32023, we completed the exchange of $106 three convertible notes for $12 3 million common shares.
Effective with this exchange, we have just $21 2 million of convertible notes remaining which matures in October 2023.
And our intent is to sell the principal and interest in cash.
And I'll wrap up with our cash position.
At June 30, we had approximately 161 million in cash cash equivalents and marketable securities. In addition to that last week. We received 30 million from the first tranche of the $75 million royalty financing commitments, we secured earlier this year.
A second tranche of $45 million remains committed from the royalty financing is available if we achieve $25 million of quarterly net revenue by June 32024.
But as a reminder, we are not required to drive the $45 million in the royalty.
We believe based on current plans and expectations the cash on hand at June 30.
The $30 million in the royalty financing and expected cash receipts from sales of Blu rays are sufficient to support the launch of <unk> and bridge the company to cash flow breakeven.
For additional detail on our financial results for the quarter ended June 32023, please refer to the 10-Q or the press release issued earlier this morning.
And I will now turn the call back to Gregg for closing remarks.
Tom.
We believe our strong foundation has supported our successful initial and very early launch of loom rise and we remain laser focused on continuing to execute the commercial launch.
But we believe we've made significant progress in this area and look forward to potentially expanding our pipeline to reach more patients in the future.
We're excited to be in the field and actively changing the treatment paradigm for patients and are fully committed to realizing the value of loom rights, which we believe has the potential to achieve peak sales greater than $1 billion.
Thank you for your support and look forward to providing future updates on our progress.
With that let's open up the call for questions operator.
Ladies and gentlemen, if you have a question or a comment at this time. Please press star one on your telephone. If your question has been answered or you wish you move yourself from the queue. Please press star one again, we will pause for a moment, while we compile the Q&A roster.
Our first question comes from Francois Brisk voice with Oppenheimer. Your line is open.
Alright, thanks for taking the questions congrats on the progress here so.
First of all I, just wanted to better understand rise up and just that metric you have 400.
Sorry, Yes, 400 from the 140 <unk> shared previously I just want to understand how should we think about those numbers and how they correlate.
Ultimately sales.
Yes, Thanks, Frank Richard do you want to talk about that yes, sure Hey, good morning, Frank Thanks for the question. So first we're super pleased with the progress that we've been making so far.
Although we're not providing specific guidance what we are doing right. Now is it's hard to predict exactly how many of those patients will convert into sales.
What we can C&I as I mentioned on our prepared remarks is we have been really having increased success in getting reimbursement and.
In fact, one of the things like you mentioned as well as you are probably not using our temporary assistance programs as much as we thought early on so although it's difficult to predict how many of those patients will convert.
I can say is the one that is more motivated than us to get those patients on to.
Product.
<unk> built for them as well.
Great and then in terms of are you ever going to share the average number or exit number of patients that are on drug or should we expect these metrics to be the metrics going forward.
And then just maybe a quick comment on.
On the CBS news is that earlier than expected or kind of inline here. Thank you, yes on the metrics again as we shared back in the commercial day. We believe during these first few months the most important leading indicators for us work Rems certifications, writeup enrollments and reimbursement because those off.
All feed into ultimately converting someone into a Pedro we absolutely agree that as we go forward and in future quarters reporting patients on therapy as an important metric right and as Richard noted and as what we said back in June we were pleased just in the first month to see some patients already convert in a much sooner than we thought we've only seen that.
Celebrate and we've and we.
As Richard noted, we havent been required or necessary to use our temporary assistance programs as much as we thought we made it. So again I think everything from our perspective is on track and that will be a metric as we get go forward. We certainly were reporting and I'll just remind you that works. We're two months into the launch and this is our second update and we haven't had our first.
Full quarter, yet so again I think you'll see those data points start coming out in the future.
In terms of your comment on Cvs Richard.
Is that on course, and timing wise or earlier than what we may have thought with Richard feel free to answer yes.
We're thrilled to actually have two significant payer.
Reimbursement wins, it's early on two months post launch.
It's really been impressive to see I think it's a real testament to the work that both our medical and our market access team has been explained the proposition of their mask to the payers and clearly that I'm sort of asking our value proposition and great negotiation. So the fact that we have two big wins already this quickly amongst many other smaller ones is a real testament to sort of the early performance from <unk>.
Team.
Thanks Frank.
Thank you.
For our next question.
Our next question comes from Andrew Tsai with Jefferies. Your line is open.
Hey, Thanks Congrats.
Congrats on the progress I appreciate the updates and thanks for taking our questions.
Appreciating you do not necessarily want to share too much but I'll try to ask in another way.
Of the 140 patients who have signed up as of June and how many of them have been converted to a treated patients. Just so we can gauge the speed as well as the desk of conversions and secondly can you just also remind us how many patients.
And in your open label study right now and when could they start rolling over to being a commercial patient and if they were to be rolled over would they be counted as a new patient and rise up or would they automatically be classified as a treated patient. Thank you yeah. Thanks, Vince Andrew again, I think we're early into.
For the launch and the specific metric around actual patients on therapy will be something we talk about in subsequent quarters. We're very focused on the leading indicators into that and we've made great progress. There I would say that we've seen through what we noted at the end of June was weak we were pleasantly surprised again to see.
Patients begin to get reimbursed in a fairly efficient way and go on commercial drug.
And again in July that's only.
Hi.
<unk> accelerated.
And in many ways and Richard you can comment.
Just these patients take some time so the earlier patients are likely the ones converting sooner unless you are converting.
Unless you're in a in a benefit design that adjudicates fairly quickly we have a few of those for sure but I think what youre seeing is the time that requires to move from the top of the funnel, which is what we'll characterize writeup is to out as a dispense takes time navigating the medical necessity process until these more formal coverage policy.
<unk> begin to take hold.
But at this point I would say, we're very pleased with how we're seeing that conversion occur even back to the $1 40 versus what we had assumed.
Perhaps equally as important is the lack of the <unk>.
Less dependency on what we call our temporary assistance program, which you may refer to as some sort of bridging our free drug program, but.
Not being required to use that at a level that we had assumed because of the team's ability to navigate the reimbursement process.
In terms of your open label question as we've previously talked about we had a little under 100, who were still in the trial at that time I would say of the of the rise up enrollment they represent a very small minority today, they are being processed into the into the into the system. They would count technically out of a new rise up enrollment because of its.
Of that we've seen some of those already transitioning to commercial drug.
Got it.
I would say that that's in the works now and without a whole lot more to actually process through and ultimately move on to commercial drug.
Very clear thank you again.
One of them before our next question.
Our next question comes from Amit <unk> with Needham <unk> Company. Your line is open.
Great. Thanks for taking my question.
I guess I'm going to try to understand that same metric in a slightly different way.
Can you talk about what are the steps that are required from the time patients get some drillers in the rise up.
And.
Go through all the steps before they can factor with the drug.
And at this point.
Do you need to make the decision of whether you wanted to put that that that patient with the drug.
If you could sort of talk to that process and also patients that are receiving drug today what percent are receiving free drug.
That would be helpful.
Yes, So Richard do you want to take them take those yes sure. Thanks for the question on me so.
I want to remind myself that getting a new specialty product to a patient early in logic is just it's complicated for any product launch right and that's why we really over invested in our services to rise up in our field reimbursement team. So the general process is this you have to sit in a room.
Enrollment form that will begin the process, sometimes the information is complete and sometimes it isn't.
Benefits investigation will begin will start to identify writeup identify with specialty pharmacy issues that will be done and then a script prescription will be set 10 that can now go through the process, but especially before any criteria is set for prioritization from a payer. It generally it's going to go through a medical necessity, which is a much more manual process.
We're at an office has the right specific reasons why they are looking to use this product. It goes to the payer goes back and forth a couple of times so.
The point is it takes a while once that is approved then of course the pharmacy.
Our lineup when that prescription will actually be fulfilled so prior to any coverage decisions being made.
<unk> medical necessity this takes well over a month.
Those things to happen in general.
So we're not measuring in a few days or a few weeks, but definitely several several weeks.
And that's why getting some of these reimbursement wins with the payers is so important because that should decrease the time.
Sort of going through that process as well so we're super pleased with how it's working because it is complicated but at the same time as Greg and I have mentioned, we're also super pleased to sort of see that level of reimbursement that we're getting and to your point I won't comment on the percentage of free product, but what is what we're seeing is a lot more reimbursement wins that we had.
Expected or projected at least.
And in general the decision about when someone goes onto our temporary assistance program is really the decision between.
The patient and the provider.
Oftentimes there.
Our existing switch patients they will have other product or any or there's other things going in their life. So it is there can be offered but a lot of times the decision of the patient and provider, that's what we listen to and figure out when should be kicking a lot of these programs as well and the last comment I can give is we actually have had drug that we are about to.
Administer through our temporary assistance program, where we did get approval for reimbursement right before we were about to send it out as well. So this is a very dynamic period of launch and like I said, we're just really excited that we're getting patients onto the horizon B, we're getting more reimbursement success than maybe we had first anticipated.
And then maybe a follow up to that is just to sort of understand how.
You guys are trying to make sure that you don't lose these patients while some of these steps are being undertaken.
It's good to see that over 400 patients Angolan right, but what I'm trying to understand are those going to eventually convert.
Into patients on drug or is that.
Is there a likelihood that percentage of those patients.
Maybe get lost through the process, either because the process with taking time or.
At some point the patient changes their mind.
They want to be on.
Yes.
Great question. Unfortunately for any product that is prescribed in United States. There is abandonment that goes on from either the provider or the patient.
But what can that's why we invested as much as we did into a writeup services.
Our nurse care navigators have individual relationships with both patients and with the office.
Does that communication I think where people that struggle. The most is when they don't know what's going on and that's why our nurse navigators really take the time to invest in the relationship to followup with those those patients as well so they understand where they are in their process. So.
It's really hard to sort of say what piece what percent will stay on right now, but what we can say is thats why we really invested as much as we did into our services because handholding patients offices, especially early on is so important so that they have a good experience.
<unk> are more likely to stay in the process to get Didnt want to give up as well, yes. The only thing I would add is that we built our programs to support patients at any point along this process. We're prepared to initiate our temporary assistance program as early as that patient and provider once the good news for us and Thats, what we assumed was <unk>.
And to be happening the good news for US is that that's not what's happened we've been able to keep them on and no one's more incentivized to keep them in that kind of system than us to keep them on and through the process.
And getting to a reimbursed product without having to use our temporary assistance program at a much much lower rate than what we had originally assumed.
Got it thank you I'll jump back in the queue.
One moment for our next question.
Our next question comes from Marc Goodman with Leerink. Your line is open.
Yes.
Yes, good morning first.
Anecdotally stories that your reps are talking about just whats going on in the marketplace. Just you got generics out there for <unk> waivers do undertaking share obviously, just any stories that youre hearing out there and secondly can you.
Talk about what.
What are sales that are needed to breakeven for the company. Thank you.
Richard do you want to start Yeah, Hey, Mark Thanks.
Anecdotes are awesome and that's why also getting the field has been terrific.
Overall, what I can say.
There has been really great receptivity from the offices that we have been in maybe a couple that could also our share that's happened several times across the country as were relatively new company and.
Our representatives go speak to the receptionist and they don't know the doctor, yet and with either Carl call. They say come back in a few weeks and then we've had doctors literary call or chase our reps in the parking lot to sort of say can you. Please come in if you've got that what the bedtime therapy. So I think it's just been a really cool to see.
We are in a very competitive marketplace, but we have a very clear strategy. We have very clear messaging and we really think the conversations have been great. So thus far I think it's been really thrilled and honored to be out there and theres a lot of energy from our team because the receptivity from the specialist office has been great and I guess I'll turn the next question.
Tom.
Yeah, Hey, Mark Thanks for the question I think mather than thinking about it in terms of sales which of course I'm seeing your question I think about it in terms of patients on therapy.
If I use what I described as our expected cash run rate of $35 million to $40 million per quarter. If you.
Annualize that you'd think about number of patients pain patients on therapy or something in the range of about 1500 patients.
At that level.
Sales required to achieve to achieve breakeven and profitability.
Thanks.
One moment.
<unk>.
Okay.
Our next question comes from David <unk> with Piper Sandler Your line is open.
Yes.
Hi. Thanks. This is skyler on for David just a couple of questions first realizing it's still early but just based on some early feedback can you comment on the patient types, where you've seen the most casual uptake or demand so far.
Patients that are currently on twice nightly octavate just prefer the once nightly or have been on twice daily in the past our oxyt naive and then in terms of the payer landscape I'm wondering what your current expectations are for whether any plans or making patients step through generic oxide or if you're expecting that in the future. Thanks.
Richard do you want those are.
For you, yes, no problem. Thanks for the question so as far as the patient types, we're sourcing coming it's right that the.
The majority thus far are patients who are currently on a first generation twice nightly octavate.
However, we are also seeing patients who are naive to.
Oxo base and also patients who have previously discontinued so a nice mix overall, but the majority of thus far are patients who are previously on our historic currently we're switching from <unk>.
First generation ox debate.
And as far as your second question is concerned our whole strategy has been to get parity access with the best of the.
First generation oxo base, thus far we are not seeing any impact for a step through generic furthers our.
Our strategy has been for that not to happen. So thus far the the plans that we have been listed with the do not require a step to go through any.
Any oxalate prior to us as well so that's really our strategy is to really make sure that the payer we're not disadvantaged through a payer perspective from an occupied access.
Really focused on sort of the communications and what we do in the offices.
With this the specialties as well.
Great. Thank you that's helpful and if I could just ask one more on just how are you thinking about the opportunities on horizon IH do you think that a once nightly option is more suited to this population do you have any thoughts on that.
Richard do you have you have any commentary and then maybe Jeff yeah.
H.
Through our AD boards and speaking through our top specialist.
The general feedback we receive is as strong as our value proposition is in narcolepsy for Lou mice, it may even be slightly stronger and IH, especially.
Especially when you when you consider the sleep inertia that patients with <unk> have and sometimes their inability to wake up and take their medication.
Or another dose so I think theres a lot of interest in.
And that's why we have been spending collective time really looking at the opportunity to get our clinical program going but John anything you'd like to add.
Just to emphasize what you mentioned Richard and that is the <unk> that is the reason that with the twice nightly formulation. They allowed for once nightly dose up to six grams, because patients simply could not wake up to take the second dose, but it is really important to note that you could only go to six brands and that is sub therapy.
<unk> X number of patients and so we certainly hear through our MSL cereal all of our interactions that there is a massive needs you have <unk> available for the IH population.
Okay.
Well thank you all.
One moment for our next question.
Our next question comes from Matt Kaplan with Ladenburg Thalmann. Your line is open.
Hi, Thanks for taking the questions.
Just a quick follow up on that.
Final question on IH opportunity can you talk a little bit about the timeline that you envision for.
Lives in this in this to develop it.
Patient.
Yes, I think Matt it's a little early right now to be that to be precise on that there's a number of steps we have to go through from clinical supply quota to you know.
Getting our protocol finalized and approved and filing our R&D and all that we're in all the work for that now.
We will certainly update as we cross through key milestones.
Going to be an event.
Envisioned to kind of level set that we would be initiating a clinical trial in 2023, there's just a lot more work that has to be done.
To get to that point and we certainly wanted to make sure we got through our approval.
With whom rise in narcolepsy first so that's in full force with our team and so we will update as we go forward.
Great.
Then a question.
Maybe for Richard in terms of the mix of patients understanding that what.
What youre seeing mostly now or the majority of our the switches.
How do you see that evolving over time or are the switches kind of let's call. It the low hanging fruit or all of the patients who were.
Our previous non octavate therapy, and coming back with therapy.
Those.
You see a shift to those being the majority of patients over time.
Yes, Matt Great question and yes, if we just think about our patient segments. There are more patients who have been on an acre base than the other segments right now so so yes right.
Right now just from the sheer number of patients who sort of go through there is probably more of those patients currently on therapy I think over time, we will start to see a little.
More of a balance across the three different segments there so.
<unk>.
Early on we're sort of seeing a lot of the usage being consistent with the market research that we've done and what that showed US is over time, we should also be able to grow sort of a new patient segment as well.
<unk>.
3000 patients who currently gone annually for first generation oxalates.
Okay. Thank you and then last question in terms of.
On the theme of anecdotes from the field what are you hearing in terms of counter detailing.
From jazz in the field on Amit.
Well you know.
I think those are always better questions to ask them, but I think in general they've been very consistent I think the message is mostly focused on sodium and clearly as a new company just the challenges in getting a new product sort of reimbursed.
We are so well prepared for that we've been clear on focus on that from day one.
Matt what I can say is nothing unexpected and our team is in a great position to handle any objections that come to them clinically or from the competition as well so just happy to be out there and having our teams in front of these specialists map.
Okay.
And maybe just one more follow up I guess, given the significant amount of awareness of <unk> prior to a launch.
Do you think the rate of patients enrolling into the rise up system.
<unk>.
I guess was there a warehousing of patients waiting for the approval and kind of eager to get in get in the line there or do you think that that pay.
So the enrollment should continue or accelerating.
Yes, I think Matt I think as we share I think some of our insights from being in the field is that there are certainly.
Examples of in office, who has a number of patients who they are processing and prosecuting.
I don't know if I'd call them warehouse, so to speak but I think our view is that what we've heard in the field at least from from Treaters is that they will see patients in their ordinary course, which is why it's important for us to execute on our direct to patient campaigns and to really you know.
Deploy our strategies and tactics to activate patients.
<unk> two.
Advocate for their therapy and go seeking out loom rides as well. So those are things that we're doing of course.
That will have impact over time, but I think our view is that and we've seen this early in the launch like what you would expect we've seen the accumulative increase kind of as time going on in terms of enrollments in dispenses and things like that so.
Our view is that that should continue and listen if somebody has a large bolus that are ready to come into our system and to rise up we will deploy our resources to support them.
And we're prepared and have the capabilities to handle that but I think our assumptions are that things will happen in the ordinary course.
Okay, great. Thanks, Thanks for taking questions.
Well remember for next question.
Our next question comes from Jason Knickerbocker with Craig Hallum. Your line is open.
Good morning, everyone. Thanks for the question just another one on rise up for me, maybe you hit a different vein.
Talk us through the patient mix you have converted onto the drug at this point I understand that's a fair mix of switch naive previous discontinuation in the funnel, but maybe talk us through the next you've pulled out of the funnel at this point is it a much easier process I would imagine from the medical necessity and process.
For switch patients and then but is it slightly less success, you have pulling naive patients or discontinued patients out of the channel or is it fairly similar process that is being required.
Yes.
I think the short answer that is Richard feel free to weigh in but I think it's reasonably representative of how they come into the funnel and some of that is time dependent right. So if there's more.
When they come in and how long it takes them as individual from that standpoint, we've had patients come in early who maybe come from all three of those groups that are prosecuted quickly.
But I think generally given how it's been distributed coming in at the top of the funnel I think directionally. It represents that coming out of the funnel So Richard feel free to weigh anymore spot on.
I mean, maybe talk to us.
The difference in medical record requirements and the process between the three in there kind of a.
Is there kind of a similar similar pull through through the bottom is it is it fair to think that they're not one in particular is in a lot more cumbersome than the rest.
Richard.
Yes, it's hard to get into that level of detail because here's what happened to medical necessity, you may actually deal with one insurer, but you may actually deal with many different case reviewers. So it's a little bit of who do you get on what day of the week you get so.
I think overall, we've just been very impressed that we have been able to get as many through as we have already.
And I think that really talks to both payers and actually clinicians being very clear about the clinical value proposition that we might have so the fact that this isn't the meat to that fact that this is the convenience of the fact that this is fundamental to how narcolepsy should be managed so.
To us that's really been maybe the best upside is the fact that it appears to us that both the clinicians and the people reviewing these cases understand our clinical value proposition.
Yes, I think the other way to think about it chases that if theres not a formal coverage policy decision then we're going through a medical necessity and it's going to go through those steps, whether it's a de novo naive or previous or a switch. So in many ways. It kind of operates the same way until there is this decision that the prior authorization criteria.
Terry has set the coverage policies in place then than it did it operates differently from that standpoint.
Okay that makes sense, yeah, that's helpful color.
And maybe just one on another kind of vein on color from the field, maybe talk about sort of additional Boone you've received from the clinically superior opinion from the FDA that's implied in the orphan designation.
Maybe feedback from the reps and how they've been effective at kind of outlay in that message and the receptivity of physicians.
Richard Yes, no. It's a great question Chase.
It's a great candidate.
It's a little bit overwhelming for some of our customers to hear that because they're not used to hearing that and what we've really had to do is break down why we received.
Not only our orphan drug exclusivity to make through the major contribution patient care, but.
Almost get into the steps of why we are deemed to be clinically superior to the fact that it's important not to disrupt nocturnal sleep you are trying to avoid fragmentation and with luminaries you can avoid that so I think once you explained the steps it becomes a lot more digestible because the statement on its own is almost in some.
With almost two powerful right. So so we've really had to make sure. We can explain the why behind it as opposed to just the statement itself and I think once the why as explained there is a lot more head mining that goes on and then just given the statement on its own. So so it's a great message for us clearly and we're just learning how to make sure. It is better digested from our customers.
As well.
Got it that's it for me thanks, guys.
One moment for our next question.
Our next question will come from Marion, Belgium with lifestyle capital. Your line is open.
Hi, good morning, and congrats on a thought there just one quick question for me.
What color can you provide on the one month discontinuation rate and these early adopter that aluminite and thoughts on how this compares to the iron ore is that way.
Yes, Richard or maybe Richard do you have any commentary on that first yeah, Hey, Marie and good morning. Thanks for the question, it's really early right now.
We're just beginning to get patients on so it's.
What's difficult when you will look early on is sort of at what point in time do you consider someone discontinued and generally most of our rules, we sort of half step up rules. Once a month has gone by without a refill or three months has gone by our six months, but you also have to recall that not every patient does get things in any standard order. So it's really.
Too early for us to comment on this and I think we're going to have to sort of get through probably a couple of quarters before we'll really understand a lot more of what that looks like.
Got it that makes sense. Thank you.
And I'm not showing any further questions at this time I'd like to turn the call back over to Greg Davis for any closing remarks.
Oh, well. Thank you everyone and thank you for your time and for joining US today on our second quarter call have a great rest of the day, we look forward to providing updates as we go forward. Thanks.
Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.
Okay.
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