Q4 2023 Avadel Pharmaceuticals PLC Earnings Call

Unknown Executive: Greetings and welcome to Avadel Pharmaceutical's fourth quarter and full year 2023 earnings call. At this time, all participants are in a listen-only mode.

Greetings and welcome to Avondale Pharmaceuticals, fourth quarter and full year 2023 earnings call. At this time, all participants are in a listen only mode.

Unknown Executive: A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Austin Murtagh, with Stern Investor Relations. You may begin.

A question and answer session will follow the formal presentation.

As a reminder, this conference is being recorded it is now my pleasure to introduce Austin, Marta with Stern Investor Relations you may begin.

Austin Murtagh: Good morning, and thank you for joining us on our conference call to discuss Avedel's fourth quarter and full year 2023 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. This includes statements related to expectations regarding revenue, operating expenses, and operating breaks. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements.

Good morning, and thank you for joining us on our conference call to discuss <unk> fourth quarter and full year 2023 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.

This includes statements related to expectations regarding revenue operating expenses and operating breakeven.

Forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward looking statements. These risks and uncertainties are described in <unk> public filings under the Exchange Act included in our Form 10-K for the year ended December 31 2023.

Unknown Executive: These risks and uncertainties are described in Avadel's public filings under the Exchange Act, including the Form 10-K for the year ended December 31st, 2023, which was filed on February 29th, 2024, and subsequent SEC filings. Except as required by law, Avadel undertakes no obligation to update or revise any forward-looking statements contained in this presentation to reflect new information, future events, or otherwise. For purposes of this conference call, the company made the decision to provide certain leading launch indicators as of January 31st, 2024, in order to provide a more current snapshot of its launch progress and in consideration of the update the company provided in early January. Avadel undertakes no obligation to provide intra-quarter results in future quarters.

Which was filed on February 29, 2024, and subsequent SEC filings.

As required by law <unk> undertakes no obligation to update or revise any forward looking statements contained in this presentation.

Reflecting new information future events or otherwise for.

For purposes of this conference call. The company made the decision to provide certain leading launch indicators as of January 31, 2024 in order to provide a more current snapshot of its launch progress and in consideration of the update the company provided in early January.

<unk> undertakes no obligations to provide intra quarter results in future quarters on the call today are Greg Davis, Chief Executive Officer, Richard Kim Chief Commercial Officer, and Tom Mchugh, Chief Financial Officer at this time I will turn the call over to Greg.

Gregory J. Divis: On the call today are Greg Divis, Chief Executive Officer; 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.

Thank you Austin and good morning, everyone and thank you for joining us for our company update and to review <unk> fourth quarter and full year 2023 results.

Gregory J. Divis: Good morning, everyone, and thank you for joining us for a company update and to review Avadel's fourth quarter and full year 2023 results. Following my brief opening remarks, Richard will provide an update on our launch progress, including our key metrics through January 31st. Tom will then review our Q4 financial results and provide some commentary regarding 2024. We will conclude with a question and answer session. As most of you are likely aware, it's been a busy few days for Avadel, especially last week with the ongoing patent trial in Delaware, where closing arguments were heard this past Friday, and we are now awaiting the jury's decision.

Following my brief opening remarks, Richard will provide an update on our launch progress, including our key metrics through January 31, Tom.

Tom will then review our Q4 financial results and provide some commentary regarding 2024, we will conclude with a question and answer session.

As most of you are likely aware its been a busy several days for EBITDA, especially last week with the ongoing patent trial in Delaware for closing arguments were heard this past Friday and we are now awaiting the jury's decision.

Gregory J. Divis: So before we dive into the commercial and business updates announced in our press release this morning, I would like to take a moment to provide some general commentary as it relates to the current and still active patent dispute. Regardless of the outcome, we don't expect the pending jury decision in the patent trial to impact our ongoing commercial launch or our belief in the potential of LUMRI. Given this is an active litigation, we will not provide any further commentary or answer any questions on the trial, the underlying dispute, or the pending decision at this time. However, as we have with all key matters, we will provide an update when the trial concludes, and we appreciate your understanding on this. 2023 was truly a monumental year for Avadel.

So before we dive into the commercial and business updates announced in our press release. This morning, I would like to take a moment to provide some general commentary as it relates to the current and still active patent dispute.

Regardless of the outcome, we don't own it we don't expect the pending Jerry decision in the patent trial to impact our ongoing commercial launch or our belief in the potential of Bloom rights.

Given this is an active litigation, we will not provide any further commentary or answer any questions on the trial the underlying dispute or the pending decision at this time.

However, as we have with all key matters, we will provide an update when the trial concludes and we appreciate your understanding on this point.

2023 was truly a monumental year for <unk> with final FDA approval, we were able to bring <unk> through the narcolepsy community and execute our initial launch plan.

Gregory J. Divis: With final FDA approval, we were able to bring Lumrise to the narcolepsy community and execute our initial launch plan, both of which have been transformational for the company and that we have worked towards for many years. In addition to the unmatched achievement of launching Moonrise within approximately one month of final FDA approval, since launch last June, Lumice has seen strong uptake among patients and prescribers, which has been supported by the positive feedback we've received from the broader narcolepsy community. Our early launch momentum throughout 2023 has continued into this year, as demonstrated by progress being made across physicians, patients, and payers, all of which Richard will provide further details on shortly. Our team's nearly decade-long dedication to advancing lume rise and to the sleep medicine space overall has allowed us to build a foundation for continued growth and the potential expansion of lume rise. And as such, our priorities as a company remain very crystal clear.

Both of which have been transformational for the company and that we have worked towards for many years.

In addition to the unmatched achievement of launching moonrise within approximately one month of final FDA approval.

Since launched last June <unk> seen strong uptake among patients and prescribers, which has been supported by the positive feedback we've received from the broader narcolepsy community.

Our early launch momentum throughout 2023 has continued into this year as demonstrated by progress being made across physicians patients and Payors all of which Richard will provide further details on shortly.

Our teams nearly decade long dedication to advancing loom rice entered the sleep medicine space overall has allowed us to build a foundation for continued growth and the potential expansion of blue months.

And as such our priorities as a company remain very crystal clear.

Gregory J. Divis: First and foremost, our focus continues to be on executing our launch strategy and delivering on the promise and the potential of Loomrise across the multi-billion dollar Octobit market opportunity. We are proud of the momentum we are building and all we have accomplished thus far. And this is evidenced by the $19.5 million in Moonrise Net Revenue in the fourth quarter and the $28 million for the seven months ended December 31st, 2022.

First and foremost continues to be our focus on executing our launch strategy and delivering on the promise and the potential of bloom rise across the multibillion dollar octavate market opportunity.

We are proud of the momentum we are building and all we've accomplished thus far and this is evidenced by the $19 5 million in <unk> net revenue in the fourth quarter and the $28 million for the seven months ended December 31 2023.

Gregory J. Divis: Our second and near-term opportunity is our potential expansion into the pediatric narcolepsy population. The FDA accepted our supplemental new drug application for Lumrise for the treatment of cataplexy or excessive daytime sleepiness in patients between the ages of 7 to 17 with narcolepsy and provided us with an action date of September 7, 2024. We believe approval in the pediatric population will allow Lumrise to provide further positive impact to the narcolepsy community and caregivers at large. We have heard directly from parents about the challenges associated with middle-of-the-night dosing and the burden a twice-nightly dosing regimen may create for the entire family.

Our second near term opportunity is our potential expansion into the pediatric narcolepsy population.

The FDA accepted our supplemental new drug application for <unk> for the treatment of cataplexy or excessive daytime sleepiness in patients between the ages of seven to 17 with narcolepsy and provided US an action date of September seven 2024.

We believe approval in the pediatric population will allow <unk> to provide further positive impact to the narcolepsy community and caregivers at large.

We have heard directly from parents about the challenges associated with the middle of the night dosing and the burden of twice nightly dosing regimen matrix for the entire family.

Gregory J. Divis: We believe lumen rise, if approved for the pediatric population, can offer the potential to reduce that treatment burden while also providing an effective treatment for children living with narcolepsy. We look forward to the potential approval and launch later this year. The next growth opportunity we're pursuing is Loom Rise for the treatment of idiopathic hypersomnia, or IH. When speaking with key opinion leaders in the field, there is a significant need for the use of once-at-bedtime Lumrise for many suffering from the deep sleep inertia associated with IH, with a current estimated unique diagnosed IH patient population of greater than 30,000.

We believe <unk> if approved for the pediatric population can offer the potential of reducing that treatment burden, while also providing an effective treatment for children living with narcolepsy.

We look forward to the potential approval and launch later this year.

The next growth opportunity were pursuing as <unk> for the treatment of idiopathic hypersomnia or IH.

When speaking with key opinion leaders in the field. There is a significant need for the use of once at bedtime loom rights for many suffering from the deep sleep inertia associated with IH.

With the current estimated uniquely diagnosed IH patient population of greater than 30000, we believe <unk> if approved for the IH indication will be an important addition to the treatment options for those suffering from this rare sleep disorder, while also providing potentially meaningful upside to the future value of aluminum.

Gregory J. Divis: We believe LUMi, if approved for the IH indication, will be an important addition to the treatment options for those suffering from this rare sleep disorder, while also providing potentially meaningful upside to the future value of LUMi. We are currently well advanced in the planning stages to initiate a multi-center randomized controlled trial for IH in the second half of this calendar year, and we intend to provide updates as we reach various important milestones, including when our first patient is enrolled. And lastly, we're continuing the pre-clinical development work of a potential no or low-sodium once-at-bedtime oxalate formulation with a target product profile that is bioequivalent to Lumrise, and we intend to provide those updates as appropriate as well. In closing, we ended this year in a strong position with a healthy balance sheet to support our operations and our continued growth.

We are currently well advanced in the planning stages to initiate a multicenter randomized controlled trial for <unk> in the second half of this calendar year and we intend to provide updates as we reach various important milestones, including when our first patient is enrolled.

And lastly, we are continuing the pre can preclinical development work of a potential no or low sodium once at bedtime oxalate formulation with a target product profile that is bio equivalent to loom rise and we intend to provide those updates as appropriate as well.

In closing we ended this year in a strong position with a healthy balance sheet to support our operations and our continued growth.

Gregory J. Divis: Coupled with the progress already made this year, we believe we are well-positioned to expand our reach and impact within the sleep medicine space and, most importantly, continue executing the launch of LUMAR. I am proud of the significant accomplishments and progress our team has delivered over the past year and remain highly confident that we will continue to do so during the year ahead. We believe we're well positioned to advance LoomRise to command a meaningful share of the multi-billion dollar oxalate market and maintain our view that LoomRise offers a greater than $1 billion potential market opportunity. With that, I'll turn the call over to Richard for details on our commercial progress. Hey, thanks, Greg, and good morning, everyone.

Coupled with the progress already made this year, we believe we are well positioned to expand our reach and impact within the sleep medicine space and most importantly continue executing the launch of rumors.

I am proud of the significant accomplishments and progress our team has delivered over the past year and remain highly confident that we will continue that during the year ahead.

We believe we are well positioned to advanced wound <unk> to command a meaningful share of the multibillion dollar oxalate market and maintain our view that <unk> offers a greater than $1 billion potential market opportunity.

With that I'll turn the call over to Richard for details on our commercial progress Richard.

Hey, Thanks, Brian and good morning, everyone.

Richard Kim: I'm excited to share our launch progress and provide some insight into the trends we saw develop as we ended 2023 and early into this year. Taking a step back and looking at what we achieved this past year, we are so proud to be part of a team that has been able to bring a life-changing treatment to the narcolepsy community. The positive feedback we hear from both people with narcolepsy and health care providers every day continues to be an inspiration for us. Great touch on this earlier, but our Lumerize commercial results have continued to be strong since we launched last June. We remain laser focused on keeping the momentum growing in 2024. Starting with patience, rising enrollments are an important indicator of early launch demand, as it is really the first step in the process for patients to receive their Lumaris prescription. We previously stated that as of December 31st, there were over 1,900 patients enrolled in HRISA.

I'm excited to share our launch progress and provide some insight into the trends we saw develop as we ended 2023 and early into this year.

Now, taking a step back and looking at what we achieved this past year. We're so proud to be part of a team that has been able to bring life changing treatment to the narcolepsy community.

The positive feedback we hear from both people with narcolepsy and health care providers everyday continues to be an inspiration for us.

Greg touched on this earlier, but our <unk> commercial results continued to be strong since we launched last June.

And we remain laser focused on keeping the momentum growing in 2024.

Starting with patients Writeup enrollments are an important indicator of early launch demand.

As David is really the first step in the process for patients to receive their <unk> prescription.

We previously stated that as of December 31, there were over 1900 patients enrolled at horizon.

Richard Kim: Since that time, we've continued to see strong demand, with now greater than 2,200 patient enrollment through the end of January. Turning to patients who have initiated therapy, as of December 31st, there were 1,000 patients who had initiated lumen rise treatment, and that number grew to more than 1,200 by the end of January.

Since that time, we've continued to see strong demand with now greater than 2200 patient enrollment through the end of January.

Turning to patients who have initiated therapy as of December 31, there were a thousand patients who initiated with <unk> treatment.

And that number grew to greater than 12 100 by the end of January.

Typically the start of the year can be more complicated to initiate your therapies. So we were pleased to see that we did not lose any momentum and getting new <unk> patients started.

Richard Kim: Typically, the start of the year can be more complicated to initiate new therapies, so we were pleased to see that we did not lose any momentum in getting new lumen virus patients started. Importantly, the majority of these patients are commercially reimbursed. When we look at our available write-up data, we can see all three patient segments: Switch Patients from First Generation Octobates, patients who previously tried and discontinued a first-generation Oxybate, and Oxybate-naive patients being low-represented.

Importantly, the majority of these patients are commercially reimbursed.

When we look at our available Writeup data, we continue to see all three patient segments.

Patients from our first generation Octavate.

Patients, who previously tried and discontinued our first generation octavate and occupied naive patients being low represented.

We are seeing the majority of initiations come from patients switching from a first generation octavate with more patients coming from the quite frankly mixed thoughts product compared to the twice nightly sodium octavate products.

Richard Kim: We are seeing the majority of initiations come from patients switching from a first-generation Oxivate with more patients coming from the twice-nightly mixed salts product compared to the twice-nightly sodium Oxivate product. For new to OxyBait patients, we saw an increase in our overall representation of all rights of patients in Q4 compared to Q3. We're also excited that in the next few weeks, we will be rolling out our Loom Rise Brand Ambassador Program, where people with narcolepsy will begin to tell their stories of how Loom Rise has transformed their lives. These stories and messages will go out through various forms of media to get these personal messages about Lumerize out to the narcolepsy community. Turning to healthcare providers, as of January 31st, there were approximately 1,900 HCPs who were REM certified.

<unk> patients we saw an increase in our overall representation of all right for patients in Q4 compared to Q3.

We're also excited that in the next few weeks, we will be rolling out our <unk> brand Ambassador program, where people with narcolepsy will begin to tell their stories of how <unk> has transformed their lives.

These stories and messages will come out through various forms of media to get these personal messages about loom right out to the narcolepsy community.

Turning to health care providers as of January 31, there were approximately 1900 ACP through a rems certified.

As previously stated, although we covered that 4500, plus hcp's, who make up the entire octavate prescribing universe, we have been spending more time with the 600 high volume prescribers, who make up 80% of that total occupied market.

Avi prescribers, we have focused more of our early efforts on the almost 500, most experienced prescribers, who account for 50% of the overall occupant market.

And greater than 70% of these top tier acp's have now written a prescription for <unk>.

Richard Kim: As previously stated, although we cover the 4,500 plus HCPs who make up the entire OxyBate-prescribing universe, we have been spending more time with the 1,600 high volume prescribers who make up 80% of the total oxfate market. Of these prescribers, we have focused more of our early efforts on the almost 500 most experienced prescribers who account for 50% of the overall Occupy market. And greater than 70% of these top-tier HCPs have now written a prescription for Lumenride. And every week, we have been consistently adding more new and repeat writers.

Every week, we have been consistently adding more new and repeat writers. Additionally in the fourth quarter, we began our kols, let speaker programs as they are a key tactic to drive HCP peer to peer education.

For product with film we continue to make strong progress demonstrated by the greater than 200 patients who have initiated therapy as of January 31.

As our overall reimbursement has grown significantly we are focused on continuing to have more acp's leverage right up and our field reimbursement team.

Get more patients initiated onto them rise and support them longer term on their numerous journey.

In February we saw continued improvement and progress with our trends.

Richard Kim: Additionally, in the fourth quarter, we began our KOL-led speaker programs as they are a key tactic to drive HTP, peer-to-peer lumarized education. For product fulfillment, we continue to make strong progress, demonstrated by the greater than 1200 patients who have initiated therapy as of January 31. As our overall reimbursement has grown significantly, we are focused on continuing to have more ACPs leverage RiseUp and our field reimbursement team to get more patients initiated onto Lumrise and support them longer term on their Lumrise journey. In February, we saw continued improvement and progress with our trend. That's a nice segue for me to provide an update on our progress. We announced that with the signing of the MSR contract, we secured all three GPO contracts last year within the first seven months of launch. Now, to start 2024, Lumarize is now also covered by Anthem and the UnitedHealthcare National Formulary.

That's a nice segue for me to provide an update on our payer progress we announced that with the signing of the MSR contract. We secured all three GPO contracts last year within the first seven months of launch.

Now to start 2024, where <unk> is now also covered by anthem and the Unitedhealthcare National formulary.

<unk> now has coverage policies with greater than 80% of commercially covered lives or over 140 million lives.

With the recent payer wins in hand positive feedback from sleep specialist and people with narcolepsy.

Growing momentum and product fulfillment and strong execution from our team.

We believe we are well positioned for long term growth and ultimately for <unk> to become the preferred oxidate for people with narcolepsy and Acp's.

With that I look forward to providing more updates on future calls and now I will turn the call over to Tom to discuss our financials Tom.

Thank you Richard.

Before we begin I will note the full financial results are available in our press release issued this morning, and the 10-K that was filed last week.

Richard Kim: Lumerize now has coverage policies with greater than 80% of commercially covered lives, or over 140 million lives. With the recent payer wins in hand, positive feedback from sleep specialists and people with narcolepsy, growing momentum and product fulfillment, and strong execution from our team, we believe we are well positioned for long-term Lumarized growth and, ultimately, for Lumarize to become the preferred oxidate for people with narcolepsy and With that, I look forward to providing more updates on future calls. And now, I will turn the call over to Tom to discuss our finances. Tom said,

We're pleased to report that we generated $19 5 million in net revenue for the quarter ended December 31 2023.

And $28 million of revenue for the seven months ended December 31 2023.

And as of December 31, we estimate that there was approximately one month of demand in the channel.

Turning to operating expenses, we reported $43 7 million of total GAAP operating expenses for the fourth quarter 2023.

Compared to $28 3 million in the fourth quarter of 2022.

Total operating expenses in the fourth quarter of 2023 includes $4 6 million of noncash charges comprised of stock based compensation of $3 5 million and depreciation and amortization of $1 1 million.

Thomas S. McHugh: Thank you, Richard. Before we begin, I'll note that full financial results are available in the press release issued this morning and the 10-K that was filed last week. We are pleased to report that we generated $19.5 million in net revenue for the quarter ended December 31, 2023, and $28 million in revenue for the seven months ended December 31st. And as of December 31st, we estimate that there was approximately one month of demand in the channel. Turning to operating expenses, we reported $43.7 million of total GAAP operating expenses for the fourth quarter of 2023, compared to $28.3 million in the fourth quarter of 2022. Total operating expenses for the fourth quarter of 2023 included $4.6 million of non-cash charges comprised of stock-based compensation of $3.5 million and depreciation and amortization of $1.1 million. After adjusting for these items, cash operating expenses were approximately $39 million for the quarter.

After adjusting for these items cash operating expenses were approximately $39 million for the quarter.

For the full year of 2023, GAAP operating expenses were $165 million compared to $98 6 million in 2022.

Excluding stock based compensation of $15 8 million and depreciation and amortization of $4 $3 million cash operating expenses for the full year of 2023 were approximately $145 million.

The increase in year over year operating expenses for both the fourth quarter and full year is primarily attributable to launch related costs.

Compensation costs related to increased head count and legal costs.

These were offset by lower R&D costs.

Prior to FDA approval on May one 2023 inventory expenses inventory purchases were expensed as R&D.

With respect to the balance sheet as of December 31, we had 105 billion of cash cash equivalents in marketable securities compared to 153 million at September 30 of 2023.

Thomas S. McHugh: For the full year of 2023, GAAP operating expenses were $165 million, compared to $98.6 million in 2022. Excluding stock-based compensation of $15.8 million and depreciation and amortization of $4.3 million, cash operating expenses for the full year of 2023 were approximately $145,000. The increase in year-over-year operating expenses for both the fourth quarter and full year is primarily attributable to launch-related costs, higher compensation costs related to increased headcount, and legal costs. These were offset by lower R&D costs. Prior to FDA approval on May 1st, 2023, inventory purchases were expensed as R&D. With respect to the balance sheet, as of December 31st, we had $105 million of cash, cash equivalents, and marketable securities, compared to $153 million on September 30. The $48 million decrease in cash during the fourth quarter is primarily due to net cash used in operations of $26 million, which is net of cash receipts from sales of Loomrise.

The $48 million decrease in cash during the fourth quarter is primarily due to net cash used in operations of $26 million.

Which is net of cash received from sales of <unk> and $22 million to pay off the remainder of the convertible notes.

As a result of paying off a notes, we're now effectively debt free.

During 2024, we currently expect our cash operating expenses.

For consideration of cash receipts from sales of <unk> will be in the range of $40 million to $45 million per quarter.

We believe that net cash used for operations will be materially lower after taking into account expected cash receipts for continuing sales of numerex.

As we look ahead based on current trends plans and assumptions. We believe we can achieve operating breakeven when there were approximately 1300 1500 commercially reimbursed patients on therapy.

And that we can achieve this during 2024.

In addition to the number of reimbursed patients on therapy, our expectations regarding breakeven take into account a number of other assumptions, including.

How quickly patient demand grows net pricing of <unk> and operating expenses to support the launch of the price.

And I'll wrap up with some commentary regarding 2020 for revenue.

Thomas S. McHugh: And $22 million to pay off the remainder of the convertible notes. As a result of paying off the notes, we are now effectively debt free. During 2024, we currently expect the cash operating expense, for consideration of cash receipts from sales of Loomrise, to be in the range of $40 to $45 million per quarter. We believe that net cash, for operation, will be materially lower after taking into account expected cash for continuing sales of the. As we look ahead, based on current trends, plans, and assumptions, we believe we can achieve operating breakeven when there are approximately 1,300 to 1,500 commercially reimbursed patients on therapy and that we can achieve this during 2024. In addition to the number of reimbursed patients on therapy, our expectations regarding break-even take into account a number of other assumptions, including how quickly patient demand grows. Net Pricing of Loom Rise and Operating Expenses to Support the Launch, And I'll wrap up with some commentary regarding 2024. While we are not providing formal guidance, pay close attention to the cell side.

While we are not providing formal guidance at this point, we pay close attention to the sell side estimates and at this time, we are comfortable with the current consensus of approximately $155 million for the full year, including the possibility that 2024 revenue could be higher if actual results from numerous such as the rate of increase.

Kris and commercially reimbursed patients.

Total number of reimbursed patients who were treated with <unk> and net pricing.

Outperforming the assumptions currently used by the sell side.

And with that I will turn the call back to Gregg for closing remarks. Thank.

Thank you Tom.

With a strong foundation, our team has built and the tenacity and bringing moonrise through the narcolepsy community. We are pleased to see the momentum we treated last year has continued as we've entered 2024.

Our 2024 priorities are clear and we remain intently focused on our launch execution, while bridging to cash flow breakeven and the near term expansion opportunities for Abbott out with our lifecycle management strategy.

We thank you for your support we look forward to providing future updates on our progress and with that we will open the call for questions operator.

Thank you.

In order to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star. One again, we do ask that you limit to one question and one follow up please standby, while we compile the Q&A Ross Sir.

The first question comes from Fran Swab, Bristol boats with Oppenheimer. Your line is open.

Thomas S. McHugh: And at this time, we are comfortable with the current consensus of approximately $155 million for the full year, including the possibility that 2024 revenue could be higher if actual results for Lumerize, such as the rate of increase in commercially reimbursed patients, the total number of reimbursed patients who were treated with Lumerize, and the net price of Lumerize, outperform the assumptions currently used by the cells. And with that, I will turn the call back to Greg for his closing remarks. Thank you, Tom.

Alright, thanks for taking the question.

Richard I think you mentioned.

Over 70% of the top 500.

Prescribers and I think represent like 50% of the strips here.

Has prescribed loom rise are ready.

Can you give any granularity as to if they are repeat prescribers that they've done it with multiple patients is there a percentage of that or is there kind of a feel of a bullish start any color there would be helpful. Yes.

Yes, Hey, Frank Good morning, and thanks for the question, Yes, I think overall, if we think about those top 500. They are the largest volume octavate prescribers.

Gregory J. Divis: With the strong foundation our team has built and the tenacity in bringing Loom Rise to the narcolepsy community, we are pleased to see the momentum we created last year has continued as we enter 2024. Our 2024 priorities are clear, and we remain intently focused on our launch execution while bridging to cash flow break-even and the near-term expansion opportunities for Avadel with our lifecycle management strategy. Thank you for your support. We look forward to providing future updates on our progress. And with that, we will open the call for questions. Operator.

We're very pleased to receive the penetration that we've had in the majority of those folks have been repeat writers as well.

All of them.

At different times, along the journey here, but we have like I said broken over 70% with the vast majority of those being repeat writers at this time as well.

Okay, Great and then in terms of the.

I don't know if theres reimbursement have an impact on how quickly someone gets the product in their patient gets the product in hand is that evolving with time or any any color there would be helpful. Thank you.

Yes.

Greg I'm going to take that one yes go ahead, Richard Yes sure.

Unknown Executive: Thank you. In order to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Thanks again, Frank so yeah as far as reimbursement is concerned yes, it does matter for us.

What we generally see if patients.

Our covered and they meet the prior authorization criteria, it's not on a sort of a given guide.

Unknown Executive: We do ask that you limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. The first question comes from Francois Brisebois with Oppenheimer.

Guidelines around about a month, but it's definitely been creeping under a month. If you have coverage and you meet the criteria. So that coverage does matter for us quite a bit here and we're seeing more of those patients now going through under that period, where they do actually have coverage and they meet the criteria. So those patients are now going through and well under a month.

Francois Brisebois: Your line is open. All right. Thanks for taking the question. Richard, I think you mentioned over 70% of the top 500 prescribers, and I think we're presenting about 50% of the strips here, have prescribed LumeRyze already. Do you give any granularity as to if they're repeat prescribers, if they've done it with multiple patients? Is there a percentage of that, or is there kind of a feel of a bullish start? Any color there would be helpful.

Period of time.

Okay, great. Thank you and congrats on the quarter guys.

Thanks Brent.

Okay.

The next question comes from Amy <unk> with Needham Your line is open.

Good morning, Thanks for taking my question.

And congrats on all the progress that you've made.

Maybe two questions from me Firstly, just with regards to add Tim.

Richard Kim: Yeah, hey, Frank. Good morning. Thanks for the question. Yeah, you know, I think overall, if we think about those top 500, you know, they are the largest volume prescribers. We're, we've, we're very pleased to sort of see that penetration that we've had. And the majority of those folks have been repeat writers as well.

What percent.

Could you Peel volume is anthem and maybe for United.

What percent of MSR.

That comprise.

And maybe if you could set us onto comment on just turned to profit in terms of pull through.

At the individuals primarily never across the three different <unk> that would be harper to understand.

Richard Kim: You know, some of them have stopped at different times along the journey here, but we have, like I said, broken over 70%, with the vast majority of those being repeat writers at this time as well. Okay, great. And then in terms of the, you know, I don't know, does reimbursement have an impact on how quickly someone gets the product in their hand, a patient gets the product in their hand? Is that evolving with time? Or is there any color there at all? It would be helpful.

And maybe.

My second question is.

What are you doing to sort of continue to drive.

This growth at the top of the funnel in terms of adding more patients to rise up and provide us with some of the objectives for 2020 for the Datacom. Thank you.

Richard do you want to take those yeah sure. Thanks, Amit for the questions. Yeah. So yes first we're super excited that we have those coverage decisions with both anthem, United healthcare to your point pushing at over 80% commercial covered lives.

Anthem and UHC are both pretty big for their respective Gpo's anthem, probably in the neighborhood of about 30% of the lives in United Healthcare, probably about somewhere for the MSR lives as well so pretty significant large plants, where we now have that coverage as well as far as the poultry is concerned.

Richard Kim: Yeah, Greg, do you want me to take that one? Yeah, go ahead, Richard. Yeah, sure. Thanks again, Frank. So yeah, as far as reimbursement is concerned, yeah, it does matter clearly for us. What we generally see is if patients are covered, and they meet the prior authorization criteria, it's not only, you know, we sort of guidelines run about a month, but it's definitely been creeping under a month if you have coverage and you meet the TA criteria. So that coverage does matter quite a bit to us here.

As per the previous question.

We're definitely seeing now where there is a covered lives and patients meet the prior prior authorization criteria.

Just somewhat.

Most other observation that those lives are being pulled through those those prescriptions are being pulled through quicker now as well. So the coverage does matter for us and we're seeing that pull through is starting to.

Francois Brisebois: And we're seeing more of those patients now going through under that period where they do actually have coverage, and they meet the criteria. So those patients are now going through in well under a month. Okay, great, thank you, and congrats on the quarter, guys. Thanks. The next question comes from Ami Fadia with Needham. Your line is open. Good morning.

Increase our overall commercial rate across the team here as well.

Now to your last question as far as growth drivers for demand, we see several cell.

When it comes to the ACP.

As we've talked about before there are ACP as Nick who adopt at various stages along the adoption curve.

Began our speaker programs to have peer to peer education going on for those physicians.

Ami Fadia: Thanks for taking my question. And congrats on all the progress that you've made. Maybe two questions from me. Firstly, just with regard to Anthem, what percent of the Zinc GPO volume is Anthem? And maybe for United, what percent of MSR would that comprise?

Going forward from that core fourth quarter of last year I also just announced earlier that our larger patient initiatives will begin in the next few weeks through our brand ambassadors for <unk>, where they will share their stories about what <unk> done for them and we plan to get those out through various forms of media as well. So it's really a two pronged approach which is to continue our.

Richard Kim: And maybe if you could sort of also comment on just general progress in terms of pull through at the, you know, individual level across the three different GPOs, that would be helpful to understand. And maybe my second question is, What are you doing to sort of continue to drive this growth at the top of the funnel in terms of adding more patients to rise, and what are some of the objectives for 2024 with that regard? Thank you. Richard, do you want to take those?

Against ACP and to also elevate the voice within the patient community as well.

Got it thank you.

One moment for the next question.

The next question comes from Andrew Tsai with Jefferies. Your line is open.

Hey, good morning, Congrats on the strong execution and thanks for taking our questions. So the first one is.

Round.

Conversion rates and discontinuation rates too.

Richard Kim: Yeah, sure. Thanks, Ami, for the questions. Yeah. So, first, we're super excited that we have those coverage decisions with both Anthem and UnitedHealthcare, to your point, pushing us over 80% of commercially covered lives. Anthem and UHC are both pretty big for their respective GPOs.

<unk> thousand 200 patients have currently signed up that's a great number you've confirmed breakeven for.

This year. So is it still fair to assume that most or the large majority of these sign ups are bound to convert suggesting discontinuation rates should still remain very favorable and maybe directionally well below 25%.

Richard Kim: Anthem probably in the neighborhood of about 30% of the lives, and UnitedHealthcare probably about similar for the MSR lives as well. So pretty significant, large plans where we now have that coverage as well. As far as the pull-through is concerned, sort of as per the previous question, we're definitely seeing now where there is a covered life and patients meet the prior authorization criteria, which is similar to most other OxyBates, that those lives are being pulled through, and those prescriptions are being pulled through quicker now as well. So the coverage does matter for us, and we're seeing that pull-through starting to increase our overall conversion rate across the team here as well.

Secondly.

You are on a great trajectory with a strong monthly adds the healthy conversion rates again your blessing sell.

Sell side consensus number so obviously the trajectory it cannot last forever. So when should the street start to consider our model a change in the slope. Thank you.

Richard do you want to maybe take the first the conversion of discontinuation rates sure I'll take those and thanks for the questions Andrew Yes. So yes, we're very pleased with it.

What the team has been doing through rise up in our field reimbursement team for conversion.

We are seeing our overall conversion rate start to increase over time here as well so and we're seeing both a improvement in the time, especially with patients who are covered with who meet the criteria, but at the same time, we're not giving up on some of the enrollment that had been in our system for a longer period of time, sometimes they're just Rick.

Richard Kim: Now, to your last question, as far as growth drivers for demand are concerned, we still see several. When it comes to the HTPs, you know, as we talked about before, there are HTPs who are adopting at various stages along the adoption curve. We began our speaker programs to have peer-to-peer education going on for those physicians in the fourth quarter of last year.

Fire, a little bit more work, but along with that to your point our discontinuation rate is below what we've seen historically for the twice that the observation.

Richard Kim: I also just announced earlier that our larger patient initiatives will begin in the next few weeks through our brand ambassadors for Lumrise, where they will share their stories about what Lumrise has done for them, and we plan to get those out through various forms of media as well. So it's really a two-pronged approach, which is to continue our efforts against HTPs and also elevate the voice within the patient community as well. I got it.

You had referenced 25%, which is above the benchmark of discontinuation for twice at least at one month. So we are seeing our rate of discontinuation rates below the historical twice nightly claims historically so to your point, we see sort of a nice buildup getting more new patients on and clearly we have a lot of efforts to appropriately keep patients on persistently overtime as <unk>.

Well, Greg I'll, maybe pass that last question will over back to you just a couple of comments first I think as it relates to conversions and discontinuation rates I think with two full quarters into the launch I think we've done incredibly well in both conversion to initiating on therapy, and how we effectively manage the discontinuation rates.

Ami Fadia: Thank you. One moment for the next question. The next question comes from Andrew Sy with Jeffries. Your line is open. Hey, good morning.

Andrew Sy: Congratulations on the strong execution. And thanks for taking our questions. So the first one is around, you know, conversion rates and discontinuation rates to 12, 2200 patients have cumulatively signed up. It's a great number; you've confirmed break even for this year.

Through all of our programs and services. So Richard's right, we're really pleased where we sit and certainly.

Richard Kim: So is it still fair to assume that most or the large majority of these signups are bound to convert, suggesting discontinuation rates should still remain very favorable, maybe directionally well below 25%. And secondly, you're on a great trajectory, you know, with the strong monthly ads and the healthy conversion rates. Again, your blessing 2024 is sell a site consensus number. So obviously, the trajectory cannot last forever. So when should the street start to consider or model a change in the slope?

We believe we are beating the benchmark relative to the existing therapies in the marketplace as it relates to your comment about when should we guide the street to change our expectation around the slope of the curve right from that standpoint listen.

We're not going to guide specifically around that Andrew I. Appreciate the question, but I'll just remind everyone that there is a large number of patients who are who have who are in our Oxford <unk> market opportunity.

Richard Kim: Thank you, Richard. Do you want to maybe take the first, the conversion and discontinuation rates? Sure, I'll take those. And thanks for the questions, Andrew. Yeah, so yeah, we're very pleased with what the team has been doing through RiseUp and our field reimbursement team for conversion. We are seeing, you know, our overall conversion rate start to increase over time here as well. So, and we're seeing both an improvement in time, especially with patients who are covered who meet the TA criteria. But at the same time, we're not giving up on some of the enrollments that have been in our system for a longer period of time. Sometimes, they just require a little bit more work.

Thats upwards of 50000 potential patients when you take in the currently existing treated patients across all forms of twice that of the OXXO Bates previously discontinued and new starts we certainly expect to see.

See us to continue to drive demand from those who are all sources of those patients at this point in time so.

There is a large pie out there.

Our view is that we haven't we haven't hit the flattening of our slope at this point.

Great. Thanks, again, and looking forward to seeing more good.

Good news.

One moment for the next question.

The next question comes from David <unk> with Piper Sandler Your line is open.

Hey, Thanks, so on the pediatric opportunity can you talk about realistically.

Richard Kim: But along with that, to your point, our discontinuation rate is below what we've seen historically for the twice-nightly oxidates. I think you had referenced 25%, which is about the benchmark for discontinuation for twice-nightly oxidates at one month. So, we're seeing our rate of discontinuation rates below the historical twice-nightly claims. To your point, we see a sort of a nice buildup getting more new patients on. And clearly, we have made a lot of efforts to appropriately keep patients on persistently over time as well. Greg, I'll maybe pass the last question over to you. Yeah, just a couple of comments.

How many patients you.

Could capture or percentage of the market. You think you can capture with a once nightly modality. So that's number one.

And then NIH.

How are you thinking about that opportunity in terms of your ability to either expand the market or do you think you'd get.

A lot of capture from patients who are on the.

The low sodium twice nightly oxidate product, just how youre thinking about those commercial dynamics NIH. Thank you, yes, thanks, David on pediatrics, depending upon your data source.

And Theres difference.

If you will claims data sources, we would it would tell us that the.

Gregory J. Divis: First, I think, as it relates to conversions and discontinuation rates. I think, you know, with two full quarters into the launch, I think we've done incredibly well in both conversion to initiating therapy and how we've effectively managed the discontinuation rates through all of our programs and services. So, Richard's right. We're really pleased where we sit, and certainly, we believe, are beating the benchmark relative to, you know, the existing therapies in the marketplace. As it relates to your comment about, you know, when should we guide the street to change the expectation around the slope of the curve, right, from that standpoint. Listen, we're not going to guide you specifically around that, Andrew.

The actual octavate utilization pediatric patients relative to the total pie is anywhere from 3% to 5%. So it's a relatively small patient population in the context of the.

The full pie and part of that is because although onset of symptoms occurs between the ages normally between the ages of 7% and 17, the diagnosis actually the proper diagnosis does incur occur to somewhere between eight to 15 years later, which is something that certainly everyone hopes improves over time.

So from US it really has been it's much less about.

The total patient population that are pediatrics, who are being treated and much more about really meeting the needs of that patient that patient population and their families right. We've heard extensively from them about how disruptive waking up in the middle of the night as four for parents for for the children and for their families.

Gregory J. Divis: I appreciate the question. But I'll just remind everyone that, like, there is a large number of patients who have, who are in our Oxybate market opportunity. Well, you know, that's upwards of 50,000 potential patients when you take in the currently existing treated patients across all forms of twice-annually Oxybates, previously discontinued, and new starts. We certainly expect to see us to continue to drive demand from all sources of those patients at this point in time. So, you know, there's a large pie out there, and, you know, our view is that, you know, we haven't hit the flattening of our slope at this point.

And so for us, it's a really straightforward opportunity for us to advance too.

This patient segment and seek approval for it.

Again so.

We do think theres, an opportunity to potentially expand that treated patient pool at this stage, but it's much more about just serving our community within the total narcolepsy patient community, who really is looking for the opportunity to not wake up.

With regards to IH.

Again with over 30000 uniquely.

<unk> patients.

And upwards of another greater than 10 to 12000 patients, who we would describe as diagnosed with IH and narcolepsy.

Andrew Sy: Great. Thanks again, and I'm looking forward to seeing more good news. One moment for the next question. The next question comes from David Amsellem with Piper Sandler. Your line is open.

And then you look at there is only one FDA approved drug and you look at the penetration in that.

Those patient population at under 10%, we think there is a.

David A. Amsellem: Hey, thanks. So on the pediatric opportunity, can you talk about realistically how many patients you could capture or the percentage of the market you think you can capture with a once-nightly modality? So that's number one.

Significant opportunity NIH to help more patients that are being treated and again.

We hear from key opinion leaders and physicians at large the first two things we hear from them. After we talk about room rents in narcolepsy is when are you going to get pediatrics and when are you going to get IHA. When are you going to study NIH and for IH. It really is about the fact that these patients suffer from really deep sleep inertia to the extent where they're sleeping.

Gregory J. Divis: And then in IH, how are you thinking about that opportunity in terms of your ability to either expand the market, or do you think you get a lot of capture from patients who are on the low-sodium twice-nightly oxibate product? Just how are you thinking about those commercial dynamics in IH. Thank you. Yeah, thanks, David. On pediatrics, you know, depending upon your data source, you know, and there's different, you know, if you will, claims data sources, we would find that the actual oxibate utilization in pediatric patients relative to the total pie is anywhere from three to five percent. So it's a relatively small patient population in the context of the full pie. And part of that is because although the onset of symptoms occurs between the ages of seven and 17, the diagnosis actually, the proper diagnosis doesn't occur until somewhere between, you know, eight to 15 years later, which is something that, you know, certainly, you know, everyone hopes improves over time.

$14 $15 16, plus hours, a day and it's hard for them to wake up right, it's hard for them to wake up and the opportunity to not be forced to do that in the middle of the night just offers a value proposition that is.

That I would say the community is very interested in with <unk>. So we're excited to initiate that study in and update everyone on as we progress it and try to help those patients as well and we think it is.

Another meaningful upside for the long term value of <unk> for sure.

Okay. Thanks, Greg.

One moment for the next question.

The next question comes from Matthew <unk> with UBS. Your line is open.

Thanks, Good morning, Congrats from my side as well.

I had two questions in terms of the switch patients can you provide some color on how much of the use is coming from <unk> item versus IV allowed us us was surprised to see that.

Narcolepsy patients starting to flatten out in the most recent quarter and then secondly, if you can.

Gregory J. Divis: So from us, it really has been, it's much less about the total patient population that are pediatric patients who are being treated and much more about, you know, really meeting the needs of that patient population and their families, right? We've heard extensively from them about how disruptive waking up in the middle of the night is for parents, for the children, and for their families.

You mentioned and if youre seeing any off label use on the IR site.

<unk>.

Richard you want to.

Yes, no problem. Thanks for the questions to ask so, yes, far assess which patients are concerned we.

We do see more coming from the mixed thoughts for <unk> than we do from the twice nightly sodium oxidate.

Gregory J. Divis: And so for us, it's a really straightforward opportunity for us to advance to this patient segment and seek approval for it. Again, we do think there is an opportunity to potentially expand that treated patient pool at this stage, but it's much more about just serving a community within the total narcolepsy patient community who are really looking for the opportunity to not wake up. With regard to IH, you know, again, with over 30,000 uniquely diagnosed patients and upwards of another greater than 10 to 12,000 patients who we would describe as diagnosed with IH and narcolepsy.

Segments overall as well.

Just a couple of perspective there.

We did market research early on in the mixed soft launch we saw that a lot of patients there tended to be early adopters of newer therapies and maybe we're seeing some of this year as well.

There are some there are more patients in the marketplace on that mixed population right now as well, but fundamentally what we also hear is the.

The amount of what thoughts that are associated with the <unk> really had no impact on the narcolepsy outcome. So it's really not much surprise to us that we're seeing more patients switching from the twice from the mixed salesperson than the twice nightly sodium octavate versions as well.

Gregory J. Divis: And then you look at there being only one FDA-approved drug, and you look at the penetration in that diagnosed patient population at under 10%; we think there is a significant opportunity in IH to help more patients that are being treated. And again, when we hear from key opinion leaders and physicians at large, the first two things we hear from them after we talk about pneumorants and narcolepsy are, "When are you gonna get kids?". And when are you gonna get IH?

And.

To answer your question about off label usage, clearly first and foremost we don't we don't promote any off label usage, but we have seen.

Request for off label usage for both pediatrics and price patients as well.

Thank you.

Thanks Ash.

One moment for the next question.

The next question comes from Mary Ann Bell Gaddy with livestock capital. Your line is open.

Gregory J. Divis: When are you gonna study IH? And for IH, it really is about the fact that these patients suffer from really deep sleep inertia to the extent that they're sleeping, you know, 14, 15, 16 plus hours a day. And it's hard for them to wake up, right?

Thank you. Good morning, just a quick question for me can you comment on patient types timing because there is a program and if you see any differentiation.

Ultimately, we see therapy exhibit similar process corn as patients discontinued patients and switch patients going through the program.

Gregory J. Divis: It's hard for them to wake up. And the opportunity to not be forced to do that in the middle of the night just offers a value proposition that is, you know, that I would say the community is very interested in with Lumerai. So we're excited to initiate that study and update everyone as we progress it and try to help those patients as well. And we think it's another meaningful upside for the long-term value of Lumerai. OK, thanks, Greg. One moment for the next question. The next question comes from Ash Verma with UBS. Your line is open. Thanks. Good morning.

Richard do you want to take that yeah sure. Thanks, Miriam So yes, yes, the process is quite similar because the.

I described the rise up enrollment.

It's it's almost like a prescription and the only reason isn't just because we have three different specialty pharmacies within our network. So.

The process is generally initiated by the provider and the amount of information that's required depending on what type of patient you ours generally the same if you're a switch with the exception of the box, which indicates if you had form our usage of an observation. So yes, we seem to be generally consistent across the board there as well and we are clearly.

Ash Verma: Congratulations from my side as well. So I have two questions. In terms of the switch patients, can you provide some color on how much of the use is coming from Zyram versus Zywave? A lot of us were surprised to see that Zywave narcolepsy patients were starting to flatten out in the most recent quarter. And then secondly, if you can, you know, briefly mention if you're seeing any off-label use on the IH side. Richard, do you want to?

Very pleased to see strong demand coming in through rise up as well.

Okay got it and then you spoke of the Kols Speaker program today can you provide a bit more detail on what that entailed.

Yes.

One of the things that's very important if you think about it beyond the terrific work that our medical team has done with publications and presentations at scientific and medical Congresses, It's pretty much been our voice carrying the word for.

Richard Kim: Yeah, no problem. Thanks for the question, Dash. So yeah, as far as switch patients are concerned, we do see more coming from the mixed salts or ZiWave than we do from the twice-nightly sodium oxidate segments overall as well. You know, just a couple of perspectives there.

For Lou right. So we now have our Speaker Bureau, we have trained.

Experts in <unk>.

Richard Kim: When we did market research early on in the mixed salts launch, we saw that a lot of patients there tended to be earlier adopters of newer therapies, and maybe we're seeing some of this here as well. There are more patients in the marketplace on the mixed salts version right now as well. But fundamentally, what we also hear is the amount of salts that are associated with the GHB really had no impact on the narcolepsy outcome.

<unk> across the country, who are now doing speaker program on our behalf.

We're generally speaking to other providers and some of their.

Their colleagues with mirror offices, and it's been really great to see we did quite a few of these programs as we exited Q4 of last year, we have executed many more of those programs in Q1 of this year and we're also doing things such as like Nashville program was broadcast programs as well. So it's really a great opportunity to get a fair and balanced sort of perspective.

Richard Kim: So it's really not much of a surprise to us that we're seeing more patients switching from the mixed salts version to the twice-nightly sodium oxidate versions as well. And, you know, to answer your question about off-label usage, clearly, first and foremost, we don't promote any off-label usage, but we have seen requests for off-label usage for both pediatric patients and for eye patients as well. Thanks, guys. One moment for the next question. The next question comes from Myriam Belghiti with LIFESAC Capital. Your line is open. Thank you. Good morning.

Right in the narcolepsy market place and the reception and the trend has been really positive as Darcy that many sort.

Sort of speed specialist that have come up these programs so getting that peer to peer education out for ACP is we think is quite critical and the speaker programs are a very important tactic for us to execute that.

Okay got it congrats on the great year.

Thank you.

One moment for the next question.

Our next question is from Chase Knickerbocker with Craig Hallum. Your line is open.

Good morning, guys, yes, great update.

My congrats as well.

Myriam Belghiti: Just a quick question for me. Can you comment on patient types signing up for the RISA program? And if you see any differentiation, then those that ultimately receive therapy, is it a similar process for naive patients, discontinued patients, and such patients going through the RISA program?

I just wanted to maybe better characterized.

Those patients that sit in the rides up program for longer.

I mean, it looks like much longer than the one month average you kind of mentioned so just kind of generally what are the characteristics of these patients that are on the program.

Did they not just meet the did they just not meet the criteria and then should we still think of kind of.

Richard Kim: Richard, do you want to take this? Yeah, sure. Thanks, Myriam. So, yeah, the process is quite similar because, you know, the way I describe the Rise Up enrollment, it's almost like a prescription, and the only reason it isn't is because we have three different specialty pharmacies within our network. So, the process is generally initiated by the provider, and the amount of information that's required, depending on what type of patient you are, is generally the same if you are a switch patient, with the exception of a box, which indicates if you have had previous usage of an Oxivate.

Conversion rate, there, reaching very high numbers or some of these patients just missed it on the program. Thanks.

Richard do you want to take that yeah sure. Thanks Chase, yes, so it's a great observation as far as some.

Some of these patients who have been in the process for longer.

To your point the general characterization is they may not have met the prior authorization criteria or in some cases they weren't in covered lives.

What we sort of thing with our processes.

Richard Kim: So, yeah, we tend to be generally consistent across the board there as well, and we're clearly very pleased to sort of see strong demand coming in through Rise Up as well. Got it. And then you spoke of a KOL-led speaker program today. Can you provide a bit more detail on what that entails?

A medical necessity or it's going through.

An appeal and denial process now.

Now one of the things, we're very proud of what we've built with our <unk> team as well as the tenacity of the team there to not give up on these cases.

So while on one hand, we're very focused on sort of a faster turnaround time, especially for patients who meet all the criteria.

Richard Kim: Yeah, we, you know, one of the things that's very important, you know, if you think about it beyond the terrific work that our medical team has done with publications and presentations at scientific medical congresses, it's pretty much our voice carrying the word for LUMRI. So, we now have a speaker bureau; we have trained experts in narcolepsy across the country who are now doing speaker programs on our behalf. You know, we're generally speaking to other providers and some of their colleagues within their offices, and it's been really great to sort of see that we did quite a few of these programs as we exited Q4 of last year. We have executed many more of those programs in Q1 of this year.

To your point, we're also not giving up on these longer standing cases, so and.

And generally what we have seen is a pretty good success rate oftentimes after many rounds of appeals and denials going through where we still can get a large portion of these patients initially on reimbursed therapy as well so.

So to.

To that point, where we see some time enrollments that started back six months ago, who can ultimately get onto therapy as well. So it's still relatively early to sort of us for us to figure out what those success rate should look like but we are still seeing on a monthly basis sort of what we would call more aged write up cases, who are successfully able to get the therapy.

Several months later.

Makes sense makes sense, Richard Thank you alright and promptly.

Richard Kim: And we're also doing things such as national programs and broadcast programs as well. So, it's really a great opportunity to get a fair and balanced sort of perspective out on LUMRI in the narcolepsy marketplace. And the reception and the turnout has been really positive to sort of see that many sort of seat specialists that have come up with these programs. So, you know, getting that peer-to-peer education out for HCPs, we think is quite critical. And these speaker programs are a very important tactic for us to execute that. Okay, I got it. Congratulations to them on a great year!

One moment for the next question.

Next question comes from Marc Goodman with Leerink. Your line is open.

Alright, Thanks for taking my question. This is Rudy on the line from Mark.

Congrats on the strong results. So I have question regarding the.

The market dynamics to see the total oxy market continue to expand in the coming years and also curious about yourselves on the opportunity of the upswing.

Products and do you see any potential impact in <unk>.

<unk> one versus <unk> NIH. Thanks.

Thanks, Richard do you want to take that as well, yes, no. Thanks for the yes, so as far as the market dynamics is concerned yes.

Prior to launch we had done six different quiet market research studies that really showed with the introduction of <unk> that the Oxford market could expand.

Myriam Belghiti: Thank you. Operator One moment for the next question. Our next question is from Chase Knickerbocker with Craig Hallam. Your line is open.

With the new patient starts somewhere in the neighborhood of.

Chase Richard Knickerbocker: Good morning, guys. Yeah, great update. Share my congratulations as well.

30% to 50%.

It's hard for us to sort of say right now because some of the other data from other company. There is no longer as visible as it used to be so we're but we're definitely seeing right now is a few things.

Richard Kim: So I just want to maybe better characterize, you know, those patients that sit in the Rise Up program for longer, you know, in some instances, it looks like much longer than the one month average you kind of mentioned. So, just kind of generally, what are the characteristics of these patients that sit in the program? And, you know, do they not just meet the criteria, do they just not?

One is we're getting more people, who had never prescribed and akshay previously into the mix.

Scribe and we're seeing obviously strong penetration within existing Oxford prescribers. So we definitely believe we're sort of seeing some of the dynamics of patients going beyond <unk>.

Using loom rise, where they maybe were more limited with twice on the oxo Bates.

Richard Kim: P.A. Criteria. And then should we still think of kind of... You know, the conversion rate there, reaching very high numbers, or some of these patients just going to sit on the program? Thanks. Richard, do you want to take that?

And as far as I think your question around erections are concerned.

For us, we're very excited to see any new treatment.

Is that could potentially come to the marketplace. Obviously those companies. They will have to go through the clinical and regulatory process as well.

First one that we <unk> is focusing more on and Q1.

Richard Kim: Yeah, sure. Thanks, Chase. Yeah, so no, it's a great observation as far as some of these patients who have been in the process for longer. You know, to your point, the general characterization is that they may not have met the authorization criteria, or in some cases, they weren't covered live.

I guess, a couple of things that we sort of see when it comes to <unk>.

They look to be really fabulous wake promoting agents.

Maybe a little less certain around their impact on sleep and clearly there's a lot of questions around the overall benefit risk profile between efficacy and tolerability as well.

Richard Kim: You know, what we first see with the process is then it's a medical necessity, or it's going through an appeal and a denial process. Now, one of the things we're very proud of what we've built with our Rise Up team, as well as the tenacity of the team there to not give up on these cases. So while on the one hand, we're very focused on sort of a faster turnaround time, especially for patients who meet all the criteria. But to your point, we're also not giving up on these longer-standing cases. So, generally, what we have seen is a pretty good success rate, oftentimes after many rounds of appeals and denials going through, where we can still get a large portion of these patients initiated on to reimburse therapy as well.

But the one thing we do know overall it tends to be a polypharmacy marketplace.

<unk> has been in the past then.

And likely will be in the future as well. So we believe that <unk> is well positioned.

Not only in NTT, but clearly because of the benefit that it hasnt and tier one as well. So I think we're still early on there as well.

But one thing that we always consider ox debates are used today in about less than 10% of patients who are diagnosed and under care for narcolepsy.

So we still see there is lots of room for our space to grow as Greg had mentioned previously and we believe we are well positioned today and also as new therapies come out in the future as well.

Thanks.

Thanks Lee.

One moment for the next question.

Next question comes from Matt Kaplan with Ladenburg Thalmann. Your line is open.

Richard Kim: So, so, and we are at that point where we sometimes see enrollments that started back six months ago who can ultimately get on to therapy as well. So it's still relatively early for us to sort of figure out what those success rates should look like. But we are still seeing, on a monthly basis, sort of what we would call more aged Rise Up cases who are successfully able to get the therapy, sometimes several months later.

Hey, good morning, guys. Thanks for taking my questions.

I guess, maybe can you provide some more color in terms of what you are hearing with respect to how important the low sodium <unk>.

Formulation is in the marketplace right now and your strategy there as you move forward your formulation.

Richard do you want to talk about that yeah, I'll take the first part there Matt. Thanks, So yeah.

Chase Richard Knickerbocker: Thank you. All right. No problem.

Candidly from our field, we hear a lot less objections about sort of sodium content overall.

Mark Goodman: Thanks, Chase. One moment for the next question. The next question comes from Mark Goodman with Lyrinc. Your line is open. Thanks for taking my question. This is Rudy on the line for Mark.

I'd say a couple of things first.

We now have our team out there as well secondarily one of the key publications. Their team uses is a publication that came out in 2020.

Rudy: Congratulations on the strong results. So I have a question regarding the market dynamics. Do you see the total oxymarket continuing to expand in the coming years? I'm also curious about your thoughts on the opportunity for the oxym products. And do you see any potential impact on oxybate in NT1 versus NT2 NIH?

Where Steve experts from Stanford and UCLA looked at the sort of the history of twice on this study marks a bait and their conclusion was that there was really no difference in cardiovascular outcomes on patients on twice nightly sodium oxidate products at that time. So I think what's happened is a science as sort of being focused on here.

Richard Kim: Thanks. Thanks, Rudy. Richard, do you want to take this as well? Yeah, no.

Richard Kim: Thanks, Rudy. Yeah, so as far as the market dynamics are concerned, yeah, prior to launch, we had done six different quantitative market research studies that really showed with the introduction of Lumi that the oxybate market could expand with new patient starts somewhere in the neighborhood of, you know, 30 to 50%. It's hard for us to sort of say right now because some of the other data from other companies is no longer as visible as it used to be. So, you know, we're, but what we're definitely seeing right now are a few things. One is we're getting more people who have never prescribed an oxybate before into the mix who will prescribe it, and we're seeing, you know, obviously, strong penetration within existing oxybate prescribers.

And there's good published data that's able to be used and.

Also there is another company out there talking about the benefits of what a once that time therapy can do overall, so we really haven't heard as much of that in the field that they are clearly ourselves some hcp's focusing on that but I think now at patient or ACP is are getting experience with <unk> and seeing the benefit of what it can offer to their patients.

I think thats held a lot of weight with those offices as well and I know, Greg if you want to talk about our lower sodium as well, yes, I think in that in that regard Matt I think our view is that there are patients who have sodium sensitivities or other comorbidities.

Richard Kim: So we definitely believe we're sort of seeing some of the dynamics of patients going beyond using Lumi where they maybe were more limited with the question of oxybate. And as far as I think your question around erections is concerned, you know, for us, we're very excited to see any new treatment modalities that could potentially come to the marketplace. Obviously, those companies still have to go through the clinical and regulatory processes as well. The first one that we sort of see is focusing more on NT1. You know, I guess a couple of things that we sort of see when it comes to erections; they like to be really fabulous wake-promoting agents, maybe a little less certain around their impact on sleep.

That may require them to accommodate for that.

There ought to be treatment choice and we want to make sure all those patients.

Have an opportunity to be honored once at bedtime therapy option. So that's why we continue to proceed with it and.

From that perspective, we think everyone should have that option.

Okay. That's helpful and then second question.

In terms of the IH opportunity you stated that you plan to launch your study.

Second half of this year can you give us more detail in terms of the potential timeline there.

Richard Kim: And clearly, there are a lot of questions around the overall benefit-risk profile between efficacy and tolerability as well. But the one thing we do know is that, overall, this tends to be a polypharmacy marketplace. It has been in the past and likely will be in the future as well. So we believe that Lumarize is well positioned, not only in NT2, but clearly because of the benefit that it has in NT1 as well. So I think we're still early on there as well. But, you know, one thing that we always consider: Oxybate is used today in about less than 10% of patients who are diagnosed and under care for narcolepsy.

And.

Of that program.

Yes, I think it's a little bit.

Premature to guide specifically on when we think enrollment will be completed or whatnot.

We clearly will initiate in the second half of this year and have every incentive to do that as early as we possibly can there is just a lot of work that has to go in terms of starting up a trial and we're well into that now whether thats CRO selection or.

Site selection.

And feasibility assessments at the site level clinical supply placebo manufacturing all those sorts of things. So all of that is happening now so we're well on track from.

From that perspective.

And so we'll cover more we will provide more context as we get into it for sure.

Richard Kim: You know, so we still see there's lots of room for Oxybates to grow, as Greg had mentioned previously, and we believe we're well positioned today and also as new therapies come out in the future as well. Thanks. Thanks, Rudy. One moment for the next question. The next question comes from Matt Kaplan with Lattenberg Thalmann.

But the team has done an excellent job to kind of ramp that up relatively quickly since the back end of last year, and we will have more to talk about it in the near future for sure.

Sounds good thanks a lot.

One moment for the next question.

The next question comes from Oren <unk> with H C. Wainwright Your line is open.

Matthew Lee Kaplan: Your line is open. Hey, good morning, guys. Thanks for taking the questions. Um, I guess maybe you could provide some more color in terms of what you're hearing, with respect to how important the low sodium formulation is in the marketplace right now and your strategy there as you move forward with your formulation? Richard, do you want to talk about that?

Thanks, Congrats on the fast ramp here I have a couple.

First I think our intention the acute here and nobody has asked about the elephant in the room. So I will can you talk about your statement upfront about your confidence in that.

Over the jury decides presumably any day now that your confidence and the potential zoom rise.

Richard Kim: Yeah, I'll take the first part there, Matt. Thanks. So yeah, candidly, you know, from our field, we hear a lot fewer objections about sort of Stodium content overall. I'd say a couple of things.

Why are you confident about the outcomes and what do you think the scenarios could be going forward and also do you have any update on timing or on the AP a lot.

Richard Kim: First, you know, we now have sort of our team out there as well. Secondarily, one of the key publications that our team uses is a publication that came out in 2020, where sleep experts from Stanford and UCLA looked at the history of twice-nightly sodium moxivate and concluded that there was really no difference in cardiovascular outcomes in patients on twice-nightly sodium moxivate products at that time.

Sure.

<unk> available or whatever you call you might have on that front and then I have a follow up thanks.

So.

The answer to your first question is really easy, which is we're just not going to comment on it at this stage.

That will become clear.

The fairly near future.

From that standpoint pending the jury's final decision so.

I'd just ask you to be patient with us in that regard.

The status of the case I think that hearing has been moved to April 9th.

So that will take place on April 9th.

Richard Kim: So I think candidly, what's happened is science is sort of being focused on here, and there's good published data that's able to be used. And it's also, there's another company out there talking about the benefits of what a once-bedtime therapy can do overall. So we really haven't sort of heard as much of that in the field.

The court and the district of Columbia.

Okay, and I'm trying to square your <unk>.

Commentary and your ramp with jazz is guidance. It seems like a market drove must be an important variable. There. They say you are not growing that part of the market that much yet I think you pilot certainly that obviously most of your add different switches, which is as expected but going forward.

Gregory J. Divis: There clearly are some ACPs focusing on that, but I think now, as a patient, our ACPs are getting experience with Lumimize and seeing the benefit of what it can offer to their patients. I think that's held a lot of weight with those offices as well. And I know, Greg, if you want to talk about our lower sodium diet as well. Yeah, I think in that regard, Matt. I think our view is that there are patients who have sodium sensitivities or other comorbidities that may require them to accommodate for that in their oxybate treatment choice.

2023, and 'twenty 'twenty four and beyond.

How confident are you that you can grow the market more and accelerate that growth as your product's been out there longer with regards to bringing back prior discontinue worse and whether those patients are identified to you or your customers and new patient demand.

Yes, Richard do you want to start on that yeah, no sure arent yet.

We said before.

We threw a theory right now to your point as the.

Gregory J. Divis: And we want to make sure all those patients have an opportunity to be on a once-at-bedtime therapy option. So that's why we continue to proceed with it. And from that perspective, we think everyone should have that.

Previously discontinued segment is real and were seeing good representation of that within our Writeup members and patients being shipped product already we're getting new prescribers, who have never written for Oxford previous to <unk> seen in the marketplace before as well and here's the one thing Thats also a little bit challenging right now.

Matthew Lee Kaplan: That's helpful. And then there is a second question. In terms of the IH opportunity, you stated that you plan to launch your study in the second half of this year. Can you give us more detail in terms of the potential timeline there and for that program? Yeah, I think it's a little bit premature to guide specifically on when we think enrollment will be completed or whatnot. We clearly will initiate enrollment in the second half of this year and have every incentive to do that as early as we possibly can.

Ken we worked hard to sort of keep our data to ourselves. So when other companies are looking at data from claims they may not be seeing the whole picture at this stage as well so.

And what we see internally is some strong strong early signs that people are going beyond where quite frankly auction based we're being used previously previous will be resting in the marketplace.

Gregory J. Divis: There's just a lot of work that has to go into starting up a trial, and we're well into that now, whether that's CRO selection or, you know, site selection and feasibility assessments at the site level, clinical supply, placebo manufacturing, all those sorts of things. So all of that is happening now. So we're well on track from that perspective, and we'll cover more, and we'll provide more context as we get into it, for sure. But the team has done an excellent job of kind of ramping that up relatively quickly since the back end of last year.

That's helpful and just one last follow up.

Can you comment at all on.

On I guess net pricing, our gross to nets in fourth quarter or annualized in general now and going forward.

Tom Yes.

Yes.

So we previously guided to 120000 net revenue.

Per patient per year, and as I've described in the past, but we'll get there when we reach a critical mass, which I would define as more patients continuing on therapy than the new patients coming onto therapy.

That said I think we're rapidly approaching that point.

Matthew Lee Kaplan: And we'll have more to talk about it, you know, in the near future. Sounds good. Thanks a lot. One moment for the next question. The next question comes from Oren Livnat with H.C. Wainwright. Your line is open. Thanks, and congrats on the fast ramp here. I have a couple.

Looking forward to providing more updates on that in the future.

Alright, thanks, guys.

<unk>.

I show no further questions at this time. So this will conclude our Q&A session I would now like to turn the call back to Greg Davis for closing remarks.

Oren Gabriel Livnat: First, I think I'm tense and acute here, and nobody's asked about the elephant in the room, so I will. Can you talk about your statement up front about your confidence in that, you know, whatever the jury decides, presumably any day now, that your confidence in the potential zoom zoom, you know, why are you confident about the outcomes and what do you think the scenarios could be going forward? And also, do you have any update on timing or on the APA lawsuit that is, you know, publicly available or whatever color you might have on that front, and then I have a follow-up. Thanks. So the answer to your first question, Oren, is really easy, which is we're just not going to comment on it at this stage. But that will become clear in the fairly near future from that standpoint, pending the jury's final decision.

Thank you and thanks, everyone for your time for joining us today on our call and we wish you all a great day, and we certainly look forward to providing any more updates here in the very near future.

This concludes today's conference call. Thank you for your participation you may now disconnect.

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Gregory J. Divis: So I would just ask you to be patient with us in that regard. The status of the APA case. I think that hearing has been moved to April 9th. So that will take place on April 9th in the courtroom in the District of Columbia.

Yes.

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Gregory J. Divis: Okay, and if I try to square your commentary and your ramp with Jazz's guidance, it seems like market growth must be an important variable there. They say you're not growing the market that much yet. I think you've highlighted clearly that, obviously, most of your ads are from switchers, which is as expected.

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Oren Gabriel Livnat: But going forward through 2023 or 2024 and beyond, how confident are you that you can grow the market more and accelerate that growth as your product's been out there longer with regard to bringing back prior discontinuers and whether those patients are identified to you or your customers and new diet patients? Yeah, you Richard, would you like to start on that? Yeah, no, sure.

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Richard Kim: And yeah, you know, like I said before, what we sort of see already right now, to your point is the previously discontinued segment is real. And we're seeing good representation of that within our rising numbers and patients being shipped product already. We're getting new prescribers who have never written for an Octavate prior to Lumerize being the marketplace before as well. And here's the one thing that's also a little bit challenging right now. You know, we've worked hard to sort of keep our data to ourselves. So when other companies are looking at our data from claims, they may not also be seeing the whole picture at this stage as well.

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Richard Kim: So, you know, and what we see internally is some strong, strong early signs that people are going beyond where twice the Octavates were being used previously, prior to Lumerize being on the market. That's helpful. Oh, and just one last follow-up. Can you comment at all on, I guess, net pricing or growth to net, I guess, in the fourth quarter or annualized in general now and going forward? Tom?

So.

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Thomas S. McHugh: Yeah, hi, Oren. Yeah, so we previously have guided to $120,000 net revenue per patient per year, and as I've described in the past, we'll get there when we reach a critical mass, which I would define as more patients continuing on therapy than new patients coming on to therapy. You know, with that said, I think we're rapidly approaching that point, and I'm looking forward to providing more updates on that. All right, thanks. I'll follow up with you guys afterward.

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Oren Gabriel Livnat: I have no further questions at this time, so this will conclude our Q&A session. I would now like to turn the call back to Greg Divis for closing remarks. Thank you. And thanks, everyone, for your time, for joining us today on our call. And we wish you all a great day, and we certainly look forward to providing more updates here in the very near future. Thanks. This concludes today's conference call. Thank you for your participation. You may now disconnect.

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