Q1 2024 Avadel Pharmaceuticals PLC Earnings Call

Greetings and welcome to <unk> Pharmaceuticals first quarter of 'twenty 'twenty four earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded it is now my pleasure to turn to introduce.

Operator: Greetings and welcome to Avadel Pharmaceuticals' first quarter 2024 earnings call. At this time, all participants are in a listen-only mode.

Operator: A question and answer session will follow the formal press call. As a reminder, this conference is being recorded. It is now my pleasure to introduce Austin Murtagh, with Stern Investor Relations. Thank you. You may begin.

Austin Huerta with Stern Investor Relations. Thank you you may begin.

Austin Murtagh: Good morning, and thank you for joining us on our conference call to discuss Avadel's first quarter 2024 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. Such 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.

Austin Murtagh: Good morning, and thank you for joining us on our conference call to discuss <unk> first quarter 2024 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.

Austin Murtagh: 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 statement contained in this presentation to reflect new information, future events, or otherwise. 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.

Austin Murtagh: <unk> looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward looking statements.

Austin Murtagh: 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, which was filed on February 29% to 2024, and subsequent SEC filings, except as required by law <unk> undertakes no obligation to update or review.

Austin Murtagh: Any forward looking statement contained in this presentation to reflect new information future events or otherwise 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. Davis: Thank you Austin good morning, everyone and thank you for joining us to review our first quarter 2024 results.

Gregory J. Divis: Good morning, everyone, and thank you for joining us to review our first quarter 2024 results. Following my opening remarks, Richard will provide an update on our launch progress, including our key metrics through March 31st. Tom will then review our Q1 financial results, and we will conclude with a question and answer session.

Gregory J. Davis: Following my opening remarks, Richard will provide an update on our launch progress, including our key metrics through March 31.

Austin Murtagh: Tom will then review our Q1 financial results and we will conclude with a question and answer session.

Gregory J. Divis: I'm pleased to report another quarter of strong execution and results for our Loom Rise launch. We continue to deliver on our ability to reach the narcolepsy community and drive significant quarter-over-quarter growth across our early launch metrics. Metrics, we believe, are critical to building a strong foundation for Loom Rise, both in the near term and in the long term.

Richard J. Kim: I'm pleased to report another quarter of strong execution and results of our <unk> launch we continue to deliver on our ability to reach the narcolepsy community and drive significant quarter over quarter growth across our early launch metrics metrics. We believe are critical to building a strong foundation further Mike both in the near term and in the long term.

Austin Murtagh: While our top business priority and focus remain on the launch of gloom rise. During Q1, we also made important progress in our efforts to expand our reach into those living with idiopathic hypersomnia or IH as well as pediatric patients with narcolepsy.

Gregory J. Divis: While our top business priority and focus remain on the launch of Loom Rise, during Q1, we also made important progress in our efforts to expand our reach into those living with idiopathic hypersomnia or IH, as well as pediatric patients with narcolepsy, both of whom can possibly benefit from LoomRise and, if approved for those uses, could offer potentially significant incremental value and future growth opportunities for LoomRise beyond Since launch last summer, our team has begun to deliver on the promise of Lumrise in our pursuit of becoming the market leader and achieving preferred Oxybate status among patients and providers.

Austin Murtagh: Both of whom can possibly benefit from moonrise and if approved for those users offers potentially significant incremental value and future growth opportunities for them rise beyond narcolepsy.

Austin Murtagh: Since launched last summer our team has begun to deliver on the promise of <unk> and our pursuit of becoming the market leader in achieving preferred occupied status among patients and providers.

Gregory J. Divis: Our early, robust uptake among patients and physicians provides unequivocal evidence of this progress and of the opportunity based on the clear, unmet needs of OxyBate-eligible patients, evidence that has been further solidified by the consistent and compelling patient, caregiver, and provider feedback we routinely hear. As we now approach our first full year in the market with LoomRise, I continue to be impressed by the relentlessness and the results being delivered by the entire Avadel team.

Austin Murtagh: Our early robust uptake among patients and physicians provides unequivocal evidence of this progress and the opportunity based on the clear unmet needs of occupancy eligible patients evidence that has been further solidified by the consistent and compelling patient caregiver and provider feedback we routinely here.

Austin Murtagh: As we now approach our first full year in the market with Bloom rise I continue to be impressed by the Relentlessness and the results being delivered by the entire <unk> team. It is their collective efforts contributions and achievements that have established the initial foundation for loom rise, which we believe positions us very well to achieve our future aspiration.

Gregory J. Divis: It is their collective efforts, contributions, and achievements that have established the initial foundation for LoomRise, which we believe positions us very well to achieve our future aspiration and expectation of achieving market leadership. Underscoring the results we announced this morning, since the launch of Lumrise, more than 2,800 patients have enrolled in Avadel's Rise Up Patient Support Services program, and more than 1,700 cumulative patients have initiated Lumrise therapy. In addition, in Q1 of this year, we generated $27.2 million in net revenue.

Austin Murtagh: And expectation of achieving market leadership.

Austin Murtagh: Underscoring the results we announced this morning since the launch of <unk> greater than 2800 patients have enrolled into avedon rise up patient support services program in greater than 1700 cumulative patients have initiated luminous therapy.

Austin Murtagh: In addition in Q1 of this year, we generated $27 2 million of net revenue.

Gregory J. Divis: The results we achieved continue to show the strength and the opportunity of LuneRise's position in the evolving narcolepsy treatment landscape. And as a team, we are laser focused on the launch of Luminize and ensuring we continue to deliver on the promise of Luminize to the narcolepsy community, and we are well positioned to continue advancing the launch and driving growth for lumen lights and narcolepsy In this regard, while our launch focus and priorities are very clear, we are also, in parallel, beginning to make real progress on specific future growth opportunities we believe can deliver additional long-term value for patients, for the company, and for our shareholders.

Austin Murtagh: The results, we achieved continued to show the strength and the opportunity of <unk> position in the evolving narcolepsy treatment landscape.

Austin Murtagh: And as a team we are laser focused on the launch of luminaries and ensuring we continue to deliver on the promise of loom west of the narcolepsy community.

Austin Murtagh: We are well positioned to continue advancing the launch and driving growth for room nights in narcolepsy and beyond.

Austin Murtagh: In this regard, while our launch and our launch focus and priorities are very clear.

Austin Murtagh: We are also in parallel beginning to make real progress on specific future growth opportunities. We believe can deliver additional long term value for patients for the company and our shareholders.

Gregory J. Divis: Our first near-term opportunity is our potential expansion into the pediatric narcolepsy population, which represents approximately 5% of all OxyBate-treated narcolepsy patients. A supplemental new drug application for Lumarize has been accepted by the FDA, and a target action date is set for September 7th.

Austin Murtagh: Our first near term opportunity as a potential expansion into the pediatric narcolepsy population.

Austin Murtagh: Which represents approximately 5% of all akshay treated narcolepsy patients.

Austin Murtagh: Our supplemental new drug application for <unk> has been accepted by the FDA and a target action date is set for September seven.

Austin Murtagh: We believe <unk> if approved for this use has the potential to address both patient and caregivers unmet needs, while potentially offering a transformational treatment option for pediatric patients and their families and we look forward to hearing the FDA decision later this year.

Gregory J. Divis: We believe Loom Rise, if approved for this use, has the potential to address both patient and caregiver unmet needs while potentially offering a transformational treatment option for pediatric patients and their families. We look forward to hearing the FDA's decision later this year. Next, as we have previously shared, we are evaluating lumen risers used for the treatment of IH. During Q1, we've made significant progress in our readiness to initiate a pivotal phase 3 trial for IH in the second half of this calendar year.

Austin Murtagh: Next as we have previously shared we are evaluating new mines is used for the treatment of IH during.

Austin Murtagh: During Q1, we made significant progress in our readiness to initiate a pivotal phase III trial for IH in the second half of this calendar year.

Gregory J. Divis: Similar to pediatric narcolepsy, we have heard from many experts in the field that there is a clear and compelling need for once-at bedtime lume rise for those suffering from IH due to the associated deep sleep inertia, making it extremely difficult for some patients to even wake up for their second dose of an immediate release oxidant. We are currently on track to dose our first patient in the second half of this year and plan to provide additional details at that time. Additionally, we are progressing the preclinical development of a potential no or low-sodium once-at-bedtime oxalate formulation with a target product profile that is bioequivalent to Lumrun.

Austin Murtagh: Similar to pediatric narcolepsy, we have heard from many experts in the field that there is a clear and compelling need for once at bedtime loom rise for those suffering from IH due to the associated deep sleep inertia, making it extremely difficult for some patients to even wake up for their second dose of an immediate release oxygen.

Austin Murtagh: We are currently on track to dose our first patient in the second half of this year and plan to provide additional details at that time.

Austin Murtagh: Additionally, we are progressing the preclinical development of a potential no or low sodium once at bedtime oxalate formulation with a target product profile that is bio equivalent to <unk>.

Gregory J. Divis: For this program, we currently expect to provide updates by the end of 2024. In summary, we have a number of opportunities to continue to build our leadership in the sleep space and, most importantly, positively impact even more patients. These opportunities will continue to be supported by our launch execution for lumens and narcolepsy, which has created a strong foundation for continued growth. And with that, I'll turn the call over to Richard for details on our commercial progress. Richard.

Austin Murtagh: For this program. We currently expect to provide updates by the end of 2024.

Austin Murtagh: In summary, we have a number of opportunities to continue to build our leadership in the sleep space and most importantly positively impact even more patients.

Austin Murtagh: These opportunities will continue to be supported by our launch execution for <unk> in narcolepsy, which has created a strong foundation for continued growth.

Austin Murtagh: And with that I'll turn the call over to Richard for details on our commercial progress with Richard.

Richard J. Kim: Thanks, Greg and good morning, everyone as Greg commented, our <unk> launch has been off to a strong start this year and today I'm excited to provide some additional context into the encouraging trends we're seeing.

Richard J. Kim: Thanks, Greg, and good morning, everyone. As Greg commented, our Lumaris launch has been off to a strong start this year. And today, I'm excited to provide some additional context on the encouraging trends we're seeing. We continue to build on the momentum generated since launching LoomRise and have made strong progress during the first quarter. Our team's commitment to bring our much-needed therapy to the narcolepsy community has allowed us to build a strong foundation, and we believe we are well-positioned to see continued growth throughout the year. Now turning to our key launch KPIs, we had more than 2,800 patients enrolled in the HRISA program at the end of March, which demonstrates a nearly 50% increase since the end of December.

Richard J. Kim: Additionally, 1,700 patients initiated therapy as of the end of Q1, representing a greater than 70% increase in cumulative patients who initiated therapy since the end of 2023. Since our launch last June, we continue to build strong and steady positive demand for loom risers. Looking more closely at the patient segment dynamics, we continue to see patients initiating therapy with lumen from all three patient segments. Now, in comparison to last year, where the majority of patients were switched patients, this year we're beginning to see a more balanced ratio with roughly 50% coming from switches and the other 50% from discontinued and naive patients.

Richard J. Kim: Another differentiator from last quarter is that we're seeing a growing number of naive patients on therapy, which signals that Lumarize's value proposition is compelling for patients who have not previously been on an OxyBate. Moving to HCPs, more than 2,100 HCPs have completed their RAM certification as of March 31st, an increase of more than 300 since the end of December, including those who are experienced OxyBate prescribers and some who, prior to Lumarize, had not written for an OxyBate.

Richard J. Kim: We continue to build on the momentum generated since launching them rise and have made strong progress during the first quarter.

Richard J. Kim: Our team's commitment to bring our much needed therapy to the narcolepsy community has allowed us to build a strong foundation and we believe we are well positioned to see continued growth throughout the year.

Richard J. Kim: Now turning to our key launch Kpis, we have more than 2800 patients enrolled at her writes a program at the end of March which demonstrates a nearly 50% increase since the end of December <unk>.

Richard J. Kim: Additionally, 700 patients initiated therapy as of the end of Q1 Rep.

Richard J. Kim: Representing a greater than 70% increase in cumulative patients who initiated therapy since the end of 2023.

Richard J. Kim: Since our launch last June we continue to build strong and steady positive demand for Liam rice.

Richard J. Kim: Looking more closely at that patient segment dynamics, we continue to see patients initiate therapy with room rates from all three patient segments.

Richard J. Kim: Now in comparison to last year with the majority of patients were switched patients via share we're seeing beginning to see a more balanced ratio with roughly 50% coming from switches and the other 50% from discontinued a naive patients.

Richard J. Kim: Another differentiator from last quarter is that we are seeing a growing number of naive patients on therapy, which signals that we might lose value proposition is compelling to patients who have not previously been on an oxalate.

Richard J. Kim: Moving to Hcp's more than 'twenty 100, Acp's are completed the Rems certification as of March 31, an.

Richard J. Kim: An increase of more than 300 since the end of December including those who are experienced octavate prescribers and some who previously had not written for an oxalate.

Richard J. Kim: As a reminder, there are more than 4,500 HCPs who make up the entire Oxybate prescribing universe, and our field teams have been focusing their initial efforts on the 1,600 high-volume oxalate prescribers who represent 80% of the total prescription volume.

Richard J. Kim: As a reminder, there are more than 4500, hcp's, who make up the entire octavate prescribing universe and our field teams have been focusing their initial efforts on the <unk> hundred high volume, Oxford, prescribers, who represent 80% of the total prescription volume.

Richard J. Kim: For the top 500, prescribers, who make up 50% of the total occupation prescription volume now.

Richard J. Kim: For the top 500 prescribers who make up 50% of the total Oxfay prescription volume, now, 80% of these HCPs have rates and preliminary rise, up from 64% at the end of December. Gaining use in the highest volume octamate prescribers has been a key part of our launch strategy, and we are pleased with the progress we are making with these HTPs. Additionally, we reached an important milestone last month when we introduced our first Lumarized Patient Ambassadors to the narcolepsy community. Katie, Tyler, and Wendy are amazing people with narcolepsy who want to share their personal journeys and how being treated with Bloom Rides has changed their lives.

Richard J. Kim: 80% of these acp's half right in the preliminary rise up from 64% at the end of December.

Richard J. Kim: Gaming youth in the highest volume Octavate prescribers has been a key part of our launch strategy and we are pleased with the progress we're making with these acp's.

Richard J. Kim: Additionally, we reached an important milestone last month, when we introduced our first <unk> patient ambassadors to the narcolepsy community.

Richard J. Kim: Katy Pilar and Wendy are amazing people with narcolepsy, who want to share their personal journeys and how being treated with <unk> has changed their lives.

Richard J. Kim: Our market research continues to show the importance of the patient voice in the narcolepsy treatment journey, as patients often receive the therapy they ask their HCP for. With the Lumerize patient voice now activated, we are unlocking another opportunity to drive the Lumerize conversation in ACP offices. Transitioning to product fulfillment, our overall reimbursement process continues to improve, with over 700 new starts in the first quarter. We have seen, through a combination of our strong payer coverage and a growing experience with HCP offices, that we are getting more patients initiated on therapy. And we continue to see good early signs of persistency with Lumrise when compared to twice-nightly OxyBase. Lastly, on the payer front, we have payer coverage policies in place with the three largest PBM-owned GPOs.

Richard J. Kim: Our market research continues to show the importance of the patient voice into narcolepsy treatment journey as patients are often receive that therapy. They after HCP for.

Richard J. Kim: With the numerous patient voice activated we are unlocking another opportunity to drive the <unk> conversation and ACP offices.

Richard J. Kim: Transitioning to product fulfillment or overall reimbursement process continues to improve with over 700, new starts in the first quarter.

Richard J. Kim: We have seen through a combination of our strong payer coverage and a growing experience with ACP offices that we are getting more patients initiated on therapy and we continue to see good early signs of persistency with lean rise when compared to twice now the oxo Bates.

Richard J. Kim: Lastly on the payer front, we have payer coverage policies in place with the three largest pbms one gpo's. Additionally, we recently gained coverage with a large pbms group Prime therapeutics, taking overall commercially covered lives to about 85%.

Thomas S. McHugh: Additionally, we recently gained coverage with a large PBM group, Prime Therapeutics, taking overall commercially covered lives to about 85%. Overall, we exited Q1 with growing momentum. And we are thrilled to see the results of our team's relentlessness and dedication to the narcolepsy community materialize and grow quarter over quarter. We believe Lumarize is positioned for long-term growth and is on track to become the preferred oxidate for the narcolepsy community. And now, I'll turn the call over to Tom to discuss our finances. Tom.

Richard J. Kim: Overall, we exited Q1 with growing momentum and we are thrilled to see the results of our team's relentlessness and dedication to narcolepsy community materialize and grow quarter over quarter.

Richard J. Kim: We believe <unk> is positioned for long term growth and is on track to becoming the preferred octavate for the narcolepsy community.

Richard J. Kim: And now I'll turn the call over to Tom to discuss our financials Tom.

Thomas S. McHugh: Thank you Richard.

Thomas S. McHugh: Thank you, Richard. Good morning, everyone. And before I begin, I'll note that full financial results are available in the press release issued this morning and in the 10-Q. We are pleased to report that we generated $27.2 million in net revenue and gross profit of $25.7 million for the quarter ending March 31, 2024. Additionally, as of March 31st, there was approximately one month of demand in the channel, which is consistent with prior quarters.

Thomas S. McHugh: Good morning, everyone and before I begin I will note that full financial results are available in the press release issued this morning and in the 10-Q.

Thomas S. McHugh: We're pleased to report that we generated $27 2 million net revenue and gross profit of $25 7 million for the quarter ending March 31 2024.

Thomas S. McHugh: And Additionally, as of March 31 <unk>.

Thomas S. McHugh: It was approximately one months of demand in the channel, which is consistent with prior quarters.

Thomas S. McHugh: Turning to operating expenses, we reported a total of $51 7 million of GAAP operating expenses for the first quarter 2024, compared to $28 3 million in the prior year the.

Thomas S. McHugh: Turning to operating expenses, we reported a total of $51.7 million of GAAP operating expenses for the first quarter of 2024, compared to $28.3 million in the prior year. The increase in year-over-year operating expenses is primarily attributable to launch-related costs and higher compensation and legal costs. Gap operating expenses in the first quarter of 2024 included $6.5 million of non-cash charges comprised of stock-based compensation of $5.4 million, and depreciation and amortization of $1.1 million. After adjusting for these items, cash operating expenses were approximately $45 million for the quarter.

Thomas S. McHugh: The increase in year over year operating expenses is primarily attributable to launch related costs and higher compensation and legal costs.

Thomas S. McHugh: GAAP operating expenses in the first quarter of 2024 includes $6 5 million of noncash charges comprised of stock based compensation of $5 4 million.

Thomas S. McHugh: And depreciation and amortization of $1 1 million <unk>.

Thomas S. McHugh: After adjusting for these items cash operating expenses were approximately $45 million for the quarter.

Thomas S. McHugh: This is at the upper end of our previously communicated guidance of $40 to $45 million in quarterly cash operating expenses, and it's due primarily to higher legal costs related to the patent trial that took place at the end of February. For the remainder of 2024, we expect that recurring quarterly cash operating expenses will be in the range of $40 to $45 million, and non-cash operating expenses will be in the range of $5 to $7 million.

Thomas S. McHugh: This is at the upper end of our previously communicated guidance of $40 million to $45 million of quarterly cash operating expenses and is due primarily to higher legal costs related to the patent trial that took place at the end of February.

Thomas S. McHugh: For the remainder of 2024, we expect our recurring quarterly cash operating expenses will be in the range of $40 million to $45 million and noncash operating expenses will be in the range of $5 million to $7 million.

Thomas S. McHugh: We believe that net cash use for operations will be materially lower after taking into account expected cash receipts from continued loom rights. With respect to the balance sheet, as of March 31st, we had approximately $89 million of cash, cash equivalents, and marketable securities, compared to $105 million as of December 31st, 2020.

Thomas S. McHugh: We believe that net cash used for operations will be materially lower after taking into account expected cash receipts from continued loom rise sales.

Thomas S. McHugh: With respect to the balance sheet as of March 31, we had approximately 89 million of cash cash equivalents and marketable securities compared to $105 million as of December 31, 2023.

Thomas S. McHugh: With our current trends.

Thomas S. McHugh: With our current trends. Plans and Assumptions, we maintain that we can achieve breakeven when there are approximately 1300 to 1500 commercially reimbursed patients and that we can achieve this milestone during 2024. In addition to the number of reimbursed patients on therapy, our expectations regarding the timing of achieving breakeven take into account a number of other assumptions including how quickly patient demand grows, net pricing aluminizes, and operating, Closing out today's financial updates, we pay close attention to the sell-side estimates and at this time we are comfortable with current consensus of approximately $162 million for the full year, including the possibility that 2024 revenue could be higher if actual results such as the rate of increase in reimbursed patients, The total number of reimbursed patients who are treated with Lumerize and NetPricing outperform the assumptions currently used by the cell site. With that, I'll turn the call back to Greg for closing remarks. Thank you, Tom.

Thomas S. McHugh: Plans and assumptions, we maintain that we can achieve breakeven when there are approximately 3500 to 500 commercially reimbursed patients.

Thomas S. McHugh: And that we can achieve this milestone during 2024.

Thomas S. McHugh: In addition to the number of reimbursed patients on therapy, our expectations regarding the timing of achieving breakeven taking into account a number of other assumptions, including how quickly patient demand grows net pricing of <unk> and operating expenses.

Thomas S. McHugh: Closing out today's financial updates, we pay close attention to the sell side estimates and at this time, we are comfortable with current consensus of approximately $162 million for the full year, including the possibility that 2024 revenue could be higher is actual results such as the rate of increase in reimbursed patients.

Thomas S. McHugh: The total number of reimbursed patients who were treated with <unk> <unk>.

Thomas S. McHugh: And net pricing outperformed the assumptions currently used by the sell side.

Thomas S. McHugh: With that I'll turn the call back to Gregg for closing remarks.

Gregg: Thank you Tom.

Gregory J. Divis: With our Loom Rise launch well positioned for continued growth this year and our meaningful expansion opportunities in the sleep space, the value we are creating today is laying a strong foundation for the long term. We thank you, as always, for your support and look forward to providing future updates on our progress.

Gregg: With our <unk> launch well positioned for continued growth this year and are meaningful expansion opportunities in the <unk> space. The value. We are creating today is laying a strong foundation for the long term.

Speaker Change: We thank you as always for your support and look forward to providing future updates on our progress and with that we will open the call for questions I will turn it over to the operator.

Operator: Thank you we will now begin the question and answer session. If you have dialed in and we would like to ask a question. Please press star one on your telephone keypad to raise your hand and trying to keep it.

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join in. If you would like to withdraw your question, simply press star 1. If you are called upon to ask your question and are listening via the loudspeaker on your device, please pick up your handset to ensure that your phone is not on mute when asking your question.

Operator: If you go back to the draw.

Operator: Question is can you. Please press star one again, if you are called upon to ask your question and our listening via loud speaker on your device. Please pickup your handset to ensure that your phone is not on mute when asking your question again crestar one to join the queue.

Operator: Again, press star 1 to join. Your first question comes from the line of Andrew Chai with Jeffreys. Your line is... Hey, good morning. Congratulations on the progress and the slope of the curve and such. My question is around patient additions and treated patients this quarter, which seemingly grew faster than the actual sales number. So can you help us reconcile the reported sales number? Was it driven more by one-time headwinds like a higher gross-to-net or maybe even free drug use, or was it more driven by, quote-unquote, permanent patient discontinuation rates increasing? Thanks. Richard, do you want to start with that?

Operator: Our first question comes from the line of Andrew Tsai with Jefferies. Your line is open.

Andrew Tsai: Hey, good morning.

Andrew Tsai: Congrats on the progress and.

Andrew Tsai: The slope of the curve and such.

Andrew Tsai: My question is around the patient additions and treated patients this quarter seemingly grew faster than the actual sales number. So can you help us reconcile the reported sales number or was it driven more by one time headwinds like a higher gross to net or maybe even free drug use or was it more driven by.

Andrew Tsai: Clinical permanent patient discontinuation rates increasing.

Andrew Tsai: Richard you want to start with that.

Richard J. Kim: Yeah, hey, thanks for the question, Andrew. Yeah, so I think overall, you know, to your point, we're very pleased with our early launch metrics, having, you know, another 900 patient ads coming in to rise and 700 patient initiations. You know, at this stage of the launch, the most important thing we're really focused on is getting patients on therapy, A, for that patient experience, and B, to get ACP offices used to prescribing and hearing those patient experiences as well.

Richard J. Kim: Yeah, Hey, thanks for the question Andrew So I think overall to your point, we're very pleased with our early launch metrics, having another 900 patient hasnt to rise up in 700 patient initiations at this stage of the launch the most important thing we really focus in on is getting patients on therapy for that patient.

Richard J. Kim: And b to get ACP offices.

Andrew Tsai: Used to prescribing adhering with patient experiences as well so that's really been our focus.

Richard J. Kim: So that's really been our focus. To your point, there are some headwinds that we experienced as an industry in Q1, with higher deductibles and other things that impact our copay. So, you know, we expect those to have settled down.

Andrew Tsai: To your point there are some headwinds that we experienced as an industry in Q1 with higher deductibles and other things that impact our copay.

Andrew Tsai: So we expect those tests settled down and maybe one last comment on your discontinuation rates. We're pleased with our early discontinuation rates that we see there numerically lower than what we see historically with a price night lease so I will turn it around what's again, we're really pleased with our early launch Kpis and maybe I'll turn it over to Greg to add some more color.

Gregory J. Divis: And maybe one last comment on your discontinuation rates. We're pleased with the early discontinuation rates that we see; they are numerically lower than what we see historically with a twice-night lease. So, you know, I'll turn this around once again. It says we're really pleased with our early launch KPIs. And maybe I'll turn it over to Greg to add some more color.

Gregory J. Davis: Yes, I think that for us most important for us is patient initiations, and getting and keeping people on therapy and I think the team has done an excellent job in that regard through the launch and.

Gregory J. Divis: Yeah, I think that for us, the most important thing for us is patient initiation and getting and keeping people on therapy. And I think the team has done an excellent job in that regard through the launch. And, and from a persistency standpoint, I think we remain really bullish on how that will translate to revenue over time. Thanks, very clear. Congratulations again, and your next question comes from the line of Franois Brisebois with Oppenheimer. Your line is open.

Gregory J. Davis: And from a from a persistency standpoint, I think we remain really bullish on how that would translate to revenue over time.

Speaker Change: Thanks, very clear congrats again.

Speaker Change: Yeah.

Gregory J. Davis: And your next question comes from the line of Francois Baseball with Oppenheimer. Your line is open.

Franois Daniel Brisebois: Thanks for the question. So I was just wondering in terms of rise up.

Richard J. Kim: Thanks for the question. So I was just wondering, in terms of rise up, that metric, do you ever see, I know it's difficult to know exactly how quickly patients move from rise up to on therapy, but are there cases where they just do not, they enter rise up, and they never get the therapy? If so, what would be the reasons for that?

Franois Daniel Brisebois: That metric do you ever see I know, it's difficult to know exactly how quickly patients move them rise up to on therapy, but are there cases, where they just they do not they enter rise up and may never get the therapy. If so what would be the reasons for that.

Franois Daniel Brisebois: Sure.

Richard J. Kim: Yeah. Hey, Frank. Yeah. No. Yeah. Sure. I'll take that, Greg.

Speaker Change: Yes, yes, yes, sure I'll take that Greg, Yes, So Greg Great question, Frank as far as Reits Op is concerned and I would say.

Richard J. Kim: Yeah. So, great question, Frank. So, yeah. As far as Rise Up is concerned, and I would say, you know, any new therapy that comes to the marketplace, there are patients who, quote-unquote, abandon the process along so that they do not ever get to initiate therapy. We're not immune to that either.

Gregory J. Davis: Any new therapy that come from marketplace. There are patients who quote unquote abandon the process along so that they do not ever get to initiate therapy that were not immune to that either that embedded memory price is very low and has stayed relatively consistently low throughout our entire launch that we've seen very good stick-to-it-ive Ness and frankly, it's the same reasons for almost any.

Richard J. Kim: That abandonment rate for us is very low, and it's stayed relatively consistently low throughout our entire launch, so we've seen very good stick-to-itiveness. And, Frank, it's the same reasons for almost any product. Sometimes patients lose interest. It could be insurance. It could be something else has come up in their lives.

Gregory J. Davis: Sometimes the patients whose interest it could be insurance it could be something else has come up with their life. We don't really get all of that all of those details, but once again, our abandonment rate has been relatively low for patients entering rise up.

Gregory J. Divis: We don't really get all of those details, but once again, our abandonment rate has been relatively low for patients entering Rise Up. Thank you. And then in terms of pediatric importance, you mentioned 5% of the population, but you know how often these patients, once they're on something that seems to work, obviously, there's discontinuation. We're going to follow that with time to see if it's better with you guys. It seems like it's trending well, but that 5% pediatric population, do you guys see that as much bigger than 5%, kind of as a read-through where if these, you know, obviously, it takes a lot of time to diagnose, but if the diagnosis gets quicker, you get kids, and then they probably don't want to change what they're on when they become adults? Is there any upside to that 5%?

Gregory J. Davis: Okay. Thank you and then in terms of the pediatric and points you mentioned, 5% of the population but.

Gregory J. Davis: How often do these patients once they are on something that seems to work. Obviously, there's discontinuation we are going to follow that with time to see if its better with you guys. It seems like it's trending well, but that 5% pediatric population do you guys see that as much bigger than 5% kind of as a read through where it is obviously it takes a lot.

Gregory J. Davis: Time to diagnose but at the diagnosis gets quicker you get pediatrics and then they probably don't want to change what they are on when they become adults is there any upside to that 5%.

Speaker Change: Well I think I think we agree with all of your thoughts trend from that perspective, we think the actual market opportunity is likely from a pediatric perspective is likely.

Gregory J. Divis: Well, I think we agree with all of your thoughts, Frank, from that perspective. But we think that the actual market opportunity is likely, from a pediatric perspective, likely materially larger than what's actually being treated today, predominantly because the condition is really a condition of adolescence, right, where initial symptoms predominantly present earlier in life. Your comment about the time to proper diagnosis is a major challenge and has been for quite some time from that perspective.

Gregory J. Davis: <unk> larger than what's actually being treated today predominantly because of the condition is really a condition of adolescence right where initial symptoms predominantly present earlier in life.

Gregory J. Davis: Your comment about the time to proper diagnosis is a major challenge and has been for quite some time.

Gregory J. Davis: From that perspective, so we do think the total opportunity is is actually larger than what the actual treated pool is today no different than how we think about adult so so for us I think the opportunity to bring something new that doesn't disrupt the entire family. We think offers opportunity for both for currently treated and potentially.

Gregory J. Divis: So we do think the total opportunity is actually larger than what the actual treated pool is today, no different than how we think about adults. So for us, I think the opportunity to bring something new that doesn't disrupt the entire family, we think, offers opportunities both for currently treated patients and potentially, you know, patients who aren't being treated today. Okay, great.

Gregory J. Davis: Patients who aren't being treated today.

Gregory J. Davis: Okay.

Speaker Change: Okay, great and in terms of I H.

Richard J. Kim: And in terms of IH, you know, it seems intuitive that if these patients need to sleep and are still restless, are you getting a lot of feedback that waking up in the middle of the night is a problem? Or, you know, is it not a big deal for these patients? Richard, you want to comment on that? Yeah, you know, I think for IH, it really comes down to more of the sleep inertia. A lot of these folks just have sleep inertia where they're just unable to wake up during the middle of the night to take a second dose.

Speaker Change: It seems intuitive that these patients need to sleep.

Gregory J. Davis: Restless.

Gregory J. Davis: Are you getting a lot of feedback that the waking up in the middle of night is a problem or.

Gregory J. Davis: Is it not a big deal for these patients.

Gregory J. Davis: Richard you want to comment on that yes.

Richard J. Kim: Yes, I think for IH, It really comes down to more of the sleep inertia.

Richard J. Kim: These folks.

Richard J. Kim: Just have signature where they're just unable to wake up during the middle of the night to take a second dose. So that's really the key area of our feedback from research that we hear about us.

Richard J. Kim: So that's really the key area of the feedback and research that we hear about: oxidates are very effective, but if you can't wake up to take that second dose, you're getting a subtherapeutic dose. Thank you. Your next question comes from the line of Ami Fadia with Needham and Company. Hi, good morning.

Richard J. Kim: Ox debates are very effective, but if you can't wakeup stipulate that can dose youre getting a sub therapeutic dose.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Ami <unk>.

Ami: Yeah with Needham and company.

Ami: Okay.

Richard J. Kim: Congratulations on all the progress. I had a couple of questions just around Lumrise. Can you sort of quantify what the net number of patients on treatment currently is? With regard to net price, how has that progressed in the first quarter, and as you comment on your confidence in being able to achieve or potentially beat where the consensus stands today, what are the assumptions you're making with regard to net price evolution through the course of the year? Richard, do you want to take the first one and Tom the second one?

Ami: Hi, good morning, Congrats on all the progress and I had a couple of questions just around.

Ami: Right.

Speaker Change: Can you.

Speaker Change: Sort of quantify what are the net number of patients on treatment.

Ami: Currently.

Ami: And.

Ami: With regards to net.

Ami: Has that progressed in first quarter and as you comment on.

Ami: Your confidence in being able to achieve or potentially beat the consensus stands today, what are the assumptions, you're making with regard to net price evolution to the course of the year.

Ami: Richard you want to take the first and Tom the second.

Richard J. Kim: Yeah sure I mean, yes. Thanks Ami right now we're really focused on our early launch metrics.

Richard J. Kim: Yeah, sure. I mean, yeah, thanks. I mean, right now, we're really clearly focused on our early launch metrics. You know, there's a lot of dynamics going on here. And at this stage of the time, we really believe that rising enrollments and patients who have initiated therapy are really the right way to look at things. We're going to continue to look at these metrics. And you know, in the future, we will be transitioning to other metrics like patients who are actually on therapy at this time as well. There's a lot of dynamics at this stage of a launch, but we do tend to shift to that in the future. Yeah, hi Ami. It's Tom.

Thomas S. McHugh: There's a lot of dynamics that are going on here and.

Thomas S. McHugh: At this age at the time, we really believe that rise up enrollments in patients who have initiated therapy already the right for you to look at things.

Thomas S. McHugh: We're going to continue to look at these metrics and in the future we will be transitioning to other metrics like patients who are actually on therapy. At this time as well there's a lot of dynamics at this stage of a launch, but we do tend to shift to that in the future.

Thomas S. McHugh: Yeah, Hi, Amit.

Thomas S. McHugh: So with respect to the second part of your question on net pricing, you know, we've consistently pointed to an expectation that on average, patients will generate about 120,000 in net revenue per year. I will share with you that we're at that point now. You know, the expectation has always been that when we have more patients continuing on therapy, as Richard just noted, the new patients coming in would represent the tipping point, as I've called it in the past.

Thomas S. McHugh: Tom So with respect to the second part of your question on net pricing, we've consistently pointed to an expectation that on average patients will generate about 120000 of net revenue per year.

Thomas S. McHugh: I wish I will share with you we're at that point now.

Thomas S. McHugh: The expectation has always been that when we have more patients continuing on therapy as Richard just noted the new patients coming in would represent the tipping point is I'll call. It in the past.

Thomas S. McHugh: You know, the other things that can affect net pricing, one of them is certainly compliance. This is if every patient took every dose every day of the year, and, you know, net revenue goes up, of course. But that's certainly one of the variables. And the other is, you know, the gross net themselves, which, you know, as we commented earlier, there were some were not unique in that regard. You know, gross net is a percentage of net revenue as percentage of revenue goes up during Q1, but that tends to settle down over the course of the rest of the year.

Thomas S. McHugh: The other things that can affect net pricing one of them is certainly compliance.

Thomas S. McHugh: And if every patient took the.

Thomas S. McHugh: The dose everyday of the year net revenue goes up of course, but that's certainly one of the variables and the other is.

Thomas S. McHugh: Is the gross to nets themselves, which.

Thomas S. McHugh: As we commented earlier there were some were not unique in that regard <unk> as a percentage of net revenue as a percentage of revenue go up during Q1.

Thomas S. McHugh: Settled out over the course of the rest of the year.

Speaker Change: Yes, the only comment I'll add Amit.

Gregory J. Divis: Yeah, the only comment I'll add, Ami, if I may, the only comment I'll add generally on metrics and KPIs is that, I think we've got our eyes set that as the launch continues to mature a little bit, and some of these variables, you know, get a little bit more mature, that really drive and ultimately result in kind of net average patients or net exit patients on therapy, that we will transition to that during the What our intention is to do that and have an overlapping quarter where we continue with the same metrics and add in patients on therapy, and then ultimately, I think where we'll net out over time is just patients on therapy. I got it.

Speaker Change: If I may the only comment I'll add generally on metrics and Kpis I think we've got our eyes set that as the launch continues to mature a little bit in some of these variables.

Speaker Change: Good.

Speaker Change: Little bit more mature that really drive and ultimately result in kind of a net average patients are net exit patients on therapy that we will transition to that during the course of this year, but our intention is to do that and have an overlapping quarter, where we continue with the same metrics and add in patients on therapy, and then ultimately I think where we'll net out over time is just.

Speaker Change: On therapy.

Speaker Change: Got it if I may ask one more question.

Richard J. Kim: If I may ask one more question. As I think about the total number of patient ads rising over the last couple of quarters, it seems that you're continuing to see growth in average monthly patient ads per quarter over the last three quarters for which we have data. Can you just talk about sort of the momentum you're seeing progressing through the course of the year? You know, I'm sort of seeing kind of an increase of a hundred new patient ads per quarter.

Speaker Change: As I think about the total number of patients to.

Speaker Change: Right.

Speaker Change: The last couple of quarters.

Speaker Change: Thank you.

Speaker Change: You're continuing to see.

Speaker Change: Growth in average monthly patient add per quarter over the last three quarters of it.

Speaker Change: Have the data.

Speaker Change: Can you just talk about sort of the momentum as you see progressing through the course of the year.

Speaker Change: Instead of themed benefit increased by 100, new patient adds per quarter.

Speaker Change: In addition to set of the quarter.

Richard J. Kim: In addition to sort of the previous quarter, and I'm just sort of trying to understand how we should be modeling that trend as we go through 2020. Richard, do you want to comment? Yeah, no, it's a great observation.

Speaker Change: I'm just sort of.

Speaker Change: Thank you understand how should we be modeling.

Speaker Change: That trend as we go through 2024.

Speaker Change: Richard you want to comment.

Richard J. Kim: You know, I think, Ami, first, we're just very pleased with the strong and steady positive growth that we've seen with Loom Rise and really just the feedback that we've heard from offices. You know, over the last couple of quarters, we've sort of been commenting on this sort of net sort of over 900 patient ads into RiseUp. It's hard to predict exactly where this will go going forward, but you know, we're only reporting on our third quarter of full launch. And we think steady positive growth is a good and positive thing.

Richard J. Kim: Yes, no. It's a great observation I think army first we're just very pleased with the strong and steady positive growth, we've seen with <unk> and really just the feedback that we've heard from offices.

Richard J. Kim: Over the last couple of quarters, we've sort of been commenting sort of on the sort of net sort of over 900 patient adds into price up.

Richard J. Kim: It's hard to predict exactly where those to go going forward.

Richard J. Kim: But we are only reporting on our third quarter a full launch.

Richard J. Kim: And we think steady positive growth is a good and positive thing so that trend of those 900 ish adds every quarter.

Richard J. Kim: So you know, that trend of those 900-ish ads every quarter, we'd like to continue that trend at a minimum going forward. Thank you. Your next question comes from the line of David Amsellem with Piper Soundgarden.

Richard J. Kim: We'd like to continue that trend at a minimum going forward.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of David <unk> with Piper Sandler.

Speaker Change: Okay.

David: Just add a couple of questions.

Operator: Just have a couple of questions, so, and I apologize if I miss these if you mentioned these details. Can you talk about the percentage of lumerized patients who have actually been on Zywave? That's number one.

Speaker Change: No.

David: Right and I apologize if I missed these if you mentioned these details can you talk to the percentage of <unk> patients who have actually been on XI wave.

Operator: Number two, can you talk about the lag time between enrollment in Rise Up and initiation of therapy and how that lag time differs between patients who have access and patients who don't have access or don't have good access? So, that's the second question. And then the last question is about idiopathic hypersomnia.

David: Number one.

David: Number two can you talk to the lag time between.

Speaker Change: Enrollment in rise up and initiation of therapy, and how that lag time differs.

Speaker Change: <unk> patients who have access in patients who don't have access or don't have good access.

Speaker Change: The second question and then last question is on idiopathic hypersomnia.

Operator: Is it fair to assume that that's going to be a randomized withdrawal design similar to the registration study that Jazz ran for Zywave? Thank you. Thanks, David. Richard, maybe you can take the first two.

Speaker Change: Is it fair to assume that that's going to be a randomized withdrawal design similar to the <unk>.

Speaker Change: Registration study that jazz wherein for sideways. Thank you.

Speaker Change: Thanks, Thanks, David Richard or maybe you can take the first two.

Richard J. Kim: Yeah, sure. No problem. Thanks, David. So as far as the percentage of Zywave patients, so the majority of our enrollments and patients initiated are patients who have switched from Toy-Stanley Oxybates, and the majority of those are Zywave patients. So if you take more than 50% of overall enrollments and more than 50% of those, it's somewhere north of 25 to 30% of the patients who have switched from Zywave.

Richard J. Kim: Yes, sure no problem, thanks, David so as far as the.

Speaker Change: The percentage of <unk> patients so.

Speaker Change: The majority of our up to up.

Speaker Change: Launched to date right now that the majority of our enrollments in patients initiated our patients who have switched from twice on the OXXO Bates and the majority of those Ars highway patient. So if you take more than 50% of overall enrollments and more than 50% of those it's somewhere north of 25% to 30% of the patients who have switched from <unk>.

Richard J. Kim: And if you look overall as far as the lag time or the timing to get that initiation through Rise Up or the enrollment of a patient started, to your point, it is very different for the two groups. Those who are covered, in essence, meet all the prior authorization criteria.

Speaker Change: And if you look overall as far as the lag time or the timing to get that initiation through right.

Speaker Change: Right after the enrollment into a patient started to your point. It is very different for the two groups. Those who are who have are covered and in essence meet all of the prior authorization criteria. Those are average until right about 30 days about a month for us to get those initiatives and those without coverage or are much hardware are being measured in months. Several we can.

Richard J. Kim: Those are still averaging right above 30 days, about a month for us to get those initiated, and those without coverage are much longer and are being measured in months. Several we can still get through in a shorter period of time, and the range is quite large. But if you don't have a coverage policy, those ones definitely take us; those timelines are measured in months and definitely not in weeks. Greg Ise, I'll turn it over back to you for IA. Yeah, I think, David, we haven't said explicitly what the trial design is yet. That will become public, you know, certainly over the summer as it gets posted on clintrials.gov and whatnot.

Speaker Change: We'll get through in shorter period of time the range is quite large, but if you don't have a coverage policy those one step we take us time.

Speaker Change: Timelines are measured in months and definitely not in weeks Greg.

Speaker Change: Greg I'll turn it over back to you for IH.

Gregory J. Davis: Yes, I think David movements that we haven't said explicitly what the trial design as yet that will become public.

Gregory J. Davis: Certainly over the summer as it gets posted on clean trials that Gov, and whatnot, but what I will say is that.

Gregory J. Divis: But what I will say is that, you know, there's been a handful of companies who have done studies in this area with the full support of FDA. We obviously engage with FDA in this process. And I think it's fair to say that, you know, those proxies are good proxies for how our trial will, you know, what our trial design will look like as we go forward. Okay, that's very helpful.

Gregory J. Davis: Theres been a handful of companies who have done studies.

Gregory J. Davis: Studies in this in this area.

Gregory J. Davis: Full support of FDA, we're obviously engaged with FDA on this process and I think it's fair to say that those proxies are good proxies for how our trial well.

Gregory J. Davis: <unk>.

Gregory J. Davis: What our trial design would look like as we go forward.

Gregory J. Davis: Okay.

Speaker Change: That's very helpful. Thank you.

Gregory J. Davis: Thanks.

Gregory J. Davis: Your next question comes from the line of Marc Goodman with Leerink partners.

Operator: Thank you. Thank you. Your next question comes from the line of Mark Goodman with Learing Partners. Hi, good morning.

Marc Harold Goodman: Hi, good morning, two questions first.

Operator: Two questions. First, what's your sense of how many patients were actually on Oxybate this past quarter, just in total, between all the companies involved? And second of all, can you just give us an update on the litigation that's still outstanding? Thank you. Richard, you want us to answer the first one to the best of our ability.

Marc Harold Goodman: Sense of how many patients are actually on oxalate.

Marc Harold Goodman: Past quarter, just in total between all the companies involved and second of all can you just give us an update on the litigation Thats still outstanding. Thank you.

Marc Goodman: Yes, Richard do you want to.

Richard J. Kim: Answer the first one to be out.

Richard J. Kim: Our ability.

Richard J. Kim: Sure. Yes, it's a great question, Mark. The data is becoming a little more fragmented across the different oxibates as we go forward right now, so I can't say we have a perfect answer for you today. But what we can say is we definitely see growth in segments that were really not there prior to Lumirise coming into the marketplace. A couple of notable ones are in patients who have previously discontinued twice the oxibates who are now on Lumirise.

Richard J. Kim: Yes, it's a great question Mark.

Richard J. Kim: The data is becoming a little more fragmented across the different <unk> as we go forward right now so I can't say, we have a perfect answer for you today, but what we can say is we definitely see growth in segments that we're really not there prior to <unk> coming to the marketplace. A couple of notable ones are in patients who have previously discontinued twice of the oxalate square now.

Richard J. Kim: On <unk> and also that we have people.

Gregory J. Divis: And also that we have people, HCPs, writing for Lumirise who have never written for an oxibate before as well. So we are definitely piecing those numbers together with our claims and reports from other oxibate companies. And our overall view is that the market is growing. It's just hard for us to give you an exact number at this stage. But we're definitely working on that. Yeah, and regarding the litigation, I'll just describe it this way, kind of generally, right, there are a couple of near-term hearings upcoming. The APA hearing, in terms of the suit against FDA, is scheduled for this Friday at 2pm in the DC federal court.

Richard J. Kim: <unk>, writing for <unk>, who had never written for an Oxford PBC as well. So we are definitely piecing those numbers together through our claims and reports from other octavate companies.

Richard J. Kim: And our overall view is the market is growing it's just hard for us to give you an exact number at this stage, but we're definitely working on that.

Speaker Change: Yes, and regarding the litigation I'll just describe it this way kind of generally right. There is there is a couple of near term hearings upcoming.

Richard J. Kim: Hearing.

Richard J. Kim: In terms of the suit against the FDA is scheduled for this Friday at two PM in the DC Federal Court.

Gregory J. Divis: As noted previously, we intervened alongside FDA and the Department of Justice, and we'll make our own arguments in support of the government this Friday. So that's the APA status. In terms of the Delaware patent litigation, obviously, we had the ruling a couple months back from the jury on the royalties and whatnot. The next stop there is a hearing on June 4th.

Richard J. Kim: As noted previously we intervened alongside the FDA and the department of Justice and we'll make our own arguments in support of the government. This Friday.

Richard J. Kim: So that's the status in terms of the Delaware Patent litigation, obviously, we had the ruling a couple months back on on.

Richard J. Kim: From the jewelry and the royalties and whatnot. The next stop there is a is a hearing on June 4th and.

Gregory J. Divis: And that's along this process in Delaware. So we'll be glad to get those 2 hearings behind us and continue to move forward with our launch. And outside of those comments, there probably isn't much else to say right now in terms of what's near term on the litigation. Thanks.

Richard J. Kim: Along this process in Delaware, So we will be glad to get those two hearings behind us and continue to move forward with our launch in outside of those comments that probably isn't much else to say right now in terms of what's the near term on the litigation.

Richard J. Kim: Thanks.

Speaker Change: Thanks Mark.

Operator: Your next question comes from Ash Verma with UBS. Thanks for taking our questions. I'm joining a little bit late, so maybe if something is repeated, let me know.

Speaker Change: Your next question comes from the line of Ash Verma with UBS.

Speaker Change: Hi.

Ashwani Verma: Thanks for taking our questions.

Ashwani Verma: Yes.

Ashwani Verma: Joining a little bit late so that maybe something is repeated let me know.

Operator: On this first question, can you clarify on the 1Q pricing or inventory dynamics of what you saw with LoomRise? It seems the patient ads were pretty encouraging, but the revenue came in a little bit lighter versus how the patient numbers are. And then secondly, Jazz noted on their first quarter call that there are some of these patients that came off the item because it's not in formularies. And for those patients who are in transition, do you think LoomRise could be an attractive option?

Ashwani Verma: Just first question, Mike can you clarify on this <unk> pricing or inventory dynamics that you saw with them right. It seems to be patient adds were pretty encouraging but the revenue came in a little bit later versus how the patient numbers are and then secondly, so that we will get on their first quarter call that data. Some of these patients that came off the item.

Ashwani Verma: Because it started formularies and for those patients who are in transition do you think <unk> can be an attractive option and <unk>.

Operator: and how much of these patients do you think you stand to benefit from during this year? Thanks. Thanks, Ash. Tom, can you take pricing and inventory? And maybe, Richard, you can take the other ones. Yeah, hi Ash.

Ashwani Verma: How much of these patient do you think.

Ashwani Verma: You stand to benefit from getting this year. Thanks.

Ashwani Verma: Thanks, Ash, Tom can you take pricing and inventory and maybe Richard you can take.

Ashwani Verma: The other come.

Thomas S. McHugh: Listen, I'd say that, you know, pricing inventory came in as we expected it to. I commented on your question that, you know, average net revenue per patient is currently annualized at about 120,000 per year. The inventory in the channel has consistently been at about a month, and that's going back to when we first launched, so really, no surprises there relative to revenue. Yeah, and as far as the changes in formulary, yeah, there clearly were several changes in formulary. In many cases, where the branded twice-lent-leaf sodium oxidate and or the AGE were no longer being covered.

Ashwani Verma: Yes.

Speaker Change: Listen I would say that pricing inventory came in as we expected it to.

Speaker Change: I commented on earlier question that average net revenue per patient were currently annualized into about 120000 per year.

Speaker Change: The inventory in the channel has consistently been at about one months and Thats going back to when we first launched so really no surprises there relative to revenue.

Speaker Change: Okay.

Speaker Change: Yes, and as far as the.

Speaker Change: Chase and formulary, yes, there clearly were several changes in formulary.

Speaker Change: In many cases, where the branded twice nightly sodium ox abate and or the AG, we're no longer being covered so yes. Those patients have definitely been a focal point for us and they have been going on for a while so we definitely see that as an option.

Richard J. Kim: So yeah, those patients have definitely been a focal point for us, and they've been going on for a while. So we definitely see that as a unique opportunity going forward here with some of the pairs as well as Lumerize. Thank you. Your next question comes from the line of Oren Livnat with HC Wainwright. Thanks for taking the question. I just want to build on others we've heard.

Speaker Change: Our unique opportunity going forward here with some of the payers as well for <unk>.

Speaker Change: Got it thank you.

Loopnet: Your next question comes from the line of our in Loopnet with H C. Wainwright.

Loopnet: Thanks for taking the question I just wanted to build on others we've heard.

Operator: From Piecing Together Jazz and your commentary today, it does seem clear that you are seeing market growth now, that you're driving some market growth from where the market was before you entered. And I'm just wondering, going forward, now that you're at a 50-50 mix, where do you see that playing out in terms of mix as you go forward? Because I'm seeing, you know, Xyrum is highly eroded now, right?

Loopnet: From piecing together jazz and your commentary today. It does seem clear that you are seeing market growth now that you are driving some market growth.

Loopnet: From where the market was before you entered and I'm just wondering going forward now you are at a 50 50 mix, where do you see that.

Loopnet: No.

Speaker Change: Laying out and mix as you go forward because.

Speaker Change: Xyrem is highly eroded now right and then a lot of those patients.

Speaker Change: Yes.

Speaker Change: The AG and Weibo and your products do you need to take patients away from the highways.

Speaker Change: To meet your targets or are you feeling like to this year comfort versus estimates.

Speaker Change: Rest on your opportunities and other buckets.

Operator: And a lot of those patients have moved to both. The A.G. and Zywave, oh, and your product. Do you need to take patients away from Zywave to meet your targets? Or are you feeling like through this year, your comfort versus estimates rests on your opportunities in other businesses? Richard, do you have any opening comments on that? Yeah, it's a great perspective.

Speaker Change: Richard do you have any maybe opening comments on it.

Richard J. Kim: So, you know, first, we're just very pleased to sort of see continued demand for all three patient segments, the switches, the previously discontinued, and naive. Going forward, we anticipate still having robust representation from all three segments, you know, and as we talked before, yes, there was a little bit of an increase in naive patients, but the proposition for switch patients is as strong as it's ever been if they've been on a twice nightly sodium oxidator or a twice nightly mixed salt version.

Richard J. Kim: Yes, it's a great perspective. So first we're just very pleased to see continued demand for all three patient segments.

Richard J. Kim: The switches the previously discontinued and <unk> going forward, we anticipate that they'll have robust representation from all three segments.

Richard J. Kim: And as we've talked before so yes, there was a little bit of an increase in naive patients, but the proposition for switch patients is the strongest it's ever been if they've been on that twice nightly sodium <unk> twice nightly mixed hopped version. So we do anticipate.

Richard J. Kim: Demand coming from all three patient segments going forward the composition.

Richard J. Kim: So we do anticipate demand coming from all three patient segments going forward. The composition may switch a little bit over time here, but we do definitely anticipate all three segments being well represented for the rest of this year. Okay, and I was hopping on and off the call.

Richard J. Kim: Swift switch a little bit over time here, but we do definitely anticipate segment all three segments being lever represented for the rest of this year.

Speaker Change: Okay, and I was hopping on and off the call. So I apologize if I misheard, but I thought I heard you say 700 patient starts in the quarter.

Operator: So I apologize if I misheard. But I thought I heard you say 700 patients start in the quarter. I wasn't sure if I heard you correctly.

Speaker Change: If I heard correctly I don't believe Thats, a metric you've given us in the past.

Speaker Change: Is that does that mean, new patients initiated on paid therapy.

Speaker Change: And do we know what that 700 on top of what before I'm trying to see if we can piece together of patients on therapy number that's wishful thinking.

Speaker Change: Sure.

Speaker Change: Richard you want to clarify yes.

Operator: I don't believe that's a metric you've given us in the past. Does that mean new patients initiated on paid therapy? And do we know what that 700 on top of what before? I'm trying to see if we can piece together a patient's number on therapy. That's wishful thinking.

Richard J. Kim: Richard, do you want to clarify? Yeah, Oren, so yeah, so just to be very clear, you know, we had announced that we had over 1,700 patients initiated cumulatively through the end of the first quarter. We were at about 1,000 at the end of Q4.

Richard J. Kim: Yes, sorry, yes, so just to be very clear.

Richard J. Kim: We had announced that we had over 700 patients initiated cumulatively through the end of the first quarter. We were at about 1000 at the end of Q4, so in Q1 and additional seven over 700 patient initiations that occurred in Q1. So just to clarify. So this is a metric that we've given before so it's just sort of taking the 1700 and.

Richard J. Kim: So that's in Q1, an additional over 700 patient initiations that occurred in Q1. So just to clarify, so this is the same metric that we've given before. So it's just sort of taking the 1,700 and subtracting out how we ended up in 2023.

Richard J. Kim: Subtracting how we ended up in 2023.

Speaker Change: Okay. Thank you.

Speaker Change: Your next question comes from the line of Chase.

Operator: Okay, thank you. Your next question comes from the line of Chase. Knickerbocker with Craig Hellen.

Chase Becker: Becker with Craig Hallum.

Chase Becker: Good morning, guys, a lot's been asked maybe just a couple around the edges here.

Operator: Morning, guys. A lot's been asked, maybe just a couple around the edges. Now that we have more patients from the naive and previously discontinued groups on drug, if we think about persistency, you know, specifically in this group on Lumrise, or, you know, trends in the larger population of people, patients on drug, now that they're a bigger portion of your patients, do trends and discontinuations that the one kind of two month timeframe picked up at all from these patients as they become a larger part of the mix, Yeah, thanks.

Chase Becker: Now that we have more patients from the naive and previously discontinued groups on drug if we think about persistency specifically in these groups on <unk> or trends in the larger population of people up patients on drug now that they are a bigger portion of your patience on that.

Chase Becker: Trends in discontinuation that the one kind of two month timeframe ticked up at all from these patients as they become a larger part of the mix basically is there a higher level of discontinuation with these two patient populations.

Speaker Change: Yes. Thanks.

Richard J. Kim: Yeah, thanks for the question, Chase. Yeah, no, overall, our discontinuation rate across all three segments is very strong. And if we look at our overall composition, it is lower than what we saw traditionally for twice on the oxibates.

Speaker Change: Yes, thanks for the question Chase yet.

Speaker Change: They're all our discontinuation rate across all three segments is very strong and if we look at our overall composition. It is lower than what we saw traditionally for twice on the oxo Bates.

Speaker Change: For the naive ended discontinued.

Richard J. Kim: You know, for the naive and the discontinued, it was really just this quarter where they sort of stepped up in the representation. We are seeing slightly lower rates compared to the switch patients, but not meaningfully lower. So it's still relatively early on.

Speaker Change: It was really just this quarter, where they sort of stepped up in the representation, we are seeing slightly lower rates compared to the switch patients, but not meaningfully lower so it's still relatively early on so we're going to definitely to watch those trends.

Richard J. Kim: So we're going to definitely watch those trends. So, as I mentioned, it's lower, but what we had sort of articulated is not meaningfully lower at this stage. As we think about the pediatric opportunity, obviously, Medicaid is a very important payer there. Can you update us on how coverage looks for Lumrise with Medicaid generally today? I know it's likely to be different state to state, but just general color there.

Speaker Change: As I mentioned, it's lower but what we had sort of articulated is not.

Speaker Change: Meaningfully lower at this stage.

Speaker Change: Helpful Color and then maybe another one for you Richard.

Richard J. Kim: When you think about the pediatric opportunity obviously Medicaid is a very important payer there can.

Richard J. Kim: Can you update us on how coverage looks for <unk> with Medicaid generally today I know, it's likely to be different state to state, but just general color there.

Richard J. Kim: Yeah, we are going through the process, Chase, and Medicaid, as you know, takes a very, very, very long time. So we haven't really had a significant amount of Medicaid usage come through at this stage. And we'll provide more updates as we make more progress there. We also have other assistance programs if patients aren't covered through our patient assistance program. But at this stage right now, we've got, you know, we're still early in the process as far as getting our Medicaid coverage.

Richard J. Kim: Yes, we are going through the process Chase in Medicaid as you know it takes a very very very long time. So we haven't really have had.

Richard J. Kim: The amount of Medicaid usage come through at this stage and we'll provide more updates as we make more progress. There. We also do have other assistance programs if patients aren't covered through our patient assistance, but at this stage right now we've got we're still early in the process as far as getting our Medicaid coverage.

Speaker Change: Got it and then 85% commercially covered lives plus there is an impressive number maybe anywhere else that you're hearing from physicians as far as kind of key sticking points as far as coverage goes as far as making that's where you can kind of block and tackle from here to make this an easy the easiest is.

Richard J. Kim: Got it. And then, you know, 85% of commercially covered lives plus there is an impressive number. Maybe more impressive than anything you're hearing from physicians as far as, you know, kind of key sticking points as far as coverage goes, as far as, you know, making this, you know, where you can kind of block and tackle from here to make this an easy, the easiest as possible kind of writing experience for them.

Richard J. Kim: Possible kind of riding experience for them and then just lastly, thus.

Richard J. Kim: As far as any impact from change the change and disruption.

Richard J. Kim: And then just lastly, as far as any impact from change, the change disruption, and the cyber attack on the quarter, did we see any change in fill rates there? Was that kind of part of what might have affected the quarter?

Richard J. Kim: <unk> on the quarter or did we see any change in fill rates there with that kind of part of what it might have affected the quarter.

Richard J. Kim: Yeah, sure. So, you know, as far as the, to your point, Chase, we're really pleased with our commercial coverage. The team has done an excellent job in securing, you know, those nearly 85% of commercially covered lives. And I would say, in general, we're sort of in the same situation now with other salvaged products where there's just always going to be some bumps and roadblocks for some patients going through. Now it's how the patients meet all the PA criteria and those sorts of things, even though they're covered.

Speaker Change: Yes, sure so as far as the tier point Chase, we're really pleased with our commercial coverage. The team has done an excellent job in securing those nearly 85% commercial covered lives and I would say in general we're sort of in the same situation now with other established products, where there is just always going to be some bumps in the roads for some patients go.

Speaker Change: Through now it's half the patients met all the criteria and those sorts of things, even though that they are covered so we have an outstanding field reimbursement team. That's there to actually help walk offices through every step and our goal is to really help sort of guide every new patient initiation through with our field reimbursement team to make it is easiest path.

Richard J. Kim: So, we have an outstanding field reimbursement team that's there to actually help walk offices through every step. And, you know, our goal is to really help sort of guide every new patient initiation through with our field reimbursement team to make it as easy as possible for the offices.

Richard J. Kim: And as far as your change health comment is concerned, thus far, we have not seen any meaningful impact on any of our field rates being impacted by them. Got it. Thank you, guys. Your next question comes from the line of Myriam Belghiti with Live Psi Kappa.

Richard J. Kim: <unk> for the offices and as far as her change health comment is concerned.

Richard J. Kim: Thus far we have not seen any any meaningful impact to any of our fill rates being impacted by them.

Speaker Change: Got it thank you guys.

Richard J. Kim: Your next question comes from the line of Marianne will get <unk> with life Science capital.

Marianne: Thanks for taking my question and congrats on the quarter I was just wondering if you could provide a little more detail on the distribution of our peso linked.

Operator: Thanks for taking my question and congrats on the quarter. I was just wondering if you could provide a little more detail in terms of the distribution of patients initiating therapy. I understand 50% is both discontinued and naive, but can you provide a further breakdown of those two segments?

Marianne: Shading therapy, and 15% as both discontinued in late but can you provide a further breakdown.

Marianne: Of those two segments.

Richard J. Kim: Okay.

Richard J. Kim: Yeah, sure, Myriam. Thanks for the question. So yeah, you know, as we said, sort of, we've seen, if we look at the overall good health of all of our patients, thus far, the majority are switch patients. Q1 was where we sort of saw more of a balance between the switches and the discontinued slash naive patients. And of those discontinued and naive, they're moderately balanced, but there definitely has been growth, almost quarter over quarter, for the naive segment within that other bucket. So, you know, it's a little bit more balanced in Q1.

Speaker Change: Yes, sure Mary Ann Thanks for the question. So yeah, as we said sort of we've seen if we look at the overall thoughts of all of our patients. Thus far the majority of our switch patients to Q1, with where we sort of saw more of a balance between the switches and the discontinued flashed naive and as those discontinued and naive there moderately.

Speaker Change: Balanced, but there definitely has been growth.

Speaker Change: Quarter over quarter for the naive segment within that other bucket so.

Speaker Change: It was a little bit more balanced in Q1.

Richard J. Kim: And you know, we'll sort of see where the trends go forward, but it's been nice to see the naive segment start to tick up here over time. And in terms of the IH opportunity, are there any important differences between IH and narcolepsy patients when it comes to cardiovascular risk or any relevant comorbidities when it comes to sodium intake? Richard, do you have any thoughts on that? Sure. Sorry about that, Greg. Yeah, in general, no. You know, these are still, you know, generally younger patients, less of a Medicare population overall.

Speaker Change: We'll sort of see where the trends going forward, but it's been nice to see the naive segments start to tick up here over over time.

Speaker Change: Okay.

Speaker Change: And Jim.

Speaker Change: <unk> opportunity are there any important differences between IH and narcolepsy patients when it comes to cardiovascular risk any relevant comorbidity of clinical to sodium intake.

Speaker Change: Richard just any general thoughts.

Richard J. Kim: Sure I'll start by that Greg Yeah in general no.

Richard J. Kim: These are still generally younger patients less of a Medicare population overall, so general statement it would be not not really that we see from our data.

Speaker Change: Okay got it thanks, Thanks for taking my question.

Speaker Change: Your next question comes from the line of Matt Kaplan with Ladenburg Thalmann.

Richard J. Kim: So a general statement would be not really what we see from our data. Okay, got it. Thanks for taking my question. Your next question comes from the line of Matt Kaplan with Ledenburg South.

Speaker Change: Mr. <unk> your line is open.

Operator: Kaplan. Your line is open. Good morning. And congratulations on the quarterly results. Given your success in terms of adding prior XyWave patients to Moonrise, how important is it to have a low-sodium offering in the market? And I guess the second part of that question is, how difficult will it be to create a low-sodium bioequivalent?

Matthew Lee Kaplan: Good morning.

Speaker Change: Okay.

Matthew Lee Kaplan: And congrats on the quarterly results given your success in terms of adding prior sideways patients too.

Matthew Lee Kaplan: Right.

Speaker Change: How important is it to.

Speaker Change: Have a low sodium offering in the market.

Speaker Change: And I guess second part of that question is how difficult will it be to create a low sodium <unk> rice.

Speaker Change: Yes, I think our view has been has been very consistent on this topic from the beginning which is that we think all patients should have the opportunity to have.

Gregory J. Divis: Yeah, I think our view has been very consistent on this topic from the beginning, which is that we think all patients should have the opportunity to have an uninterrupted night's sleep. And for the subset of patients who are at risk for sodium, if we have the ability to formulate and develop and bring that opportunity to the marketplace, then we're certainly going to do the work to try to accomplish that.

Speaker Change: An uninterrupted night's sleep and for the subset of patients who are at risk for sodium if we have the ability to formulate and develop and bring that opportunity.

Speaker Change: So the marketplace. Then then we're certainly going to do the work to try to to try to accomplish that so from our perspective it isn't a requirement.

Speaker Change: To have a successful <unk> once nightly <unk> franchise, because we do believe the data on sodium speaks for itself that being said, we certainly know there is patients out there who could benefit.

Gregory J. Divis: So, from our perspective, it isn't a requirement to have a successful branch, a once-a-nightly lume rise franchise, because we do believe the data on sodium speaks for itself. That being said, you know, we certainly know there are patients out there who could benefit from both a lower sodium version and a once at bedtime lume rise. So, you know, therefore, we're doing the work in terms of, you know, the difficulty of it. It's, you know, it's a formulation challenge in and of itself, given how the active moiety performs in this sort of situation.

Speaker Change: Both a lower sodium version and a once at bedtime loom right. So.

Speaker Change: Therefore, we're doing the work in terms of the difficulty of it.

Gregory J. Divis: But we certainly have our best and brightest working with our third-party partners on this, and we'll look forward to giving an update later this year. All right. Thanks for taking the question. Thanks, Matt. That concludes our Q&A session. I will now turn the conference back over to Greg Davis for closing remarks. Thank you, and most importantly, thank you everyone for joining us today. Thank you for your time, and we wish you a great day. We look forward to future updates and any follow-up during the course of today and over the next couple weeks.

Speaker Change: As a formulation challenge in and of itself given how the active moiety performs.

Speaker Change: In this sort of situation, but we certainly have our our best and brightest working with our third party partners on this and we look forward to giving you an update later this year.

Speaker Change: Alright, thanks for taking the questions.

Speaker Change: Thanks, Matt.

Speaker Change: That concludes our Q&A session I will now turn the conference back over to Greg Davis for closing remarks.

Gregory J. Divis: Have a great day. Thank you. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect. ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ??

Gregory J. Davis: Thank you and and most importantly, thank you everyone for joining us today. Thank you for your time.

Gregory J. Davis: And we wish you a great day, and we look forward to.

Gregory J. Davis: Future updates and any follow up during the course of today and over the next couple of weeks have a great day. Thank you.

Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.

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