Q2 2024 OptiNose Inc Earnings Call

August 8, 2024

Operator: Hello, and welcome to the OptiNose second quarter 2024 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone; you will then hear an automated message advising that your hand has been raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. It is now my pleasure to introduce the Vice President.

Unknown Executive: Hello, and welcome to the OptiNose 2nd quarter 2024 Ernest conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press Star 11 on your telephone. You will then hear an automated message advising that your hand has been raised. So withdraw your question, please press star 11 again.

Speaker Change: Hello and welcome to the OptiNose second quarter 2024 earnings conference call.

Operator: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star-one-one on your telephone. You will then hear an automated message advising that your hand has been raised. To withdraw your question,

Speaker Change: At this time, all participants are in a listen-only mode.

Speaker Change: After the speaker presentation, there will be a question and answer session.

Speaker Change: To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand has been raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded.

Unknown Executive: Please be advised that today's conference isn't being recorded.

Jonathan Neely: It is now my pleasure to introduce Vice President of Investor Relations, Jonathan Neely.

Speaker Change: It is now my pleasure to introduce Vice President of Investor Relations, Jonathan Neely.

Ramy Mahmoud: Good morning. Thank you for joining us today as we review OptiNose's 2nd quarter 2024 performance and our plans for the remainder of the year. I am joined by our CEO, Dr. Ramy Mahmoud, and our Chief Commercial Officer, Paul Spence.

Jonathan Neely: Good morning. Thank you for joining us today as we review OptiNose's second quarter 2024 performance and our plans for the remainder of the year. I'm joined today by our CEO, Dr. Ramy Mahmoud, and our Chief Commercial Officer, Paul Spence. Slides that will be presented on this call can be viewed on our website, OptiNose.com, in the Investors section. Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements.

Jonathan Neely: Good morning. Thank you for joining us today as we review OptiNose's second quarter 2024 performance and our plans for the remainder of the year.

Jonathan Neely: Slides that will be presented on this call can be viewed on our website, OptiNose.com, in the investor section. Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements. All statements that are not historical facts are hereby identified as forward-looking statements. Forward-looking statements are subject to risks and uncertainties because actual results differ materially from those indicated in such statements. Additional information regarding these factors in forward-looking statements is discussed under the cautionary note on forward-looking statements section of the earnings release that we issued today, as well as under the risk factors section, and elsewhere in OptiNose's most recent Form 10-K and 10-Q that are filed with the SEC and available at their website, SEC.gov, and our website at OptiNose.com.

Speaker Change: I'm joined today by our CEO , Dr. Ramy Mahmoud, and our Chief Commercial Officer, Paul Spence.

Speaker Change: Slides that will be presented on this call can be viewed on our website OptiNose.com in the investor section.

Speaker Change: Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements. All statements that are not historical facts are hereby identified as forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated in such statements.

Jonathan Neely: All statements that are not historical facts are hereby identified as forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated in such statements. Additional information regarding these factors and forward-looking statements is discussed under the Cautionary Note on Forward-Looking Statements section of the earnings release that we issued today, as well as under the Risk Factors section and elsewhere in OptiNose's most recent Form 10-K and 10-Q, which are filed with the SEC and available at their website, SEC.gov, and our website at OptiNose.com.

Speaker Change: Additional information regarding these factors and forward-looking statements is discussed under the Cautionary Note on Forward-Looking Statements section of the earnings release that we issued today, as well as under the Risk Factors section and elsewhere in OptiNose's most recent Form 10-K and 10-Q that are filed with the SEC and available at their website, sec.gov, and our website at optinose.com.

Jonathan Neely: Please use your caution not to place undue reliance on forward-looking statements. Forward-looking statements during this conference call speak only as of the original date of this call or any earlier date indicated in such statement, and we undertake no obligation to update or revise any of these statements. I will now make prepared remarks, and then we will move to a question and answer session.

Jonathan Neely: Your caution not to place undue reliance on forward-looking statements. Before looking at statements, during this conference call, we will speak only as of the original date of this call or any earlier date indicated in such statement, and we undertake no obligation to update or revise any of these statements.

Speaker Change: Your caution not to place undue reliance on forward-looking statements. Forward-looking statements during this conference call speak only as of the original date of this call or any earlier date indicated in such statement. And we undertake no obligation to update or revise any of these statements.

Ramy Mahmoud: We will now make prepared remarks, and then we will move to a question-and-answer session.

Ramy Mahmoud: With that, I will now turn the call over to Rami.

Speaker Change: We will now make prepared remarks, and then we will move to a question and answer session. With that, I will now turn the call over to Ramy.

Ramy Mahmoud: Thank you, Jonathan, and thank you to everyone listening for joining us this morning. We appreciate you joining us for our second quarter of 2024 update. Starting on slide three, we're pleased to report a promising start to our chronic sinusitis launch and good progress in the quarter.

Unknown Executive: Thank you, Jonathan, and thank you to everyone listening for joining us this morning. We appreciate you joining us for our second quarter 2024 update. Next, Jonathan Neely, our VP of Investor Relations and Business Development, will review our second quarter 2024 performance and our financial guidance for full year 2024. Finally, we'll return to wrap up the call and take your questions.

Ramy Mahmoud: Thank you, Jonathan. And thank you to everyone listening for joining us this morning. We appreciate you joining us for our second quarter 2024 update, starting on slide three. We're pleased to report a promising start to our chronic sinusitis launch and good progress in the quarter. I'll start with a brief outline of what we'll cover during our call today.

Ramy Mahmoud: Thank you, Jonathan, and thank you to everyone listening for joining us this morning. We appreciate you joining us for our second quarter 2024 update.

Ramy Mahmoud: Starting on slide three.

Ramy Mahmoud: I'll start with a brief outline of what we'll cover during our call today. First, I'll review three key takeaways from today's call.

Ramy Mahmoud: First, I'll review three key takeaways from today's call. Second, our chief commercial officer, Paul Spence, will discuss our early efforts to educate our ENT and allergy specialist physician audience about Exantz's new clinical profile and some encouraging early signals of progress that will enable future updates. Next, Jonathan Neely, our VP of Investor Relations and Business Development, will review our second quarter 2024 performance and our financial guidance for full year 2024. Finally, we'll return to wrap up the call and take your questions.

Ramy Mahmoud: We're pleased to report a promising start to our chronic sinusitis launch and good progress in the quarter. I'll start with a brief outline of what we'll cover during our call today.

Ramy Mahmoud: Second, our Chief Commercial Officer, Paul Spence, will discuss our early efforts to educate our ENT and allergy specialist physician audience on Xhance's new clinical profile, and some encouraging early signals of progress that will enable future update.

Speaker Change: First, I'll review three key takeaways from today's call. Second, our Chief Commercial Officer, Paul Spence, will discuss our early efforts to educate our ENT and allergy specialist physician audience on EXANSE's new clinical profile and some encouraging early signals of progress that will enable future uptake.

Ramy Mahmoud: Next, Jonathan Mealy, our VP of Investor Relations and Business Development, will review our second quarter of 2024 performance and our financial guidance for full year 2024. Finally, we'll return to wrap up the call and take your questions.

Jonathan Neely: Next, Jonathan Neely, our VP of Investor Relations and Business Development, will review our second quarter 2024 performance and our financial guidance for full year 2024. Finally, we'll return to wrap up the call and take your questions.

Ramy Mahmoud: Turning to slide four, I'd like to highlight three key takeaways from today's presentation. First, I'd like to reiterate the significant long-term potential of the opportunity in front of us, which we believe has potential to reshape our business for years into the future. Claim status suggests that chronic sinusitis is currently being diagnosed by healthcare providers, at least ten times more frequently than nasal polyps. Re-shaping our business by launching Xhance in chronic sinusitis started in the second quarter. In April, we held a national sales meeting to complete training of our sales team, and they are now engaged with a full set of new materials and have been interacting with a universe of both familiar and new prescribers.

Jonathan Neely: Turning to slide four, I'd like to highlight three key takeaways from today's presentation.

Jonathan Neely: First, I'd like to reiterate the significant long-term potential of the opportunity in front of us, which we believe has potential to reshape our business for years into the future.

Jonathan Neely: Claims data suggest that chronic sinusitis is currently being diagnosed by healthcare providers at least 10 times more frequently than nasal polyps. Over the course of the prior five quarters, since I accepted responsibility for this position, our focus has been on seeking approval for the new first and only chronic sinusitis indication and greatly increasing our operating efficiency. Our success in these areas means that initial launch efforts by our commercial team in the second quarter of this year are building on a significantly stronger base than we had at the start of 2023.

Speaker Change: Claims data suggest that chronic sinusitis is currently being diagnosed by healthcare providers at least 10 times more frequently than nasal polyps.

Ramy Mahmoud: Reshaping Our Business by Launching Exams for Chronic Sinusitis started in the second quarter. In April, we held a national sales meeting to complete training of our sales team, and they are now engaged with a full set of new materials and have been interacting with a universe of both familiar and new prescribers. As a reminder, our plan is to launch with our current sales force infrastructure, arming our sales team with a suite of new chronic sinusitis promotional materials accompanied by digital and non-personal promotion and educational efforts based on the new label with the objective of attaining peak year sales of at least 300 million dollars and producing positive income from operations for the full year 2025.

Speaker Change: Reshaping Our Business by Launching Exanth in Chronic Sinusitis started in the second quarter. In April , we held a national sales meeting to complete training of our sales team, and they are now engaged with a full set of new materials and have been interacting with a universe of both familiar and new prescribers.

Ramy Mahmoud: As a reminder, our plan is to launch with our current sales force infrastructure, arming our sales team with a suite of new products on your site as promotional materials, accompanied by digital and non-personal promotion, and by educational efforts based on the new label with the objective of attaining peak year sales of at least $300 million and producing positive income from operations for full year 2025. Over the course of the prior five quarters since I accepted responsibility for this position, our focus has been on seeking approval for the new first and only chronic sinusitis indication, on greatly increasing our operating efficiency, on stabilizing ex-hands revenue, and on preparing our organization for the greatly expanded opportunity in chronic sinusitis.

Speaker Change: As a reminder, our plan is to launch with our current Salesforce infrastructure.

Speaker Change: arming our sales team with a suite of new chronic sinusitis promotional materials.

Speaker Change: Accompanied by Digital and Non-Personal Promotion.

Speaker Change: And by educational efforts based on the new label, with the objective of attaining peak year sales of at least $300 million and producing positive income from operations for full year 2025.

Ramy Mahmoud: Over the course of the prior five quarters, since I accepted responsibility for this position, our focus has been on seeking approval for the new first and only chronic sinusitis indication, on greatly increasing our operating efficiency, on Stabilizing Expanse Revenue, and on Preparing our Organization for the Greatly Expanded Opportunity in Chronic Sinusitis. Our success in these areas means that initial launch efforts by our commercial team in the second quarter of this year are building on a significantly stronger base than we had at the start of 2023.

Speaker Change: Over the course of the prior five quarters, since I accepted responsibility for this position, our focus has been on seeking approval for the new first and only chronic sinusitis indication.

Speaker Change: on greatly increasing our operating efficiency.

Speaker Change: on Stabilizing Enhanced Revenue and on Preparing Our Organization for the Greatly Expanded Opportunity in Chronic Sinusitis.

Ramy Mahmoud: Our success in these areas means that initial launch efforts by our commercial team in the second quarter of this year are building on a significantly stronger base than we had at the start of 2023. From a financial perspective, this includes a stronger balance sheet, lower expenses, and improving average net revenue per prescription. During the first few quarters of launch, we are aiming to sustain our operating efficiency gains while building on the strength and foundation to begin to penetrate the greatly expanded total addressable market, resulting from our first and only new CS indication. Over the initial quarters after launch, we expected gradually improving insurance coverage, and our pleas that late in second quarter, ex-hands was added to large Express-Scripts national formularies.

Speaker Change: Our success in these areas means that initial launch efforts by our commercial team in the second quarter of this year are building on a significantly stronger base than we had at the start of 2023.

Ramy Mahmoud: From a financial perspective, this includes a stronger balance sheet, lower expenses, and improving average net revenue per prescription. During the first few quarters of launch, we are aiming to sustain our operating efficiency gains while building on the strength and foundation to begin to penetrate the greatly expanded total addressable market resulting from our first and only new CS indication. Over the initial quarters after launch, we expected gradually improving insurance coverage and are pleased that late in the second quarter, Exhans was added to large Express Scripts national formularies. You'll hear more about that in a moment.

Jonathan Neely: From a financial perspective, this includes a stronger balance sheet, lower expenses, and improving average net revenue per prescription. Our Chief Commercial Officer, Paul Spence, will provide some encouraging updates about initial progress by his team in just a moment. We continue to believe that consistent commercial plan execution on multiple fronts will lead to future acceleration of the growth trajectory in the much larger market that has now been opened, for example. As a result, we are increasing our expectation for enhanced net revenue per prescription for full year 2024 to at least $250, compared to our previous expectation of at least $230, an increase of at least 20% compared to 2023.

Speaker Change: From a financial perspective, this includes a stronger balance sheet, lower expenses, and improving average net revenue per prescription.

Speaker Change: During the first few quarters of launch, we are aiming to sustain our operating efficiency gain while building on the strength and foundation to begin to penetrate the greatly expanded total addressable market resulting from our first and only new CS indication.

Speaker Change: Over the initial quarters after launch, we expected gradually improving insurance coverage and are pleased that late in second quarter, Exhans was added to large Express Scripts national formularies. You'll hear more about that in a moment.

Ramy Mahmoud: You'll hear more about that in a moment. In the second quarter, we also empowered our sales force to use new and differentiated clinical data and new promotional materials to engage prescribers and begin the educational interactions that should facilitate gradual adoption of ex-hands as a regular part of clinical practice for treating this underserved disease. In addition, as we previously noted earlier this year, we began to transition much of our prescription fulfillment to a central intake pharmacy or hub, and during the first few quarters of launch, we expect to continue work to optimize the effectiveness of that fulfillment channel.

Ramy Mahmoud: In the second quarter, we also empowered our sales force to use new and differentiated clinical data and new promotional materials to engage prescribers and begin the educational interactions that should facilitate the gradual adoption of exanth as a regular part of clinical practice for treating this underserved disease. In addition, as we previously noted, earlier this year, we began to transition much of our prescription fulfillment to a central intake pharmacy or hub, and during the first few quarters of launch, we expect to continue work to optimize the effectiveness of that fulfillment channel.

Speaker Change: In the second quarter, we also empowered our sales force to use new and differentiated clinical data and new promotional materials to engage prescribers and begin the educational interactions that should facilitate gradual adoption of Exant as a regular part of clinical practice for treating this underserved disease.

Speaker Change: In addition, as we previously noted, earlier this year, we began to transition much of our prescription fulfillment to a central intake pharmacy, or hub. And during the first few quarters of launch, we expect to continue work to optimize the effectiveness of that fulfillment channel.

Ramy Mahmoud: Overall, we believe we're making progress on laying the necessary foundation to be able to realize the significant long-term potential of ex-hands in our new market. Today, we're reporting on the first quarter of our launch and have achieved revenue consistent with our expectations.

Ramy Mahmoud: Overall, we believe we're making progress on laying the necessary foundation to be able to realize the significant long-term potential of Exantus in our new market. Today, we're reporting on the first quarter of our launch, and we have achieved revenue consistent with our expectations. Our Chief Commercial Officer, Paul Spence, will provide some encouraging updates about initial progress by his team in just a moment. We continue to believe the first few quarters after launch will produce gradual growth while we progressively implement insurance coverage changes and steadily educate target prescribers on clinical data related to the new indication.

Speaker Change: Overall, we believe we're making progress on laying the necessary foundation to be able to realize the significant long-term potential of Exhanse in our new market.

Speaker Change: Today we're reporting on the first quarter of our launch and have achieved revenue consistent with our expectations.

Ramy Mahmoud: Archive commercial officer Paul Spence will provide some encouraging updates about initial progress by his team in just a moment. We continue to believe the first few quarters after launch will produce gradual growth while we progressively implement insurance coverage changes and steadily educate target prescribers on clinical data related to the new indication. We continue to believe that consistent commercial plan execution on multiple fronts will lead to future acceleration of the growth trajectory in the much larger market that has now been opened for ex-hands. Lastly, during the first half of this year, we have been more successful than we originally anticipated in our efforts to focus on profitable business and move away from lower profit and unprofitable business.

Paul Spence: Our Chief Commercial Officer, Paul Spence, will provide some encouraging updates about initial progress by his team in just a moment.

Paul Spence: We continue to believe the first few quarters after launch will produce gradual growth while we progressively implement insurance coverage changes and steadily educate target prescribers on clinical data related to the new indication.

Ramy Mahmoud: We continue to believe that consistent commercial plan execution on multiple fronts will lead to future acceleration of the growth trajectory in the much larger market that has now been opened for examination. Lastly, during the first half of this year, we have been more successful than we originally anticipated in our efforts to focus on profitable business and move away from lower profit and unprofitable business. As a result, we are increasing our expectation for enhanced net revenue per prescription for full year 2024 to at least $250, compared to our previous expectation of at least $230, an increase of at least 20% compared to 2023.

Paul Spence: We continue to believe that consistent commercial plan execution on multiple fronts will lead to future acceleration of the growth trajectory in the much larger market that has now been opened for expanse.

Paul Spence: Lastly, during the first half of this year, we have been more successful than we originally anticipated in our efforts to focus on profitable business and move away from lower profit and unprofitable business.

Ramy Mahmoud: As a result, we are increasing our expectation for ex-hands net revenue per prescription for full year 2024 to at least $250, compared to our previous expectation of at least $230, an increase of at least 20% compared to 2023. We're also narrowing our full year 2024 ex-hands net revenue guidance range to $85 to $90 million from $85 to $95 million previously. The new range represents revenue growth of 20 to 27% compared to full year 2023 revenues of $71 million. The narrowing of the revenue range reflects removal of revenues associated with lower profit and unprofitable business for which we have intentionally reduced co-pay support.

Paul Spence: As a result, we are increasing our expectation for enhanced net revenue per prescription for full year 2024 to at least $250, compared to our previous expectation of at least $230, an increase of at least 20% compared to 2023.

Jonathan Neely: We're also narrowing our full year 2024 enhanced net revenue guidance range to $85 to $90 million from $85 to $95 million previously. The new range represents revenue growth of 20 to 27% compared to full year 2023 revenues of $71 million. We believe focusing on growth in profitable lines of business will result in a healthier, more sustainable business over the long term. However, it's important to note that the combined effect of these two changes is directionally offsetting, which leaves our expectations for cash runway and operating income largely unchanged.

Ramy Mahmoud: We're also narrowing our full year 2024 enhanced net revenue guidance range to $85 to $90 million from $85 to $95 million previously. The new range represents revenue growth of 20 to 27% compared to full year 2023 revenues of $71 million. The narrowing of the revenue range reflects removal of revenues associated with lower profit and unprofitable business for which we have intentionally reduced copay support. We believe focusing on growth in profitable lines of business will result in a healthier, more sustainable business over the long term.

Paul Spence: We're also narrowing our full year 2024 enhanced net revenue guidance range to 85 to 90 million dollars from 85 to 95 million previously.

Paul Spence: The new range represents revenue growth of 20-27% compared to full year 2023 revenues of $71 million.

Paul Spence: The narrowing of the revenue range reflects removal of revenues associated with lower profit and unprofitable business for which we have intentionally reduced co-pay support.

Ramy Mahmoud: We believe focusing on growth in profitable lines of business will result in a healthier, more sustainable business over the long term. It's important to note that the combined effect of these two changes is directionally offsetting, which leaves our expectations for cash runway and operating income largely unchanged. Finally, with respect to operating expense, we continue to plan for full year 2024 to be modestly incremental to full year 2023 in support of promotional launch efforts, as previously communicated.

Paul Spence: We believe focusing on growth in profitable lines of business will result in a healthier, more sustainable business over the long term.

Ramy Mahmoud: It's important to note that the combined effect of these two changes is directionally offsetting, which leaves our expectations for cash runway and operating income largely unchanged. Finally, with respect to operating expense, we continue to plan for full year 2024 to be modestly incremental to full year 2023 in support of promotional launch efforts as previously communicated. I'd now like to turn the call over to Paul Spence to review initial launch performance and recent commercial highlights. Paul? Thank you, Ron.

Paul Spence: It's important to note that the combined effect of these two changes is directionally offsetting, which leaves our expectations for cash runway and operating income largely unchanged.

Paul Spence: Finally, with respect to operating expense, we continue to plan for full year 2024 to be modestly incremental to full year 2023 in support of promotional launch efforts as previously communicated.

Paul Spence: I'd now like to turn the call over to Paul Spence to review initial launch performance and reheat commercial highlights.

Paul Spence: Oh, thank you, Ronnie. Turning to slide six. To set the context, we're leveraging four major tactics to launch its hands into this major new market opportunity. These include in-person promotions by our sales force, non-personal promotion, peer-to-peer education, and presence at medical meetings. They can't launch into chronic sinusitis required a significant shift in our commercial model, most especially around the opportunity to expand the number of new exams prescribers. Some estimate that, with new products and indications, the required 10 to 12 calls on new physicians before they fully understand and believe in a product's clinical information and then identify appropriate patients to trial the new medication and change behavior.

Paul Spence: I'd now like to turn the call over to Paul Spence to review initial launch performance and recent commercial highlights. Paul?

Paul Spence: Ramy, turning to slide six. These include in-person promotions by our sales force, and non-personal promotion. The enhanced launch into chronic sinusitis required a significant shift in our commercial model, most especially around the opportunity to expand the number of new enhanced prescribers. In the second quarter, we started that climb to the hill.

Paul Spence: Ramy, turning to slide six. Contact us at www.OptiNose.com. We are leveraging four major tactics to launch XANCE into this major new market opportunity. These include in-person promotions by our sales force. Not personal promotion

Paul Spence: Peer-to-peer education and presence at medical meetings. The enhanced launch into chronic sinusitis required a significant shift in our commercial model, most especially around the opportunity to expand the number of new enhanced prescribers. Some estimate that with new products and indications, they require 10 to 12 calls on new physicians before they fully understand and believe in a product's clinical information and then identify appropriate patients to trial the new medication and change behavior. In the second quarter, we started that climb up the hill.

Paul Spence: Thank you, Ramy. Turning to slide six.

Paul Spence: to set the context.

Paul Spence: We are leveraging four major tactics to launch Exhance into this major new market opportunity. These include in-person promotion by our sales force.

Speaker Change: Not personal promotion.

Speaker Change: Peer-to-peer education, and presence at medical meetings.

Speaker Change: The enhanced launch into chronic sinusitis required a significant shift in our commercial model, most especially around the opportunity to expand the number of new enhanced prescribers.

Speaker Change: Some estimate that with new products and indications,

Speaker Change: that require 10 to 12 calls on new physicians.

Speaker Change: Before they fully understand and believe in a product's clinical information, and then identify appropriate patients to trial the new medication and change behavior.

Paul Spence: In second quarter, we started that climb to the hill. Successful product trials across our new physician targets will be a precursor for consistent adoption and city growth over time. Our effort thus far, already getting the ball rolling with both Naivex and prescribers, and those ACPs we believe prescribe very little due to prior restrictions around the nasal polyps-only indication. And we expect gradually accelerating product uptake in the second half of this year. Since the CS launch, more than half of the sales calls have been made to ACPs who we categorize as Naivex to prescribing these hands or as having the history of infrequently prescribing prior to the CS approval.

Paul Spence: Successive product trials across our new physician targets will be a prerequisite for consistent adoption and continued growth over time. Our efforts thus far are already getting the ball rolling with both naive enhanced prescribers and those ACPs we believe prescribe very little due to prior restrictions around the nasal polyps only indication, and we expect gradually accelerating product uptake in the second half of this year.

Paul Spence: Successive product trials across our new physician targets will be a prerequisite for consistent adoption and continued growth over time. Our market research suggests that within this group of ACPs, allergy and primary care prescribers appear to have a stronger initial response to our communication about the new CF indication and efficacy of Xant. In parallel, we are also focused on increasing the productivity of our promotional efforts by improving overall commercial coverage and access to exams.

Speaker Change: In second quarter, we started that climb to the hill.

Speaker Change: Successful product trials across our new physician targets will be a precursor for consistent adoption and continued growth over time.

Speaker Change: Our efforts thus far are already getting the ball rolling with both naïve advanced prescribers and those ACPs we believe prescribe very little due to prior restrictions around the nasal polyps only indication.

Speaker Change: And we expect gradually accelerating product uptake in the second half of this year.

Paul Spence: Since the CNS launch, more than half of the sales calls have been made to ACPs, who we categorize as naive to prescribing these hands or as having a history of infrequent prescribing prior to the CF's approval. New and total prescription growth with both groups has started out positive, and we believe is responding to a combination of sales calls, peer-to-peer education programs, and sampling. Our market research suggests that within this group of ACPs, allergy and primary care prescribers appear to be having a stronger initial response to our communication about the new CS indication and efficacy of Xant.

Speaker Change: Since the CNS launch, more than half of the sales calls have been made to HCPs, who we categorize as naïve to prescribing these hands.

Speaker Change: or as having a history of infrequently prescribing prior to the CF's approval.

Paul Spence: New and total prescription growth with both groups has started out positive, and we believe is responding to a combination of sales calls, peer-to-peer education programs, and sampling. Our market research suggests that within this group of ACPs, the allergy and primary care prescribers appear to be having a stronger initial response to our communication about the new CS indication and efficacy of exams. In addition, market research validates that these HCP targets use efficacy as their number one preference driver in the CS space, and therefore our primary strategic communication focus is to educate them about its expansive differentiated efficacy.

Speaker Change: New and total prescription growth with both groups has started out positive, and we believe is responding to a combination of sales calls, peer-to-peer education programs, and sampling.

Speaker Change: Our market research suggests that within this group of ACPs, the allergy and primary care prescribers appear to be having a stronger initial response to our communication about the new CF indication and efficacy of Xant.

Paul Spence: In addition, market research validates that these HCP targets use efficacy as their number one preference driver in the CF space, and therefore, our primary strategic communication focus is to educate them about how Exantz enhances differentiated efficacy. We expect the adoption of Exantz by this group of high potential HCPs to gradually continue to grow in the second half, and that we will advance the number of both new and more frequent prescribers of Exantz

Speaker Change: In addition, market research validates that these HCP targets use efficacy as their number one preference driver in the CF space, and therefore, our primary strategic communication focus is to educate them about enhanced differentiated efficacy.

Paul Spence: We expect the adoption of extants by this group of high potential HCPs to gradually continue to grow in the second half, and that we will advance the number of both new and more frequent prescribers of extants. The balance of our direct selling resources are deployed against high CS volume E&T and allergy specialists over history prescribing extants. We continue to listen to and work closely with these HCPs and their staff to support their efforts to bring extants to significantly more CS patients via strong clinical evidence, personal experience with the product intent, and streamline the prescribing process.

Speaker Change: We expect the adoption of EXANSE by this group of high potential HCPs to gradually continue to grow in the second half and that we will advance the number of both new and more frequent prescribers of EXANSE.

Paul Spence: The balance of our direct selling resources is deployed against high CS volume ENT and allergy specialists who have a history of prescribing Xant. We continue to listen to and work closely with these HTPs and their staff to support their efforts to enhance a significantly more CF patient via strong clinical evidence, personal experience with the product itself, and a streamline prescribing process. For example, we've deployed new field support resources via the hub that we expect to help advance HCP and staff proficiency within the enhanced patient support program and to ease the process of working with the hub.

Speaker Change: The balance of our direct selling resources are deployed against high CS volume ENT and allergy specialists who have a history of prescribing Xans.

Speaker Change: we continue to listen to and work closely with theps and their staff to support their efforts to bring extans significantly more cpatient be a strong clinical evidence personal experience with the product chan and streamline prescribing process

Paul Spence: For example, we've deployed new field support resources via the hub that we expect to help advance HCP and staff at proficiency within the extants patient support program, and to ease the process of working with the hub. We believe this, in combination with important educational efforts on new extants clinical information, will begin to translate into this group of prescribers choosing extants for treatment of more CS patients over time. In parallel, we are also focused on increasing the productivity of our promotional efforts by improving overall commercial coverage and access to extants. We're constantly working to streamline the process for managing prior authorization paperwork and the overall prescription fulfillment process in continuing to offer a patient-friendly co-pay support program to ensure the experience for HCPs and patients is as smooth and accessible as possible.

Speaker Change: For example, we've deployed new field support resources via the Hub that we expect to help advance HCP and staff proficiency within the Enhanced Patient Support Program and to ease the process of working with the Hub.

Paul Spence: We believe this, in combination with important educational efforts on new EXANCE clinical information, will begin to translate into this group of prescribers choosing EXANCE for treatment of more CS patients over time. In parallel, we are also focused on increasing the productivity of our promotional efforts by improving overall commercial coverage and access to exams. We're constantly working to streamline the process for managing prior authorization paperwork and the overall prescription fulfillment process and continuing to offer a patient-friendly co-pay support program to ensure the experience for HCPs and patients is as smooth and accessible as possible. Removing and reducing obstacles to filling and refilling prescriptions for both patients and doctors alike will ensure that more CS patients can receive and stay on advanced therapy, maintaining their symptom control throughout the year. Attorney 5-7.

Speaker Change: We believe this, in combination with important educational efforts on new EXANSE clinical information, will begin to translate into this group of prescribers choosing EXANSE for treatment of more CS patients over time.

Speaker Change: In parallel, we are also focused on increasing the productivity of our promotional efforts by improving overall commercial coverage and access to expanse.

Paul Spence: We're constantly working to streamline the process for managing prior authorization paperwork and the overall prescription fulfillment process, and continuing to offer a patient-friendly co-pay support program to ensure the experience for HCPs and patients is as smooth and accessible as possible. This will ensure that more CS patients can receive and stay on advanced therapy, maintaining their symptom control throughout the year. At the end of June, we announced the addition of a CAN to Large Express Scripts National Formulary and further consumer engagement, which can expand our reach to more than 30 million total patients with chronic sinusitis.

Speaker Change: We're constantly working to streamline the process for managing prior authorization paperwork and the overall prescription fulfillment process, and continuing to offer a patient-friendly co-pay support program to ensure the experience for HCPs and patients is as smooth and accessible as possible.

Paul Spence: We're moving and reducing obstacles to filling and refilling prescriptions for both patients and doctors alike. We're unsure that more CS patients can receive and stay on the chance therapy, maintaining their symptom control throughout the year.

Speaker Change: Removing and reducing obstacles to filling and refilling prescriptions for both patients and doctors alike will ensure that more CS patients can receive and stay on enhanced therapy, maintaining their symptom control throughout the year.

Paul Spence: Turning to slide seven. At the end of June, we announced the addition of a can to large Express Scripts national formularies, including in this the National Preferred, Flex, and Basic Formularies. These are among the largest commercial formularies in the US with more than 24 million lives. This also marks the first time its hand that help prefer tier two coverage on a national formulary. We believe this is an important milestone for patients to suffer from chronic sinusitis, and for our business, as this improvement will make it easier and more affordable for patients in these plans to get a can, which is the only improvement medication for the treatment of this disease.

Paul Spence: At the end of June, we announced the addition of a CAN to the Large Express Scripts National Formulary, including in this the National Preferred Flex and Basic Formulary. These are among the largest commercial formularies in the US with more than 24 million lives. This also marks the first time that TANF has held preferred Tier 2 coverage on a national formulary.

Speaker Change: twenty five seven

Speaker Change: At the end of June , we announced the addition of a CAN to large Express Scripts national formularies.

Speaker Change: Including in this the National Preferred, Flex, and Basic formularies.

Speaker Change: these are among the largest commercial formul in the u s with more than twenty-four million lives

Speaker Change: This also marks the first time they've had a health-preferred Tier 2 coverage on a national formulary.

Paul Spence: We believe this is an important milestone for patients who suffer from chronic sinusitis and for our business, as this improvement will make it easier and more affordable for patients in these plans to get a cast, which is the only improved medication for the treatment of this disease. From a business perspective, the new ESI preferred formulary coverage requires only a simple step: the patient is privileged to use a standard delivery nasal steroid. Prescribers will not have to complete prior authorization paperwork, and it is expected to improve prescribing and fulfillment at the pharmacy.

Speaker Change: We believe this is an important milestone for patients who suffer from chronic sinusitis and for our business, as this improvement will make it easier and more affordable for patients in these plans to get a CAT, which is the only approved medication for the treatment of this disease.

Paul Spence: From a business perspective, the newly assigned preferred formulary coverage requires only a simple step: that the patient's previously used a standard delivery nasal steroid. Prescribers will not have to complete prior authorization paperwork. This is expected to improve prescribing and fulfillment at the pharmacy. Further streamlining the prescription fulfillment process and improving the quality of our insurance coverage over time will also help prepare the market for potential future commercial initiatives that we discussed in the past, such as Salesforce expansion, especially offices, the addition of a primary care partnership, and further consumer engagement, which can expand our reach to more than 30 million total patients with chronic sinusitis.

Speaker Change: From a business perspective, the new ESI Preferred Formulary Coverage requires only a simple step.

Speaker Change: that the patient is privileged to use a standard delivery nasal steroid.

Speaker Change: Prescribers will not have to complete prior authorization paperwork.

Speaker Change: This is expected to improve prescribing and fulfillment at the pharmacy.

Paul Spence: Further streamlining the prescription fulfillment process and improving the quality of our insurance coverage over time will also help prepare the market for potential future commercial initiatives that we've discussed in the past, such as salesforce expansion and specialty offices, the addition of a primary care partnership, and further consumer engagement, which can expand our reach to more than 30 million total patients with chronic sinusitis. As mentioned earlier, the Exhance CS launch presents a significant change in our commercial strategy and requires a shift in the Exhance business from a small, dense group of prescribers to now a much larger group of HCPs with big future potential in CS.

Speaker Change: Further streamlining the prescription fulfillment process and improving the quality of our insurance coverage over time will also help prepare the market for potential future commercial initiatives that we've discussed in the past, such as

Speaker Change: Salesforce Expansion and Specialty Offices, the addition of a primary care partnership, and further consumer engagement, which can expand our reach to more than 30 million total patients with chronic sinusitis.

Paul Spence: As mentioned earlier, the EXAMCS launch presents a significant change in our commercial strategy and requires a shift in the EXAMS business from a small dense group of prescribers to now a much larger group of ACPs with big future potential in CS. It takes time to deliver the necessary number of engagements with high potential ACPs, especially including both those new to attend and those not new, but are new to the chronic sinusitis data, in order to move their interest and prescribing out of the chance. We expect this to gradually accelerate over the first few quarters of our launch, and I believe we're seeing early patterns suggesting green shoots of growth that increase my confidence in the future potential of exams. Finally, you may recall earlier this year we launched a central intake pharmacy model or a hub to prepare for the growth that we expect from expansive new education.

Speaker Change: As mentioned earlier, the EXANSE CS launch presents a significant change in our commercial strategy and requires a shift in the EXANSE business from a small, dense group of prescribers to now a much larger group of HCPs.

Paul Spence: It takes time to deliver the necessary number of engagements with high potential HCPs, especially those new to ICTANTS and those not new but who are new to chronic sinusitis data, in order to gain their interest in prescribing ICTANTS.

Speaker Change: with big future potential in CS.

Speaker Change: It takes time to deliver the necessary number of engagements with high potential HCPs.

Speaker Change: Especially including both those new to Xanth and those not new, but are new to the chronic sinusitis data, in order to move their interest and prescribing of Xanth.

Paul Spence: We expect this to gradually accelerate over the first few quarters of our launch, and I believe we're seeing early patterns suggesting green shoots of growth that increase my confidence in the future potential of the exam. Finally, you may recall earlier this year, we launched a central intake pharmacy model, or a hub, to prepare for the growth that we expect from expansive new indications. During Q2, we can transition a significant portion of our business from a historical preferred pharmacy network to the hub.

Speaker Change: We expect this to gradually accelerate over the first few quarters of our launch, and I believe we're seeing early patterns suggesting green shoots of growth that increase my confidence in future potential of exams.

Paul Spence: Finally, you may recall earlier this year, we launched a central intake pharmacy model, or a hub, to prepare for the growth that we expect from expansive new indications. This transition has been slight, has had a slight headwind as we continue to optimize the process at the hub, and the ACP office has become familiar with working with this new fulfillment channel. However, we believe this transition will become a tailwind as we begin to realize the efficiencies that the hub can offer.

Speaker Change: Finally, you may recall earlier this year we launched a Central Intake Pharmacy Model, or a HUP, to prepare for the growth that we expect from expansive new indications.

Paul Spence: During Q2, we can transition to a significant portion of our business from a historical, preferred pharmacy network now to the hub. In addition to offering the necessary scalability for our anticipated growth and providing improved protection for business continuity, we believe the hub has the potential to provide more comprehensive and consistent patient support and prescription fulfillment services. This transition has been slight, had a slight headwind as we continue to optimize the process at the hub, and as ACP offices become familiar with working with this new fulfillment channel. However, we believe this transition will become a tailwind as we begin to realize the efficiency that the hub can offer.

Speaker Change: During Q2, we can transition to a significant portion of our business from a historical preferred pharmacy network, now to the hub.

Paul Spence: In addition to offering the necessary scalability for anticipated growth and providing improved protections for business continuity, we believe the hub has the potential to provide more comprehensive and consistent patient support and prescription fulfillment services. This transition has been slight, has had a slight headwind as we continue to optimize the process at the hub, and the ACP office has become familiar with working with this new fulfillment channel. However, we believe this transition will become a tailwind as we begin to realize the efficiencies that the hub can offer. I would like to now turn it over to Jonathan Neely to review our second quarter financial performance and financial guidance for the full 24 years. Jonathan

Speaker Change: In addition to offering the necessary scalability for anticipated growth and providing improved protections for business continuity, we believe the Hub has the potential to provide more comprehensive and consistent patient support and prescription fulfillment services.

Speaker Change: This transition has had a slight headwind as we continue to optimize the process at the Hub, and as ACP Office has become familiar with working with this new fulfillment channel. However, we believe this transition will become a tailwind as we begin to realize the efficiencies that the Hub can offer.

Jonathan Neely: I would like to now turn it over to Jonathan Nealey to review our second quarter financial performance and financial guidance for the full 24-year.

Jonathan Neely: Jonathan? Thank you, Paul. Turning to slide 9. We are encouraged by our second quarter 2024 financial results. Regarding revenue, OptiNose recognized $20.5 million of expansion net revenue in the second quarter, a 5% increase compared to the second quarter of 2023 net revenues of $19.5 million. Based on available prescription and inventory data purchased from third parties and on data which we received directly from our hub and preferred pharmacy network, the estimated increase in average net revenue per prescription for the second quarter of 2024 was $309, a 44% increase compared to $214 of estimated average net revenue per prescription in the second quarter of 2023.

jonathan nely: I would like to now turn it over to Jonathan Neely to review our second quarter financial performance and financial guidance for the full 24 year. Jonathan. Thanks, Paul. Turning to slide 9.

Jonathan Neely: Jonathan, thanks, Paul.

Jonathan Neely: Turning to slide 9. We are encouraged by our second quarter 2024 financial results. Regarding revenue, I can now recognize $20.5 million in the stands net revenue in the second quarter. A 5% increase compared to the second quarter of 2023 net revenues is $19.5 million. Based on available prescription and inventory data purchased from third parties and on data, which we received directly from our hub for pharmacy network, the estimated extent average net revenue per prescription for the second quarter of 2024 was $309, a 44% increase compared to $214, the estimated average net revenue per prescription in the second quarter of 2023.

Jonathan Neely: We are encouraged by our second quarter 2024 financial results. Regarding revenue, OptiNose recognized $20.5 million of expansive net revenue in the second quarter, a 5% increase compared to the second quarter of 2023 net revenues of $19.5 million.

Speaker Change: Based on available prescription and inventory data purchased from third parties and on data which we received directly from our hub and Preferred Pharmacy Network, the estimated expense to average net revenue per prescription for the second quarter of 2024 was $309, a 44% increase compared to $214 of estimated average net revenue per prescription in the second quarter of 2023.

Jonathan Neely: As discussed on our first quarter earnings call, the year-over-year increase driven by favorable business mix resulting from changes we made to our co-based work program; I would discuss this in more detail when reviewing our expectations for full-year 2024. Finally, as we reported earlier, Optimus recognized $25.1 million success to DNA plus R&D expenses in the second quarter of 2024. This is an increase of approximately $4 million compared to the second quarter 2023 expenses of $21.1 million.

Jonathan Neely: As discussed on our first quarter earnings call, the year-over-year increase is driven by favorable business mix, resulting from changes we made to our co-pay support program. I will discuss this in more detail when reviewing our expectations for full year 2024.

Speaker Change: As discussed on our first quarter earnings call, the year-over-year increase is driven by a favorable business mix resulting from changes we made to our co-pay support program. I will discuss this in more detail when reviewing our expectations for full year 2024.

Jonathan Neely: Finally, as we reported earlier, OptiNose recognized $25.1 million in SG&A plus R&D expenses in the second quarter of 2024. This is an increase of approximately $4 million compared to the second quarter 2023 expenses of $21.1 million. Turning to slide 10.

Unknown Executive: Finally, as we reported earlier, OptiNose recognized $25.1 million of SG&A plus R&D expenses in the second quarter of 2024. This is an increase of approximately $4 million compared to the second quarter 2023 expenses of $21.1 million. Finally, as we reported earlier, OptiNose recognized $46.8 million of SG&A plus R&D expenses in the first half of 2024. This is approximately a $1 million increase compared to the first half of 2023 expenses of $45.6 million, turning to slide 12.

jonathan nely: Finally, as we reported earlier, OptiNose recognized $25.1 million of SG&A plus R&D expenses in the second quarter of 2024. This is an increase of approximately $4 million compared to the second quarter 2023 expenses of $21.1 million.

Jonathan Neely: Turning to slide 10, our results for the first half of 2024 similarly reflect the improvements to now revenue per prescription and the initial investments to support the CS1. Regarding revenue, OptiNose recognized $35.4 million of ExantNet revenue in the first half of 2024, a 13% increase compared to the first half of 2023. Net revenue is $31.3 million. ExantNet revenue per prescription for the first half of 2024 was $269, a 51% increase compared to $178, the estimated average net revenue per prescription in the first half of 2023. Finally, as we reported earlier, OptiNose recognized $46.8 million of ExantNet plus R&D expenses in the first half of 2024; it is approximately $1 million increase compared to the first half of 2023 expenses of $45.6 million.

Jonathan Neely: Our results for the first half of 2024 similarly reflect the improvements to net revenue per prescription and the initial investments to support the CS launch. Regarding revenue, OptiNose recognized $35.4 million of exchange net revenue in the first half of 2024, a 13% increase compared to the first half of 2023 net revenues of $31.3 million. Expanse net revenue per prescription for the first half of 2024 was $269, a 51% increase compared to $178 of estimated average net revenue per prescription in the first half of 2023.

jonathan nely: Turning to slide 10. Our results for first half of 2024 similarly reflect the improvements to net revenue per prescription and the initial investments to support the CS launch.

Speaker Change: guarding revenue off nos recognizede thirty five point four million of cexpan net revenue in the first half of two thousand and twenty four thirteen percent increase compared to the first half two thousand and twentythree net revenues of thirty-one point three million dollars

Speaker Change: Expanse net revenue per prescription for the first half of 2024 was $269, a 51% increase compared to $178 of estimated average net revenue per prescription in the first half of 2023.

Jonathan Neely: Finally, as we reported earlier, OptiNose recognized $46.8 million of SG&A plus R&D expenses in the first half of 2024. This is approximately a $1 million increase compared to the first half 2023 expenses of $45.6 million. Turning to slide 12, our full year 2024 operating expense guidance remains unchanged. We expect total operating expenses to be between $95 to $101 million, of which approximately $6 million is expected to be stock-

Speaker Change: Finally, as we reported earlier, OptiNose recognized $46.8 million of SG&A plus R&D expenses in the first half of 2024. This is approximately a $1 million increase compared to the first half 2023 expenses of $45.6 million.

Jonathan Neely: Turning to slide 12, our full year 2024 operating expense guidance remains unchanged. We expect total operating expenses to be between $95 to $101 million, of which approximately $6 million is expected to be stock-based compensation. What is changing is our expectation for both full year 2024, ExantNet revenue and full year 2024 revenue per prescription. As we have discussed previously, we expect average net product revenues per prescription to increase in 2024 compared to 2023. Primarily as a result of the revisions that we made to our co-pay assistance program in 2023 and early 2024, intended to enhance average net revenue per prescription by reducing co-pay support to and thus prescriptions filled by patients and commercial insurance plans that either do not cover ExantNet or are in commercial insurance plans that happen.

Unknown Executive: Our full year 2024 operating expense guidance remains unchanged. We expect total operating expenses to be between $95 and $101 million, of which approximately $6 million is expected to be stock-based compensation. The magnitude of the benefit derived from these revisions to our co-pay assistance program was greater than we expected in the first half of 2024, and as a result, today we are increasing our expected average net product revenues per prescription estimate for the full year 2024 while narrowing our expected range for full year 2024, fixed-annual net revenue. I will now turn the call back over to Ramy for his closing remarks.

Speaker Change: Turning to slide 12.

Speaker Change: Our full year 2024 operating expense guidance remains unchanged. We expect total operating expenses to be between $95 to $101 million, of which approximately $6 million is expected to be stock-based compensation.

Jonathan Neely: What is changing is our expectation for both full year 2024 exanthnet revenue and full year 2024 revenue per prescription. As we have discussed previously, we expect average net revenue, and net product revenues per prescription, to increase in 2024 compared to 2023, primarily as a result of the revisions that we made to our copay assistance program in 2023 and early 2024, intended to enhance average net revenue per prescription by reducing copay support to and thus prescriptions filled by patients and commercial insurance plans that either do not cover EXANCE or are in commercial insurance plans that have high As these prescriptions have limited or no profitability,

Speaker Change: What is changing is our expectation for both full-year 2024 ExanthNet revenue and full-year 2024 revenue per prescription.

Speaker Change: As we have discussed previously, we expect average net revenue, net product revenues per prescription to increase in 2024 compared to 2023, primarily as a result of the revisions that we made to our copay assistance program in 2023 and early 2024, intended to enhance

Unknown Executive: Hello, and welcome to the OptiNose 2nd quarter, 2024 Ernest Conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand has been raised. So withdraw your question, please press star 11 again. Please be advised that today's conference isn't being recorded.

Speaker Change: Average Net Revenue Per Prescription by reducing co-pay support to, and thus prescriptions filled by, patients in commercial insurance plans that either do not cover EXANCE or are in commercial insurance plans that have high deductibles, as these prescriptions have limited or no profitability.

Jonathan Neely: We have high deductibles as these prescriptions have limited or no profitability. The magnitude of the benefit derived from these revisions to our co-pay assistance program was greater than we expected in the first half of 2024. And as a result, today we are increasing our expected average net product revenues per prescription estimate for the full year 2024 while narrowing our expected range for full year 2024 ExantNet revenues. Specifically, we now expect ExantNet revenues per prescription to exceed $250 for the full year 2024, which represents an increase of at least 20% compared to $209 for the full year of 2023.

Jonathan Neely: The magnitude of the benefit derived from these revisions to our co-pay assistance program was greater than we expected in the first half of 2024, and as a result, today we are increasing our expected average net product revenues per prescription estimate for the full year 2024 while narrowing our expected range for full year 2024 fixed-amount net revenue. Specifically, we now expect Exant's net revenues per prescription to exceed $250 for the full year of 2024, which represents an increase of at least 20% compared to $209 for the full year of 2023.

Jonathan Neely: It is now my pleasure to introduce Vice President of Investor Relations, Jonathan Neely. Good morning. Thank you for joining us today as we review OptiNose's 2nd quarter, 2024 performance, and our plans for the remainder of the year. I am joined by our CEO, Dr. Ramy Mahmoud, in our Chief Commercial Officer, Paul Spence. Slides that will be presented on this call can be viewed on our website, OptiNose.com, in the Investor section. Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements.

Speaker Change: The magnitude of the benefit derived from these revisions to our co-pay assistance program was greater than we expected in the first half of 2024.

Speaker Change: And as a result, today we are increasing our expected average net product revenues per prescription estimate for the full year 2024, while narrowing our expected range for full year 2024 exhanced net revenues.

Speaker Change: Specifically, we now expect Exant's net revenues per prescription to exceed $250 for the full year of 2024, which represents an increase of at least 20% compared to $209 for the full year of 2023.

Jonathan Neely: All statements that are not historical facts are hereby identified as forward-looking statements. Forward-looking statements are subject to risks and uncertainties because actual results differ materially from those indicated in such statements. Additional information regarding these factors in forward-looking statements is discussed under the cautionary note on forward-looking statements, section of the earnings release that we issued today as well as under the risk factors section, and elsewhere in OptiNose's most recent form 10K and 10Q that are filed with the SEC and available at their website, SEC.gov, and our website at OptiNose.com.

Jonathan Neely: Previously, we expected ExantNet average net revenues per prescription to exceed $230 for the full year 2024. Finally, our guidance for ExantNet revenue for the full year of 2024 is now between $85 to $90 million compared to full year 2023. This is growth of 20% to 27%. Previously, we expected ExantNet revenue for the full year 2024 to be between $85 million and $95 million. The narrowing of the guidance range for the full year of 2024 ExantNet revenues is primarily driven by our expectation for less net revenue from prescriptions that have limited or no profitability, for which we have intentionally reduced the level of co-pay support.

Speaker Change: Previously, we expected Exantz Average Net Revenues per Prescription to exceed $230 for the full year of 2024.

Jonathan Neely: Previously, we expected Exantz Average Net Revenues per prescription to exceed $230 for the full year of 2024. Finally, our guidance for Expansion net revenue for the full year of 2024 is now between $85 to $90 million compared to full year 2023. This is growth of 20% to 27%. Previously, we expected Exantus Net Revenue for the full year 2024 to be between $85 million and $95 million. The narrowing of the guidance range for the full year of 2024 exam notes net revenues is primarily driven by our expectation for less net revenue from prescriptions that have limited or no profitability for which we have intentionally reduced the level of co-pay support.

Speaker Change: Finally, our guidance for expanse net revenue for the full year of 2024 is now between $85 to $90 million compared to full year 2023, this is growth of 20% to 27%.

Speaker Change: Previously, we expected Exant's net revenue for the full year 2024 to be between $85 million to $95 million.

Jonathan Neely: Your caution not to place undue reliance on forward-looking statements. Before looking at statements, during this conference call will speak only as of the original date of this call or any earlier date indicated in such statement, and we undertake no obligation to update or revise any of these statements.

Speaker Change: the narrow of the guidance range for the full year two thousandand twentyfour andnets net revenues is primarily driven by our expectation for pl net revenue from prescription that have limited or no profitability for which we have intentionally reduced a level of co-based support

Jonathan Neely: These revised expectations are offsetting.

Jonathan Neely: These revised expectations are offset. As a result, our projections for operating income and cash runway are largely unaffected. We continue to expect that our existing cash and cash equivalents will be sufficient to fund our operations and debt service obligations through 2025 and that we will produce positive income from operations for the full year 2025. I will now turn the call back over to Ramy for closing remarks.

Jonathan Neely: As a result, our projections for operating income and cash runway are largely unaffected. We continue to expect that our existing cash equivalents will be sufficient to fund our operations and debt service obligations through 2025, and that we will produce positive income from operations for full year 2020. 5.

Unknown Executive: We will now make prepared remarks, and then we will move to a question-and-answer session.

Speaker Change: These revised expectations are offsetting, and as a result, our projections for operating income and cash runway are largely unaffected.

Ramy Mahmoud: With that, I will now turn the call over to Rami. Thank you, Jonathan, and thank you to everyone listening for joining us this morning. We appreciate you joining us for our second quarter of 2024 update. Starting on slide three, we're pleased to report a promising start to our chronic sinusitis launch and good progress in the quarter. I'll start with a brief outline of what we'll cover during our call today. First, I'll review three key takeaways from today's call.

Speaker Change: We continue to expect that our existing cash equivalents will be sufficient to fund our operations and debt service obligations through 2025, and that we will produce positive income from operations for full year 2025.

Ramy Mahmoud: I will now turn the call back over to Ramy for closing remarks.

Ramy Mahmoud: Thanks, Jonathan. Turning to slide 14.

Ramy Mahmoud: Thanks, Jonathan, turning this slide 14. Before moving to take questions, I'd like to reiterate the significance of the opportunity in front of us, which we believe has the potential to reshape our business for years into the future. We're pleased with the success we had in executing our pre-launch operating strategy. In 2023, we achieved increased operating efficiency while stabilizing revenue in the comparatively niche nasal polyp indication. At the same time, we preserved capital and focused our organization on preparation to see the much larger opportunity that would be created by approval of exams as the first prescription treatment for one of the most common diseases diagnosed in the adult outpatient medicine.

Speaker Change: I will now turn the call back over to Ramy for closing remarks. Ramy? Thanks, Jonathan. Turning to slide 14.

Ramy Mahmoud: Before moving to take questions, I'd like to reiterate the significance of the opportunity in front of us, which we believe has the potential to reshape our business for years into the future. We are pleased with the success we have had in executing our pre-launch operating strategy. In 2023, we achieved increased operating efficiency while stabilizing revenue in the comparatively niche nasal polyp indication. At the same time, we preserved capital and focused our organization on preparation to seize the much larger opportunity that would be created by approval of EXANSE as the first prescription treatment for one of the most common diseases diagnosed in adult outpatient medicine.

Paul Spence: Second, our Chief Commercial Officer, Paul Spence, will discuss our early efforts to educate our ENT and allergy specialist physician audience on Xhance's new clinical profile, and some encouraging early signals of progress that will enable future update.

Speaker Change: We're pleased with the success we had in executing our pre-launch operating strategy. In 2023, we achieved increased operating efficiency while stabilizing revenue in the comparatively niche nasal polyp indication.

Jonathan Neely: Next, Jonathan Mealy, our VP of Investor Relations and Business Development, will review our second quarter of 2024 performance and our financial guidance for full year 2024.

Speaker Change: At the same time, we preserved capital and focused our organization on preparations to seize the much larger opportunity that would be created by approval of exams as the first prescription treatment for one of the most common diseases diagnosed in adult outpatient medicine.

Ramy Mahmoud: Finally, we'll return to wrap up the call and take your questions. Turning to slide four, I'd like to highlight three key takeaways from today's presentation. First, I'd like to reiterate the significant long-term potential of the opportunity in front of us, which we believe has potential to reshape our business for years into the future. Claim status suggests that chronic sinusitis is currently being diagnosed by healthcare providers, at least ten times more frequently than nasal polyps.

Ramy Mahmoud: We are still in the early innings of our launch, but we've already begun to see the desired improvements in insurance coverage following our new indication and are laying the groundwork necessary to expand our prescriber base for the future. Although we expect it will naturally take some time to realize the benefits of our initial efforts, we continue to believe that the size of this opportunity, coupled with a stronger balance sheet, positions us well to build a profitable E&T and allergy-focused business by tapping into the significantly expanded net revenue potential with an efficient base of commercial capability.

Speaker Change: We are still in the early innings of our launch, but we've already begun to see the desired improvements in insurance coverage following our new indication, and are laying the groundwork necessary to expand our prescriber base for the future.

Ramy Mahmoud: Although we expect it will naturally take some time to realize the benefits of our initial efforts, we continue to believe that the size of this opportunity, coupled with a stronger balance sheet, positioned us well to build a profitable E&T analogy-focused business by tapping into the significantly expanded net revenue potential with an efficient base of commercial capabilities. In addition, we believe the Quantaxonucytus indication will facilitate commercial partnerships or other approaches to accessing additional value in the primary care space that's incremental to what we can access on our own in the specialty segment.

Speaker Change: Although we expect it will naturally take some time to realize the benefits of our initial efforts, we continue to believe that the size of this opportunity, coupled with a stronger balance sheet, position us well to build a profitable ENT and allergy-focused business by tapping into the significantly expanded net revenue potential with an efficient base of commercial capabilities.

Ramy Mahmoud: Re-shaping our business by launching Xhance in chronic sinusitis started in the second quarter. In April, we held a national sales meeting to complete training of our sales team, and they are now engaged with a full set of new materials, and have been interacting with a universe of both familiar and new prescribers. As a reminder, our plan is to launch with our current sales force infrastructure, arming our sales team with a suite of new products on your site as promotional materials, accompanied by digital and non-personal promotion, and by educational efforts based on the new label with the objective of attaining peak year sales of at least $300 million and producing positive income from operations for full year 2025.

Ramy Mahmoud: In addition, we believe the Chronic Sinusitis Indication will facilitate commercial partnerships or other approaches to accessing additional value in the primary care space that's incremental to what we can access on our own in the specialty sector. With that, I'd like to thank you very much for your attention and open the call to Q&A.

Ramy Mahmoud: In addition, we believe the Chronic Sinusitis Indication will facilitate commercial partnerships or other approaches to accessing additional value in the primary care space that's incremental to what we can access on our own in the specialty segment. With that, I'd like to thank you very much for your attention and open the call to Q&A.

Speaker Change: In addition, we believe the chronic sinusitis indication will facilitate commercial partnerships or other approaches to accessing additional value in the primary care space that's incremental to what we can access on our own in the specialty segment.

Ramy Mahmoud: With that, I'd like to thank you very much for your attention and open the call up for Q&A.

Unknown Executive: As a reminder, ladies and gentlemen, 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.

Operator: As a reminder, ladies and gentlemen, 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. And our first question comes from the line of David Amsellem with Piper Sandler.

Operator: As a reminder, ladies and gentlemen, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. And our first question comes from the line David Amsellem with Piper Sandler.

Speaker Change: With that, I'd like to thank you very much for your attention and open the call up for Q&A.

Speaker Change: As a reminder, ladies and gentlemen, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.

Ramy Mahmoud: Over the course of the prior five quarters since I accepted responsibility for this position, our focus has been on seeking approval for the new first and only chronic sinusitis indication, on greatly increasing our operating efficiency, on stabilizing ex-hands revenue, and on preparing our organization for the greatly expanded opportunity in chronic sinusitis. Our success in these areas means that initial launch efforts by our commercial team in the second quarter of this year are building on a significantly stronger base than we had at the start of 2023.

David Amsellem: Our first question comes from the line of David Amselam with Piper Sandler.

unknown: in terms of the third question,

Speaker Change: And our first question comes from the line of David Amsellem with Piper Sandler.

Schuyler Broek: Hi, thanks. It's a Skylaron for David. So, curious, what are your assumptions for your path to profitability? In other words, what level of sales do you think you need to get to in order to reach break even? And what are your overall thoughts on balancing the sales force versus extending cash runway? And then similarly, how do you feel about your revenue covenant in third quarter? Are you concerned at all about not meeting that minimum?

Schuyler Broek: Hi, thanks. This is Schuyler on behalf of David.

Schuyler Broek: Curious, what are your assumptions for your path to profitability? In other words, what level of sales do you think you need to get to in order to reach breakeven? And what are your overall thoughts on balancing the salesforce versus extending the cash runway? And then, similarly, how do you feel about your revenue covenant for the third quarter? Are you concerned at all about not meeting that minimum? Thanks.

Speaker Change: Hi, thanks. This is Schuyler on for David.

Schuyler: So curious, what are your assumptions for your path to profitability? In other words, what level of sales do you think you need to get to in order to reach break-even? And what are your overall thoughts on balancing the sales force versus extending cash runway?

Ramy Mahmoud: From a financial perspective, this includes a stronger balance sheet, lower expenses, and improving average net revenue per prescription. During the first few quarters of launch, we are aiming to sustain our operating efficiency gains while building on the Strength and Foundation to begin to penetrate the greatly expanded total addressable market, resulting from our first and only new CS indication. Over the initial quarters after launch, we expected gradually improving insurance coverage and our pleas that late in second quarter, ex-hands was added to large express-scripts national formularies.

Speaker Change: And then similarly, how do you feel about your revenue covenant in third quarter? Are you concerned at all about not meeting that minimum? Thanks.

Ramy Mahmoud: Thanks.

Ramy Mahmoud: Schuyler, thanks for the question. I'll take the second of your three questions, and I'll ask Jonathan to speak to the first and the third. Your second question was around the sales force, and I'll just reiterate what we have said before, that our plan is to launch with our current sales force infrastructure. So, at least through the third quarter, probably through the remainder of the year, and, you know, and potentially significantly longer, we don't expect to make material changes to our current sales force infrastructure. Jonathan, do you want to address the first and third questions?

Ramy Mahmoud: Skylar, thanks for the question. I'll take the second of your three questions, and I'll ask Jonathan to speak to the first and the third. Your second one was around the sales force, and I'll just reiterate what we have said before that our plan is to launch with our current sales force infrastructure.

Speaker Change: Schuyler, thanks for the question. I'll take the second of your three questions and I'll ask Jonathan to speak to the first and the third. Your second one was around the Salesforce and I'll just reiterate what we have said before, that our plan is to launch with our current Salesforce infrastructure.

Ramy Mahmoud: So, at least through the third quarter, probably through the remainder of the year, and potentially significantly longer, we don't expect to make material changes to our current sales force infrastructure.

Jonathan: So, at least through third quarter, probably through the remainder of the year, and potentially significantly longer. We don't expect to make material changes to our current Salesforce infrastructure.

Jonathan Neely: Jonathan, do you want to address the first and third questions?

Jonathan Neely: Sure, I might ask you to remind me of the third one by the time we get there. But in terms of the pathway to profitability, you know, I think what we've highlighted for everybody is that, you know, for this year, we're expecting revenue growth of, you know, somewhere between 20 to 27%. And that, you know, over the long term, we think that the peak revenue potential for this product inside of our current commercial infrastructure is approximately $300 million.

Jonathan Neely: Sure. Might actually remind me that third one by the time we get there, but in terms of the pathway to profitability, I think what we've highlighted for everybody is that for this year, we're expecting revenue growth somewhere between 20 to 27 percent, and that over the long term, we think that the peak revenue potential for this product inside of our current commercial infrastructure is approximately $300 million. And so that's going to apply multiple years of strong growth ahead of us.

Speaker Change: Jonathan, do you want to address the first and third questions? Sure. I might ask you to remind me of the third one by the time we get there. But in terms of the pathway to profitability, I think what we've highlighted for everybody is that for this year, we're expecting revenue growth of somewhere between 20 to 27 percent.

Speaker Change: And that, you know, over the long term, we think that the, you know, the peak revenue potential for this product inside of our current commercial infrastructure is approximately $300 million. And so that's going to, you know, apply kind of multiple years of strong growth ahead of us. And so, you know, we think that if you were to look at product with 90%, you know, approximately 90% gross margins,

Jonathan Neely: And so, we think that if you were to look at product with approximately 90 percent growth margins and types of operating expense structure, we have today, that there's a clear pathway to profitability for the full year of 2025. In terms of the third question, do you remind me of the third question? I was taking some notes on the first one.

Jonathan Neely: And so that's going to, you know, apply kind of multiple years of strong growth ahead of us. And so you know, we think that if you were to look at a product with 90%, you know, approximately 90% gross margins, and the types of operating, you know, expense structure, you know, that we have today, that there's, there's a clear pathway to profitability, you know, for the full year of 2025, in terms of the third question. Can you remind me of the third question? I was taking some notes on the first one.

Speaker Change: and the types of operating expense structure that we have today that there's a clear pathway to profitability for the full year of 2025.

Ramy Mahmoud: Today, we're reporting on the first quarter of our launch and have achieved revenue consistent with our expectations.

Speaker Change: In terms of the third question.

Jonathan Neely: Yeah, no, just if you're confident about the revenue covenant in the third quarter.

unknown: Yeah, no, just if you're confident about the revenue covenant in the third quarter. Oh, yeah. I mean, I think, you know, the third quarter revenue

Speaker Change: Can you remind me of the third question? I was taking some notes on the first one.

Jonathan Neely: Oh, yeah, I mean, the third, third quarter revenue covenant, I think, you know, we're probably already on a trailing 12 months basis, I think, ahead of that. And so, you know, again, I think we're expecting growth for this year. And so I think we're on a pathway to maintain compliance. As a reminder, I think that that number is 72 and a half million dollars for the third quarter. And, you know, for the fourth quarter's work, the target is trailing 12 months of sales of 75 million. Great.

Schuyler Broek: Great, and helpful. Thank you.

Speaker Change: Yeah, no, just if you're confident on the revenue covenant in the third quarter. Oh, yeah, I mean, I think, you know, third, third quarter revenue covenant, I think, you know, we're probably already on a trailing 12 months basis, you know, I think, ahead of that. And so, you know, again, I think we're expecting growth for this year. And so I think we're on a pathway to maintain compliance. As a reminder, you know, I think that that number is 72 and a half million dollars for the third quarter. And, you know, for the fourth quarter work, you know, the target is trailing 12 months sales of 75 million.

Jonathan Neely: And so I think we're on a pathway that may think compliance is reminded. Yeah, I think that that number is 72 and a half million dollars for the third quarter. And, you know, the fourth quarter worth, you know, the target is trailing 12 months sales of 75 million.

Ramy Mahmoud: Lastly, during the first half of this year, we have been more successful than we originally anticipated in our efforts to focus on profitable business and move away from lower profit and unprofitable business. As a result, we are increasing our expectation for ex-hands net revenue per prescription for full year 2024 to at least $250, compared to our previous expectation of at least $230, an increase of at least 20% compared to 2023. We're also narrowing our full year 2024 ex-hands net revenue guidance range to $85 to $90 million from $85 to $95 million previously.

Schuyler Broek: Great. Help. Well, thank you.

Unknown Executive: Thank you. One moment, please, for our next question.

Operator: One moment, please, for our next question. David Amsellem, Ramy Mahmoud, Our next question comes from the line of Thomas Flaten with Lake Street Capital Markets.

Speaker Change: Great, helpful. Thank you.

Thomas Flaten: Your next question comes from the line of Thomas Flaten with Lake Street Capital Markets.

Speaker Change: Thank you.

Thomas Flaten: Your next question comes from the line of Thomas Flaten with Lake Street Capital Markets.

Speaker Change: One moment, please, for our next question.

Speaker Change: Our next question comes from the line of Thomas Flaten with Lake Street Capital Markets.

Thomas Flaten: Good morning. I appreciate you taking the questions. Jonathan, on the average net revenue per prescription, you know, for the first half, you're already 269. And that number tends to stay similar across the third and fourth quarter. So 250 seems a bit conservative. Should I read it that way, or do you think there's a side to that number? And I know you said it would exceed 250, but seems like 250 is a very conservative number.

Thomas Flaten: Good morning. I appreciate you taking the questions.

Thomas Flaten: Jonathan, on average net revenue per prescription, you know, for the first half, you're already at 269. And that number tends to stay similar across the third and fourth quarters. So 250 seems a bit conservative. Should I read it that way?

Thomas Flaten: Or do you think there's an upside to that number? And I know you said it would exceed 250, but it seems like 250 is a very conservative number.

Thomas Flaten: Good morning. I appreciate you taking the questions. Jonathan, on the average net revenue per prescription, you know, for the first half, you're already at $269, and that number tends to stay.

Ramy Mahmoud: The new range represents revenue growth of 20 to 27% compared to full year 2023 revenues of $71 million. The narrowing of the revenue range reflects removal of revenues associated with lower profit and unprofitable business for which we have intentionally reduced co-pay support.

Speaker Change: Similar across the third and fourth quarter. So 250 seems a bit conservative, should I read it that way? Or do you think there's upside to that number? And I know you said it would exceed 250. But seems like 250 is a very conservative number.

Jonathan Neely: Thanks, Thomas, for the question. Yeah, so I mean, again, I think what we're trying to, you know, build in, you know, to our expectation for average net revenue per prescription is, you know, some flexibility for, you know, the lower profit or not, you know, not profitable kind of volumes to rebound in conjunction with the launch. You know, clearly, I think through the first half, you know, we haven't seen that that volume is going to come back into the business.

Jonathan Neely: Thanks, Thomas, for the question. Yeah, so I think what we're trying to, you know, build into our expectation for average net revenue per prescription is, you know, some flexibility for, you know, the lower profit or not, you know, not profitable kind of volumes to rebound in conjunction with the launch. You know, clearly, I think, through the first half, we haven't seen that volume kind of come back into the business.

Jonathan: Thanks, Thomas, for the question. Yeah, so I mean, again, I think what we're trying to, you know, build in, you know, to our expectation for average net revenue per prescription is

Speaker Change: some flexibility for the lower profit or not not profitable kind of volumes to reboundingin conjunction with the launch clearly i think through the first half

Jonathan Neely: And it also, I think, allows us, you know, some operational flexibility related to copay assistance and other programs that could be used to, you know, stimulate additional demand as we move through the second half. But, you know, I think our, you know, so, yes, we're at 269, you know, on a year-to-date basis, and there is some room up against the 250, but it allows us some flexibility.

Jonathan Neely: And it also, I think it allows us, you know, some operational flexibility, you know, related to co-pay assistance and other programs that could be used to, you know, stimulate additional demand, you know, as we move through the second half. But I think our, you know, so yes, we're 269, you know, on a year and a day basis. And there is some room up against 250, but it allows us some flexibility.

Speaker Change: You know, we haven't seen, you know, that volume kind of come back into the business.

Speaker Change: And it also, I think, allows us, you know, some operational flexibility, you know, related to co-pay assistance and other programs that could be used to, you know, stimulate additional demand, you know, as we move through the second half.

Paul Spence: I'd now like to turn the call over to Paul Spence to review initial launch performance and reheat commercial highlights. Oh, thank you, Ronnie. Turning to slide six.

Paul Spence: To set the context, we're leveraging four major tactics to launch its hands into this major new market opportunity. These include in-person promotions by our sales force, non-personal promotion, peer-to-peer education, and presence at medical meetings. They can't launch into chronic sinusitis required a significant shift in our commercial model, most especially around the opportunity to expand the number of new exams prescribers. Some estimate that with new products and indications, the required 10 to 12 calls on new physicians before they fully understand and believe in a product's clinical information and then identify appropriate patients to trial the new medication and change behavior.

Speaker Change: Yes, we're at 269 on a year-to-date basis, and there is some room up against the 250, but it allows us some flexibility.

Ramy Mahmoud: This is Ramy. I'll just remind you that in the first half, we also had the sort of strange one-time event of the change healthcare disruption in the switch. And as a consequence of that, we saw sort of an artificial one-off suppression of unprofitable volumes with an emphasis on profitable volumes that we might not otherwise have seen. So we're trying to think carefully about the effect of that sort of one-time event also.

Ramy Mahmoud: Tom, I'll just, this is Romeo. Just remind you that in first half, we also have the sort of strange one time event of the change health care disruption in the switch. And as a consequence of that, we saw sort of an artificial one-off suppression of unprofitable volumes within an excess, you know, emphasis on profitable volumes that we might not otherwise have seen. So we're trying to, you know, think carefully about that, the effect of that sort of one-time event also.

Speaker Change: This is Ramy, I'll just remind you that in first half, we also had the sort of strange one-time event of the change healthcare disruption in the switch. And as a consequence of that, we saw

Speaker Change: sort of an artificial one-off suppression of unprofitable volumes with an emphasis on profitable volumes that we might not otherwise have seen. So we're trying to, you know, think carefully about the effect of that sort of one-time event also.

Thomas Flaten: And then maybe for Paul, I'm just curious, in the dialogue you've had with payers to expand the coverage to the new indication, qualitatively, what have those engagements been like? Has there been any pushback? Is it more of just a paper processing issue? Yeah, no, thanks.

Paul Spence: And then maybe for Paul, I'm just curious in the dialogue you've had with payers to expand the coverage to the new indication. What qualitatively, what are those engagements been like? Has there been any pushback? Is it more of just a paper processing issue? Yeah, no thanks for the question, Thomas. No, what I'd say is that payers are seeing the increased demand and prescribing as a result of the new indication in our efforts. And as a result, you know, more and more approaching us about that indication and the opportunity for improved access and improved coverage across the board.

Speaker Change: And then maybe for Paul, I'm just curious, in the dialogue you've had with payers to expand the coverage to the new indication, qualitatively, what have those engagements been like? Has there been any pushback? Is it more of just a paper processing issue?

Paul Spence: Yeah, thanks for the question, Thomas. You know, what I'd say is that payers are seeing increased demand and prescribing as a result of the new indication in our efforts. And as a result, you know, more and more are approaching us about that indication and the opportunity for improved access and improved coverage across the board. You know, other than that, we continue to work with our own processes and HCPs around paperwork and supporting their staff and the HCPs and the patients in doing so. But overall, HCPs or payers are noticing the demand increasing as a result of the indication in our efforts.

Speaker Change: Thanks for the question, Thomas. What I'd say is that payers are seeing the increase.

Speaker Change: Demand and Prescribing.

Speaker Change: As a result of the new indication in our efforts, and as a result...

Speaker Change: More and more are approaching us about that indication and the opportunity for improved access and improved coverage across the board. Other than that, we continue to work with our own processes and ACPs around paperwork and

Paul Spence: You know, other than that, you know, we continue to work with on our own processes and HCPs around paperwork and supporting their staff and the HCPs and the patients and doing it. But overall, HCPs and payers are noticing. The demand increasing as a result of the indication in our efforts.

Paul Spence: Since the CS launch, more than half of the sales calls have been made to ACPs who we categorize as Naivex to prescribing these hands or as having the history of infrequently prescribing prior to the CS approval. New and total prescription growth with both groups has started out positive and we believe is responding to a combination of sales calls, peer-to-peer education programs, and sampling. Our market research suggests that within this group of ACPs the allergy and primary care prescribers appear to be having a stronger initial response to our communication about the new CS indication and efficacy of exams.

Speaker Change: Supporting their staff and the HCPs and the patients in doing it, but overall, HCPs or payers are noticing the demand increasing as a result of the indication in our efforts.

unknown: Excellent. Thanks so much. Thank you.

Ramy Mahmoud: I'll now hand the call back over to CEO, Ramy Mahmoud, for any closing remarks. Great. Thank you very much.

Operator: I'll now hand the call back over to CEO Ramy Mahmoud for any closing remarks.

Ramy Mahmoud: I'll now hand the call back over to CEO Ramy Mahmoud for any closing remarks.

Speaker Change: Excellent. Thanks so much. Thank you.

Ramy Mahmoud: Great. Thank you very much.

Speaker Change: Thank you.

Ramy Mahmoud: So I'll just close by reiterating that we're in a formative phase of our business right now. We've made a major transition from preparing ourselves and sort of laying the groundwork to be able to seize the opportunity associated with our new indication to beginning the execution process on the gradual ramp-up over time with the new indication. And we believe we're making progress on those foundational activities in the initial couple of months here. We look forward to getting back with you again in a few months to tell you a little bit more about our progress during the second quarter of launch. Thank you again for joining us today.

Ramy Mahmoud: So I'll just close by reiterating that, you know, we're in a formative phase of our business right now. We've made a major transition from preparing ourselves and sort of laying the groundwork to be able to seize the opportunity associated with our new indication to beginning the execution process on the gradual ramp-up over time with the new indication. And we believe we're making progress on those foundational activities in the initial couple of months here. We look forward to getting back with you again in a few months to tell you a little bit more about our progress during the second quarter of launch. Thank you again for joining us today.

Speaker Change: I'll now hand the call back over to CEO Ramy Mahmoud for any closing remarks.

Paul Spence: In addition, market research validate that these HCP targets use efficacy as their number one preference driver in the CS space, and therefore our primary strategic communication focus is to educate them about its expansive differentiated efficacy. We expect the adoption of extants by this group of high potential HCPs to gradually continue to grow in the second half, and that we will advance the number of both new and more frequent prescribers of extants.

Ramy Mahmoud: So I'll just close by reiterating that we're in a formative phase of our business right now. We've made a major transition from preparing ourselves, and through allaying the groundwork to be able to seize the opportunity associated with our new indication, to beginning the execution process on the gradual ramp up over time with the new indication. And we believe we're making progress on those foundational activities in the initial couple of months here.

Ramy Mahmoud: Thank you very much. So I'll just close by reiterating that, you know, we're in a formative phase of our business right now. We've made a major transition from preparing ourselves and sort of laying the groundwork to be able to seize the opportunity associated with our new indication to beginning the execution process on the gradual ramp up over time with the new indication.

Unknown Executive: We look forward to getting back with you again in a few months to tell you a little bit more about our progress during the second quarter of launch. Thank you again for joining today.

Speaker Change: And we believe we're making progress on those foundational activities in the initial couple of months here. We look forward to getting back with you again in a few months to tell you a little bit more about our progress during the second quarter of launch. Thank you again for joining today.

Operator: Ladies and gentlemen, thank you for participating. This does conclude today's program, and you may now disconnect.

Unknown Executive: Ladies and gentlemen, thank you for participating. This does conclude today's program, and you may now disconnect.

Operator: Ladies and gentlemen, thank you for participating. This does conclude today's program, and you may now disconnect.

Speaker Change: Ladies and gentlemen, thank you for participating. This does conclude today's program and you may now disconnect.

Paul Spence: The balance of our direct selling resources are deployed against high CS volume E&T and allergy specialists over history prescribing extants. We continue to listen to and work closely with these HCPs, and their staff to support their efforts to bring extants to significantly more CS patients via strong clinical evidence, personal experience with the product intent, and streamline prescribing process. For example, we've deployed new field support resources via the hub that we expect to help advance HCP and staff at proficiency within the extants patient support program, and to ease the process of working with the hub.

Paul Spence: We believe this in combination with important educational efforts on new extants clinical information will begin to translate into this group of prescribers choosing extants for treatment of more CS patients over time. In parallel, we are also focused on increasing the productivity of our promotional efforts by improving overall commercial coverage and access to extants. We're constantly working to streamline the process for managing prior authorization paperwork, and the overall prescription fulfillment process in continuing to offer a patient-friendly co-pay support program to ensure the experience for HCPs and patients is as smooth and accessible as possible. We're moving and reducing obstacles to filling and refilling prescriptions for both patients and doctors alike. We're unsure that more CS patients can receive and stay on the chance therapy, maintaining their symptom control throughout the year.

Paul Spence: Turning to slide seven. At the end of June, we announced the addition of a can to large express scripts national formularies, including in this the National Preferred, Flex, and Basic Formularies. These are among the largest commercial formularies in the US with more than 24 million lives. This also marks the first time its hand that help prefer tier two coverage on a national formulary. We believe this is an important milestone for patients to suffer from chronic sinusitis, and for our business, as this improvement will make it easier and more affordable for patients in these plans to get a can, which is the only improvement medication for the treatment of this disease.

Paul Spence: From a business perspective, the newly assigned preferred formulary coverage requires only a simple step, that the patient's previously used a standard delivery nasal steroid. Prescribers will not have to complete prior authorization paperwork. This is expected to improve prescribing and fulfillment at the pharmacy. Further streamlining the prescription fulfillment process and improving the quality of our insurance coverage over time will also help prepare the market for potential future commercial initiatives that we discussed in the past, such as Salesforce expansion, especially offices, the addition of a primary care partnership, and further consumer engagement, which can expand our reach to more than 30 million total patients with chronic sinusitis.

Paul Spence: We expect this to gradually accelerate over the first few quarters of our launch, and I believe we're seeing early patterns suggesting green shoots of growth that increase my confidence in future potential of exams. Finally, you may recall earlier this year we launched a central intake pharmacy model or a hub to prepare for the growth that we expect from expansive new education. During Q2 we can transition to a significant portion of our business from a historical, preferred pharmacy network now to the hub.

Paul Spence: In addition to offering the necessary scalability for our anticipated growth and providing improved protection for business continuity, we believe the hub has the potential to provide more comprehensive and consistent patient support and prescription fulfillment services. This transition has been slight had a slight headwind as we continue to optimize the process at the hub, and as ACP offices become familiar with working with this new fulfillment channel. However, we believe this transition will become a tailwind as we begin to realize the efficiency that the hub can offer.

Jonathan Neely: I would like to now turn it over to Jonathan Nealey to review our second quarter financial performance and financial guidance for the full 24-year. Jonathan, thanks Paul. Turning to slide 9. We are encouraged by our second quarter 2024 financial results. Regarding revenue, I can now recognize $20.5 million in the stands net revenue in the second quarter. A 5% increase compared to the second quarter of 2023 net revenues is $19.5 million. Based on available prescription and inventory data purchased from third parties and on data, which we received directly from our hub for pharmacy network, the estimated extent average net revenue per prescription for the second quarter of 2024 was $309, a 44% increase compared to $214, the estimated average net revenue per prescription in the second quarter of 2023.

Jonathan Neely: As discussed on our first quarter earnings call, the year-over-year increase driven by favorable business mix resulting from changes we made to our co-based work program, I would discuss this in more detail when reviewing our expectations for full-year 2024. Finally, as we reported earlier, Optimus recognized $25.1 million success to DNA plus R&D expenses in the second quarter of 2024. This is an increase of approximately $4 million compared to the second quarter 2023 expenses of $21.1 million.

Jonathan Neely: Turning to slide 10, our results for first half of 2024 similarly reflect the improvements to now revenue per prescription and the initial investments to support the CS1. Regarding revenue, OptiNose recognized $35.4 million of ExantNet revenue in the first half of 2024, a 13% increase compared to the first half of 2023 net revenue is $31.3 million. ExantNet revenue per prescription for the first half of 2024 was $269, 51% increase compared to $178 the estimated average net revenue per prescription in the first half of 2023.

Jonathan Neely: Finally, as we reported earlier, OptiNose recognized $46.8 million of ExantNet plus R&D expenses in the first half of 2024 is approximately $1 million increase compared to the first half of 2023 expenses of $45.6 million. Turning to slide 12, our full year 2024 operating expense guidance remains unchanged. We expect total operating expenses to be between $95 to $101 million of which approximately $6 million is expected to be stock-based compensation. What is changing is our expectation for both full year 2024, ExantNet revenue and full year 2024 revenue per prescription.

Jonathan Neely: As we have discussed previously, we expect average net product revenues per prescription to increase in 2024 compared to 2023. Primarily as a result of the revisions that we made to our co-pay assistance program in 2023 and early 2024, intended to enhance average net revenue per prescription by reducing co-pay support to and thus prescriptions filled by patients and commercial insurance plans that either do not cover ExantNet or are in commercial insurance plans that happen.

Jonathan Neely: We have high deductibles as these prescriptions have limited or no profitability. The magnitude of the benefit derived from these revisions to our co-pay assistance program was greater than we expected in the first half of 2024. And as a result, today we are increasing our expected average net product revenues per prescription estimate for the full year 2024 while narrowing our expected range for full year 2024 ExantNet revenues. Specifically, we now expect ExantNet revenues per prescription to exceed $250 for full year 2024, which represents an increase of at least 20% compared to $209 for the full year of 2023.

Jonathan Neely: Previously, we expected ExantNet average net revenues per prescription to exceed $230 for the full year 2024. Finally, our guidance for ExantNet revenue for the full year of 2024 is now between $85 to $90 million compared to full year 2023. This is growth of 20% to 27%. Previously, we expected ExantNet revenue for the full year 2024 to be between $85 million to $95 million. The narrowing of the guidance range for the full year of 2024 ExantNet revenues is primarily driven by our expectation for less net revenue from prescriptions that have limited or no profitability for which we have intentionally reduced the level of co-pay support.

Jonathan Neely: These revised expectations are offsetting. As a result, our projections for operating income and cash runway are largely unaffected. We continue to expect that our existing cash equivalents will be sufficient to fund our operations and debt service obligations through 2025, and that we will produce positive income from operations for full year 2020. 5.

Ramy Mahmoud: I will now turn the call back over to Ramy for closing remarks. Ramy? Thanks, Jonathan, turning this slide 14.

Ramy Mahmoud: Before moving to take questions, I'd like to reiterate the significance of the opportunity in front of us, which we believe has potential to reshape our business for years into the future. We're pleased with the success we had in executing our pre-launch operating strategy. In 2023, we achieved increased operating efficiency while stabilizing revenue in the comparatively niche nasal polyp indication. At the same time, we preserved capital and focused our organization on preparation to see the much larger opportunity that would be created by approval of exams as the first prescription treatment for one of the most common diseases diagnosed in the adult outpatient medicine.

Ramy Mahmoud: We are still in the early innings of our launch, but we've already begun to see the desired improvements in insurance coverage following our new indication, and are laying the groundwork necessary to expand our prescriber base for the future. Although we expect it will naturally take some time to realize the benefits of our initial efforts, we continue to believe that the size of this opportunity, coupled with a stronger balance sheet, positioned us well to build a profitable E&T analogy-focused business by tapping into the significantly expanded net revenue potential with an efficient base of commercial capabilities. In addition, we believe the Quantaxonucytus indication will facilitate commercial partnerships or other approaches to accessing additional value in the primary care space that's incremental to what we can access on our own in the specialty segment.

Unknown Executive: With that, I'd like to thank you very much for your attention and open the call up for Q&A. As a reminder, ladies and gentlemen, 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.

Schuyler Broek: Our first question comes from the line of David Amselam with Piper Sandler. Hi, thanks. It's a Skylaron for David.

Ramy Mahmoud: So, curious, what are your assumptions for your path to profitability? In other words, what level of sales do you think you need to get to in order to reach break even? And what are your overall thoughts on balancing the sales force versus extending cash runway? And then similarly, how do you feel about your revenue covenant in third quarter? Are you concerned at all about not meeting that minimum? Thanks. Skylar, thanks for the question.

Ramy Mahmoud: I'll take the second of your three questions, and I'll ask Jonathan to speak to the first and the third. Your second one was around the sales force, and I'll just reiterate what we have said before that our plan is to launch with our current sales force infrastructure. So, at least through third quarter, probably through the remainder of the year, and potentially significantly longer, we don't expect to make material changes to our current sales force infrastructure.

Jonathan Neely: Jonathan, do you want to address the first and third questions? Sure. Might actually remind me that third one by the time we get there, but in terms of the pathway to profitability, I think what we've highlighted for everybody is that for this year, we're expecting revenue growth somewhere between 20 to 27 percent, and that over the long term, we think that the peak revenue potential for this product inside of our current commercial infrastructure is approximately $300 million.

Jonathan Neely: And so that's going to apply multiple years of strong growth ahead of us. And so, we think that if you were to look at product with approximately 90 percent growth margins and types of operating expense structure, we have today that there's a clear pathway to profitability for the full year of 2025. In terms of the third question, do you remind me of the third question I was taking some notes on the first one.

Jonathan Neely: Yeah, no, just if you're coughing on the revenue covenant in the third quarter. Oh, yeah, I mean, I think the third quarter revenue covenant, I think we're probably already on a trailing 12 month basis ahead of that. And so, you know, again, I think we're expecting growth for this year. And so I think we're on a pathway that may think compliance is reminded. Yeah, I think that that number is 72 and a half million dollars for the third quarter. And, you know, the fourth quarter worth, you know, the target is trailing 12 months sales of 75 million.

Unknown Executive: Great. Help. Well, thank you. Thank you. One moment, please for our next question.

Thomas Flaten: Your next question comes from the line of Thomas Flaten with Lake Street Capital Markets. Good morning. I appreciate you taking the questions. Jonathan, on the average net revenue per prescription, you know, for the first half, you're already 269. And that number tends to stay similar across the third and fourth quarter. So 250 seems a bit conservative. Should I read it that way or do you think there's a side to that number? And I know you said it would exceed 250, but seems like 250 is a very conservative number.

Jonathan Neely: Thanks, Thomas, for the question. Yeah, so I mean, again, I think what we're trying to, you know, build in, you know, to our expectation for average net revenue per prescription is, you know, some flexibility for, you know, the lower profit or not, you know, not profitable kind of volumes to rebound and conjunction with the launch. You know, clearly, I think through the first half, you know, we haven't seen that that volume is going to come back into the business.

Paul Spence: And as a result, you know, more and more approaching us about that indication and the opportunity for improved access and improved coverage across the board. You know, other than that, you know, we continue to work with on our own processes and HCPs around paperwork and supporting their staff and the HCPs and the patients and doing it. But overall, HCPs are payers are noticing. The demand increasing as a result of the indication in our efforts.

Unknown Executive: Thank you.

Ramy Mahmoud: I'll now hand the call back over to CEO, Ramy Mahmoud, for any closing remarks. Great. Thank you very much.

Unknown Executive: So I'll just close by reiterating that we're in a formative phase of our business right now. We've made a major transition from preparing ourselves, and through allaying the groundwork to be able to seize the opportunity associated with our new indication, to beginning the execution process on the gradual ramp up over time with the new indication. And we believe we're making progress on those foundational activities in the initial couple of months here.

Unknown Executive: This does conclude today's program, and you may now disconnect.

Q2 2024 OptiNose Inc Earnings Call

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