Q3 2024 OptiNose Inc Earnings Call

[music].

Operator: Music Good day and welcome to the OptiNose third quarter 2024 earnings call. At this time, all participants are in a listen only mode. After the speaker's presentation, there'll be a question and answer session.

Good day and welcome to the opt in those third quarter 2024 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session and instructions will be given at that time.

Operator: Instructions will be given at that time. As a reminder, this call may be recorded.

As a reminder, this call maybe recorded.

Jonathan Neely: I would now like to turn the call over to Jonathan Neely, Vice President, Investor Relations. Please go ahead.

Speaker Change: Like to turn the call over to Jonathan Neely, Vice President Investor Relations. Please go ahead.

Jonathan Neely: Good morning, and thank you for joining us today as we review OptiNose's third quarter 2024 performance and our plans for the year ahead.

Good morning, and thank you for joining us today as we review <unk> third quarter 2024 performance and our plans for the year ahead.

Jonathan Neely: I am joined today by our CEO, Dr. Ramy Mahmoud, our new CFO, Terry Kohler, and our Chief Commercial Officer, Paul Spence. The slides that will be presented on this call can be viewed on our website, OptiNose.com in the investor section.

Speaker Change: I'm joined today by our CEO Rami Dr. Rami.

Speaker Change: Our new CFO Terry color at our Chief Commercial Officer, Paul Spence the slides that will be presented on this call can be viewed on our website at <unk> dot com in the investors section.

Jonathan Neely: 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 cause actual results to differ materially from those indicated by 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 that are filed with the SEC and available at their website, sec.gov, and on our website at optinose.com.

Speaker Change: Before we start I would like to remind you that our discussions during this conference call will include forward looking statements update.

Speaker Change: 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 by such statements.

Additional information regarding these factors and forward looking statements are 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 <unk> note that the most recent Form 10-K, and 10-Q that are filed with the SEC and available at their website SEC Gov and on our website at <unk> Dot com.

Jonathan Neely: Your caution not to place undue reliance on forward-looking statements. The 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.

Speaker Change: You are cautioned not to place undue reliance on forward looking statements.

Speaker Change: We're 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. 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 Rami.

Jonathan Neely: 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 Ram. Thank you, Jonathan. And thank you to everyone listening for joining us this morning. We appreciate you joining us for our third quarter 2024 update.

Rami: Thank you Jonathan and thank you to everyone listening for joining us this morning, we.

Rami: We appreciate you joining us for our third quarter 2024 update.

Ramy Mahmoud: Before we get into the call, I want to offer a warm welcome to Terry Kohler, our new Chief Financial Officer. Terry brings significant expertise in leading financial strategy for commercial-stage branded pharmaceutical products, and is a strong new addition to our leadership team. Welcome, Terry. Starting on slide three, we have a lot to unpack on the call today. I'll start with a brief outline of what we'll cover during our call. First, I'll provide a high-level overview and key takeaways from today's call. Second, our chief commercial officer, Paul Spence, will provide a commercial update with a focus on what we've learned during the CS launch, how we've adapted business practices during the third quarter, and on recent data that suggests we've now begun to observe an inflection in enhanced prescription growth.

Rami: Before we get into the call I want to offer a warm welcome to Terry cooler, our new Chief Financial Officer.

Rami: Terry brings significant expertise in leading financial strategy for commercial stage branded pharmaceutical product is a strong New addition to our leadership team welcome Terry.

Rami: Starting on slide three we.

Rami: We have a lot to unpack on the call today I will start with a brief outline of what we'll cover during our call.

Rami: First I'll provide a high level overview and key takeaways from today's call.

Rami: Second our Chief commercial Officer, Paul Spence, who will provide a commercial update with a focus on what we've learned during the CES launch how we've adapted business practices during the third quarter and on a recent data that suggests we have now begun to observe an inflection in <unk> prescription growth.

Ramy Mahmoud: Next, Terry will walk you through our financial performance and our financial guidance for full year 2024.

Rami: Next Terry will walk you through our financial performance and our financial guidance for full year 2020 for.

Ramy Mahmoud: Finally, I will return to wrap up the call and take your questions. Turning to slide four. I'd like to cover three key topics in today's presentation. First, I'd like to reiterate the significant long-term opportunity in front of us and provide high-level context for our commercialization activities in 2024. We believe peak annual net revenue will exceed $300 million with our specialty-focused efforts, a magnitude of opportunity that we believe has potential to reshape our business for years into the future. Claims data suggest that chronic sinusitis is currently being diagnosed and coded for by healthcare providers an estimated 10 million or more times per year, which is more than 10 times more frequently than nasal polyps.

Rami: Finally, I'll return to wrap up the call and take your questions.

Turning to slide four.

Rami: I'd like to cover three key topics in today's presentation.

Rami: First I'd like to reiterate the significant long term opportunity in front of us and provide high level context for our commercialization activities in 2024.

Rami: We believe peak annual net revenue will exceed $300 million with our specialty focused efforts a magnitude of opportunity that we believe has potential to reshape our business for years into the future.

Rami: Claims data suggest the chronic sinusitis is currently being diagnosed and coded for by health care providers, an estimated $10 million or more times per year, which is more than 10 times more frequently than nasal polyps.

Ramy Mahmoud: While our revenue in third quarter was not in line with our expectations, we believe we are now observing a clear inflection in new prescription demand. We believe the recent accelerating trend in new prescription demand reinforces the magnitude of the longer-term opportunity. In addition, we believe that our experience in the initial phases of the launch has improved our understanding of the key drivers of adoption and that this experience will help support achievements of our PQ objectives. As a reminder, in 2024, we commercialized Exhance without any change in the size of our prior Salesforce infrastructure. Since launch, and with evolution in recent months, we have provided enhanced HCP targeting and call frequency plans, sharpened HCP messaging, created and then expanded our suite of chronic sinusitis focused promotional materials, increased the quality of enhanced PayRX.

Rami: While our revenue in the third quarter was not in line with our expectations. We believe we are now observing a clear inflection in new prescription demand.

Rami: We believe the recent accelerating trend in new prescription demand reinforces the magnitude of the longer term opportunity.

Rami: In addition, we believe that our experience in the initial phases of the launch has improved our understanding of the key drivers of adoption and that this experience will help support achievement of our peak year objective.

Rami: As a reminder, in 2024, we commercialized <unk> hands without any change in the size of our prior sales force infrastructure.

Rami: Since launch and with evolution in recent months.

Rami: We have provided enhanced HCP targeting and call frequency plan <unk>.

Harper and HCP messaging created and expanded our suite of chronic sinusitis focused promotional materials.

Rami: Increased the quality of <unk> payer access.

Ramy Mahmoud: and continued enhancements in our specialty pharmacy and hub operations to improve HCP and patient experiences with prescription fulfillment. Our objective was, and remains, to attain peak year net revenues of at least $300 million, with a specialty-focused field force calling on ENTs, allergists, hominologists, and a limited number of call points within primary care. In addition to that, we continue to believe there is a significant incremental revenue opportunity for the new CS indication within the traditional primary care market, which is largely outside of our existing call point. And we are actively exploring ways to enter that market in the coming year.

Rami: And continued enhancements in our specialty pharmacy and hub operations to improve HCP and patient experiences with prescription fulfillment.

Rami: Our objective was and remains to attained peak year net revenues of at least $300 million.

Rami: With a specialty focused field force, calling on Emts, Allergists, Pulmonologists and a limited number of call points within primary care.

Rami: In addition to that we continue to believe there is a significant incremental revenue opportunity for the new CF indication within the traditional primary care market, which is largely outside of our existing call points and we are actively exploring ways to enter that market in the coming year.

Ramy Mahmoud: Our focus on growing profitable prescriptions, rather than simply overall prescription volume, and on building a broader base of prescribers who are new to EXAMPT in the context of the launch, rather than focusing only on the historical base of high prescribers for nasal polyps, are among the factors that have shaped 2024 performance. Eventually, we believe the business we build, with attention to profitability and to breadth of prescribing, will be more robust. Second, earlier today we reported $20.4 million of enhanced net revenue for the third quarter. While this is less than our expectations for the quarter and may reflect a slower than initially anticipated uptake, we believe we are now seeing clear progress towards our peak sales expectations.

Rami: Our focus on growing profitable prescriptions, rather than simply overall prescription volume and on building a broader base of prescribers, who are new to <unk> in the context of the launch rather than focusing only on the historical base of high prescribers for nasal polyps.

Are among the factors that have shaped 2020 for performance.

And truly we believe the business, we built with attention to profitability and to breadth of prescribing will be more robust.

Second earlier today, we reported $24 million of enhanced net revenue for the third quarter.

Rami: While this is less than our expectations for the quarter and may reflect a slower than initially anticipated uptake. We believe we are now seeing clear progress towards our peak sales expectations.

Ramy Mahmoud: As context, I'd like to remind you of the strategic direction of our commercial efforts since our launch in April. In order to achieve the full commercial potential of EXANSE, we felt it was necessary to make changes to our call point messaging to emphasize the important new clinical efficacy profile, to modify our prescriber targeting towards those with potential in the new indication. and to modify our previous distribution and fulfillment strategy to allow scalability in volume, which involved implementation of a new hub services platform. The Hub platform was also intended to improve patient access and improve prescription fulfillment service levels for both patients and prescribers by standardizing reimbursement and fulfillment processes and increasing visibility to performance metrics to allow a continuous improvement.

Rami: As context, I'd like to remind you of the strategic direction of our commercial efforts since our launch in April.

Rami: In order to achieve the full commercial potential of <unk>, we felt it was necessary to make changes to our call point messaging to emphasize the important new clinical efficacy profile to modify our prescriber targeting towards those with potential in the new indication.

Rami: And to modify our previous distribution and fulfillment strategy to allow scalability in volume, which involved implementation of a new hub services platform.

Rami: The hub platform was also intended to improve patient access and improved prescription fulfillment service levels for both patients and prescribers by standardizing reimbursement and fulfillment processes and increasing visibility to performance metrics to allow the continuous improvement.

Ramy Mahmoud: Since the launch of the CS indication, we also felt it was important to focus on improving the quality of enhanced insurance coverage. including the inclusion of new indication in utilization management schemes and other improvements in coverage, such as inclusion of the product in preferred formulary positions, as we saw with the addition of Exhans to large Express Scripts national formularies in July. In addition, we felt it was important to focus on consistent and repeated communication over time of our new clinical data through our sales force, a cumulative effort that we believe is an important driver of trial and then adoption by physicians.

Rami: Since the launch of the CF indication. We also felt it was important to focus on improving the quality of <unk> insurance coverage, including the inclusion of new indications and utilization management schemes and other improvements in coverage such as inclusion of the product in preferred formulary positions as we saw with the addition of <unk> to large <unk>.

Rami: Press Scripps National Formularies in July.

In addition, we felt it was important to focus on consistent and repeated communication over time of our new clinical data through our sales force accumulative effort that we believe is an important driver of trial and then adoption by physicians.

Ramy Mahmoud: During the first months of launch, we have focused on field performance against core elements of this plan and our prescription fulfillment related efforts, including migration to the new hub. We monitor performance and, as we learn from experience, our commercial team has taken actions to improve sales execution and increase efficiency of prescription fulfillment. We believe leading data suggests that these actions are having an effect, and we are beginning to see a corresponding inflection in performance. Paul will provide additional color during his update on how we believe we are now progressing up the launch curve in the chronic sinusitis market as we advance healthcare provider knowledge and confidence in the efficacy of exams and address the overall prescribing experience.

Rami: During the first months of launch we are focused on field performance against core elements of this plan and our prescription fulfillment related efforts, including migration to the new hub.

Rami: We monitor performance and as we learned from experience our commercial team has taken actions to improve sales execution and increase efficiency of prescription fulfillment.

We believe leading data suggests that these actions are having an effect and we are beginning to see a corresponding inflection in performance.

Rami: Paul will provide additional color during his update on how we believe we are now progressing up the launch curve in the chronic sinusitis market as we advanced healthcare provider knowledge and confidence in the efficacy of <unk> hands and address the overall prescribing experience.

Ramy Mahmoud: He will also speak to the improvement in enhanced insurance coverage in the third quarter and how we believe that has contributed to recent positive trends in our business and why we continue to seek to further improve the quality of our coverage heading into 2025.

Rami: He will also speak to the improvement in <unk> insurance coverage in the third quarter and how we believe that has contributed to recent positive trends in our business.

Rami: While we continue to seek to improve.

Rami: Further improved quality of our coverage heading into 2025.

Ramy Mahmoud: Finally, as Terry will cover in more detail, the delayed inflection of prescription growth trends, although not changing our expectation for at least $300 million in peak revenue, has resulted in a reduction in our guidance for calendar year 2024 enhanced net revenue. We now expect revenues in a range from $75 million to $79 million, compared to prior expectations of $85 to $90 million. The new range implies 6 to 11 percent growth compared to full year 2023 enhanced net revenue of approximately $71 million. While the road we traveled in the third quarter had some bumps, and our trajectory has been a bit delayed as a result, I am pleased with the team's focus on continuous improvement.

Rami: Finally, as Terry will cover in more detail the delayed inflection of prescription growth trends, although not changing our expectation for at least $300 million in peak revenue has resulted in a reduction in our guidance for calendar year 2024, <unk> net revenue.

Rami: We now expect revenues in a range from 75 million to $79 million compared.

Rami: Compared to prior expectations of $85 million to $90 million.

Rami: The new range implies 6% to 11% growth compared to full year 2023, <unk> net revenue of approximately $71 million.

Rami: While the road, we traveled in the third quarter had some bumps in our trajectory has been a bit delayed as a result, I am pleased with the team's focus on continuous improvement.

Ramy Mahmoud: We believe their efforts have placed us on a growth trajectory in chronic sinusitis. Recent data now indicate growth trends that reinforce our belief in the significant long-term potential of EXAMS as it penetrates a total addressable market of over 30 million patients.

Rami: We believe their efforts have placed us on a growth trajectory in chronic sinusitis.

Rami: Recent data now indicate growth trends that reinforce our belief in the significant long term potential of exams as it penetrates a total addressable market of over 30 million patients.

Paul Spence: I'd now like to turn the call over to Paul Spence to review initial launch performance and some recent commercial highlights. Thank you, Ramy. Turning to slide six. I would like to dive a little further into three aspects of a commercial effort that, as Ramy just described, we believe are supporting a recent acceleration of growth. First aspect I will discuss is Salesforce execution. In the third quarter, appropriate delivery of on-target efficacy-focused discussion. at sufficient frequencies continue to be an area of focus. Balancing the initial excitement of having the first and only FDA-approved drug treatment for chronic sinusitis against the need to focus sales calls on enhanced differentiated clinical efficacy remains critical because efficacy remains the primary CF therapy choice driver for prescribers.

Speaker Change: I would now like to turn the call over to Paul <unk> to review initial launch performance and some recent commercial highlights.

Paul Spence: Thank you Rami.

Paul Spence: Turning to slide six.

Speaker Change: I would like to dive a little further into three aspects of our commercial effort that as Rami. Just described we believe we are supporting our recent acceleration of growth.

Paul Spence: First aspect I will discuss the sales force execution.

Paul Spence: For the third quarter appropriate delivery of on target efficacy focused discussions.

Paul Spence: At sufficient frequency to continue to be an area of focus.

Balancing the initial excitement of having the first and only FDA approved drug treatment for chronic sinusitis against the need to focus sales calls on enhances <unk> differentiated clinical efficacy remains critical.

Paul Spence: <unk> efficacy remains the primary CF therapy choice driver for prescribers.

Paul Spence: In addition, accelerating the number and quality of efficacy discussions with the segment, potential prescribers that were new to our target universe continue to be an area of focus because new targets represent an important part of our growth in the new indication and are part of our audience necessary to reach the future peak potential. Sales were enhanced in our specialty space. We believe we've seen improvement in both efficacy messaging and in HCP target reach and frequency, producing improved metrics on call plan attainment. We believe this is an important contributor to the new prescription growth inflection observed in the later part of the third quarter.

Paul Spence: In addition, accelerating the number and quality of efficacy discussions with the segment potential prescribers that were new to our target universe continue to be an area of focus because of the new targets represent an important part of our growth and the new indication and are part of our audience necessary to reach the future.

Paul Spence: Potential sales for <unk> and our specialty space.

Paul Spence: We believe we see an improvement in both efficacy messaging and in HCP target reach and frequency producer.

Paul Spence: Producing improved metrics on call planet payment.

Paul Spence: We believe this is an important contributor to the new prescription growth inflection observed in the later part of the third quarter.

Paul Spence: We view continued focus on these aspects of self-execution as critical because both external benchmarks and our own launch data demonstrate that with ACPs who are naïve to exams, they can require 10 to 12 total calls before they fully understand and believe in the product's clinical information and then identify appropriate patients to trial a new medication to begin to change behavior. On that note, we observe the number of new prescribers of Xanth increased steadily in the third quarter. We believe this is evidence that we are starting to change behavior and broaden our prescribing audience. Looking slightly forward, we've modified our call plan for our territory managers in the fourth quarter to concentrate on a target audience of the top 75 CS potential HCPs per territory.

Paul Spence: We view continued focus on these aspects of sales execution is critical because both external benchmarks and our own launch data demonstrate that with Hcp's, who are naive to exam. They could require 10 to 12 total calls before they fully understand I believe and the product's clinical information and then identify appropriate patients to.

Paul Spence: <unk> trial, a new medication to begin to change behavior.

Paul Spence: On that note, we observed the number of new prescribers of <unk>.

Paul Spence: Increased steadily in the third quarter.

Paul Spence: We believe this is evidence that we're starting to change behavior and broaden our prescribing audience.

Looking slightly forward, we've modified our call plan for our territory managers in the fourth quarter to concentrate on a target audience of the top 75. These potential hcp's per territory, that's compared to approximately 105 top potential hcp's that we targeted earlier this.

Paul Spence: That's compared to approximately 105 top CS potential HCPs that we targeted earlier this year. In doing so, we aim to increase the number and frequency of calls, our most important targets, and accelerate progress towards product adoption as a standard part of clinical practice. This elevation in focus and frequency is supported by promotional response analysis from the first six months of the Expanse launch.

Paul Spence: Year.

Paul Spence: In doing so we aim to increase the number and frequency of call are our most important targets and accelerate progress towards product adoption is a standard part of clinical practice.

This elevation and focus on frequency as supported by promotional response analysis from the first six months of <unk>.

Paul Spence: Launch.

Paul Spence: Prescription Fulfillment, and particularly Hub Services and Pharmacy Network, is the second aspect of commercial performance that I would like to address today. We always expect that incremental refinements in the efficiency and delivered HCP and patient experience would be necessary over the first months of initial implementation of our new hub, both for new and refilled prescription processes. However, this has required more time and effort to optimize than initially anticipated. An important example is that in September, we decided to add to the network of dispensing pharmacies underneath the hub to improve prescription fulfillment and capacity. We also made other changes to optimize health performance during the third quarter, most especially related to the HCP inpatient prescribing fulfillment experience.

Paul Spence: Prescription fulfillment, and particularly hub services and pharmacy network and the second aspect commercial performance I would like to address today.

Paul Spence: We always expect that incremental refinement in the efficiency and delivered.

Paul Spence: HCP and patient experience would be necessary over the first months of initial implementation of our new hub, both for new and refill prescription processes. However, this has required more time and effort to optimize than initially anticipated.

Paul Spence: An important example is that in September we decided to add to the network dispensing pharmacies underneath the hub to improve prescription fulfillment and capacity.

Paul Spence: We also made other changes to optimize our performance during the third quarter, most especially related to the HCP and patient prescribing fulfillment experience.

Paul Spence: We're continuing to work closely with our customers, patients, and partners to get their feedback and ideas and continually optimize prescription fulfillment processes.

Paul Spence: We're continuing to work closely with our customers patients and partners to get their feedback and ideas and continually optimize prescription fulfillment processes.

Paul Spence: Finally, improving the quality of insurance coverage is another focus of our commercialization effort. while approximately 70% of lives are in insurance plans that cover exams. We estimate that approximately 50% of commercial covered lives are subject to prior authorization. We believe that prior authorization can create hassles for prescribers and challenges for efficient prescription fulfillment for the patient. On that front, we announced some positive news at the start of the third quarter with the addition of a chance to express GRIPS national formularies, including national preferred, FLEX, and basic formularies, which are among the largest commercial formularies in the U.S.

Paul Spence: Finally, improving the quality of insurance coverage is another focus of our commercialization effort.

Paul Spence: While approximately 70% of lives are in insurance plans that cover <unk>.

Paul Spence: We estimate that approximately 50% of commercial covered lives are subject to prior authorizations.

Paul Spence: We believe that prior authorizations can create hassles for prescribers and challenges for efficient prescription fulfillment for the patient.

Paul Spence: On that front, we announced some positive news at the start of the third quarter with the addition of <unk> to express scripts national formularies, including National preferred flex and basic formulary, which are among the largest commercial formularies in the U S.

Paul Spence: with more than 24 million lives in total. 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 chance. The only FDA-approved medication for the treatment of this disease. From a business perspective, ESI preferred formulary coverage requires only a single step. that the patient has previously used standard delivery nasal steroids. Subscribers will not have to complete a prior authorization if the insurer's records support the patient's prior use of such therapy. Being included on Express Scripts formularies was just a step in this journey.

Paul Spence: More than 24 million lives in total.

Paul Spence: We believe this is an important milestone for patients who suffer from chronic sinusitis and for our business as it is improvement will make it easier and more affordable for patients in these plants to get.

Paul Spence: The only FDA approved medication for the treatment of this disease.

Paul Spence: New business perspective, ESI preferred formulary coverage requires only a single step.

Paul Spence: But the patient has previously used standard deliberately deliveries nasal steroid.

Paul Spence: Prescribers will not have to complete a prior authorization.

Paul Spence: <unk> record support the patient's prior use of such therapy.

Paul Spence: Being included on express scripts formularies with just a step in this journey.

Paul Spence: In the third quarter, we began to equip our territory managers with training, messaging, and tools that enabled them to have discussions with individual prescribers about this improved insurance coverage that was specific to their practice. Using these tools, our representatives were able to start the process of informing target prescribers with a concentration of patients in these formularies about the new coverage. We are now starting to see the evidence of a pull-through, which I will discuss further in the next slide. During the third quarter, our sales team increased the total calls with top potential ESI targets by 24% over the first quarter, and we are seeing a significant increase in new prescriptions from these targets through early October.

Paul Spence: Third quarter, we began to equip our territory managers, we're training messaging and tools that enable them to have discussions with individual prescribers about this improved insurance coverage that was specific to their practice practice.

Paul Spence: Using these tools, our representatives were able to start the process of performing target prescribers with a concentration of patients in these formulary is about the new coverage or we're now starting to see the evidence of pull through which I will discuss further in the next slide.

Paul Spence: During the third quarter, our sales team increased the total calls with top potential ESI target by 24% over the first quarter and we are seeing a significant increase in new prescriptions from these targets through early October.

Paul Spence: As we move forward, we believe this type of coverage enhancement can facilitate improvement in both prescribing and in fulfillment at the pharmacy, and so we're pursuing opportunities for OptiNose to continue to improve coverage. by reducing utilization management burden, for example, removing prior authorization and step edits. Further streamlining 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 sales floor expansion in specialty offices, the addition of a primary care partnership, and direct-to-consumer engagement aimed at expanding our reach to more than 30 million total patients with chronic sinusitis.

Paul Spence: As we move forward. We believe this type of coverage enhancement can facilitate improvement in both prescribing and in fulfillment at the pharmacy and so were pursuing opportunities for op units continued to improve coverage by.

Paul Spence: By reducing utilization management burden for example, removing prior authorizations and step edits.

Paul Spence: Further streamlining prescription fulfillment process and improving the quality of our insurance coverage over time will also help prepare the market.

Paul Spence: For potential future commercial initiatives that we've discussed in the past such as Salesforce expansion in especially offices.

Paul Spence: The addition of a primary care at partnership.

Paul Spence: And direct to consumer engagement aimed at expanding our reach to more than $30 million total patients with chronic sinusitis.

Paul Spence: Charting slide seven. We believe new prescription growth is an important measure of CF launch performance. We believe the improvements in Salesforce execution in Hub Services and Pharmacy Network. and in insurance coverage have all contributed to a recent inflection in new prescriptions.

Paul Spence: Turning to slide seven.

Paul Spence: We believe new prescription growth as an important measure of CFS launched performance.

Paul Spence: We believe the improvements in sales force execution and hub services and pharmacy network.

And in insurance coverage of all contributed to our recent inflection in new prescriptions.

Paul Spence: On this slide, we show the four-week moving average of weekly new prescriptions, starting with the week ended June 28 through the week ended October 25, which is the most recent week available for today's presentation. We're showing a moving average to better illustrate trends over time by reducing the week-to-week noise created by factors such as holiday weeks and the estimation process inherent to the third-party data included in our prescription metrics. As you can see, in July and August, prior to the inflection period during September, this moving average ranged between approximately 1,760 to 1,960 NRF. During October so far, the moving average has reached approximately 2,300 to 2,500 NRX per week.

On this slide we show the four week moving average.

Paul Spence: Weekly new prescriptions, starting with the week ended June 28.

Paul Spence: Through the week ended October 25, which is the most recent week available for today's presentation.

Paul Spence: We're showing a moving average to better illustrate trends over time by reducing the week to week noise created by factors such as holiday weeks.

Paul Spence: The estimation process inherent to the third party data is included in our prescription metrics.

Paul Spence: As you can see in July and August prior to the inflection period. During September this moving average range between approximately 1760 to 1960 <unk>.

October so far the moving average has reached approximately 2300 2500 <unk> per week.

Paul Spence: That equates to a growth of approximately 20 to 40 percent.

Paul Spence: That equates to growth of approximately 20% to 40%.

Paul Spence: As we discussed previously, new prescriptions drive the refill prescriptions that are a vital component to enhance net revenues and overall growth in future periods. It's noteworthy that new prescriptions for the most recent six weeks ending October 25th include the top five ranked weeks for new prescriptions in 2024. In addition, we believe that among other changes made in the third quarter, the enhancement of Salesforce targeting to focus on the top ESI HCPs and generating a desirable promotional response is contributing meaningfully to the overall inflection in new prescriptions has occurred.

Paul Spence: As we've discussed previously new prescriptions drive the refill prescriptions that are vital components to enhance revenue net net revenues and overall growth in future periods.

Yeah.

Paul Spence: It is noteworthy that new prescriptions for the most recent six weeks ending October 25th include the top five ranked weeks for new prescriptions in 2024.

Paul Spence: In addition.

Paul Spence: We believe that among other changes made in the third quarter the enhancement of sales force targeting to focus on.

Paul Spence: The top ESI, hcp's and generating a desirable promotional response with <unk>.

Paul Spence: Contributing meaningful meaningfully to the overall collection the new prescriptions has occurred.

Terry Kohler: I would like to turn the call over now to Terry Kohler to review our third quarter financial performance and the financial guidance for the full year 2024. Terry. Thank you, Paul. Turning to slide nine, as Ramy mentioned earlier in his remarks, OptiNose recognized $20.4 million of ex-hanf net revenue in the third quarter of 2024, a 3% increase compared to third quarter 2023 net revenues of $19.8 million. As we also mentioned in our 10-Q file this morning, revenue in the quarter reflects an increase in inventory in the channel, driven in part by the addition of new dispensing pharmacies in the hub pharmacy network, as Paul discussed earlier.

Speaker Change: I would like to turn the call over now to Cherry Cola to review, our third quarter financial performance and the financial guidance for the full year 2024, alright. Thank you.

Paul Spence: Paul turning to slide nine as Rami mentioned earlier in his remarks optimists recognized $24 million of <unk>.

Paul Spence: Revenue in the third quarter of 2024 three.

Paul Spence: <unk>, 3% increase compared to third quarter 2023, net revenues of $19 8 million.

Paul Spence: As we also mentioned in our 10-Q filed this morning revenue in the quarter reflects an increase in inventory in the channel.

Paul Spence: Driven in part by the addition of new dispensing pharmacies and the hub pharmacy network as Paul discussed earlier.

Terry Kohler: Based on available prescription and inventory data purchased from third parties and on data we received directly from our hub and Preferred Pharmacy Network, the estimated enhanced average net revenue per prescription for the third quarter of 2024 was $320, a 36% increase compared to $236 of estimated average net revenue per prescription in the third quarter of 2023. The year-over-year increase is driven by favorable business mix resulting from the changes we made to our co-pay support program, which improved our commercial business mix and by the channel inventory build associated in part with the onboarding of new pharmacies in the latter part of the third quarter.

Paul Spence: Based on available prescription and inventory data purchased from third parties and on data we received directly from our hub and preferred pharmacy network. The estimated <unk> average net revenue per prescription for the third quarter of 2024 was $320, a 36% increase compared to $236.

Paul Spence: The estimated average net revenue per prescription in the third quarter of 2023.

Paul Spence: The year over year increase is driven by favorable business mix, resulting from the changes we made to our co pay support program, which improved our commercial business mix and by the channel inventory build associated in part with the Onboarding of new pharmacies in the latter part of the third quarter I will discuss this in more detail when reviewing our expectations for full year 2012.

Terry Kohler: I will discuss this in more detail when reviewing our expectations for full year 2024. Finally, as we reported earlier, OptiNose recognized $20.4 million of SG&A plus R&D expenses in the third quarter of 2024. This is an increase of approximately $1 million compared to third quarter 2023 expenses of $19.3 million and is attributable to promotional efforts supporting the CF launch. However, compared to our original expectations, there's favorability in operating expenses.

Paul Spence: Four.

Paul Spence: Finally, as we reported earlier after those recognized $24 million of SG&A, plus R&D expenses in the third quarter of 2020 for.

Paul Spence: This is an increase of approximately $1 million compared to third quarter 2023 expenses of $19 3 million and is attributable to promotional efforts supporting the <unk> launch however.

Paul Spence: However, compared to our original expectations Theres favorability in operating expenses. This operating expense favorability influences, our thinking about financial guidance for full year, 2024, and projected cash balances, which I will discuss shortly turning.

Terry Kohler: This operating expense favorability influences our thinking about financial guidance for full year 2024 and projected cash balances, which I will discuss shortly.

Terry Kohler: Turning to slide 10. Similar to our results through the first half of 2024, our third quarter results reflect improvements to net revenue per prescription and the initial investments to support the CS launch. Regarding revenue, OptiNose recognized 55.8 million of exhanced net revenue year-to-date through September 2024, a 9% increase compared to prior year period exhanced net revenue of 51.1 million. Exhanced average net revenue per prescription for the nine months ended September 30, 2024, was $285, a 45% increase compared to $197 of estimated average net revenue per prescription for the prior year period. Most of this increase is driven by the changes to our copay assistance program, which has resulted in a reduction in the number and proportion of commercial prescriptions that were historically unprofitable.

Paul Spence: Turning to slide 10.

Paul Spence: Similar to our results through the first half of 2024.

Paul Spence: Our third quarter results reflect improvements to net revenue per prescription in the initial investments to support the <unk> launch.

Regarding revenue <unk> recognized $55 8 million or <unk> net revenue year to date through September 2024% to 9% increase compared to prior year period, <unk> net revenue of $51 1 million.

Paul Spence: <unk> average net revenue per prescription for the nine months ended September 32024 was $285, a 45% increase compared to $197 of estimated average net revenue per prescription for the prior year period.

Paul Spence: Most of this increase is driven by the changes to our co pay assistance program, which has resulted in a reduction in the number and proportion of commercial prescriptions that were historically unprofitable. In addition, the increase in inventory in the channel during the third quarter of 2024 that we discussed earlier provided some lift.

Terry Kohler: In addition, the increase in inventory in the channel during the third quarter of 2024 that we discussed earlier provided some lift. Finally, as we reported earlier, OptiNose recognized $67.2 million of SG&A plus R&D expenses in year-to-date through September 2024. This is approximately a $2 million increase compared to year-to-date through September 2023 expenses of $64.9 million.

Paul Spence: Finally, as we reported earlier <unk> recognized $67 $2 million of SG&A, plus R&D expenses and year to date through September 2024.

Paul Spence: This is approximately a $2 million increase compared to year to date through September 2023 expenses of $64 9 million.

Terry Kohler: As with the third quarter results, the year-to-date increase was expected and is attributable to the promotional efforts supporting the CS law.

As with the third quarter results the year to date increase was expected and is attributable to the promotional efforts supporting the <unk> launch.

Terry Kohler: Turning to slide 12. Based on all the factors we have just discussed, we are changing our expectation for full year 2024 enhanced net revenue, enhanced revenue per prescription, and operating expenses. Our guidance for enhanced net revenue for full year 2024 is between $75 to $79 million. Previously, we expected enhanced net revenue for full year 2024 to be between $85 and $90 million. The implied fourth quarter revenue guidance is approximately $19 to $23 million reflecting uncertainty, projecting the shape of the curve and demand growth we will experience in the context of an encouraging recent inflection and new prescriptions, but recognizing that much of our business is comprised of refills that will take time to come into play.

Paul Spence: Going to slide 12.

Paul Spence: Based on all the factors. We've just discussed we are changing our expectation for full year 2024, <unk> net revenue <unk> revenue per prescription and operating expenses our guidance for enhanced net revenue for full year 2024 is between 75% to $79 million.

Paul Spence: Previously, we expected <unk> net revenue for full year 2024 to be between $85 and $90 million.

Paul Spence: The implied fourth quarter revenue guidance is approximately 19% to $23 million, reflecting uncertainty projecting the shape of the curve and demand growth. We will experience in the context of encouraging recent inflection and new prescriptions, but recognizing that much of our business is comprised of refills that will.

Paul Spence: Take time to come into play.

Terry Kohler: As we have discussed previously, we continue to expect average net product revenues per prescription to increase in 2024 compared to 2023, primarily because of revisions that we made to our copay assistance program in 2023 and early 2024. The magnitude of the benefit derived from these revisions to our copay assistance program was greater than we expected in the first nine months of 2024. As a result, we are increasing our expected average net product revenues per prescription estimate for full year 2024. Specifically, we now expect Exant's average net revenues per prescription to be approximately $270 for the full year of 2024, which represents an increase of approximately 29% compared to $209 for the full year of 2023.

Paul Spence: As we have discussed previously we continue to expect average net product revenues per prescription to increase in 2024 compared to 2023, primarily because of revisions that we made to our copay assistance program in 2023 in early 2020 for the.

Paul Spence: The magnitude of the benefit derived from these revisions to our copay assistance program was greater than we expected in the first nine months of 2024 as a result, we are increasing our expected average net product revenues per prescription estimate for full year 2024, specifically.

Paul Spence: Specifically, we now expect <unk> average net revenue per prescription to be approximately $270 for the full year of 2024, which represents an increase of approximately 29% compared to $209 for the full year of 2023 pre.

Terry Kohler: Previously, we expected Exant's average net revenues per prescription to exceed $250 for the full year 2024. In addition, the change in launch trajectory has resulted in operating expense favorability. A portion of the favorability is volume related in the form of lower than projected variable product expenses. Together with reduced third-party expenses and payroll savings, we expect an overall reduction of at least $5 million. Our full year 2024 operating expense guidance is now $90 to $93 million, of which approximately $6 million is expected to be stock-based compensation. Previously, we expected total operating expenses to be between $95 million to $101 million, of which approximately $6 million was expected to be stock-based compensation.

Paul Spence: Previously, we expected <unk> average net revenue per prescription to exceed $250 for the full year 2024.

Paul Spence: In addition, the change in launch trajectory as resulted in operating expense favorability.

Paul Spence: Portion of the favorability is volume related in the form of lower than projected variable product expenses.

Paul Spence: Whether with reduce third party expenses and payroll savings, we expect an overall reduction of at least $5 million. Our full year 2020 for operating expense guidance is now 90% to 93 million of which approximately $6 million is expected to be stock based compensation.

Previously, we expected total operating expenses to be between $95 million to $101 million of which approximately $6 million was expected to be stock based compensation.

Terry Kohler: Based on these new expectations, we now believe our existing cash and cash equivalents will be sufficient to fund our operations and debt service obligations for at least the next 12 months if we are able to maintain compliance with or obtain a waiver or modification of the financial and other covenants under our debt agreement.

Paul Spence: Based on these new expectations, we now believe our existing cash and cash equivalents will be sufficient to fund our operations and debt service obligations for at least the next 12 months. If we are able to maintain compliance with or obtain a waiver or modification of the financial and other covenants under our debt agreements I will now turn the.

Ramy Mahmoud: I will now turn the call back over to Ramy for closing remarks. Ramy? Thanks, Jerry, and thank you, Paul.

Call back over to Rami for closing remarks Rami.

Rami: Thank you Terry and thank you Paul.

Ramy Mahmoud: Turning to slide 14. Before moving to take questions, I'd like to return to a high-level view of the opportunity in front of us. Because of the high disease prevalence, the high perceived unmet need and symptomatic nature of the disease, and the lack of alternative medications that are proven to work, or which are approved by FDA, for the condition, we believe the overall future potential of Exhans with the new chronic sinusitis indication is large and has potential to reshape this business for years into the future. While the initial CF launch, like many product launches, has been a bit slow, recent data suggests that we are starting to see evidence of progress consistent with the expected future potential of Excel.

Speaker Change: Turning to slide 14.

Speaker Change: Moving to take questions I'd like to return to a high level view of the opportunity in front of us.

Speaker Change: Hi disease prevalent the high perceived unmet need in symptomatic nature of the disease and the lack of alternative medications that are proven to work or which are approved by FDA for the condition. We believe the overall future potential of enhanced with the new chronic sinusitis indication is large and has potential to reshape this business three years.

Speaker Change: And for the future.

Speaker Change: While the initial <unk> launch like many product launches has been a bit slow recent data suggests that we are starting to see evidence of progress consistent with the expected future potential of Exane.

Ramy Mahmoud: Exhans remains an attractive asset, and in our current specialty audience, we believe peak annual net revenues of at least $300 million are achievable. In addition, we are actively working to engage in a commercial primary care partnership or to adopt other approaches that will allow us to access the large incremental opportunity in the primary care space.

Enhanced remains an attractive asset and in our current specialty audience. We believe peak annual net revenues of at least $300 million.

Speaker Change: Are achievable.

Speaker Change: In addition, we are actively working to engage in a commercial primary care partnership or to adopt other approaches that will allow us to access the large incremental opportunity in the primary care space.

Operator: With that, I'd like to thank you for your attention and open the call for Q&A. Thank you. If you would like to ask a question, please press star 1 1. If your question has been answered and you would like to remove yourself from the queue, please press star 1 1 again.

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

Speaker Change: Thank you and if you'd like to ask a question. Please press star one one if your question has been answered and you'd like to remove yourself from the queue. Please press star one again.

Thomas Flaten: Our first question comes from Thomas Flaten with Lake Street Capital Markets, your line is open. Good morning. Thanks for taking the questions.

Speaker Change: Our first question comes from Thomas Flaten with Lake Street Capital markets. Your line is open.

Speaker Change: Good morning, Thanks for taking the questions just on the guide on the low end.

Thomas Flaten: Just on the guide, on the low end, if we just do the math, that would imply a sequentially down fourth quarter. Could you maybe fill us in on some of the factors that would prompt you to be that conservative at this point?

Speaker Change: We just do the math that would imply sequentially down fourth quarter could you maybe fill us in on some of the factors that would that would prompt you to be that conservative at this point.

Terry Kohler: Sure, Thomas, good morning. Thank you for the question. So in the third quarter, our revenue was affected, as we mentioned in our script, with some inventory stocking in the channel. That inventory stocking represented a little under $3 million. And so when you think about Q4, our guide in the context of that adjusted Q3, there's a step up in demand that we're expecting in Q4.

Speaker Change: Sure Thomas Good morning. Thank you for the question. So in the third quarter. Our revenue was affected as we mentioned in north script.

Speaker Change: With some inventory stocking in the channel that inventory stocking represented.

Speaker Change: Little under $3 million and so when you think about Q4 guide in the context of that adjusted Q3, there's a step up in demand that we're expecting in Q4.

Thomas Flaten: Got it. And then there was there was a fair bit of conversation about in insurance coverage, and you mentioned 70% of the patients who had who had plans that covered ex-hance. What number what proportion of the plans that currently cover ex-hance have updated their policies for the new indication?

Speaker Change: Got it and then.

Speaker Change: There was there was a fair bit of conversation about.

Speaker Change: Insurance coverage and you mentioned, 70% of the patients who had who had plans that covered expands what number what proportion of the plans that currently cover extensive updated their policies for the new indication.

Thomas Flaten: So, Tom, it's a little hard to be sure about that, because some of the updates aren't sort of fundamental changes in coverage. They're changes qualitatively to the content of the prior authorization forms. But we believe that at this point, most plans have updated their coverage to be inclusive of both approved indications.

Paul Spence: So Tom it's a little hard to be sure about that because some of the some of the updates arent.

Speaker Change: Fundamental changes in coverage there changes qualitatively to the content of the of the prior authorization forms.

Speaker Change: But we believe that at this point most plan have updated.

Speaker Change: Their coverage to be inclusive of both approved indications.

Speaker Change: Sure.

Thomas Flaten: Got it. And then just one final one. You have talked about full year profitability in 2025. Any change to that guidance?

Speaker Change: Got it and then just one final one you haven't talked about full year profitability in 2025, any change to that guidance or should we.

Ramy Mahmoud: Or should we, or how should we think about We are evaluating that, Thomas. We are not going to give any 2025 guidance on today's call, but we are removing that guidance so that we can take an opportunity to evaluate our performance in the fourth quarter and how that will impact our expectations for 2025 revenue. Just to add to that, as Terry said a few minutes ago, with the recent inflection in demand that we've seen, which is encouraging, it becomes a little bit more difficult to forward project exactly what we're going to see over the course of the entire coming year.

Speaker Change: How should we think about them.

Speaker Change: But we are actually we are evaluating that Tom is that.

Speaker Change: We are not going to.

Speaker Change: Given the 2025 guidance on today's call.

Speaker Change: We are removing that guidance. So that we can take an opportunity to evaluate our performance in the fourth quarter and how that will impact our expectations for 2025 revenue.

Speaker Change: Just to add to that.

Speaker Change: As Terry said, a few minutes ago.

With the recent inflection in demand that we've seen which is encouraging.

Speaker Change: It becomes a little bit more difficult to forward project exactly what we're going to see over the course of the entire coming year and as a consequence of some of that uncertainty associated with our recent positive inflection we have to be had.

Ramy Mahmoud: And as a consequence of some of that uncertainty associated with our recent positive inflection, we have to be in the position of reevaluating what the next year is going to look like.

Speaker Change: Have to be in the position of reevaluating what the next year is going to look like.

Thomas Flaten: Excellent. I appreciate you taking the question. Thank you.

Speaker Change: Excellent I appreciate you taking the question. Thank you.

Speaker Change: Thank you. Our next question comes from David <unk> with Piper Sandler Your line is open.

David Amsellem: Our next question comes from David Amsellem with Piper Sandler. Your line is open. Thanks. Just a quick one on the cost structure. Do you feel like it's the right size?

Okay.

Thanks, just a quick one on the cost structure do you feel like it's right size can you talk about.

David Amsellem: Can you talk about – I know you've talked about primary care co-promote, but just talk generally about the cost structure, the sales force, and to the extent that there isn't a partner, how you're thinking about managing spend given the trajectory of expense so you can get to profitability eventually. Thank you.

Speaker Change: I know you've talked about.

Speaker Change: Primary care co promote but just talk generally about.

Speaker Change: The cost structure of the sales force and to the extent that there isn't a partner how are you thinking about managing spend given the trajectory of <unk>. So you can get to profitability eventually thank you.

Ramy Mahmoud: Yeah, that's a complex and challenging question, David. You know, we have been cautious about our spending, as you can tell from the fact that our operating expenses are actually, you know, relatively tightly controlled, even in the context of a launch year. So, I think the answer is that, you know, we have to regularly, you know, continuously monitor the rate of our investment in the business based on the responsiveness we're seeing to our investment and the rate of growth that we're seeing. So, you know, the recent inflection in growth that we've seen over the last few months here, changes our thinking relative to what it might have been as recently as, you know, the middle of this summer, and we're going to have to continue to reassess as we go forward.

Speaker Change: Yes.

The complex and challenging questions David.

Speaker Change: We have been.

Speaker Change: Cautious about our spending as you can tell from the fact that our operating expenses are actually relatively tightly controlled even in the context of a launch year.

Speaker Change: So I think the answer is that.

Speaker Change: We have to.

Speaker Change: Regularly continuously monitor the rate of our investment in the business based on the responsiveness we're seeing.

Speaker Change: Our investment in the rate of growth that we're seeing so the recent inflection in growth that we've seen over the last few months here changes our thinking relative to what it might have been as recently at the middle of this summer.

Speaker Change: And we're going to have to continue to reassess as we go forward.

Ramy Mahmoud: So, I can't really give you a concrete answer about that, but I will also add that, and as we have said before, we believe that there is incremental opportunity, even in the specialty space, beyond what we're able to get at with our current level of investment. So, when the time is right, we think there's ROI positive opportunity for incremental investment, you know, even within our current footprint outside of the primary care space.

Speaker Change: Can't really give you a concrete answer about that but I will also add that.

Speaker Change: And as we have said before we believe that there is incremental opportunity even in the specialty space beyond what we're able to get at with our current level of investment. So when the time is right.

Speaker Change: There is ROI positive opportunity for incremental investment.

Speaker Change: Even within our current footprint outside of the primary care space.

David Amsellem: Thank you.

Speaker Change: Thank you. Our next question comes from Glen Santangelo with Jefferies. Your line is open.

Glen Santangelo: Our next question comes from Glen Santangelo with Jeffries. Your line is open. Oh, yeah, good morning. Thanks for taking my question. Hey, Terry, I missed in your prepared remarks, you gave the net revenue for prescription this quarter. Did you say $320, and can you remind us what that was in 2Q?

Speaker Change: Oh, yes. Good morning, Thanks for taking my question, Hey, Terry I missed in your prepared remarks, you gave the.

Speaker Change: Net revenue per prescription this quarter did you say 320.

Speaker Change: And can you remind us what that was on <unk>.

Glen Santangelo: Sure, Glen, good morning. In 2Q, it was $309, and yes, that's correct, $320 in Q3. Okay, and so maybe just back to that previous question on the implied 4Q guidance, because it looks like your scripts are almost trending up almost 30% on a sequential basis, and with the improved sort of reimbursement, it would seem like even accounting for the inventory, you know, the inventory gain in 3Q, it just sort of seems like the moment that guidance seems somewhat, you know, not congruent with the uptick in the scripts that you're seeing. So I just want to make sure I'm not missing anything.

Speaker Change: Sure Glenn good morning, since <unk>, it was $309 and yes, thats correct $320 in Q3.

Speaker Change: Okay, and so maybe just back to that previous question on the implied <unk> guidance because it looks like you are.

Speaker Change: Your scripts are almost trending up almost 30% on a sequential basis.

Speaker Change: The improved sort of reimbursement it would seem like even accounting for the inventory.

Speaker Change: The inventory gain in <unk>.

Speaker Change: The low end of that.

Speaker Change: It seemed somewhat.

Speaker Change: Not.

Speaker Change: With the uptick in the scripts that you sold so I just want to make sure of that.

Speaker Change: Okay.

Speaker Change: Yeah.

Terry Kohler: So, in year-to-date, net revenue per prescription is about $285,000, so you're correct, there is an implied step-down in Q4. As a reminder, the year-to-date figure includes the impact of the chained healthcare outage in Q2, which we believe benefited our net revenue per prescription. And as you mentioned, that the inventory stocking in the third quarter benefited the third quarter number. So, you know, full-year guidance is at $270,000 per prescription.

Speaker Change: And year to date year to date net revenue per prescription is about 285.

So you're correct there is an implied step down in Q4.

Speaker Change: Mind you the year to date figure includes the impact of the change healthcare outage in Q2, which we believe benefited our net revenue per prescription.

Speaker Change: As you mentioned that the inventory stocking in the third quarter benefited the third quarter number so.

Speaker Change: Full year guidance is a 270.

Speaker Change: Per prescription.

Glen Santangelo: Glen, can I just add a couple of thoughts to what Terry just said? It might help address your question. The first is that the average net revenue per prescription in the fourth quarter historically, if you look over, you know, all the years we've been on the market, tends to be lower than it has been in some of the prior quarters. So, you know, take a look at our overall expectation for the year and not just our third quarter result as you're thinking about, you know, projecting the fourth quarter. The other thing I want to kind of remind you about, and we mentioned this earlier, is that we showed you the NRX trend, the new prescription trend.

Speaker Change: Glenn can I just add a couple more.

Speaker Change: To work towards that.

Speaker Change: Might help help address your question.

Speaker Change: First is that the average net revenue per prescription in the fourth quarter historically if.

Speaker Change: If you look over all the years had been on the market.

Speaker Change: <unk> tends to be lower than it has been in some of the prior quarters. So take a look at our overall expectation for the year and not just our third quarter results as youre thinking about projecting the fourth quarter. The other thing I want to kind of remind you about and we mentioned this earlier is that we showed you the rx trend the new prescription trend.

Ramy Mahmoud: But we have a chronic disease treatment, and historically, and I would expect in the future, a large fraction of our total prescriptions are actually refilled and not just new prescriptions. So new prescriptions are a leading indicator, and it takes some time for all the refills to stack up subsequent to the new prescriptions and drive total prescriptions up, you know, correspondingly.

Speaker Change: But we have a chronic disease treatment.

Speaker Change: And and historically and I would expect in future a large fraction of our total prescriptions are actually refills and not just new prescription so new prescriptions are a leading indicator and it takes some time for all the refills to stack up subsequent to the new prescriptions.

Speaker Change: And drive total prescriptions up correspondingly.

Glen Santangelo: Okay, thanks very much.

Okay. Thanks very much.

Glen Santangelo: Thank you.

Speaker Change: Thank you.

Matthew Caulfield: Our next question comes from Matthew Caulfield with H.P. Wainwright. Your line is open. Hi, thanks. Good morning guys. For the specialty space, how is the uptake different at all between polyp or non-polyp patients? And is that distinction even being made by prescribers based on the broad labeling?

Speaker Change: Our next question comes from Matthew <unk> with HC Wainwright. Your line is open.

Speaker Change: Hi, Thanks, Good morning, guys.

Speaker Change: For the specialty space, how is the uptake differ at all between policy for non polyp patients and is that distinction even being made by prescribers based on the broad labeling.

Matthew Caulfield: So, Matt, I appreciate your question, and I think I understand where you're coming from, but I'll just reiterate something that I think we've said before, which is that we have difficulty distinguishing the parts of our business that are coming from nasal polyps and chronic sinusitis.

Speaker Change: So Matt I. Appreciate your question I think I understand where you're coming from but.

Speaker Change: I'll just.

Reiterate something that I think we've said before which is that we have difficulty distinguishing the parts of our business that are coming from nasal polyps and chronic sinusitis.

Matthew Caulfield: I don't know that we can have confidence in the specificity with which that is reported in prescribing practice or the specificity with which it's reported in sort of third-party purchased claims data. So, you know, I think it's our overall business we have to look at, and, you know, we just don't want to pay too much attention to the, you know, by diagnosis fractions of that business. It's just not clear we can rely on that. Got it. Okay, that's helpful. And then just one other follow up.

Speaker Change: I don't know that we can have confidence.

Speaker Change: In the specificity with which that is reported in.

Speaker Change: In prescribing prescribing.

Speaker Change: Prescribing practice or the specificity with which it's reported in through a third party purchase claims data.

Speaker Change: So.

Speaker Change: <unk>.

Speaker Change: It is our overall business, we have to look at and we just don't want to pay too much attention to.

Speaker Change: By diagnosis fractions of that business, it's just not clear we can rely on that.

Speaker Change: Got it Okay. That's helpful. And then just one other follow up I was curious is the greatest kind of high level pushback from prescribers based on not distinguishing that ex hands is not just a familiar steroid therapy.

Ramy Mahmoud: I was curious, is the greatest kind of high level pushback from prescribers based on not distinguishing that Exhance is not just a familiar steroid therapy? Is that kind of their biggest you know, aversion or pushback to getting on board. You know, I think, and I'm kind of paraphrasing something that Paul articulated earlier, I think our view is that we have to get the word out. We can't assume that prescribers will understand the benefit of our product, especially in the new indication, where their prior experience suggests that the products they've tried before in the nasal steroid category have not been very helpful.

Speaker Change: That kind of the biggest.

Speaker Change: Our version are pushed back to to getting onboard.

Speaker Change: I think.

I'm kind of paraphrasing something that Paul articulated earlier I think our our view is that.

Speaker Change: We have to get the word out we can't assume that prescribers will.

Speaker Change: Understand the benefit of our product, especially in the new indications where their prior experience suggests that the products they've tried before in the nasal steroid category have not been very helpful Limited data of benefit.

Ramy Mahmoud: What limited data of benefit and personal experience supporting that. So it's incumbent on us to get the word out about the clinical data that we have, and the real benefit that they can bring to patients. And it's taking us time, and we have to learn from experience as we go, and how we can be effective in getting the word out. So it's not so much, you know, push back, it's about people won't adopt until they appreciate the real benefits that can be offered. And it's taking us, you know, it's a real effort to get that out in people's hands.

Speaker Change: And personal experience supporting that so it's incumbent on us to get the word out about the clinical data that we have and the real benefit that they can bring to patients and it's taking us time.

Speaker Change: And we have to learn from experience as we go and how we can be effective in getting the word out so it's not so much.

Speaker Change: Pushed back it's about.

Speaker Change: People won't adopt until they appreciate the real benefits that can be offered.

Speaker Change: And it's taking US now, it's a real effort to get that.

Speaker Change: People's hand.

Matthew Caulfield: Okay, very helpful. I appreciate that.

Speaker Change: Okay very helpful. I appreciate that.

Operator: Thank you. I'm showing no further questions at this time.

Speaker Change: Thank you I'm showing no further questions at this time I would like to turn the call back over to Rami Mahmud for closing remarks.

Ramy Mahmoud: I'd like to turn the call back over to Ramy Mahmoud for closing remarks. Alright, so thank you very much for joining this morning. I appreciate you hanging with us as we went through a little bit more content than usual to describe sort of a complex quarter and unpack all the different things that have happened. We're looking forward to some of the positive trends that we have described being, you know, projected forward into the fourth quarter, and we look forward to coming back and telling you about it in our next quarterly update call.

Rami Mahmud: Alright. Thank you very much for joining this morning I appreciate you hanging with US as we went through a little bit more content than usual to describe sort of a complex quarter and unpack all the different things that have happened.

Rami Mahmud: Looking forward to some of the positive trends that we have described being <unk>.

Rami Mahmud: Projected forward into the fourth quarter, and we look forward to coming back and telling you about it in our next quarterly update call. Thank you again.

Ramy Mahmoud: Thank you again. Thank you for your participation.

Speaker Change: Thank you for your participation. This does conclude the program and you may now disconnect everyone have a great day.

Operator: This does conclude the program and you may now disconnect.

Operator: Everyone, have a great day.

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Operator: Good day and welcome to the OptiNose third quarter 2024 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. Instructions will be given at that time. As a reminder, this call may be recorded.

Speaker Change: Good day and welcome to the opt in those third quarter 2024 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session instructions will be given at that time.

Speaker Change: As a reminder, this call maybe recorded.

Jonathan Neely: I would now like to turn the call over to Jonathan Neely, Vice President, Investor Relations. Please go ahead.

Speaker Change: I'll now turn the call over to Jonathan Neely, Vice President Investor Relations. Please go ahead.

Jonathan Neely: Good morning, and thank you for joining us today as we review OptiNose's third quarter 2024 performance and our plans for the year ahead.

Speaker Change: Good morning, and thank you for joining us today as we review at the nose with third quarter 2024 performance and our plans for the year ahead.

Jonathan Neely: I am joined today by our CEO, Dr. Ramy Mahmoud, our new CFO, Terry Kohler, and our Chief Commercial Officer, Paul Spence. The slides that will be presented on this call can be viewed on our website, OptiNose.com in the investor section.

Speaker Change: I am joined today by our CEO Rami Dr. Rami.

Speaker Change: CFO Terry color at our Chief Commercial Officer, Paul Spence.

Speaker Change: That will be presented on this call can be viewed on our website at <unk> dot com in the investors section.

Jonathan Neely: 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 cause actual results to differ materially from those indicated by 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 that are filed with the SEC and available at their website, sec.gov, and on our website at optinose.com.

Speaker Change: Before we start I would like to remind you that our discussions during this conference call will include forward looking statements.

Speaker Change: 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 by such statements. Additional information regarding these factors and forward looking statements are discussed under the cautionary note on forward looking statements section of the earnings release that we issued today.

Speaker Change: As well as under the risk factors section and elsewhere in Optum notices most recent Form 10-K, and 10-Q that are filed with the SEC and available at their website SEC Gov and on our website at <unk> Dot com.

Jonathan Neely: Your caution not to place undue reliance on forward-looking statements. The 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.

Speaker Change: You are cautioned not to place undue reliance on forward looking statements.

Rami Mahmud: The 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. 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 Rami.

Jonathan Neely: 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 Ramy. Thank you, Jonathan. And thank you to everyone listening for joining us this morning. We appreciate you joining us for our third quarter 2024 update.

Rami Mahmud: Thank you Jonathan and thank you to everyone listening for joining us this morning.

Rami Mahmud: We appreciate you joining us for our third quarter 2024 update.

Ramy Mahmoud: Before we get into the call, I want to offer a warm welcome to Terry Kohler, our new Chief Financial Officer. Terry brings significant expertise in leading financial strategy for commercial-stage branded pharmaceutical products, and is a strong new addition to our leadership team. Welcome, Terry. Starting on slide three, we have a lot to unpack on the call today. I'll start with a brief outline of what we'll cover during our call. First, I'll provide a high-level overview and key takeaways from today's call. Second, our Chief Commercial Officer, Paul Spence, will provide a commercial update with a focus on what we've learned during the CS launch, how we've adapted business practices during the third quarter, and on recent data that suggests we've now begun to observe an inflection in ex-ans prescription growth.

Rami Mahmud: Before we get into the call I want to offer a warm welcome to Terry cooler, our new Chief Financial Officer.

Rami Mahmud: Terry brings significant expertise in leading financial strategy for commercial stage branded pharmaceutical products and has a strong New addition to our leadership team welcome Terry.

Rami Mahmud: Starting on slide three.

Speaker Change: We have a lot to unpack on the call today I will start with a brief outline of what we'll cover during our call.

Rami Mahmud: First I'll provide a high level overview and key takeaways from today's call.

Rami Mahmud: Second our Chief commercial officer, Paul Spence will provide a commercial update with a focus on what we've learned during the CES launch how we've adapted business practices during the third quarter and on recent data that suggests we have now begun to observe an inflection in <unk> prescription growth.

Ramy Mahmoud: Next, Terry will walk you through our financial performance and our financial guidance for full year 2024.

Rami Mahmud: Next Terry will walk you through our financial performance and our financial guidance for full year 2020 for.

Ramy Mahmoud: Finally, I will return to wrap up the call and take your questions. Turning to slide four. I'd like to cover three key topics in today's presentation. First, I'd like to reiterate the significant long-term opportunity in front of us and provide high-level context for our commercialization activities in 2024. We believe peak annual net revenue will exceed $300 million with our specialty-focused efforts, a magnitude of opportunity that we believe has potential to reshape our business for years into the future. Claims data suggest that chronic sinusitis is currently being diagnosed and coded for by healthcare providers an estimated 10 million or more times per year, which is more than 10 times more frequently than nasal polyps.

Rami Mahmud: Finally, I'll return to wrap up the call and take your questions.

Speaker Change: Turning to slide four.

Speaker Change: I'd like to cover three key topics in today's presentation.

Speaker Change: First I'd like to reiterate the significant long term opportunity in front of us and provide high level context for our commercialization activities in 2024.

Speaker Change: We believe peak annual net revenue will exceed $300 million with our specialty focused efforts a magnitude of opportunity that we believe has potential to reshape our business for years into the future.

Speaker Change: Claims data suggest the chronic sinusitis is currently being diagnosed and coded for by health care providers, an estimated $10 million or more times per year, which is more than 10 times more frequently than nasal polyps.

Ramy Mahmoud: While our revenue in third quarter was not in line with our expectations, we believe we are now observing a clear inflection in new prescription demand. We believe the recent accelerating trend in new prescription demand reinforces the magnitude of the longer-term opportunity. In addition, we believe that our experience in the initial phases of the launch has improved our understanding of the key drivers of adoption, and that this experience will help support achievement of our peak year objectives. As a reminder, in 2024, we commercialized Exhanse without any change in the size of our prior Salesforce infrastructure. Since launch, and with evolution in recent months, we have provided enhanced HCP targeting and call frequency plans, sharpened HCP messaging, created and then expanded our suite of chronic sinusitis-focused promotional materials, increased the quality of enhanced PayRacks.

Speaker Change: While our revenue in the third quarter was not in line with our expectations. We believe we are now observing a clear inflection in new prescription demand.

Speaker Change: We believe the recent accelerating trend in new prescription demand reinforces the magnitude of the longer term opportunity.

Speaker Change: In addition, we believe that our experience in the initial phases of the launch has improved our understanding of the key drivers of adoption and that this experience will help support achievement of our peak your objective.

Speaker Change: As a reminder, in 2024, we commercialized <unk> hands without any change in the size of our prior sales force infrastructure.

Speaker Change: Since launch and with evolution in recent months, we have provided enhanced HCP targeting and call frequency plan sharpened HCP messaging created and then expanded our suite of chronic sinusitis focused promotional materials increased the quality of exams payer access and.

Ramy Mahmoud: and continued enhancements in our specialty pharmacy and hub operations to improve HCP and patient experiences with prescription fulfillment. Our objective was, and remains, to attain peak year net revenues of at least $300 million, with a specialty-focused field force calling on ENTs, allergists, pulmonologists, and a limited number of call points within primary care. In addition to that, we continue to believe there is a significant incremental revenue opportunity for the new CF indication within the traditional primary care market, which is largely outside of our existing call points, and we are actively exploring ways to enter that market in the coming year.

Speaker Change: And continued enhancements in our specialty pharmacy and hub operations to improve HCP and patient experiences with prescription fulfillment.

Speaker Change: Our objective was and remains to attained peak year net revenues of at least $300 million.

Speaker Change: With a specialty focused field force, calling on Emts, Allergists, Pulmonologists and a limited number of call points within primary care.

Speaker Change: In addition to that we continue to believe there is a significant incremental revenue opportunity for the new CF indication within the traditional primary care market, which is largely outside of our existing call points and we are actively exploring ways to enter that market in the coming year.

Ramy Mahmoud: Our focus on growing profitable prescriptions, rather than simply overall prescription volume, and on building a broader base of prescribers who are new to EXAMSS in the context of the launch, rather than focusing only on the historical base of high prescribers for nasal polyps, are among the factors that have shaped 2024 performance. Eventually, we believe the business we build, with attention to profitability and to breadth of prescribing, will be more robust. Second, earlier today we reported $20.4 million of enhanced net revenue for the third quarter. While this is less than our expectations for the quarter and may reflect a slower than initially anticipated uptake, we believe we are now seeing clear progress towards our peak sales expectations.

Speaker Change: Our focus on growing profitable prescriptions, rather than simply overall prescription volume and on building a broader base of prescribers, who are new to <unk> in the context of the launch rather than focusing only on the historical base of high prescribers for nasal polyps.

Speaker Change: Are among the factors that have shaped 2020 for performance.

Speaker Change: And truly we believe the business, we built with attention to profitability and to breadth of prescribing will be more robust.

Speaker Change: Second earlier today, we reported $20 4 million of net revenue for the third quarter.

Speaker Change: While this is less than our expectations for the quarter and may reflect a slower than initially anticipated uptake. We believe we are now seeing clear progress towards our peak sales expectations.

Ramy Mahmoud: As context, I'd like to remind you of the strategic direction of our commercial efforts since our launch in April. In order to achieve the full commercial potential of Exanth, we felt it was necessary to make changes to our call point messaging to emphasize the important new clinical efficacy profile, to modify our prescriber targeting towards those with potential in the new indication. and to modify our previous distribution and fulfillment strategy to allow scalability in volume, which involved implementation of a new hub services platform. The HUB platform was also intended to improve patient access and improve prescription fulfillment service levels for both patients and prescribers by standardizing reimbursement and fulfillment processes and increasing visibility to performance metrics to allow a continuous improvement.

Speaker Change: As context, I'd like to remind you of the strategic direction of our commercial efforts since our launch in April.

Speaker Change: In order to achieve the full commercial potential of <unk>, we felt it was necessary to make changes to our call point messaging to emphasize the important new clinical efficacy profile to modify our prescriber targeting towards those with potential in the new indication.

Speaker Change: And to modify our previous distribution and fulfillment strategy to allow scalability in volume, which involve the implementation of a new hub services platform.

Speaker Change: The hub platform was also intended to improve patient access and improved prescription fulfillment service levels for both patients and prescribers by standardizing reimbursement and fulfillment processes and increasing visibility to performance metrics to allow the continuous improvement.

Ramy Mahmoud: Since the launch of the CS Indication, we also felt it was important to focus on improving the quality of enhanced insurance coverage. including the inclusion of the new indication in utilization management schemes and other improvements in coverage, such as inclusion of the product in preferred formulary positions, as we saw with the addition of Exhans to large Express Scripts national formularies in July. In addition, we felt it was important to focus on consistent and repeated communication over time of our new clinical data through our sales force, a cumulative effort that we believe is an important driver of trial and then adoption by physicians.

Speaker Change: Since the launch of the CF indication. We also felt it was important to focus on improving the quality of <unk> insurance coverage.

Speaker Change: <unk>, the inclusion of new indications and utilization management schemes and other improvements in coverage such as inclusion of the product in preferred formulary positions as we saw with the addition of <unk> to large express scripts national Formularies in July.

Speaker Change: In addition, we felt it was important to focus on consistent and repeated communication over time of our new clinical data through our sales force accumulative effort that we believe is an important driver of trial and then adoption by physicians.

Ramy Mahmoud: During the first months of launch, we have focused on field performance against core elements of this plan and our prescription fulfillment related efforts, including migration to the new hub. We monitor performance and, as we learn from experience, our commercial team has taken actions to improve sales execution and increase efficiency of prescription fulfillment. We believe leading data suggests that these actions are having an effect, and we are beginning to see a corresponding inflection in performance.

Speaker Change: During the first months of launch we are focused on field performance against core elements of this plan and our prescription fulfillment related efforts, including migration to the new hub.

Speaker Change: We monitor our performance and as we learned from experience our commercial team has taken actions to improve sales execution and increase efficiency of prescription fulfillment.

Speaker Change: We believe leading data suggests that these actions are having an effect and we are beginning to see a corresponding inflection in performance.

Ramy Mahmoud: Paul will provide additional color during his update on how we believe we are now progressing up the launch curve in the chronic sinusitis market as we advance healthcare provider knowledge and confidence in the efficacy of exams and address the overall prescribing experience. He will also speak to the improvement in enhanced insurance coverage in the third quarter and how we believe that has contributed to recent positive trends in our business and why we continue to seek to further improve the quality of our coverage heading into 2025.

Paul will provide additional color during his update on how we believe we are now progressing up the launch curve in the chronic sinusitis market as we advanced healthcare provider knowledge and confidence in the efficacy of <unk> and address the overall prescribing experience.

Speaker Change: He will also speak to the improvement in <unk> insurance coverage in the third quarter and how we believe that has contributed to recent positive trends in our business and why we continue to seek treatment.

Speaker Change: Further improved the quality of our coverage heading into 2025.

Ramy Mahmoud: Finally, as Terry will cover in more detail, the delayed inflection of prescription growth trends, although not changing our expectation for at least $300 million in peak revenue, has resulted in a reduction in our guidance for calendar year 2024 enhanced net revenue. We now expect revenues in a range from $75 million to $79 million, compared to prior expectations of $85 to $90 million. The new range implies 6 to 11 percent growth compared to full year 2023 enhanced net revenue of approximately $71 million. While the road we traveled in the third quarter had some bumps, and our trajectory has been a bit delayed as a result, I am pleased with the team's focus on continuous improvement.

Speaker Change: Finally, as Terry will cover in more detail the delayed inflection of prescription growth trends, although not changing our expectation for at least $300 million in peak revenue has resulted in a reduction in our guidance for calendar year 2024, <unk> net revenue.

Speaker Change: We now expect revenues in a range from $75 million to $79 million compared.

Speaker Change: Compared to prior expectations of $85 million to $90 million.

Speaker Change: The new range implies 6% to 11% growth compared to full year 2023, <unk> net revenue of approximately $71 million.

Speaker Change: While the road, we traveled in the third quarter had some bumps in our trajectory has been a bit delayed as a result, I am pleased with the team's focus on continuous improvement.

Ramy Mahmoud: We believe their efforts have placed us on a growth trajectory in chronic sinusitis. Recent data now indicate growth trends that reinforce our belief in the significant long-term potential of EXAMSS as it penetrates a total addressable market of over 30 million patients.

We believe their efforts have placed us on a growth trajectory in chronic sinusitis.

Speaker Change: Recent data now indicate growth trends that reinforce our belief in the significant long term potential of exam penetrate the total addressable market of over 30 million patients.

Paul Spence: I'd now like to turn the call over to Paul Spence to review initial launch performance and some recent commercial highlights. Thank you, Ramy. Turning to slide six. I would like to dive a little further into three aspects of a commercial effort that, as Ramy just described, we believe are supporting a recent acceleration of growth. First aspect I will discuss is Salesforce execution. In the third quarter, appropriate delivery of on-target efficacy-focused discussion. at sufficient frequency to continue to be an area of focus. Balancing the initial excitement of having the first and only FDA-approved drug treatment for chronic sinusitis against the need to focus sales calls on enhances differentiated clinical efficacy remains critical because efficacy remains the primary CF therapy choice driver for prescribers.

I would now like to turn the call over to Paul <unk> to review initial launch performance and some recent commercial highlights.

Paul Spence: Thank you Rami.

Paul Spence: Turning to slide six.

Speaker Change: I would like to dive a little further into three aspects of our commercial effort that as Rami. Just described we believe for supporting our recent acceleration of growth.

Speaker Change: First aspect I will discuss the sales force execution.

Speaker Change: In the third quarter appropriate delivery of on target efficacy focused discussions.

That sufficient frequency to continue to be an area of focus.

Balancing the initial excitement of having the first and only FDA approved drug treatment for chronic sinusitis against the need to focus sales call on enhances <unk> differentiated clinical efficacy remains critical.

Speaker Change: <unk> efficacy remains the primary CF therapy choice driver for prescribers.

Paul Spence: In addition, accelerating the number and quality of efficacy discussions with the segment, potential prescribers that were new to our target universe continue to be an area of focus because new targets represent an important part of our growth in the new indication and are part of our audience necessary to reach the future peak potential, sales for expanse in our specialty space. We believe we've seen improvement in both efficacy messaging and in HCP target reach and frequency, producing improved metrics on call plan attainment. We believe this is an important contributor to the new prescription growth inflection observed in the later part of the third quarter.

Speaker Change: In addition to accelerating the number and quality of efficacy discussions with the segment potential prescribers.

Speaker Change: We are new to our target universe continue to be an area of focus because new targets represent an important part of our growth and the new indication.

Speaker Change: <unk> are part of our audience necessary to reach the future potential.

Speaker Change: Sales for <unk> and our specialty space.

Speaker Change: We believe we see an improvement in both efficacy messaging and in HCP target reach and frequency producing.

Speaker Change: Producing improved metrics on call planet payment.

Speaker Change: We believe this is an important contributor to the new prescription growth inflection observed in the later part of the third quarter.

Paul Spence: We view continued focus on these aspects of self-execution as critical because both external benchmarks and our own launch data demonstrate that with ACPs who are naïve to exams, they can require 10 to 12 total calls before they fully understand and believe in the product's clinical information and then identify appropriate patients to trial a new medication to begin to change behavior. On that note, we observe the number of new prescribers of Exant increased steadily in the third quarter. We believe this is evidence that we are starting to change behavior and broaden our prescribing audience. Looking slightly forward, we've modified our call plan for our territory managers in the fourth quarter to concentrate on a target audience of the top 75 CS potential HCPs per territory.

Speaker Change: We view continued focus on these aspects of sales execution is critical because both external benchmarks and our own launch data demonstrate that with Hcp's, who are naive to extent they could.

Speaker Change: The required 10 to 12 total calls before the <unk>.

Speaker Change: Fully understand I believe and the product's clinical information and then identify appropriate patients to trial, a new medication to begin to change behavior.

Speaker Change: On that note, we observed a number of new prescribers of <unk>, Inc.

Speaker Change: Increased steadily in the third quarter.

Speaker Change: And believe this is evidence that we are starting to change behavior and broaden our prescribing audience.

Speaker Change: Looking slightly forward, we've modified our call plan for our territory managers in the fourth quarter to concentrate on a target audience of the top 75 potential hcp's per territory, that's compared to approximately 105 tops, yes potential hcp's that we targeted earlier this.

Paul Spence: That's compared to approximately 105 top CS potential HCPs that we targeted earlier this year. In doing so, we aim to increase the number and frequency of calls are our most important targets, and accelerate progress towards product adoption as a standard part of clinical practice. This elevation in focus and frequency is supported by promotional response analysis from the first six months of the Expanse launch.

Speaker Change: Year.

Speaker Change: In doing so we aim to increase the number and frequency of call are our most important targets and accelerate progress towards product adoption is a standard part of clinical practice.

Speaker Change: This elevation and focus on frequency as supported by promotional response analysis from the first six months of <unk>.

Speaker Change: Launch.

Paul Spence: Prescription Fulfillment and particularly Hub Services and Pharmacy Network is the second aspect of commercial performance that I would like to address today. We always expect that incremental refinements in the efficiency and delivered HCP and patient experience would be necessary over the first months of initial implementation of our new hub, both for new and refilled prescription processes. However, this has required more time and effort to optimize than initially anticipated. An important example is that in September, we decided to add to the network dispensing pharmacies underneath the hub to improve prescription fulfillment and capacity. We also made other changes to optimize health performance during the third quarter, most especially related to the HCP inpatient prescribing fulfillment experience.

Speaker Change: Yes.

Speaker Change: Prescription fulfillment, and particularly hub services and pharmacy network and the second aspect commercial performance I would like to address today.

Speaker Change: We always expect that incremental refinement and the efficiency and delivered.

Speaker Change: HCP and patient experience would be necessary over the first months of initial implementation of our new hub, both for new and refill prescription processes. However, this has required more time and effort to optimize than initially anticipated.

Speaker Change: An important example is that in September we decided to add to the network dispensing pharmacies underneath the hub to improve prescription fulfillment capacity.

Speaker Change: We also made other changes to optimize our performance during the third quarter, most especially related to the HCP and patient prescribing fulfillment experience we're.

Paul Spence: We're continuing to work closely with our customers, patients, and partners to get their feedback and ideas and continually optimize prescription fulfillment processes.

Speaker Change: <unk> worked closely with our customers patients and partners to get their feedback and ideas and continually optimize prescription fulfillment processes.

Paul Spence: Finally, improving the quality of insurance coverage is another focus of our commercialization effort. While approximately 70% of lives are in insurance plans that cover exams, we estimate that approximately 50% of commercial covered lives are subject to prior authorization. We believe that prior authorizations can create hassles for prescribers and challenges for efficient prescription fulfillment for the patient. On that front, we announced some positive news at the start of the third quarter with the addition of a chance to express GRIPS national formularies, including national preferred, FLEX, and basic formularies, which are among the largest commercial formularies in the U.S., with more than 24 million lives in total.

Speaker Change: Finally, improving the quality of insurance coverage is another focus of our commercialization effort.

Speaker Change: While approximately 70% of lives are in insurance plans that cover <unk>.

Speaker Change: We estimate that approximately 50% of commercial covered lives are subject to prior authorizations.

Speaker Change: We believe that prior authorizations can create hassles for prescribers and challenges for efficient prescription fulfillment for the patient.

Speaker Change: On that front, we announced some positive news at the start of the third quarter with the addition of <unk> to express scripts national formularies, including National preferred flex and basic formulary, which are among the largest commercial formularies in the U S.

Speaker Change: More than 24 million lives in total.

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 advanced. The only FDA-approved medication for the treatment of this disease. From a business perspective, ESI preferred formulary coverage requires only a single step. that the patient has previously used standard delivery nasal steroids. Prescribers will not have to complete a prior authorization if the insurer's records support the patient's prior use of such therapy. Being included on ExpressGrips formularies was just a step in this journey.

Speaker Change: We believe this is an important milestone for patients who suffer from chronic sinusitis and for our business as it is improvement will make it easier and more affordable for patients in these plants to get a chance.

Speaker Change: The only FDA approved medication for the treatment of this disease.

Speaker Change: New business perspective, ESI preferred formulary coverage requires only a single step.

Speaker Change: But the patient has previously used standard deliberately deliveries nasal steroid.

Speaker Change: Prescribers will not have to complete a prior authorization if the insurers record support the patient's prior use of such therapy.

Speaker Change: Being included on express scripts formularies with just a step in this journey.

Paul Spence: In the third quarter, we began to equip our territory managers with training, messaging, and tools that enabled them to have discussions with individual prescribers about this improved insurance coverage that was specific to their practice. Using these tools, our representatives were able to start the process of informing target prescribers with a concentration of patients in these formularies about the new coverage. We are now starting to see the evidence of pull-through, which I will discuss further in the next slide. During the third quarter, our sales team increased the total calls with top potential ESI targets by 24% over the first quarter, and we are seeing a significant increase in new prescriptions from these targets through early October.

Speaker Change: In the third quarter, we began to equipped our territory managers.

Speaker Change: Training messaging and tools that enable them to have discussions with individual prescribers about this improved insurance coverage that was specific to their practice practice.

Speaker Change: Using these tools, our representatives were able to start the process of performing target prescribers with a concentration of patients in these formulary is about the new coverage, where we are now starting to see the evidence of pull through which I will discuss further in the next slide.

Speaker Change: During the third quarter, our sales team increased the total calls with top potential ESI target by 24% over the first quarter and we are seeing a significant increase in new prescriptions from these targets through early.

October.

Paul Spence: As we move forward, we believe this type of coverage enhancement can facilitate improvement in both prescribing and in fulfillment at the pharmacy, and so we're pursuing opportunities for OptiNose to continue to improve coverage. by reducing utilization management burden, for example, removing prior authorization and step edits. Further streamlining 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 sales floor expansion in specialty offices, the addition of a primary care partnership, and direct-to-consumer engagement aimed at expanding our reach to more than 30 million total patients with chronic sunny-sided.

Speaker Change: As we move forward. We believe this type of coverage enhancement can facilitate improvement in both prescribing and in fulfillment at the pharmacy and so were pursuing opportunities for opera news continued to improve coverage.

Speaker Change: By reducing utilization management burden for example, removing prior authorizations and step edits.

Speaker Change: Further streamlining prescription fulfillment process and improving the quality of our insurance coverage over time will also help prepare the market for <unk>.

Speaker Change: <unk> future commercial initiatives that we've discussed in the past such as Salesforce expansion in specialty offices.

Speaker Change: <unk> of our primary care partnership.

Speaker Change: And direct to consumer engagement aimed at expanding our reach to more than $30 million total patients with chronic sinusitis.

Paul Spence: Turning to slide seven. We believe new prescription growth is an important measure of CF launch performance. We believe the improvements in Salesforce execution in Hub Services and Pharmacy Network. and in insurance coverage have all contributed to a recent inflection in new prescriptions. On this slide, we show the four-week moving average of weekly new prescriptions, starting with the week ended June 28 through the week ended October 25, which is the most recent week available for today's presentation. We're showing a moving average to better illustrate trends over time by reducing the week-to-week noise created by factors such as holiday weeks and the estimation process inherent to the third-party data included in our prescription metrics.

Speaker Change: Turning to slide seven.

Speaker Change: We believe new prescription growth as an important measure of CF launch performance.

Speaker Change: We believe the improvements in sales force execution and hub services and pharmacy network.

Speaker Change: And in insurance coverage all contributed to our recent inflection in new prescriptions.

Speaker Change: On this slide we showed a four week moving average weekly new prescriptions, starting with the week ended June 28 through.

Speaker Change: Through the week ended October 25, which is the most recent week available for today's presentation.

Speaker Change: We're showing a moving average to better illustrate trends over time by reducing the week to week noise.

Speaker Change: Factors such as holiday weeks in the estimation process inherent to the third party data is included in our prescription metrics.

Paul Spence: As you can see, in July and August, prior to the inflection period during September, this moving average ranged between approximately 1,760 to 1,960 nRF. During October so far, the moving average has reached approximately 2,300 to 2,500 NRX per week. That equates to a growth of approximately 20 to 40 percent. As we've discussed previously, new prescriptions drive the refill prescriptions that are a vital component to enhance net revenues and overall growth in future periods.

Speaker Change: As you can see in July and August prior to the inflection period. During September this moving average range between approximately 1760 to 1960 <unk>.

Speaker Change: <unk> October so far the moving average has reached approximately 2300 to 2500 <unk> per week.

Speaker Change: It equates to growth of approximately 20% to 40%.

Speaker Change: As we've discussed previously new prescriptions drive the refill prescriptions that are vital components to enhance revenue net net revenues and overall growth in future periods.

Paul Spence: It's noteworthy that new prescriptions for the most recent six weeks ending October 25th include the top five ranked weeks for new prescriptions in 2024. In addition, we believe that among other changes made in the third quarter, the enhancement of salesforce targeting to focus on the top ESI HCPs and generating a desirable promotional response is contributing meaningfully to the overall inflection that new prescriptions have occurred.

Speaker Change: Sure.

Speaker Change: It is noteworthy that new prescriptions for the most recent six weeks ending October 25th include the top five ranked weeks for new prescriptions in 2024.

In addition.

Speaker Change: We believe that among other changes made in the third quarter the enhancement of sales force targeting to focus on.

Speaker Change: The top ESI, hcp's and generating a desirable promotional response with <unk>.

Speaker Change: Contributing meaningful meaningfully to the overall collection the new prescriptions has occurred.

Terry Kohler: I would like to turn the call over now to Terry Kohler to review our third quarter financial performance and the financial guidance for the full year 2024. Terry? Thank you, Paul. Turning to slide 9, as Ramy mentioned earlier in his remarks, OptiNose recognized $20.4 million of exchange net revenue in the third quarter of 2024, a 3% increase compared to third quarter 2023 net revenues of $19.8 million. As we also mentioned in our 10-Q file this morning, revenue in the quarter reflects an increase in inventory in the channel, driven in part by the addition of new dispensing pharmacies in the hub pharmacy network, as Paul discussed earlier.

Speaker Change: I would like to turn the call over now to Terry Kohler to review, our third quarter financial performance and the financial guidance for the full year 2024.

Terry Kohler: Thank you Paul turning to slide nine.

Terry Kohler: Rami mentioned earlier in his remarks, optimists recognized $24 million of <unk>.

Terry Kohler: Revenue in the third quarter of 2024 three.

Terry Kohler: <unk>, 3% increase compared to third quarter 2023, net revenues of $19 8 million.

Terry Kohler: As we also mentioned in our 10-Q filed this morning revenue in the quarter reflects an increase in inventory in the channel.

Terry Kohler: Driven in part by the addition of new dispensing pharmacies and the hub pharmacy network as Paul discussed earlier.

Terry Kohler: Based on available prescription and inventory data purchased from third parties and on data we received directly from our hub and Preferred Pharmacy Network, the estimated enhanced average net revenue per prescription for the third quarter of 2024 was $320, a 36% increase compared to $236 of estimated average net revenue per prescription in the third quarter of 2023. The year-over-year increase is driven by favorable business mix resulting from the changes we made to our co-pay support program, which improved our commercial business mix and by the channel inventory build associated in part with the onboarding of new pharmacies in the latter part of the third quarter.

Terry Kohler: Based on available prescription and inventory data purchased from third parties and on data we received directly from our hub and preferred pharmacy network. The estimated <unk> average net revenue per prescription for the third quarter of 2024 was $320, a 36% increase compared to $236.

Terry Kohler: Estimated average net revenue per prescription in the third quarter of 2023.

Terry Kohler: The year over year increase is driven by favorable business mix, resulting from the changes we made to our co pay support program, which improved our commercial business mix and by the channel inventory build associated in part with the Onboarding of new pharmacies in the latter part of the third quarter I will discuss this in more detail when reviewing our expectations for full year 2012.

Terry Kohler: I will discuss this in more detail when reviewing our expectations for full year 2024. Finally, as we reported earlier, OptiNose recognized $20.4 million of SG&A plus R&D expenses in the third quarter of 2024. This is an increase of approximately $1 million compared to third quarter 2023 expenses of $19.3 million and is attributable to promotional efforts supporting the CF launch. However, compared to our original expectations, there's favorability in operating expenses. This operating expense favorability influences our thinking about financial guidance for full year 2024 and projected cash balances, which I will discuss shortly.

Terry Kohler: Four.

Terry Kohler: Finally, as we reported earlier the nose recognized $24 million of SG&A, plus R&D expenses in the third quarter of 2020 for.

Terry Kohler: This is an increase of approximately $1 million compared to third quarter 2023 expenses of $19 3 million and is attributable to promotional efforts supporting the <unk> launch however.

Terry Kohler: However, compared to our original expectations Theres favorability in operating expenses. This operating expense favorability influences, our thinking about financial guidance for full year, 2024, and projected cash balances, which I will discuss shortly turning.

Terry Kohler: Turning to slide 10. Similar to our results through the first half of 2024, our third quarter results reflect improvements to net revenue per prescription and the initial investments to support the CS law. Regarding revenue, OptiNose recognized $55.8 million of exhanced net revenue year to date through September 2024, a 9% increase compared to prior year period exhanced net revenue of $51.1 million. EXAN's average net revenue per prescription for the nine months ended September 30, 2024 was $285, a 45% increase compared to $197 of estimated average net revenue per prescription for the prior year period. Most of this increase is driven by the changes to our copay assistance program, which has resulted in a reduction in the number and proportion of commercial prescriptions that were historically unprofitable.

Terry Kohler: Turning to slide 10.

Similar to our results through the first half of 2024.

Terry Kohler: Our third quarter results reflect improvements to net revenue per prescription in the initial investments to support the CF launch.

Terry Kohler: Regarding revenue <unk> recognized $55 8 million of <unk> net revenue year to date through September.

Terry Kohler: September 2024.

Terry Kohler: 9% increase compared to prior year period, <unk> net revenue of $51 1 million.

Terry Kohler: <unk> average net revenue per prescription for the nine months ended September 32024 was $285, a 45% increase compared to $197 of estimated average net revenue per prescription for the prior year period.

Terry Kohler: Most of this increase is driven by the changes to our co pay assistance program, which has resulted in a reduction in the number and proportion of commercial prescriptions that were historically unprofitable. In addition, the increase in inventory in the channel during the third quarter of 2024 that we discussed earlier provided some lift.

Terry Kohler: In addition, the increase in inventory in the channel during the third quarter of 2024 that we discussed earlier provided some lift. Finally, as we reported earlier, OptiNose recognized $67.2 million of SG&A plus R&D expenses in year-to-date through September 2024. This is approximately a $2 million increase compared to year-to-date through September 2023 expenses of $64.9 million. As with the third quarter results, the year-to-date increase was expected and is attributable to the promotional efforts supporting the CS law.

Terry Kohler: Finally, as we reported earlier <unk> recognized $67 2 million of SG&A, plus R&D expenses and year to date through September 2024.

Terry Kohler: This is approximately a $2 million increase compared to year to date through September 2023 expenses of $64 9 million.

Terry Kohler: As with the third quarter results the year to date increase was expected and is attributable to the promotional efforts supporting the <unk> launch.

Terry Kohler: Turning to slide 12. Based on all the factors we have just discussed, we are changing our expectation for full year 2024 ex-hance net revenue, ex-hance revenue per prescription, and operating expenses. Our guidance for ex-hance net revenue for full year 2024 is between $75 to $79 million. Previously, we expected ex-hance net revenue for full year 2024 to be between $85 and $90 million. The implied fourth quarter revenue guidance is approximately $19 to $23 million. Reflecting uncertainty, projecting the shape of the curve and demand growth we will experience in the context of an encouraging recent inflection and new prescriptions, but recognizing that much of our business is comprised of refills that will take time to come into play.

Terry Kohler: Going to slide 12.

Terry Kohler: Based on all the factors. We've just discussed we are changing our expectation for full year 2024, <unk> net revenue <unk> revenue per prescription and operating expenses our guidance for enhanced net revenue for full year 2024 is between $75 to $79 million previously.

Terry Kohler: Previously we expected <unk> net revenue for full year 2024 to be between $85 to $90 million.

Terry Kohler: The implied fourth quarter revenue guidance is approximately 19% to $23 million, reflecting uncertainty projecting the shape of the curve and demand growth. We will experience in the context of an encouraging recent inflection and new prescriptions, but recognizing that much of our business is comprised of refills that will take time to come into play.

Terry Kohler: As we have discussed previously, we continue to expect average net product revenues per prescription to increase in 2024 compared to 2023, primarily because of revisions that we made to our copay assistance program in 2023 and early 2024. The magnitude of the benefit derived from these revisions to our copay assistance program was greater than we expected in the first nine months of 2024. As a result, we are increasing our expected average net product revenues per prescription estimate for full year 2024. Specifically, we now expect Exant's average net revenues per prescription to be approximately $270 for the full year of 2024, which represents an increase of approximately 29% compared to $209 for the full year of 2023.

Terry Kohler: As we have discussed previously we continue to expect average net product revenues per prescription to increase in 2024 compared to 2023, primarily because of provisions that we made to our copay assistance program in 2023 in early 2020 for the.

Terry Kohler: The magnitude of the benefit derived from these revisions to our copay assistance program was greater than we expected in the first nine months of 2024 as a result, we are increasing our expected average net product revenues per prescription estimate for full year 2024, specifically, we now expect <unk> average net revenue per prescription to be approximately $270.

Terry Kohler: For the full year of 2024, which represents an increase of approximately 29% compared to $209 for the full year of 2023.

Terry Kohler: Previously, we expected Exant's average net revenues per prescription to exceed $250 for the full year 2024. In addition, the change in launch trajectory has resulted in operating expense favorability. A portion of the favorability is volume-related in the form of lower-than-projected variable product expenses. Together with reduced third-party expenses and payroll savings, we expect an overall reduction of at least $5 million. Our full year 2024 operating expense guidance is now $90 to $93 million, of which approximately $6 million is expected to be stock-based compensation. Previously, we expected total operating expenses to be between $95 million to $101 million, of which approximately $6 million was expected to be stock-based compensation.

Terry Kohler: Previously, we expected <unk> average net revenue per prescription to exceed $250 for the full year 2024.

Terry Kohler: In addition, the change in launch trajectory as resulted in operating expense favorability.

A portion of the favorability is volume related in the form of lower than projected variable product expenses.

Terry Kohler: Together with reduced third party expenses and payroll savings, we expect an overall reduction of at least $5 million. Our full year 2020 for operating expense guidance, because now 90% to $93 million of which approximately $6 million is expected to be stock based compensation.

Terry Kohler: Previously, we expected total operating expenses to be between $95 million to $101 million of which approximately $6 million was expected to be stock based compensation.

Terry Kohler: Based on these new expectations, we now believe our existing cash and cash equivalents will be sufficient to fund our operations and debt service obligations for at least the next 12 months if we are able to maintain compliance with or obtain a waiver or modification of the financial and other covenants under our debt agreement.

Based on these new expectations, we now believe our existing cash and cash equivalents will be sufficient to fund our operations and debt service obligations for at least the next 12 months. If we are able to maintain compliance with or obtaining a waiver or modification of the financial and other covenants under our debt agreements I will now turn the.

Ramy Mahmoud: I will now turn the call back over to Ramy for closing remarks. Ramy? Thanks, Jerry, and thank you, Paul. Turning to slide 14.

Call back over to Rami for closing remarks Rami.

Rami Mahmud: Thank you Terry and thank you Paul.

Speaker Change: Turning to slide 14.

Ramy Mahmoud: Before moving to take questions, I'd like to return to a high-level view of the opportunity in front of us. Because of the high disease prevalence, the high perceived unmet need and symptomatic nature of the disease, and the lack of alternative medications that are proven to work, or which are approved by FDA, for the condition, we believe the overall future potential of Exhance with the new chronic sinusitis indication is large and has potential to reshape this business for years into the future. While the initial CS launch, like many product launches, has been a bit slow, recent data suggests that we are starting to see evidence of progress consistent with the expected future potential of Excel.

Speaker Change: Moving to take questions I'd like to return to a high level view of the opportunity in front of us.

Speaker Change: Hi disease prevalent the high perceived unmet need in symptomatic nature of the disease and the lack of alternative medications that are proven to work or which are approved by FDA for the condition. We believe the overall future potential of enhanced with the new chronic sinusitis indication is large and has potential to reshape this business three years.

Speaker Change: And for the future.

Speaker Change: While the initial <unk> launch like many product launches has been a bit slow recent data suggests that we are starting to see evidence of progress consistent with the expected future potential of Exane.

Ramy Mahmoud: Exance remains an attractive asset, and in our current specialty audience, we believe peak annual net revenues of at least $300 million are achievable.

Speaker Change: Enhanced remains an attractive asset and in our current specialty audience. We believe peak annual net revenues of at least $300 million.

Speaker Change: Are achievable.

Ramy Mahmoud: In addition, we are actively working to engage in a commercial primary care partnership or to adopt other approaches that will allow us to access the large incremental opportunity in the primary care space.

In addition, we are actively working to engage in a commercial primary care partnership or to adopt other approaches that will allow us to access a large incremental opportunity in the primary care space.

Operator: With that, I'd like to thank you for your attention and open the call for Q&A. Thank you. If you'd like to ask a question, please press star 11. If your question has been answered and you'd like to remove yourself from the queue, please press star 11 again.

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

Speaker Change: Thank you and if you'd like to ask a question. Please press star one one if your question has been answered and you'd like to remove yourself from the queue. Please press star one again.

Thomas Flaten: Our first question comes from Thomas Flaten with Lake Street Capital Markets. Your line is open. Good morning, thanks for taking the questions.

Speaker Change: Our first question comes from Thomas Flaten with Lake Street Capital markets. Your line is open.

Thomas Flaten: Good morning, Thanks for taking the questions just on the guide on the low end.

Thomas Flaten: Just on the guide, on the low end, if we, you know, just do the math, that would imply a sequentially down fourth quarter. Could you maybe fill us in on some of the factors that would, that would, you know, prompt you to be that conservative at this point?

Thomas Flaten: We just do the math that would imply sequentially down fourth quarter could you maybe fill us in on some of the factors that would that would prompt you to be that conservative at this point.

Terry Kohler: Sure, Thomas, good morning. Thank you for the question. So in the third quarter, our revenue was affected, as we mentioned in our script, with some inventory stocking in the channel. That inventory stocking represented a little under $3 million.

Speaker Change: Sure Thomas Good morning. Thank you for the question. So in the third quarter. Our revenue was affected as we mentioned in our script.

With some inventory stocking in the channel that inventory stocking represented.

Thomas Flaten: And so when you think about Q4, our guide in the context of that adjusted Q3, there's a step up in demand that we're expecting in Q4. Got it. And then there was there was a fair bit of conversation about insurance coverage, and you mentioned 70% of the patients who had who had plans that covered ex-hance.

Speaker Change: Little under $3 million and so when you think about Q4 guide in the context of that adjusted Q3, there's a step up in demand that we're expecting in Q4.

Speaker Change: Got it and then.

Speaker Change: There was there was a fair bit of conversation about.

Speaker Change: Insurance coverage and you mentioned, 70% of the patients who had.

Thomas Flaten: What number, what proportion of the plans that currently cover ex-hance have updated their policies for the new indication?

Speaker Change: Our plans are covered expanse, what number what proportion of the plans that currently cover extensive updated their policies for the new indication.

Thomas Flaten: So, Tom, it's a little hard to be sure about that because some of the some of the updates aren't sort of fundamental changes in coverage. There are changes qualitatively to the content of the of the prior authorization forms. But we believe that at this point, most plans have updated their coverage to be inclusive of both approved indications.

Thomas Flaten: So Tom it's a little hard to be sure about that because some of the some of the updates arent.

Speaker Change: Sort of fundamental changes in coverage there changes qualitatively to the content of the of the prior authorization forms.

Speaker Change: But we believe that at this point most plan have updated.

Speaker Change: Their coverage to be inclusive of both approved indications.

Thomas Flaten: Got it.

Thomas Flaten: And then just one final one. You have talked about full year profitability in 2025. Any change to that guidance? Or should we? How should we think about that? We are actually, we're evaluating that, Thomas. We are not going to give any 2025 guidance on today's call, but we are removing that guidance so that we can take an opportunity to evaluate our performance in the fourth quarter and how that will impact our expectations for 2025 revenue. Just to add to that, as Terry said a few minutes ago, with the recent inflection in demand that we've seen, which is encouraging, it becomes a little bit more difficult to forward project exactly what we're going to see over the course of the entire coming year.

Speaker Change: Got it and then just one final one you had talked about full year profitability in 2025, any change to that guidance or should we or how should we think about that.

Speaker Change: We are actually we.

Speaker Change: We're evaluating that Thomas.

Speaker Change: We're not going to.

Speaker Change: Given the 2025 guidance on today's call.

Speaker Change: But we are removing that guidance. So that we can take an opportunity to evaluate our performance in the fourth quarter and how that will impact our expectations for 2025 revenue.

Speaker Change: Just to add to that.

Speaker Change: As Terry said, a few minutes ago.

Speaker Change: With the recent inflection in demand that we've seen which is encouraging.

Speaker Change: It becomes a little bit more difficult to forward project exactly what we're going to see over the course of the entire coming year and as a consequence of some of that uncertainty associated with our recent positive inflection we have to be.

Ramy Mahmoud: And as a consequence of some of that uncertainty associated with our recent positive inflection, we have to be in the position of re-evaluating what the next year is going to look like.

Speaker Change: You have to be in the position of reevaluating what the next year is going to look like.

Thomas Flaten: Excellent. I appreciate you taking the question.

Speaker Change: Excellent I appreciate you taking the question. Thank you.

David Amsellem: Thank you.

David Amsellem: Our next question comes from David Amsellem with Piper Sandler. Your line is open. Thanks.

Speaker Change: Thank you. Our next question comes from David <unk> with Piper Sandler Your line is open.

Speaker Change: Okay.

David Amsellem: Just a quick one on the cost structure. Do you feel like it's right-sized? Can you talk about, I know you've talked about, you know, primary care co-promote, but just talk generally about, you know, the cost structure, the sales force, and to the extent that there isn't a partner, how you're thinking about managing spend given the trajectory of exams so you can get to profitability eventually. Thank you.

Thanks, just a quick one on the cost structure do you feel like it's right size can you talk about.

Speaker Change: I know you've talked about.

<unk> co promote but let's just talk generally about.

Speaker Change: The cost structure of the sales force and to the extent that there isn't a partner how are you thinking about managing spend given the trajectory of <unk>. So you can get to profitability eventually thank you.

Ramy Mahmoud: Yeah, that's a complex and challenging question, David. You know, we have been cautious about our spending, as you can tell from the fact that our operating expenses are actually relatively tightly controlled, even in the context of a launch year. So I think the answer is that, you know, we have to regularly, you know, continuously monitor the rate of our investment in the business based on the responsiveness we're seeing to our investment and the rate of growth that we're seeing. So, you know, the recent inflection in growth that we've seen over the last few months here changes our thinking relative to what it might have been as recently as the middle of this summer.

Speaker Change: Yes.

Speaker Change: A complex and challenging questions David.

Speaker Change: We have been.

Speaker Change: <unk> about our spending as you can tell from the fact that our operating expenses are actually.

Speaker Change: Relatively tightly controlled even in the context of a launch here.

Speaker Change: So I think the answer is that.

Speaker Change: We have to.

Regularly.

Speaker Change: <unk> monitor the rate of our investment in the business based on the responsiveness we're seeing.

Our investment in the rate of growth that we're seeing so the recent inflection in growth that we've seen over the last few months here changes our thinking relative to what it might have been as recently at the middle of this summer.

Ramy Mahmoud: And we're going to have to continue to reassess as we go forward. So I can't really give you a concrete answer about that. But I will also add that, and as we have said before, we believe that there is incremental opportunity, even in the specialty space, beyond what we're able to get at with our current level of investment. So when the time is right, we think there's ROI positive opportunity for incremental investment, you know, even within our current footprint outside of the primary care space.

Speaker Change: And we're going to have to continue to reassess as we go forward. So I can't really give you a concrete answer about that but I will also add that.

Speaker Change: And as we have said before we believe that there is incremental opportunity even in the specialty space beyond what we were able to get at with our current level of investment. So when the time is right.

There is ROI positive opportunity for incremental investment.

Speaker Change: Even within our current footprint outside of the primary care space.

David Amsellem: Thank you.

Glen Santangelo: Our next question comes from Glen Santangelo with Jeffreys. Your line is open. Oh, yeah. Good morning. Thanks for taking my question. Hey, Talia, I'm interested in your prepared remarks. You gave the net revenue for prescription this quarter. Did you say $320, and can you remind us what that was in 2Q?

Speaker Change: Thank you. Our next question comes from Glen Santangelo with Jefferies. Your line is open.

Oh, yes. Good morning, Thanks for taking my question, Hey, Terry I missed in your prepared remarks, you gave the.

Speaker Change: Net revenue per prescription this quarter did you say 320.

Speaker Change: And can you remind us what that was on <unk>.

Glen Santangelo: Sure, Glen, good morning. In 2Q, it was $309, and yes, that's correct, $320 in Q3. Okay, and so maybe just back to that previous question on the implied 4Q guidance, because it looks like your scripts are almost trending up almost 30% on a sequential basis, and with the improved sort of reimbursement, it would seem like even accounting for the inventory, you know, the inventory gain in 3Q, it just sort of seems like the moment for that guy seems somewhat, you know, not congruent with the uptick in the scripts that you're seeing, so I just want to make sure I'm not missing anything.

Speaker Change: Sure Glenn Good morning, and QQ, It was $309 and yes, thats correct $320 in Q3.

Speaker Change: Okay, and so maybe just back to that previous question on the implied <unk> guidance because it looks like you are.

Speaker Change: Your scripts are almost trending up almost 30% on a sequential basis and.

And with the improved sort of reimbursement it would seem like even accounting for the inventory.

Speaker Change: Uh huh.

The inventory gain in <unk>.

Speaker Change: But at the moment.

Speaker Change: And somewhat.

Speaker Change: With the uptick in the scripts that you sold so I just want to make sure of that.

Speaker Change: Films.

Terry Kohler: So, in year-to-date, net revenue per prescription is about $285,000, so you're correct, there is an implied step-down in Q4. As a reminder, the year-to-date figure includes the impact of the chained healthcare outage in Q2, which we believe benefited our net revenue per prescription. And, as you mentioned, that the inventory stocking in the third quarter benefited the third quarter number. So, you know, full-year guidance is at $270,000 per prescription.

Speaker Change: And year to date year to date net revenue per prescription is about 285.

Speaker Change: So you're correct. There is an implied step down in Q4 as a reminder of the year to date figure includes the impact of the changed healthcare outage in Q2, which we believe benefited our net revenue per prescription and then you mentioned that the inventory stocking in the third quarter benefited the third quarter number so.

Speaker Change: Full year guidance is a 270.

Speaker Change: Foot per prescription.

Ramy Mahmoud: Glen, can I just add a couple of thoughts to what Terry just said? It might help address your question. The first is that the average net revenue per prescription in the fourth quarter, historically, if you look over, you know, all the years you've been on the market, tends to be lower than it has been in some of the prior quarters. So, you know, take a look at our overall expectation for the year and not just our third quarter result as you're thinking about, you know, projecting the fourth quarter. The other thing I want to kind of remind you about, and we mentioned this earlier, is that we showed you the NRX trend, the new prescription trend.

Speaker Change: And then can I just add a couple more.

Speaker Change: Towards that might help that help address your question. The first is that the average net revenue per prescription in the fourth quarter historically.

If you look over all the years had been on the market.

Speaker Change: Tends to be lower than it has been in some of the prior quarters. So take a look at our overall expectation for the year and not just our third quarter result, as youre thinking about projecting the fourth quarter. The other thing I want to remind you about and we mentioned this earlier is that we showed you the rx trend the new prescription trend.

Ramy Mahmoud: But we have a chronic disease treatment, and historically, and I would expect in the future, a large fraction of our total prescriptions are actually refilled and not just new prescriptions. So new prescriptions are a leading indicator, and it takes some time for all the refills to stack up subsequent to the new prescriptions and drive total prescriptions up, you know, correspondingly.

But we have a chronic disease treatment.

Speaker Change: And historically and I would expect in future a large fraction of our total prescriptions are actually refills and not just new prescription so new prescriptions are a leading indicator and it takes some time for all the refills to stack up subsequent to the new prescriptions and.

Speaker Change: And drive total prescriptions up correspondingly.

Glen Santangelo: Okay, thank you very much. Thank you.

Speaker Change: Okay. Thanks very much.

Matthew Caulfield: Our next question comes from Matthew Caulfield with H.P. Wainwright. Your line is open. Hi, thanks. Good morning guys.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Matthew <unk> with HC Wainwright. Your line is open.

Speaker Change: Hi, Thanks, Good morning, guys.

Matthew Caulfield: For the specialty space, how is the uptake different at all between polyp or non-polyp patients? And is that distinction even being made by prescribers based on the broad labeling?

Speaker Change: For the specialty space, how is the uptake differ at all between policy or non polyp patients and is that distinction even being made by prescribers based on the broad labeling.

Matthew Caulfield: So, Matt, I appreciate your question, and I think I understand where you're coming from, but I'll just reiterate something that I think we've said before, which is that we have difficulty distinguishing the parts of our business that are coming from nasal polyps and chronic sinusitis.

So Matt I. Appreciate your question I think I understand where you're coming from but.

Speaker Change: I'll just.

Speaker Change: Reiterate something I think we've said before which is that we have difficulty distinguishing the parts of our business that are coming from nasal polyps and chronic sinusitis.

Ramy Mahmoud: I don't know that we can have confidence in the specificity with which that is reported in prescribing practice or the specificity with which it's reported in sort of third-party purchased claims data. So, you know, I think it's our overall business we have to look at, and, you know, we just don't want to pay too much attention to the, you know, by diagnosis fractions of that business.

Speaker Change: I don't know that we can have confidence.

Speaker Change: In the specificity with which that is reported in.

Speaker Change: In prescribing prescribing practices.

Speaker Change: Practice or the specificity with which it's reported in through a third party purchase stock claims data.

Speaker Change: So.

Speaker Change: I think it's our overall business we have to look at.

Speaker Change: We just don't want to pay too much attention to it.

Matthew Caulfield: It's just not clear we can rely on that. Got it. Okay, that's helpful. And then just one other follow up.

Speaker Change: By diagnosis fractions of that business, it's just not clear we can rely on that.

Speaker Change: Got it Okay. That's helpful. And then just one other follow up I was curious is the greatest kind of high level pushback from prescribers based on not distinguishing that ex hands is not just a familiar steroid therapy.

Matthew Caulfield: I was curious, is the greatest kind of high level pushback from prescribers based on not distinguishing that Exhance is not just a familiar steroid therapy? Is that kind of their biggest you know, aversion or pushback to getting on board. You know, I think, and I'm kind of paraphrasing something that Paul articulated earlier, I think our view is that we have to get the word out. We can't assume that prescribers will understand the benefit of our product, especially in the new indication where their prior experience suggests that the products they've tried before in the nasal steroid category have not been very helpful.

Speaker Change: Is that kind of the biggest.

Speaker Change: Our version are pushed back to getting on board.

Speaker Change: I think.

Speaker Change: And I'm kind of paraphrasing something that Paul articulated earlier I think our our view is that.

Speaker Change: We have to get the word out we can't assume that prescribers will.

Speaker Change: Understand the benefit of our product, especially in the new indications where their prior experience.

Speaker Change: Yet the products they've tried before in the nasal steroid category have not been very helpful Limited data of benefit.

Ramy Mahmoud: What limited data of benefit and, you know, personal experience supporting that. So it's incumbent on us to get the word out about the clinical data that we have and the real benefit that they can bring to patients. And it's taking us time, and we have to learn from experience as we go and how we can be effective in getting the word out. So it's not so much, you know, push back. It's about people won't adopt until they appreciate the real benefits that can be offered. And it's taking us, you know, it's a real effort to get that out in people's hands.

Speaker Change: Personal experience supporting that so it's incumbent on us to get the word out about the clinical data that we have and the real benefit that they can bring to patients and it's taking us time.

Speaker Change: And we have to learn from experience as we go and how we can be effective in getting the word out so it's not so much.

Speaker Change: Pushed back it's about.

Speaker Change: People won't adopt until they appreciate the real benefits that can be offered.

Speaker Change: And it's taking US now, it's a real effort to get that that peoples.

Speaker Change: People's hand.

Matthew Caulfield: Okay, very helpful. I appreciate that.

Speaker Change: Okay very helpful. I appreciate that.

Operator: Thank you.

Operator: I'm showing no further questions at this time.

Speaker Change: Thank you I'm showing no further questions at this time I would like to turn the call back over to Rami Mahmud for closing remarks.

Ramy Mahmoud: I'd like to turn the call back over to Ramy Mahmoud for closing remarks. Alright, so thank you very much for joining this morning. I appreciate you hanging with us as we went through a little bit more content than usual to describe sort of a complex quarter and unpack all the different things that have happened. We're looking forward to some of the positive trends that we have described being, you know, projected forward into the fourth quarter, and we look forward to coming back and telling you about it in our next quarterly update call.

Rami Mahmud: Alright. Thank you very much for joining this morning I appreciate you hanging with US as we went through a little bit more content unusual to describe sort of a complex quarter and unpack all the different things that have happened.

Rami Mahmud: We're looking forward to some of the positive trends that we have described.

Rami Mahmud: <unk>.

Rami Mahmud: Projected forward into the fourth quarter, and we look forward to coming back and telling you about it in our next quarterly update call. Thank you again.

Ramy Mahmoud: Thank you again. Thank you for your participation.

Speaker Change: Thank you for your participation. This does conclude the program and you may now disconnect everyone have a great day.

Operator: This does conclude the program and you may now disconnect.

Operator: Everyone, have a great day.