Q1 2025 Verona Pharma PLC Earnings Call

Operator: Welcome to Verona Pharma's First Quarter 2025 Financial Results and Operating Highlights Conference Call. At this time, all participants are in a listen-only mode.

Welcome to Verona Pharma first quarter 2025 financial results and operating highlights conference call at.

At this time all participants are in a listen only mode.

Victoria Stewart: I'd now like to turn the call over to Victoria Stewart, Senior Director, Investor Relations and Communications. Please go ahead. Thank you.

Speaker Change: I'd now like to turn the call over to Victoria Stewart Senior Director Investor Relations and Communications. Please go ahead.

Speaker Change: Thank you.

Unknown Executive: Earlier this morning, Verona Pharma issued a press release announcing its financial results for the three months ended March the 31st, 2025. A copy can be found in the Investor Relations tab on the corporate website, www.veronapharma.com.

Speaker Change: I did this morning, Verona pharma issued a press release announcing its financial results for the three months ended March 31st 2025, a copy can be found in the Investor Relations tab on the corporate website www trying to farm it they'll come before.

Unknown Executive: Before we begin, I'd like to remind you that during today's call, statements about the company's future expectations, plans and prospects are forward-looking statements. These forward-looking statements are based on the management's current expectations. These statements are neither promises nor guarantees and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from our expectations expressed or implied by the Any such forward-looking statements represent management's estimates as of the date of this conference call.

Speaker Change: Before we begin I'd like to remind you that during today's call statements about the company's future expectations plans and prospects are forward looking statements.

Speaker Change: These forward looking statements are based on management's current expectations. These statements are neither promises no guarantees and involve known and unknown risks uncertainties and other important factors that may cause our actual results performance or achievements to be materially different from our expectations expressed or implied by the forward looking statements.

Speaker Change: Any such forward looking statements represent managements estimates as of the date of this conference call. While the company may elect to update such forward looking statements at some point in the future.

Unknown Executive: While the company may elect to update such forward-looking statements at some point in the future, it disclaims any obligation to do so, even if subsequent events cause its views to change.

Speaker Change: Any obligation to do so even if subsequent events causes views to change.

Unknown Executive: As a reminder, this call is being recorded and will remain available for 90 days.

Speaker Change: As a reminder, this call is being recorded and will remain available for 90 days.

David Zaccardelli: I'd now like to turn the call over to Dr. David Zaccardelli, Chief Executive Officer. Thank you and welcome everyone to today's call.

David: I'd now like to turn the call over to Dr. David <unk>, Chief Executive Officer.

Dr. David: Thank you and welcome everyone to today's call.

David Zaccardelli: With me today are Mark Hahn, our Chief Financial Officer, Dr. Kathy Rickard, our Chief Medical Officer, Chris Martin, our Chief Commercial Officer, and Dr. Tara Rheault, our Chief Development Officer. The first quarter of 2025 was phenomenal for Verona Pharma as we continue to drive the highly successful U.S. launch of O2VER for the maintenance treatment of COPD, as well as advance our clinical development programs and global regulatory strategy.

Speaker Change: With me today are Mark Hahn, our Chief Financial Officer Dr.

Speaker Change: Dr. Kathy Ricard, our Chief Medical Officer, Chris Martin, Our Chief Commercial Officer, and Dr. Terrell row, our Chief Development Officer.

Speaker Change: The first quarter of 2025 whats the nominal for Verona pharma as we continue to drive the highly successful U S launch of O to bear for the maintenance treatment of COPD as well as advance our clinical development programs and global regulatory strategy.

David Zaccardelli: I am incredibly pleased to report, for the first time, Verona's quarterly revenue exceeded our quarterly operating expenses, excluding non-cash charges. First, let's review the ongoing launch of O2VERE, which continues to accelerate quarter over quarter. The remarkable uptake of O2-VER, which is the first inhaled product with a novel mechanism of action to treat COPD in more than 20 years, underscores the unmet need of patients with COPD. Its rapid adoption is grounded in O2VAR's broad indication for the maintenance treatment of COPD and its compelling benefit-to-risk profile. In the first quarter of 2025, which is only the second full quarter of commercial availability, we almost doubled sales of O2Ver compared to the fourth quarter of 2024, recording $71.3 million in net product sales with continued month-over-month growth.

Speaker Change: I'm incredibly pleased to report for the first time <unk> quarterly revenue exceeded our quarterly operating expenses, excluding noncash charges.

Speaker Change: First let's review the ongoing launch of <unk>, which continues to accelerate quarter over quarter.

Speaker Change: The remarkable uptake of <unk>, which is the first inhaled product with a novel mechanism of action to treat COPD in more than 20 years underscores the unmet need of patients with COPD.

Speaker Change: Its rapid adoption is grounded in <unk> broad indication for the maintenance treatment of COPD.

Speaker Change: And it's compelling benefit to risk profile.

Speaker Change: In the first quarter of 2025, which is only the second full quarter of commercial availability, we almost doubled sales of <unk> compared to the fourth quarter of 2024.

Speaker Change: A recording $71.3 million and net product sales with continued month over month growth.

David Zaccardelli: The launch is demonstrating success across every measure. Prescriptions increased to approximately 25,000 filled during the first quarter. New patient starts grew over 25% compared to Q4 2024 and refills represented 60% of all dispenses during the first quarter. Total prescribers grew about 50% relative to Q4, to approximately 5,300, of which 60% are Verona's Tier 1 HCP. Prescriber death is also increasing, with over 425 HCPs prescribing O2VIR to 20 patients or more. This dramatic early adoption reinforces our belief that O2VIR is the most successful COPD launch and is tracking to become what we consider a blockbuster product.

Speaker Change: The launches demonstrating success across every measure.

Speaker Change: Prescriptions increased to approximately 25000 filled during the first quarter.

New patient starts grew over 25% compared to Q4, 2024, and refills represented 60% of all.

Speaker Change: All of the expenses during the first quarter.

Speaker Change: Total prescribers school about 50% relative to Q4 to approximately 5300.

Speaker Change: With 60% of around this tier one H C. Pete.

Speaker Change: Prescriber depth is also increasing with over 425, hcp's prescribing owe to bear to 20 patients or more.

Speaker Change: This dramatic early adoption reinforces our belief that <unk> is the most successful COPD launch and is tracking to become what we consider a blockbuster product.

David Zaccardelli: HCPs continue to prescribe O2VIR to a wide spectrum of their COPD patients. including patients on background single, dual, and approximately 50% on triple therapy. This broad application across diverse patient types highlights our confidence that O2-VaR's novel bronchodilator and non-steroidal anti-inflammatory activity has the potential to redefine the standard of care in COPD treatment. We continue to receive meaningful and extremely encouraging feedback from patients and HCPs regarding the impact of O2VIR, which is reflected in our growing refill and persistency data. with our launch momentum. We are planning to expand our field sales team to around 30 representatives to about 120 total in the third quarter.

Speaker Change: Hcp's continued to prescribe <unk> to a wide spectrum of their COPD patients, including patients on background single dual and approximately 50% on triple therapy.

Speaker Change: Broad application across diverse patient types highlights our confidence that <unk> novel, Bronchodilator, and nonsteroidal anti inflammatory activity has the potential to redefine the standard of care in COPD treatments.

Speaker Change: We continue to receive meaningful and extremely encouraging feedback from patients and hcp's regarding the impact of O to bear which is reflected in our growing refill and persistency data.

Speaker Change: With our launch momentum.

Speaker Change: We are planning to expand our field sales team to around 30 representatives to about 120 total in the third quarter.

David Zaccardelli: We believe this expanded field presence will enable us to further support accelerating the launch. As part of our ongoing strategic work to solidify the long-term success of O2VAIR, a new Orange Book Listed patent has been granted with an expiration date in 2044, giving us a total of four Orange Book Listed patents.

Speaker Change: We believe this expanded field presence will enable us to further support accelerating the launch.

Speaker Change: As part of our ongoing strategic work to solidify the long term success of O two there.

Speaker Change: A new Orange book listed patents has been granted with an expiration date in 2044, giving us a total of four Orange book listed patents.

David Zaccardelli: In parallel with our successful launch of O2VaR, we continue to advance our pipeline with two Phase II clinical programs. We plan to initiate a dose ranging phase 2b trial in the second half of this year, evaluating a fixed dose combination of NC Fentron with glycopyrrolate compared to the individual component. In addition, enrollment is ongoing in our Phase 2 clinical trial of nebulized n-Cfentrin in non-CF bronchiectomies. The study will assess the effect of n-Cfentrin, three milligrams, twice daily, on the rate and risk of pulmonary exacerbations, symptoms, and quality of life.

Speaker Change: In parallel with our successful launch of O. Two there we continue to advance our pipeline with two phase III clinical programs.

Speaker Change: We plan to initiate a dose ranging phase two b trial in the second half of this year evaluating a fixed dose combination of <unk> pension with geico parallel compared to the individual components.

Speaker Change: In addition, enrollment is ongoing in our phase II clinical trial, I mean, that'd be life and pension in non CF bronchiectasis.

Speaker Change: This study will assess the effect of <unk> three milligrams twice daily on the rate and risk of pulmonary exacerbations symptoms and quality of life.

David Zaccardelli: Turning to our global strategy, in February, Nuance Pharma, our development partner for NC Fentron in Greater China, announced O2-VER was approved in Macau for the maintenance treatment of COPD in adults.

Speaker Change: Turning to our global strategy in February nuanced pharma, our development partner for NC Penetrant in greater China.

Speaker Change: Bounced owed to bear was approved in Macau for the maintenance treatment of COPD in adults.

David Zaccardelli: This is the first regulatory approval of O2VIR outside the U.S. In addition, Nuance Pharma is expected to report results from its pivotal phase three trial, evaluating antifentrin for the maintenance treatment of COPD in China in the second quarter. Finally, we continue to advance regulatory activities for potential marketing authorization application submissions for O2VAIR for the maintenance treatment of COPD in the European Union and in the UK. We look forward to keeping you updated on this project.

Speaker Change: This is the first regulatory approval of <unk> outside the U S.

Speaker Change: In addition, nuanced pharma is expected to report results from its pivotal phase III trial evaluating <unk> for the maintenance treatment of COPD in China in the second quarter.

Speaker Change: Finally, we continue to advance regulatory activities for a potential marketing authorization application submissions for O to bear for the maintenance treatment of COPD in the European Union and in the UK.

Speaker Change: We look forward to keeping you updated on this progress.

Mark Hahn: I will now turn the call over to Mark to review our financial results for the quarter. Good morning. Our full financial results can be found in the press release issued this morning with additional details in the Form 10-Q also filed today. I'll walk through the financial results for the first quarter of 2025 and review our recent strategic financial. As Dave described, in the first quarter, we recorded $71.3 million in O2 Fairnet sales. with the achievement of a $5 million clinical milestone from Nuance Pharma. Total net revenue for the first quarter was $76.3 million. And in line with prior quarters, our specialty pharmacy partners continue to maintain inventory.

Marc: I will now turn the call over to Marc to review, our financial results for the quarter.

Marc: Good morning.

Marc: Our full financial results can be found in the press release issued this morning with additional details in the Form 10-Q also filed today.

Marc: I'll walk through the financial results for the first quarter of 2025 and review our recent strategic financing.

Speaker Change: As Dave described in the first quarter, we recorded $71 $3 million and <unk> of our net sales.

Speaker Change: With the achievement of a $5 million clinical milestone from nuance pharma.

Speaker Change: Total net revenue for the first quarter was $76 $3 million.

Speaker Change: And in line with prior quarters, our specialty pharmacy partners continue to maintain inventory.

Mark Hahn: at their contracted levels of two to three weeks. Cost of O2VaR sales was $3.4 million for the quarter ending March 31, 2025, in line with the level of net sales of O2VaR.

Speaker Change: At their contracted levels of two to three weeks.

Cost of O. Two bear sales was $3 $4 million for the quarter ended March 31, 2025 in line with the level of net sales of O two there.

Mark Hahn: Research and Development Expenses. were $14.1 million for the first quarter, reflecting increases in share-based compensation. and clinical trial and development costs related to our two phase two studies. Selling, General, and Administrative expenses were $69.1 million in the first quarter, reflecting increases in share-based compensation and the hiring of our field-based sales team, marketing, and other commercialization expenses related to the launch of O2Vera. In total, our operating expenses for the first quarter were $86.6 million, resulting in an operating loss of $10.3 million and a net loss after tax of $16.3 million for the period. Excluding the $36.8 million in share-based compensation recorded in Q1.

Speaker Change: Research and development expenses.

Speaker Change: Were $14 $1 million for the first quarter.

Speaker Change: Reflecting increases in share based compensation.

Speaker Change: And clinical trial and development costs related to our two phase III studies.

Speaker Change: Selling general and administrative expenses were $69 $1 million in the first quarter.

Speaker Change: Reflecting increases in share based compensation and the hiring of our field based sales team marketing and other commercialization expenses related to the launch of <unk> there.

Speaker Change: In total our operating expenses for the first quarter were $86 $6 million.

Speaker Change: <unk> and an operating loss of $10 $3 million and a net loss after tax of $16 $3 million for the period.

Speaker Change: Excluding the $36 $8 million and share based compensation recorded in Q1.

Mark Hahn: on an adjusted basis. We had an adjusted net income for the quarter of $20.5 million. You can find the gap to non-gap reconciliation for adjusted net income on the last page of today's press release.

Speaker Change: On an adjusted basis.

Speaker Change: We had an adjusted net income for the quarter of $25 million.

Speaker Change: You can find the GAAP to non-GAAP reconciliation for adjusted net income on the last page of today's press release.

Mark Hahn: Finally, our balance sheet remains strong, with $401.4 million in cash in equivalents as of March 31, 2025. compared to $399.8 million as of December 31, 2024.

Speaker Change: Finally, our balance sheet remains strong.

Speaker Change: With $401 $4 million in cash and equivalents as of March 31, 2025.

Speaker Change: Compared to $399 8 million as of December 31, 2024.

Mark Hahn: In addition, in March of this year, we amended our Strategic Financing Arrangement with Oaktree and OMERS . repurchasing the previously existing $100 million obligation under the RPSA and increasing the existing debt facility to $450 million on more favorable terms. With this amendment, we have increased our financial flexibility, reduced the cost of capital, and simplified the balance sheet, leaving us in a strong financial position. As a result of this amendment, at March 31, 2025, the company had $250 million outstanding under the Oak Tree Enomers facility and $200 million available in potential future draws. With our cash and equivalents and up to $200 million of additional potential draws under the debt facility, we feel very confident in our ability to fund the ongoing U.S.

Speaker Change: In addition.

Speaker Change: In March of this year.

Speaker Change: We amended our strategic financing arrangement with Oaktree and owners reap.

Speaker Change: Repurchasing the previously existing $100 million obligation under the ripsaw and increasing the existing debt facility.

Speaker Change: $450 million on more favorable terms.

Speaker Change: With this amendment, we have increased our financial flexibility and reduce the cost of capital and simplify the balance sheet.

Speaker Change: Leaving us in a strong financial position.

Speaker Change: As a result of this amendment.

Speaker Change: At March 31, 2025, the company had $250 million outstanding under the <unk> facility.

And $200 million available and potential future draws.

Speaker Change: With our cash and equivalents and up to $200 million of additional potential draws under the debt facility we.

Speaker Change: We feel very confident in our ability to fund the ongoing U S launch of <unk> as well as our development programs.

Mark Hahn: launch of O2VERR as well as our development program. Given the success of the O2VAR launch. It is our intention to use future draws on the DECK facility primarily to support the in-license or acquisition of products as needed.

Speaker Change: Given the success of the <unk> launch.

Speaker Change: It is our intention to use future draws on the debt facility primarily to support the in license or acquisition of products as needed.

Operator: With that, I'll now turn the call back over to the operator for the Q&A. Thank you. We will now begin the question and answer session.

Speaker Change: With that I'll now turn the call back over to the operator for the Q&A.

Speaker Change: Thank you we will now begin the question and answer session. If you have dialed in I would like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question simply press Star one again.

Operator: If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again.

Andrew Tsai: We'll take our first question from Andrew Tsai at Jeffreys. Hey, good morning. Congrats on another great quarter. Thanks for taking my questions. I have two this morning.

We'll take our first question from Andrew Tsai at Jefferies.

Andrew Tsai: Hey, good morning, Congrats on another great quarter. Thanks for taking my questions I have two this morning. So first is as we exit Q1 and enter Q2 can you talk about.

Andrew Tsai: So first is, as we exit Q1 and enter Q2, can you talk about the trends that you're seeing? Can you share any color or characterize how healthy these metrics are looking in April so far, and how might they look in May and June?

Andrew Tsai: The trends that you're seeing can you share any color or characterize how has how healthy are these metrics are looking in April so far and how might they look in may and June.

David Zaccardelli: Good morning, Andrew. Thanks for the question.

Speaker Change: Good morning, Andrew Thanks for the question.

David Zaccardelli: You know, I think that, first, I want to just sort of level set that, make sure that we are, you know, updating on Q1 and not providing, you know, projections of Q2 and beyond. With that said, as we've indicated previously, the launch is going extremely well. As we talked about this morning, the adoption is very high. We are expanding on every metric, including overall prescriptions, new prescribers, new patients, refills, and very encouraged by persistency. So, every expectation that the launch, while, as a reminder, is so early, and at the same time has such great traction, we believe that, of course, that continues.

Speaker Change: I think that first I wanted to just sort of level set that makes sure that we are updating on Q1 end.

Speaker Change: In providing projections of Q2 and beyond with that said.

Speaker Change: As we've indicated previously the launch is going extremely well as we talked about this morning the.

Speaker Change: The adoption is very high we are expanding on every metric including.

Speaker Change: Overall prescriptions, new prescribers, new patient refills.

Speaker Change: And I'm very encouraged by persistency so.

Speaker Change: They have every expectation that the launch.

Speaker Change: As a reminder is so early.

Speaker Change: And at the same time as such great traction.

Speaker Change: We believe that.

Speaker Change: That continues as it should.

David Zaccardelli: As it should. Right.

Andrew Tsai: And then as it relates to my second part, which is a bigger picture, you know, Q1, my understanding saw some seasonality, the typical industry phenomenon, which based on my understanding affected the pace of uptake, not necessarily gross to net. And so that should not play out going forward this year. And I think refills will continue on as well.

Speaker Change: Right.

Speaker Change: And then as it relates to my second part, which is a bigger extra Q1, my understanding saw some seasonality the typical industry phenomenon.

Speaker Change: Which based on my understanding of factors the pace of uptake not necessarily a gross to net and so that should not play out going forward. This year and I think refills will continue on as well. So I guess the second part of my question is do you think sales could inflect even faster in Q2, Q3, Q4, I'm just trying to envision.

Andrew Tsai: So I guess the second part of my question is, do you think sales could inflect even faster in Q2, Q3, Q4? Just trying to envision or gauge how you're envisioning the sales curve to look, whether it's more parabolic or linear from here.

Speaker Change: Alright gauge, how you're envisioning the sales curve to look whether its more parabolic or linear from here. Thank you.

David Zaccardelli: Thank you. Yeah, I think that again, early on, but extremely encouraged, as you know, how the launch curve will start to take shape chronically, as a refill business as more and more patients come on and persistency occurs over over the years. So, you know, we're very encouraged by the new patient ads, which builds the foundation. That'll be a continued focus, of course, for us. When you have the expanding prescriber base, as we talked about over 5300 prescribers, that's a tremendous base of additional prescriptions, additional new patients. And and, as I mentioned, we're very encouraged by the growth in the refill rates and the persistency overall.

Speaker Change: Yeah, I think that again early on but extremely encouraged as you know how the.

Speaker Change: The launch curve will start to take shape.

Speaker Change: Clinically as a refill business as more and more patients come on in persistency occurs over over the years. So.

Speaker Change: We're very encouraged by the new patient adds which builds the foundation.

Speaker Change: That'll be a continued focus of course for us.

Speaker Change: You have the expanding prescriber base as we've talked about over 5300 prescribers, that's a tremendous base of additional prescriptions additional new patients and and as I mentioned, we're very encouraged by the growth in the refill rates and persistency overall so.

David Zaccardelli: So, you know, shape of the curve remains. I would say that we are extremely encouraged and confident on the growth trajectory. And in many ways, as, you know, there are millions of patients who remain symptomatic on current standard of care. And so while the growth is phenomenal, there is a lot to go and we barely just started.

Speaker Change: Shape of the curve remains.

Speaker Change: I would say that we are extremely encouraged and confident on the growth trajectory.

Speaker Change: And in many ways as you know there are millions of patients who remain symptomatic on current standard of care and so.

Speaker Change: While the growth is phenomenal.

Speaker Change: There is a lot to go and we've barely just started.

Andrew Tsai: Great, thank you again and congrats.

Speaker Change: Great. Thank you again and congrats.

Speaker Change: Danny.

Yasmeen Rahimi: We'll go next to Yasmeen Rahimi at Piper Sandler. Good morning team and congrats for an outstanding quarter. I guess kind of like going along with Andrew's questions that he started off with, within that theme, I think, I mean, it's pretty remarkable. You've doubled from 4Q to 1Q. There's a big TAM. This is a really safe and effective drug. I guess just to be like, why couldn't you continue seeing such a rapid growth?

Speaker Change: We'll go next he asked me Rahimi at Piper Sandler.

Speaker Change: Good morning team and congrats on the outstanding quarter, I guess, it's kind of like going along with Andrews questions that he started off but within that theme I think I mean, it's pretty remarkable you've doubled from four Q1 Q, there's a big Tam this isn't really a.

Speaker Change: Safe and effective drug I guess just to be like.

Speaker Change: Why couldn't you continue seeing such a rapid growth like I guess, what I'm trying to figure out is what is the difference between <unk> and <unk>. We know <unk> had the seasonality add back like I guess, what I'm trying to figure out is before you put up the number but the consensus I think the run rate for this year was around 300 to three.

Yasmeen Rahimi: Like, guess what I'm trying to figure out is what is the difference between 2Q and 1Q? And we know 1Q had the seasonality aspect. Like, I guess what I'm trying to figure out is before you put up this number, the consensus, I think the run rate for this year was around 300 to 350. That was the range. But now with this 71 million on hand, you would basically project this to be substantially higher. So if you could just kind of help us understand sort of with this really remarkable 1Q, what the run rate could look like, that would be really helpful.

Speaker Change: 50 that was the range, but now with the 71 million on hand, you would basically project to be substantially higher. So if you could just kind of help us understand sort out with that's really a marketable while Q what the run rate could look like that that that would be really helpful. And then if you could.

Yasmeen Rahimi: And then if you could comment on what the growth to net is now and how it will change going into the year, that would be helpful. Great. Thanks, Yasmeen.

Speaker Change: Comment on what the gross to net is now and how it will change going into the year that'd be helpful. I'll jump back into the queue.

Speaker Change: Great. Thanks, guys. Good morning, So maybe we'll start in reverse.

Mark Hahn: So maybe we'll start in reverse on growth standard, and I know Mark can provide some guidance on that. Yeah, yep.

Speaker Change: On gross to net and I know mark and provide some guidance on that.

Mark Hahn: Good morning. So one of the things that we've talked about over time is that we saw the opportunity for the gross net to improve over time. And it has. It's continued to decrease. And in Q1, I'd characterize it as well below 20% as we as we exited the quarter. And so I think in addition to the growth that we expect through 2025, I think some of the concepts that you mentioned are correct. You know, clearly we saw as the whole industry sees a level of blunting that happens early on in Q1, which as you can see, you know, prescriptions have been written through that, albeit we noticed it as well as I'm sure everyone did, as deductibles are reset, co-pays are reset, things like that.

Speaker Change: Yes, yes. Good morning, yes, so one of the things that we've talked about over time is that we saw the opportunity for the gross to net to improve over time and it has it has continued to decrease.

Speaker Change: In Q1.

Speaker Change: Characterize it is well below 20%.

Speaker Change: As we as we exited the quarter.

Speaker Change: And.

Speaker Change: So I think in addition to the growth that we expect through 2025 I think some of the concept that you mentioned are correct clearly we saw as the as the whole industry sees as a level of blending that happens early on in Q1, which as you can see.

Speaker Change: <unk> prescriptions have been written through that.

Speaker Change: Be it we noticed it as well as I'm sure everyone did as deductibles are reset copays are reset and things like that.

Mark Hahn: But with that said, you know, we see tremendous growth as we've seen already. I think we continue to focus on the important aspects that I mentioned already, that is growing the prescriber base, growing new prescriptions, being attentive, of course, to the refill dynamics that occur. And as you look at it, it becomes very much a stacking phenomenon as the weeks and months and quarters unfold. And all of that, of course, has continued to build on the base. We have mentioned while grown substantially over just two full quarters, still plenty of room to go in having of a huge opportunity in new patients.

Speaker Change: But with that said we see.

Speaker Change: Tremendous growth as we've seen already.

Speaker Change: I think we continue to focus on the important aspects that I mentioned already that is growing the prescriber base growing new prescriptions.

Speaker Change: That being attentive of course to the refill dynamics that occur and.

Speaker Change: As you look at it it becomes very much a stacking phenomenon.

Speaker Change: As the weeks and months and quarters unfold.

Speaker Change: And all of that of course has continued to build on the base we have.

Speaker Change: <unk> grown substantially over just two full quarters.

Speaker Change: Plenty of room to go and having.

Speaker Change: And the huge opportunity in new patients so yes.

Mark Hahn: So yeah, I think the growth is substantial. We expect it to be continued to be substantial and we're just such early on in the process. There's plenty of room to go.

Speaker Change: I think the growth is substantial but we expect it to be continue to be substantial and.

Speaker Change: And we're just such early on in the process.

Speaker Change: There's plenty of room to go.

Yasmeen Rahimi: Thank you, congrats again.

Speaker Change: Thank you congrats again.

Speaker Change: Thanks.

Olivia Brayer: Our next question comes from Olivia Brayer at Cantor Fitzgerald. Hi, good morning. Congrats on the quarter. And thank you guys for the questions. Maybe just following up on Growth Tonight quickly, it's obviously trending much better than that 25% discount that you guys have previously talked about. So maybe just any thoughts on where you think that could ultimately shake out?

Speaker Change: Our next question comes from Olivia Brayer at Cantor Fitzgerald.

Olivia Brayer: Hi, good morning, Congrats on the quarter and thank you guys for the questions. Maybe just following up on gross to net quickly, it's obviously trending much better than that 25%.

Olivia Brayer: Discount that you guys have previously talked about so maybe just any thoughts on where you think that could ultimately shake out and then on hitting operating cash flow positive. This quarter is that something you think you can maintain going forward and just any thoughts on the kind of earnings power that you could start to have especially as we think about 2026 and beyond.

Olivia Brayer: And then on hitting operating cash flow positive this quarter, is that something you think you can maintain going forward? And just any thoughts on the kind of earnings power that you could start to have, especially as we think about 2026 and beyond? Thank you. Sure, sure. Good morning, Olivia. So first On the gross net, I think we've talked about this in the past, that while we started at launch, we said we thought it could be in the 25% range, but we thought it could actually work out to be much lower, and then in Q3, we talked about it being below 25%, now well below 20%.

Olivia Brayer: Thank you guys.

Speaker Change: Sure sure good morning Olivia.

Olivia Brayer: First on.

Speaker Change: The gross to net I think we've talked about this in the past that.

Speaker Change: Well, we started at launch we said we thought it could be in the 25% range, but we thought it could it could actually work out to be much lower.

Speaker Change: Then in Q3, we talked about it being below 25% now well below 20% I think we're getting to a point of stabilizing there may be a little bit of room for improvement, yet, but but not a dramatic amount.

Mark Hahn: I think we're getting to a point of stabilizing. There may be a little bit of room for improvement yet, but not a dramatic amount.

Mark Hahn: As far as the cash flow breakeven, to be technical from an accounting and financial reporting perspective, as I think my job is, we were not at cash flow breakeven from operations because of the accounts receivable bill. We were, however, at a run rate of revenue that exceeds cash expenses. And yeah, I think as we continue to grow and execute on sales, I do think that we will be able to continue that pace going forward. And I think we've talked many times about the long-term profitability of the business. I think that as sales continue to grow, the expenses will only grow so much over time.

Speaker Change: As far as the cash flow breakeven.

Speaker Change: And to be technical off from an accounting and financial reporting perspective is I think my job is.

Speaker Change: We were not a cash flow breakeven from operations because of the.

Speaker Change: Accounts receivable build we were however at a run rate of revenue.

Speaker Change: That exceeds cash expenses.

Speaker Change: And yes, I think as we continue to grow and execute on sales I do think that we will be able to continue that pace going forward.

Speaker Change: And I think we've talked.

Speaker Change: Many times about the long term.

Speaker Change: Bob.

Speaker Change: Profitability of the business I think that as sales continue to grow the expenses well.

Speaker Change: Only grow so much overtime there is theirs.

Mark Hahn: There's a relatively tight sales force and relatively, I'd say, a lean commercial spend against it as well.

Speaker Change: A relatively tight sales force and relatively.

Speaker Change: I would say a lean commercial spend against it as well.

Speaker Change: Yeah.

Olivia Brayer: Great. Thanks, guys.

Speaker Change: Great. Thanks, guys congrats on a great quarter. Thanks.

Speaker Change: Thank you.

Tara Bancroft: We'll go next to Tara Bancroft at TD County. Hi, good morning. Thanks for taking the questions and congrats on the fantastic quarter. So I was hoping if you could provide any more color on the refill rate for patients who initiated O2Ver treatment six or more months ago. Like, what are the rate of refills per year also that you're expecting at steady state? Basically, any color you could provide on how you expect this to evolve would be really helpful. Thanks. Sure.

Speaker Change: We'll go next to Tara Bancroft at TD Cowen.

Tara Bancroft: Hi, good morning, Thanks for taking the questions and congrats on the fantastic quarter. So I was hoping if you could provide any more color on the refill rate for patients who initiated owe to bear treatment six or more months ago like what are the rate of refills per year also that you're expecting at steady state basically.

Tara Bancroft: Any any color you could provide on how you expect us to evolve would would be really helpful. Thanks.

Chris Martin: Good morning, Tara. Yeah, maybe, Chris, you can provide some color on what we're seeing in refill rates and persistency. Yeah, thanks, Dave. And thanks, Tara. You know, the thing that, as Dave mentioned, we've been very encouraged by the way the persistency and refill rates have been progressing since launch. Keep in mind, as Dave talked about, we're adding more new patients every single month. So the number of patients that could be eligible for five, six refills is smaller than the patients that we, the ends of patients that we have today. But when we look historically at that right now, we are very encouraged at how those refill and persistency rates look.

Tara Bancroft: Sure Good morning Tara.

Tara Bancroft: Maybe Chris you against that provide some color on what we're seeing in refill rates and persistency.

Chris: Yeah, Thanks, Dave and thanks Tara.

Chris: The thing that as Dave mentioned, we've been very encouraged by the way the persistency and refill rates have been progressing since launch keep in mind as Dave talked about we're adding more new patients every single month. So the number of patients that could be eligible for five six refills is smaller than the pace.

Chris: <unk>.

Chris: And the patients that we have today, but when we look historically at that right. Now we are very encouraged at how those refill and persistency rates look I think we talked about in our previous call that we were starting to see patients have a significant number of refills already in there.

Chris Martin: I think we talked about in a previous call that, you know, we were starting to see patients have a significant number of refills already in their path on treatment. And we felt like there was a potential for an upside on the overall persistency that we saw with patients. Remember, in COPD, we see patients fill about six times a month or six times a year, excuse me. And over time, we felt like there was a potential upside there based on the product and O2VARES benefits that provide these patients, but also our distribution channel and the way that we provide a white glove service to these patients.

Chris: They are passed on treatment and we felt like there was a a tactful for an upside on the overall persistency that we saw with patients remember in COPD, we see patients feel about six times, a month or six times a year excuse me and over time, we felt like there was a potential upside there based on the product.

Chris: And <unk> benefits. It provides these patients but also our distribution.

Chris: Channel and the way that we provide a white glove service to these patients.

Tara Bancroft: I think early on, there's no reason to believe that this upside doesn't still exist. And again, we're very encouraged by how we're seeing that refill rate kind of progress over time. I think we need a few more months so that we have more ends and a full look back on the totality of a year. But again, very encouraged by what we see early on in these patients. Okay, great. Yeah, thank you so much.

Chris: I think early on there is no reason to believe that this upside doesn't it still exists and again, we're very encouraged by how we're seeing that refill rate.

Chris: Progress over time, I think we need a few more months, so that we have more and.

Chris: We'll look back on the totality of it.

Chris: A year, but again very encouraged by what we see early on in these patients.

Speaker Change: Okay, great yeah. Thank you so much and just briefly separately.

Tara Bancroft: And just briefly, separately, just, do you have the option or the interest to repurchase China rights and any kind of Description of the size of the China market would be really, really helpful, too. Thanks.

Chris: <unk> did.

Chris: Do you have the option or the interest to repurchase China rights and any kind of.

Chris: Description of the size of the China market would be really really helpful too. Thanks.

David Zaccardelli: Yes, thanks for the question. You know, I think that there is that opportunity, although it requires certain conditions to be met on other types of transactions that we're making.

Chris: Yes. Thanks.

Chris: I think that there is.

Chris: That opportunity.

Chris: Although it requires certain conditions to be met.

Chris: Other types of transactions that we're making so.

Tara Bancroft: So I think that at this time, that is not part of any plan or thinking. And we continue to have a very strong collaboration with Nuance Pharma, as we've talked about on the call this morning. Okay, thank you so much.

Chris: I think that at this time.

Chris: That is not part of any plan our thinking.

Chris: And we continue to have a very strong collaboration with nuance pharma.

Chris: As we've talked about on the call. This morning.

Chris: Okay. Thank you so much.

Chris: Thanks.

Tiago Fauth: We'll move next to Tiago Fauth at Wells Fargo. Great. Let me add my congrats and thanks for taking the questions. Just on the persistent question, when we do our channel checks, the discontinuation rate seems to be very low, so it's fairly anecdotal. But I'm curious if you have any insights from the field in terms of if there are discontinuations, what might be driving that? It doesn't feel like it's safety tolerability or anything like that. It feels a little bit more random, at least when we do those channel checks.

Chris: Well move next to Thiago South at Wells Fargo.

Chris: Great. Let me add my congrats and thanks for taking my questions.

Speaker Change: Just on the persistent question when we do our channel checks the discontinuation rate seems to be very low so fairly anecdotal, but I'm curious if you have any insights from the field in terms of if there are discontinuation is what might be driving that.

Speaker Change: That doesn't feel like it's safety tolerability or anything like that it feels a little bit more random or at least when we do those channel checks.

Tiago Fauth: So any color there would be helpful.

Speaker Change: So any color there would be helpful. And my second question is more related to long term competition with biologics been getting a lot of inbounds on how that could potentially impact the opportunity here.

Tiago Fauth: And my second question is more related to long-term competition of biologics. I've been getting a lot of inbounds on how that could potentially impact the opportunity here, especially if you have more upstream mechanisms of action. I'm curious how you guys are seeing the long-term play here.

Speaker Change: Especially if you have more upstream mechanisms of action I'm curious how you guys are seeing that the long term play here. Thank you.

Unknown Executive: Thank you. Fair enough.

Speaker Change: Hi, good morning, Thiago Thanks for those questions.

Speaker Change: Start with.

Speaker Change: A bit of color on discontinuation, but I think it's a little early too.

Speaker Change: Speak with clarity around discontinuation says you've mentioned.

Speaker Change: And Europe calls with physicians.

Speaker Change: It can be sporadic and for different reasons I think also.

Speaker Change: What constitutes a discontinuation is a bit unclear because as we've talked about the patients can be somewhat sporadic and timing on when they will be filled prescriptions and so.

Speaker Change: They may take longer to refill and yet it's not technically a discontinuation.

Speaker Change: Of how theyre going to use <unk> chronically.

Speaker Change: I think again, along with refills it takes a bit more time to provide some clarity around.

Speaker Change: True discontinuation.

Speaker Change: As we've talked about in the past and as you alluded to just now Tolerability is very favorable without you there.

Speaker Change: That comes of course from the clinical trial data and as our general experience in the commercial setting as well.

Speaker Change: With regard to biologics.

Ed: Think it's Ed.

Ed: Credibly, great for the field for patients with COPD to have.

Speaker Change: Different mechanisms.

Speaker Change: Approaching they're applying two different mechanisms for inflammation. So I think all of that's great. We don't.

Speaker Change: Don't view it as competitive in any way with O two there.

Speaker Change: In many ways. It can be very complementary I think approaching inflammation from multiple mechanisms will be.

Speaker Change: Solid approach for the treatment of COPD.

Speaker Change: And also keep in mind that <unk> has.

Speaker Change: Bronchodilator.

Speaker Change: Acute bronchodilator effects as well.

Speaker Change: It is part of it.

Speaker Change: Pharmacology in its clinical profile, which the biologics.

Speaker Change: Some are more focused on inflammation and broncho dilation and I still think patients with COPD will require chronic broncho dilation to treat them along with different approaches.

Speaker Change: Anti inflammation. So I think it's great for the field I think we're looking forward to it and I don't think Theres any pharmacologic reason that <unk> could not be used in conjunction.

Speaker Change: With biologics if physicians thought that was appropriate for a patient.

Unknown Executive: Thank you so much.

Speaker Change: Fair enough all right. Thank you so much.

Speaker Change: Thanks.

Thomas Shrader: We'll go next to Tom Shrader at BTIG. Good morning and congratulations for essentially hitting our 2Q number. I have a do some reading on bronchiectasis. And as far as I understand it, a fair number of COPD patients also have that diagnosis. Do you know how you do well in those patients, or were they excluded?

Speaker Change: Well go next to Tom Shrader at B T I D.

Speaker Change: Good morning, and congratulations for essentially hitting our <unk> number.

Speaker Change: I have.

Speaker Change: Doing some reading on bronchiectasis and as far as I understand it a fair number of COPD patients also have that diagnosis.

Speaker Change: You know, how you do well with those patients or were they excluded.

Thomas Shrader: And then a real quick one for either Mark or Chris, are you guys completely outside of the Medicare Part D redesign, or is that something you also have to think about? Thanks.

Speaker Change: And then a real quick one for either Mark or Chris are you guys completely outside of the Medicare part D redesign or is that something you also have to think about.

Speaker Change: Yes.

Unknown Executive: Great.

Unknown Executive: Good morning, Tom.

Speaker Change: Great. Good morning, Tom So maybe the last question first I don't know, Chris you want to talk about being outside of the part D.

Chris Martin: So maybe the last question first. I don't know, Chris, you want to talk about being outside Part D?

Chris Martin: And then I think Tara and Kathy can comment on bronchiectasis. Yeah, Tom, thanks for the question. I appreciate the context. I'm hitting the Q2 consensus number two. I think for Medicare Part D redesign, I think it's an interesting, you know, we are primarily through a medical benefit reimbursement. So 80% of our reimbursement is through medical benefit, either through traditional Part B or through Medicare Advantage. We can see Medicare Part D reimbursement in a long-term care facility or a skilled nursing home facility.

Speaker Change: And then I think.

Speaker Change: Tara and Kathy can comment on bronchiectasis.

Speaker Change: Yeah, Tom Thanks for the question.

Speaker Change: Shape for context time, hitting the Q2 consensus number two.

Speaker Change: I think for Medicare part D redesign I think it's been interesting.

Speaker Change: Our primarily through a medical benefit.

Speaker Change: Reimbursed yet so 80% of our reimbursement is through medical benefit either through traditional part b or through Medicare advantage, we can see Medicare part D reimbursement and a.

Speaker Change: Our long term care facility or a skilled nursing home facility, but that is such a small percentage that I would say were not affected by any of this redesign is going on with purely met the prada.

Kathy Rickard: But that is such a small percentage that I would say we're not affected by any of this redesign that is going on with purely MedD products that exist today. Great, and then touching on the bronchiectasis question as well, you know, we really had few patients with confirmed bronchiectasis by a CT scan in the enhanced program. You know, certainly the reason we're doing that program is because we think the mechanisms that help improve COPD and patients with COPD are also applicable to patients with bronchiectasis and it's the anti-inflammatory mechanism targeting neutrophilic inflammation and also the effects on cough and sputum that we saw in COPD patients stemming from potentially CFTR activation, which we've seen in nonclinical studies, helping those patients to clear their cough and sputum, which are the two main symptoms in bronchiectasis.

Speaker Change: Products that exist today.

Speaker Change: Congrats again.

Speaker Change: Okay, Great and then touching on the Bronchiectasis question.

Speaker Change: As well we.

Speaker Change: Really had few patients with confirmed bronchiectasis ICT scan in the enhanced program.

Speaker Change: Certainly the reason we're doing that program is because we think the mechanisms that help improve COPD in patients with COPD are also applicable to patients.

Speaker Change: Patients with bronchiectasis and its the anti inflammatory mechanism targeting neutrophil like inflammation and also the effects on coffee beauty that we saw in COPD patients.

Speaker Change: Stemming from potentially see FTR activation, which we've seen in non clinical studies, helping those patients to clear their constant sputum, which are the two.

Speaker Change: Symptoms in bronchiectasis.

Thomas Shrader: Just to follow up, what is the overlap? Is it very small?

Speaker Change: Just a follow up what is the overlap as it is at very small.

Unknown Executive: Last one confirmed.

Speaker Change: Yes, Brian Yes go.

Kathy Rickard: Go ahead, Kathy. Go ahead. I just had a comment from the medical perspective. So patients with COPD could have isolated areas of bronchia. Certainly, as Tara talked about, their sputum, cough, things like that are similar to patients who have bronchiectasis by itself, but patients with COPD have a much broader spectrum because they have bronchitis, so it's affecting their bronchial tubes, but it also affects their airways. They have emphysema, and then they'll have some localized areas of bronchitis. Patients with bronchiectasis primarily have just effects on their bronchial airways, the larger airways. This results from usually past infections and things like that in the past versus patients with COPD who have underlying disease primarily related.

Cathy: Go ahead Cathy.

Speaker Change: Okay.

Speaker Change: In a minute perspective, so patients with COPD could have isolated areas.

Speaker Change: Areas of Bronchiectasis.

Speaker Change: Certainly and that Terry talked about executing them.

Speaker Change: Things like that are similar to patients who have bronchiectasis by itself.

Speaker Change: It's painful in COPD have a much broader spectrum because they have bronchitis.

Speaker Change: Affecting the bronchial tubes, but also affects their airways they have emphysema and then they'll have some localized areas of bronchiectasis.

Speaker Change: Mistras with Bronchiectasis, primarily have just look back on the bronchial airway. It's the larger Airways. This result from usually pass infections and things like that in the past.

Speaker Change: Versus patients with COPD, who have underlying disease primarily related.

Kathy Rickard: cigarette smoke, and other toxic exposures. So the bronchiectasis patient will have some things in common with COPD, but not the overall, the whole overall look of the disease, so to speak. And as Tara said, because of our effects on cough and sputum and so forth, we would expect it to work on those patients with bronchiectasis alone.

Speaker Change: Cigarette smoke and other toxic exposures.

Speaker Change: The bronchiectasis patient will have some things in common with <unk>, but not the overall the whole overall look of the disease, so to speak and as Karen said.

Speaker Change: Because of our effects on coffee speed and so forth, we would expect it to.

Speaker Change: To work on those patients with bronchiectasis alone.

Tara Rheault: Tara? And the overlap, if you look at the diagnosed bronchiectasis population, you might find around 20% of those patients also have a COPD diagnosis. I think going the other direction and looking at the COPD population, I think what we're understanding as the, you know, understanding of bronchiectasis progresses, is that the more they look for it in COPD patients, the more they find it.

Speaker Change: Tara.

Sure Neal.

Neal: Your lap if you look at the diagnostic bronchiectasis population you might find around 20% of those patients also have a COPD diagnosis.

Neal: I think going the other direction and looking at the COPD population I think what we're understanding is as the.

Neal: Understanding those bronchiectasis progresses is that the more they look for it in COPD patients to more and they find it.

Neal: Great. Thank you.

Raghuram Selvaraju: We'll move next to Rahm Selvaraju at H.C. Wainwright. Thanks very much for taking my questions, and congrats again on this excellent quarter. Really impressive performance. I was wondering if you could maybe give us some more information and insight on the competitive landscape and what you are hearing from physicians as we approach potential readouts from biologics that are kind of in the same vein as dupilumab, in particular drugs like itapecumab or astagolumab. And in particular, you know, this kind of follows on from one of, I think, the earlier questions about competition from biologics. If there are any physician opinions indicating that prescribers might look at the lower frequency of administration for biologics as a potential advantage or reason to put patients on a biologic versus NCC.

Speaker Change: Well move next to Ron stuff ours, you at H C Wainwright.

Speaker Change: Thanks, very much for taking my questions and congrats again on this excellent quarter really impressive performance I was wondering if you could maybe give us some more information and insight on the competitive landscape and what you are hearing from physicians as we approach potential readouts from biologics.

Speaker Change: That are kind of in the same vein as the pillow Mab in particular drugs like it's a pack a mab or Astra Golden lab and in.

Speaker Change: <unk> you know this kind of follows on from one of I think the earlier questions about <unk>.

Speaker Change: Competition from biologics, if there are any physician opinions, indicating that prescribers might look at the lower frequency of administration for biologics as a potential advantage or reason to put patients on a biologic verse events in country.

Raghuram Selvaraju: And if you are not seeing evidence of that, you know, maybe give us a sense of why, and in particular, if this might be traced back to not only Encephentrine's unique mechanism of action, but also the safety advantages that it would likely continue to enjoy over any future biologic competitors. Thank you.

Speaker Change: And if you are not seeing evidence of that you know maybe give us a sense of why and in particular, if this might be traced back to not only in <unk> unique mechanism of action, but also the safety advantages that it would likely continue to enjoy over any future biologic competitors. Thank you.

David Zaccardelli: Hi, good morning. Thanks for the question. I may provide a general comment and then Chris can talk about what's been, you know, what we're seeing in the field. I think from a pharmacology basis, we don't see it as competitive in any particular way. I think the use case for a biologic, again, assuming that we'll have to see what the results actually say, is different than for O2-VERE. O2-VERE is a PD3, PD4 inhibitor with both bronchodilation and non-steroidal anti-inflammatory has a unique profile. And as we talked about on the call, a very compelling benefit to risk profile, and other drugs will have to stand on their own with regard to that.

Speaker Change: Hi, Good morning. Thanks for the question I May provide a general comment and then Chris can talk about what's been.

Speaker Change: What we're seeing in the field that I think from a pharmacology basis.

Speaker Change: Don't see it as competitive in any particular way I think the use case for a.

Speaker Change: Biologic again, assuming that we'll have to see what the results actually say is.

Speaker Change: Aren't and then for <unk> there.

Speaker Change: <unk> is a PD <unk> four inhibitor with both broncho dilation and nonsteroidal anti inflammatory has a unique profile and as we talked about on the call a very compelling benefit to risk profile.

Speaker Change: In other drugs will have to stand on their own with regard to that.

David Zaccardelli: As I look at it, you know, patients who are symptomatic and need additional treatment, a lot of that is around treating their dyspnea, which, you know, typically requires bronchodilation. That is a use case for O2-VERE, in addition to supporting the treatment with anti-inflammatory effects to the PD3, PD4 pathway. So, I think that all of the treatments coming along can be complementary to O2-VERE. As I mentioned, treating inflammation from multiple pharmacologic pathways seems to make some sense broadly. And I think the use case for them are going to be different.

Speaker Change: Hey.

Speaker Change: I look at it.

Speaker Change: Patients, who are symptomatic and need additional treatment a lot of that is around treating their destiny.

Speaker Change: Which typically requires broncho dilation.

Speaker Change: That is a use case for O. Two there in addition to supporting the treatment with anti inflammatory effects of the PD <unk> four pathway. So.

Speaker Change: I think that all of the treatments coming along can be complementary to <unk>. There as I mentioned treating inflammation for multiple pharmacologic pathways seem to make some sense broadly and and I think the use case for them are going to be different and so we're very confident that <unk>.

Chris Martin: And so, we're very confident that O2-VERE has a place in the treatment paradigm, and as I've talked about, has the potential to redefine exactly how patients are treated for their symptoms. I don't know, Chris, do you want to add anything to that with what we're seeing in the field from physicians? Yeah, Dave, I think you covered it really well. I would just say anecdotally, when we hear our field reps interact with physicians, they express very similar things to what Dave talks about, which is that O2-VAER's profile is a broad-use COPD treatment. Because these patients, as Dave described, come in complaining of dyspnea, they need that bronchodilation effect, and O2-VAER is always going to provide bronchodilation and non-steroidal anti-inflammatory effects as a base for these patients.

Speaker Change: <unk> has a place in the treatment paradigm and as I've talked about has the potential to redefine exactly how patients are treated for their symptoms.

Speaker Change: Chris do you want to add anything to that but what we're seeing in the field from physicians.

Chris: Yes, Dave I think you've covered it really well I would just say anecdotally when we hear our field.

Speaker Change: Reps interact with physicians they they express very similar things to what Dave talks about which is that <unk> profile as a broad use COPD treatments because these patients as Dave described come in complaining of Disney they need that broncho dilation effect in <unk> is always going to provide broncho dilation and non.

Chris: Right only anti inflammatory effects as a base for these patients and they look at the biologics.

Chris Martin: And they look at the biologics as an add-on or something that they can hit inflammation in another way at another point in time for these patients. So I think we're very pleased and encouraged at how physicians view O2-VAER as a broad-based COPD treatment for all their patients that are persistently symptomatic. So I think it goes back to what Dave talked about, which is the profile of O2-VAER.

Chris: Add on or something that they can hit inflammation in another way at another point in time for these patients. So I think we were very pleased and encouraged at how physicians view <unk> as a broad base COPD treatment for all of their patients that are persistently symptomatic. So I think it goes.

Chris: Back to what Dave talked about which is the profile of O two there.

Chris: Okay.

Raghuram Selvaraju: That's very helpful.

Speaker Change: That's very helpful and just one other quick one you mentioned earlier in the call about the possibility of turning attention towards in licensing or acquiring additional potential products or product opportunities can you elaborate on that a little bit just from a broad strategic perspective, and if you are looking at spin.

Unknown Executive: Just one other quick one. You mentioned earlier in the call about the possibility of turning attention towards in licensing or acquiring additional potential products or product opportunities.

Unknown Executive: Can you elaborate on that a little bit just from a broad strategic perspective? And if you are looking specifically, I would imagine at pulmonology focused products and how broadly you expect to cast your net. And if you are going to specifically only concentrate on those opportunities that are likely to be directly complementary to Oaks. Yeah, no, that's a great question. I think that, yes, we, you know, as we continue to have great success with the launch of O2VAIR, and as we expand our global footprint, we want to, you know, again, grow the business, and we are a development-based commercial company.

Speaker Change: Typically I would imagine at Pulmonology focused products and how broadly you expect to cast here in that and if you are going to specifically only concentrate on those opportunities that are likely to be directly complementary told you. There. Thank you.

Speaker Change: Yes, no thats great question I think that yes, we are.

Speaker Change: As we continue to have great success with the launch of <unk> and as we expand our global footprint.

Speaker Change: We wanted to again grow the business.

Speaker Change: And we are a development base.

Speaker Change: Based commercial company. So we want to look at assets that would leverage our capabilities.

David Zaccardelli: So, we want to look at assets that would leverage our capabilities, of course, in development, regulatory, and commercial. That would sit primarily in the respiratory space. Of course, pulmonology as a call point would be a strength, and I think there are opportunities and mid and later stage products that currently are out there that exist in that space. So, we have an eye out for that. Clearly, we want to continue to have success with the U.S. launch and continue to expand our global reach with O2VAIR.

Speaker Change: In development regulatory and commercial that would fit.

Speaker Change: Primarily in the respiratory space of course, Pulmonology is a call point would be a strength.

Speaker Change: And I think there are opportunities and.

Speaker Change: Mid and later stage products that.

Speaker Change: Currently are out there that exist in that space. So.

Speaker Change: We have a eye out for that.

Speaker Change: Clearly we want to continue to have success with the U S launch and continue to expand our global reach with OTA, there, but as we build the company acquiring assets will be the core of that.

Unknown Executive: But as we build the company, acquiring assets will be the core of that.

Speaker Change: Thank you very much.

Joon Lee: We'll move next to Joon Lee at Truist Securities. Good morning and congrats on the really strong quarter. This is awesome on for June. Thanks for taking the questions. Just a couple from us. So, for the tier one doctors who haven't yet prescribed Otivir, what are you hearing from them? And then on the patent update, you know, you had several patents that were potentially eligible for an orange book listing. Can you remind us which one was granted for June 2044? Thank you. Great.

Speaker Change: We'll move next to Jim Lee at tourists Securities.

Jim Lee: Good morning, and congrats on the really strong quarter. This is awesome on for Jim Thanks for taking the questions.

Speaker Change: Just a couple from us so for the tier one doctors, who haven't yet prescribed <unk> what are you hearing from them.

Speaker Change: And then on the patent update you know you had several patents that were potentially eligible for an orange book listing can you remind us which one was granted for June 2044. Thank you.

David Zaccardelli: No, thanks for the question. I guess I'll start with the latter one and then turn it over to Chris on talking about our Tier 1 HCPs. Yes, we're very pleased that we have an additional patent listed in the Orange Book with the 2044 expiration. And so that patent centers around what can be just generically called the purity aspects of n-C-fentrin. And what I would say is sort of a fingerprint of what n-C-fentrin looks like from a chemical basis. So a lot of that has to do with the novel aspects of n-C-fentrin, both purity and impurities that exist within its fingerprint.

Speaker Change: Great. Thanks for the question so I'll start with the latter one and then turn it over to Chris on talking about our tier one hcp's.

Speaker Change: Yes, we're very pleased that we have an additional patent listed in the.

Speaker Change: Orange book with a 2044.

Speaker Change: Exploration or and so that patent centers around what can be just generically called the purity aspects of.

Speaker Change: Hence if entrant.

Speaker Change: And what I would say, it's sort of a fingerprint of what NC Ventura and looks like.

Speaker Change: From a chemical basis.

Speaker Change: So a lot of that has to do with the novel aspects of empty veterans.

Speaker Change: Both purity and impurities that exist within its fingerprint and I don't know.

David Zaccardelli: And I don't know if you want to...

Chris Martin: Chris, you want to talk about Tier 1? Yeah, as far as Tier 1, Dave, you know, when we look at our Tier 1, then we see approximately 60% of them writing within nominally the first two full quarters of launch. It's something that I think is an impressive start for the brand. Remember, these Tier 1 physicians are seeing upwards of more than 150 COPD patients a month. So the opportunity within this group is tremendous. You know, what we've done over the course of the last few months is also try to understand within physicians that have written to date and those that haven't, is there a difference in sentiment?

Speaker Change: Chris you want to talk about tier one yes.

Speaker Change: As far as tier one.

Speaker Change: Dave you know when we look at our tier one and we see approximately 60% of them writing within nominally the first two full quarters of launch it's something that I think is an impressive start for for the brand I remember these tier one physicians are seeing upwards of more than 150 <unk>.

Speaker Change: <unk> patients a month so the opportunity within this group is tremendous.

Speaker Change: What we've done over the course of the last few months is also try to understand within physicians that have written to date and those that have a is there a difference in sentiment and I think the thing that we've seen in our market research is that regardless of if a doctor has ridden oh two there today or if they haven't they all see the utility of O to bear in the <unk>.

Chris Martin: And I think the thing that we've seen in our market research is that regardless of if a doctor has written O2VaR today or if they haven't, they all see the utility of O2VaR in the future and eventually get the same share levels of our capture rate of patients within their practice. You know, sometimes physicians are a little bit slower in adopting and that's usually contributed to needing to see it in the guidelines, having a peer discuss it with them. And those are all things that if you think about it, we got added to the gold guidelines at the end of November.

Speaker Change: Sure and eventually get the same share levels of our capture rate of patients within their practice sums.

Speaker Change: Sometimes physicians are a little bit slower in adopting and that's usually contributed to meeting to see it in the guidelines having appear discuss it with them and those are all things that if you think about it we got added to the gold guidelines at the end of November we've continued to do speaker programs. So I would suspect.

Chris Martin: We've continued to do speaker programs. So I would suspect as we continue through this year, we'll continue to increase the number of Tier 1 prescribers that we have. And I think what is very encouraging to me is that regardless of what they've done today is the outcome in the future between the writers and non-writers today is very similar because the benefit and the profile of O2VaR is so compelling for them by providing bronchodilation and non-steroidal anti-inflammatory effects for them.

Speaker Change: As we continue through this year, we will continue to increase the number of tier one prescribers that we have and I think what is very encouraging to me is that regardless of what they've done today is the outcome in the future between the riders and non riders today is very similar because the benefit and the profile of <unk>.

Speaker Change: <unk> is so compelling for them by providing broncho dilation and nonsteroidal anti inflammatory effects for them.

Speaker Change: Okay.

Speaker Change: Thank you.

Shashila Hernandez: We'll go next to Shashila Hernandez at Van Lansholt Campus. Yes, thank you for taking my question and congrats on a quarter. As you continue to progress the regulatory activities for potential marketing, authorization, application submissions in the EU and UK, could you share your latest thinking on strategy and partnering in these regions? Thank you.

Speaker Change: We'll go next to Sheila Hernandez at Van Den Landshark campaign.

Sheila Hernandez: Yes. Thank you for taking my question and congrats on a quarter.

Speaker Change: Sure continue to progressive regulatory activities for a potential marketing authorization application submissions in the EU and U K could you share your latest thinking on strategy and factoring in these regions. Thank you.

David Zaccardelli: Yes, good morning. Thanks for the question. Yeah, we continue to engage both the EMA and the MHRA in the sort of very structured approach to discussing the applications. That's ongoing as we speak. And as you know, it's a very calendared approach for both of them. I would say that sometime around mid-year, we will be better informed as to the responses and thoughts on our application. And so I think we look forward to updating you as we get into the next quarter and beyond in 2025 to bring more clarity as to what the exact plan in Europe will be.

Speaker Change: Yes. Good morning, Thanks for the question.

Speaker Change: Yes, we continue to engage.

Speaker Change: Both the EMA and the MH array.

In the.

Speaker Change: The sort of a very structured.

Speaker Change: Approach to discussing the applications.

Speaker Change: That's ongoing as we speak.

Speaker Change: And it's as you know, it's a very calendar approach for both of them I would say that sometime around mid year, we would be.

Speaker Change: Better informed as to their responses and thoughts on our application and so I think we look forward to updating you as we get into the next quarter and beyond in 2025 to bring more clarity as to what the exact plan in <unk>.

Speaker Change: Europe will be.

David Zaccardelli: Our strategy around partnering in Europe remains the same. And I guess you would imagine that having regulatory clarity is also part of that discussion with partners. So all of it kind of comes together as we progress through 2025. Okay, that's clear. Thank you.

Speaker Change: Our strategy around partnering in Europe remains the same.

And I guess, you would imagine that having regulatory clarity is also part of that discussion with partners. So all of that kind of comes together as we progress through 2025.

Speaker Change: Yes.

Speaker Change: Okay. That's clear thank you.

Boobalan Pachaiyappan: and we'll go next to Boobalan Pachaiyappan at Roth's Capital. Hi, good morning, team, and congrats on the progress. So I have a couple of questions. So firstly, with respect to price stability, so with all the news about tariffs and inflation taking the center stage, so I wonder if price stability will be maintained for holdover in 2025. Any thoughts on that? That's the first question.

Speaker Change: And we'll go next to the Lamb <unk> at Roth capital.

Speaker Change: Hi, Good morning, David and congrats on the progress so I have a couple of questions firstly with respect to price stability.

So with all the new solar tariff and inflation taken center stage. So I wonder if price stability will be maintained for hardware in 2020 filed any.

Speaker Change: That's the first question on the second with respect to your face to be fixed dose study I was wondering if you could provide some high level thoughts on what to expect in the started that youre planning to start.

Boobalan Pachaiyappan: And the second, with respect to your phase to be fixed or steady, I was wondering if you could provide some high-level thoughts, you know, what to expect in the study that you're planning to start second half of this year. And then in that regard, I wonder if you're planning to measure pre-dose FEV1, because my understanding is that this is one of the important efficacy markers the FDA is looking for, even though the zero to 12-hour FEV1, sorry, is also a good one. Thank you. Great.

Speaker Change: Half of this year and then in that regard I Wonder if you are planning to measure pre drew pre dose <unk>.

Speaker Change: E V. One because my understanding is that this is one of the important efficacy markers that FDA is looking for even though the zero to one of our FTE.

Speaker Change: <unk> sorry.

Speaker Change: It's a good one thank you.

Mark Hahn: Good morning, Boobalan. So, with regards to price stability, you know, as you can imagine, things are somewhat fluid and never changing. But with that said, we see the price of O2 air as stable through 2025. There's nothing that we have in concrete form that would change our thinking on that.

Speaker Change: Great Good morning, Glenn.

Speaker Change: So with regards to price stability.

Speaker Change: As you can imagine things are somewhat fluid and never changing but with that said we.

Speaker Change: We see the price of OTA, where as stable through 2025.

Speaker Change: There is nothing that we have been concrete.

Speaker Change: From that with things that would change our thinking on that.

Tara Rheault: And I'll turn it over to Tara to talk about the Phase 2b study and our endpoints and what we're measuring. Sure. So the team has really done a great job progressing the fixed-dose combination program. And we, as we stated in the release, are planning to start our kind of pivotal Phase 2B study later this year on the fixed-dose combination. In terms of endpoints there, you know, I think we'll take the same approach that we took with O2Vir. You know, insufentrin is a twice-daily drug with a 12-hour duration of action. Twice-daily drug is operationally difficult to get a clear picture of a pre-dose trough, FEV1.

Speaker Change: And I'll turn it over to Terry to talk about the phase <unk> study.

Speaker Change: Our endpoints and what we're measuring.

Speaker Change: Sure.

Speaker Change: The team has really done a great job progressing the fixed dose combination program and we as we stated in the release.

Speaker Change: Our planning to start our pivotal phase <unk> study later this year on the fixed dose combination.

Speaker Change: In terms of endpoints there.

Speaker Change: We will take the same approach that we took with <unk> there.

Speaker Change: Anthos entering as a twice daily drag with a 12 hour duration of action twice daily drug is is operationally difficult to get a clear picture of the trough pre dose trough FTB, one and so while we will measure it I don't expect that will be necessarily our primary endpoint. We will continue to look at the lung function effects over the <unk>.

Tara Rheault: And so while we'll measure it, I don't expect that will be necessarily our primary endpoint. We'll continue to look at the lung function effects over the dosing interval. All right.

Speaker Change: The interval.

Unknown Executive: Thank you very much.

Speaker Change: Alright, Thank you very much.

David Zaccardelli: And that concludes our Q&A session.

Speaker Change: And that concludes our Q&A session I will now turn the conference back over to David Soccer Daly for closing remarks.

David Zaccardelli: I will now turn the conference back over to David Zaccardelli for closing remarks. Great, thank you very much. And thank you everyone for joining us today on the call. I just wanted to reiterate how pleased we are with our progress and how O2VAIR is impacting patients' lives. And we very much look forward to keeping you updated through 2025 and have a great day.

Speaker Change: Great. Thank you very much and thank you everyone for joining us today on the call.

Speaker Change: Wanted to reiterate how pleased we are with our progress.

Speaker Change: And how to bear is impacting patients' lives.

Speaker Change: We very much look forward to keeping you updated through 2025 and have a great day.

Operator: And this concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: And this concludes today's conference call. Thank you for your participation you may now disconnect.

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