Q1 2025 Avadel Pharmaceuticals PLC Earnings Call
<unk> open label extension trial participants using loom rise and from initiating new clinical trials or studies with <unk>.
This is a clear win for avid Alan for patients as we are now able to proceed with the development of <unk> for additional indications conducting clinical studies and seeking FDA approval for those indications including IH.
Since the beginning of 2025, we have seen improvements across our key launch metrics for loom rights, including patient enrollments, new patient starts persistency rates and most importantly, the accelerated growth of net new patients on therapy.
This progress reflects the investments we have made in strengthening our leadership team refining our commercial strategy, providing additional patient support expanding our customer facing roles and as such expanding our provider and patient engagement.
While we are pleased with these promising early results, we're not remotely satisfied and expect to build on this momentum through the remainder of this year and beyond.
We ended the first quarter with 2008 hundred patients on them rise, reflecting a 100% growth over the same period last year.
Additionally, we reaccelerate the growth of net new patients during Q1, delivering an increase of 300 patients, which is a 50% increase compared to the fourth quarter of 2024.
Lastly, despite the typical Q1 seasonality headwinds headwinds, we generated $52 5 million in net revenue.
Which represented greater than 90% growth versus Q1 of 2024.
Our commercial performance underscores the strong clinical value proposition of <unk> and its unmatched advantage as a once at bedtime, Oxford.
Given the positive momentum year to date, we are raising our revenue guidance to $255 million to $265 million for the full year.
Speaker Change: Tom will provide additional details related to this later in the call.
Speaker Change: As you May recall effective January one we increased our sales force by 15% expanding our target focus and our sales team capabilities.
Speaker Change: The execution of this and related initiatives resulted in positive patient demand growth across all patient segments during Q1 versus Q4, including growth in switch patients starts and an expansion of our <unk> prescriber base.
Speaker Change: We are encouraged by the continued expansion of new writers, who previously according to currently available data had not prescribed in oxalate, but who are now beginning to prescribed loom rights. We believe this is another strong data point, highlighting <unk> as both competing in the acetate market and growing it.
Speaker Change: Complementing our salesforce, we doubled the size of our field reimbursement team. This expansion, which also took effect January one has rapidly demonstrated the ability to drive additional patient starts faster while enabling this team to spend more time in the field directly engaging with targeted prescribers and their office staff.
Speaker Change: All of which has resulted in an improvement in new patient starts across all patient segments in Q1, when compared to Q4.
Speaker Change: And lastly, we turned our attention to the expansion of our nursing support team, which also doubled in size effective January one.
Speaker Change: This is our team who is directly engaging with patients prior to at the start of and during their <unk> treatment in.
Speaker Change: In Q1, we saw an improvement in persistency or in other words, a decrease in our discontinuation rate when compared to Q4.
Speaker Change: Importantly that that improvement occurred across all patient segments, including new to <unk> patients and in particular during the first 90 days of treatment.
Speaker Change: This positive impact as a result of both the expansion of the team and the implemented training that is designed to both assist patients getting onto therapy and also provide ongoing support during their loom right.
Speaker Change: The cumulative impact of these positive trends has resulted in a reacceleration in the growth of the most important patient metrics, which is net new patient adds where we delivered 15% growth in Q1 versus Q4.
Speaker Change: Furthermore, the addition of our new commercial leaders in sales in patient services had been positive catalyst to our recent performance.
Speaker Change: We expect this will be further enhanced by the impending appointment of our next executive commercial leader.
Speaker Change: From a timing perspective, we are in the very final stages of this process and expect to announce the appointment of a highly accomplished and experienced rare disease leader, who we believe will elevate our capabilities and accelerate our performance.
Speaker Change: Now moving beyond the horizon launch in narcolepsy, a few additional updates that are key to <unk> future growth and value creation.
Speaker Change: First enrollment is progressing and on track and our phase III revitalized trial evaluating <unk> in idiopathic hypersomnia as <unk>.
Speaker Change: Previously communicated we expect to complete enrollment in the trial before the end of 2025 and are targeting top line data in the first part of 2026, followed by an NDA filing thereafter.
Speaker Change: To give you a sense of the size of the IH opportunity. There are approximately 42000 patients diagnosed and only one FDA approved treatment available today, which has reached approximately 10% of that population.
Speaker Change: If approved for use NIH, we believe Lou mindset, the potential to unlock a significant additional unrealized market opportunity.
Speaker Change: Prescribers regularly expressed their excitement about the future prospect of being able to prescribe <unk> for indications beyond narcolepsy and specifically IH.
Speaker Change: We consistently hear that having an uninterrupted predictable consistent and fully prescribed OXXO bait dose night. After night is important to patients and physicians.
Speaker Change: <unk> currently offers that potential for narcolepsy patients, who have difficulty staying awake and believe it is only an intuitive to extend that potential possibility to iag's patients who struggle with waking up.
Speaker Change: With clear market potential and vocal community support we believe <unk>, if approved is well positioned to potentially transform the IH patient experience.
Speaker Change: Beyond <unk>, we are advancing efforts around a once nightly nowhere low sodium oxalate program aligned with the target product profile that is bio equivalent of <unk>.
Speaker Change: We believe this alternative formulation could serve as an additional compelling treatment option to serve patients dealing with hypersound related disorders, who could also benefit from the opportunity of an uninterrupted predictable consistent and fully prescribed oxygen treatment night after night.
Speaker Change: Now moving briefly onto our litigation, we remain confident in our comprehensive legal strategy and while we're waiting for decisions on certain prior matters. We are actively pursuing the following actions against jazz to protect and further build our business first our ongoing defense and the initial patent lawsuit, whereas noted we won an important.
Speaker Change: Yesterday.
Speaker Change: Next the anti trust case against Yes currently scheduled for a jury trial in early November and which we are seeking total potential recovery well in excess of $1 billion.
Speaker Change: And finally, our recently initiated offensive patent suits and which we are serving the once nightly use of their mixed salt product NIH as described in its label infringes, five avedon patents and which reflects our unwavering commitment to protect our intellectual property.
Speaker Change: Wrapping up my opening remarks, we're encouraged by the progress made across all aspects of our business and in particular, the reacceleration of our numerous narcolepsy franchise and yesterday's court decision we.
Speaker Change: We remain focused on sustaining this momentum as we continue working toward our long term goal of $1 billion and moonrise narcolepsy revenue, while expanding our impact to potential patient populations in the future who may also benefit from a once a bedtime luminous leveraging leveraging our innovative technology platform.
Speaker Change: With that let me turn the call over to Tom to walk through our financial results. Thanks, Greg.
Tom: Before I begin. Please note that full financial results are available in the press release issued this morning and the 10-Q.
Tom: I'll also be reviewing non-GAAP financial results, which can be found on our investor relations website at investors Dot Abdel Dot com.
Tom: Looking at the momentum in patient demand as we closed out Q1 and continued progression through the first month of Q1, we raised our guidance to appropriately reflect our performance expectations for the remainder of 2025.
Tom: And as Greg noted earlier, we raised our full year 2025, net revenue guidance to $255 million to $265 million.
Tom: From 240 to $260 million to $150 million.
Tom: We also are raising our guidance for patients on therapy to 34 to 3600 patients by year end from 3300 to 3500 patients and prior guidance.
Tom: While we are increasing revenue guidance, we are maintaining our previous full year cash operating expense guidance of $180 million to $200 million.
Tom: At this time.
Tom: Given the long term and.
Tom: An unknown implications of industry wide changes around potential tariffs and policies impacting biotech we want to also provide visibility into our near term expectations for Q2 performance.
Tom: In that regard, we expect to generate 60 to 63 million in net revenue during the second quarter of 2025 with cash operating expenses in the range of $45 million to $50 million.
Tom: By providing this additional guidance during today's call, we hope to import more certainty and confidence in our full year guidance as we close out the first half of the year.
Tom: Overall, our increased guidance underscores our conviction in the commercial investments we've made at the beginning of this year.
Tom: What they were designed to achieve while further confirming that loom rises honest way to achieving $1 billion in revenue.
Tom: And turning to financial updates.
Tom: In the quarter ended March 31, 2025, we reported net revenue of $52 5 million and gross profit of $46 9 million compared to net revenue and gross profit in the prior year quarter of $27 2 million and $25 7 million respectively.
Tom: Additionally.
Tom: I'll note that gross profit in the current year includes an adjustment in cost of goods sold for potential three 5% royalty on numerous revenue related to the Delaware Court memorandum opinion issued in September of 2024.
Tom: To be clear.
Tom: While this matter is pending a final resolution it is a noncash expense.
Tom: A ruling from the Delaware Court regarding future ongoing royalty rate is pending and while we intend to appeal the underlying jury decision regarding the validity of the patent from an accounting standpoint, we have included a noncash accrual and cost of goods sold.
Tom: Also worth highlighting as we scale above and beyond the $50 million quarterly revenue level, we expect incremental revenue in patient additions to increasingly flowed through to the bottom line.
Tom: This marks the beginning of a period of financial leverage for Abdel and moving forward, we expect the growth in revenue and cash flow to continue over the coming year, while maintaining financial discipline with regard to operating expenses.
Tom: And turning to operating expenses.
Tom: While we reported 93% increase in year over year net revenue, we reported a 3% decrease in total operating expenses.
Tom: Total GAAP operating expenses for the first quarter were $49 9 million versus $51 7 million in the prior year.
Tom: The current quarter includes $5 million of noncash charges comprised of stock based compensation of $4 2 million and depreciation and amortization of 800000.
Tom: After adjusting for these items cash operating expenses for the quarter were $44 9 million.
Tom: The leverage inherent in our operating model is increasingly evident as incremental revenue in patient additions continue translating effectively and to improve cash flow and profitability.
Tom: We view this as a key inflection point and a validation of the strategic investments we've made during our initial launch phase.
Tom: With respect to cash.
Tom: The company ended the first quarter with $56 5 million of cash cash equivalents and marketable securities.
Tom: We also wanted to take the opportunity during this call to provide perspective on our path to achieving sustainable operating breakeven and cash flow.
Tom: During the first quarter GAAP operating loss was $3 million.
Tom: After adjusting for noncash operating expenses adjusted operating income was a positive $2 million.
Tom: Calculated as gross profit of $46 9 million minus cash operating expenses of $44 9 million.
Tom: This marks the third consecutive quarter of positive adjusted operating income for the company.
Tom: And while cash flow was negative in the first quarter due to working capital requirements and higher gross to nets.
Tom: We expect cash flow for the full year based on current plans and assumptions to be in the range of $30 million to $40 million versus previous guidance of $20 million to $40 million.
Tom: And on a final note we want to address a topic that is top of mind for many.
Tom: Tariffs.
Tom: Some of you may have heard from our public comments over the last months based on what we know today.
Tom: <unk> currently does not expect to be materially impacted by recent trade policy developments as we've taken steps over the past four years to onshore all aspects of our manufacturing, which in turn build strategic and Derisking redundancies into our supply chain.
Tom: Importantly.
Tom: We source our API from two suppliers both in the United States and this has resulted in the majority of our manufacturing now being based in the U S.
Tom: And in addition to sourcing all API in the U S are U S based manufacturers already FDA approved and is fully operational.
Tom: With that said, we have the ability if needed to source exclusively from our U S domestic parks.
Tom: With that I will turn the call back to Gregg for closing remarks. Thank you Tom before we open the call for Q&A, Let me summarize the opportunities that we believe can unlock value for avid outlined 2025 and beyond.
Tom: First our commercial investments have accelerated our growth and further advance our growing leadership position in the narcolepsy community. We achieved strong results during the first quarter and expect continued execution during the remainder of this year.
Tom: We are well positioned to generate sustainable positive cash flow from the trends, we are seeing which is further bolstered by our highly leverages cost structure and our increase in 2025 revenue guidance.
Tom: We're we're pursuing opportunities to maximize the potential of our unique once at bedtime formulation beyond narcolepsy through our lifecycle management initiatives and are confident in our team's expertise to turn the promise of our innovative science into reality that could possibly benefit even more eligible patients.
Tom: Based on our successful past actions to diversify and Derisk our supply chain, we are well positioned relative to the current tariff dialogue as our infrastructure is predominantly based in the U S and we currently anticipate little to no impact.
Tom: And finally underpinning our progress slides are robust and growing intellectual property portfolio that protects <unk> and its underlying innovation until 2042. This is a foundational strength that we will continue to protect and defend which is representative in our recent actions in this regard.
Tom: As always we thank you for your time and your support and joining US today and we'll now open the line for Q&A operator.
Tom: Thank you as a reminder to ask a question you will need to press star one on your telephone through move yourself from the queue. You May press Star one again.
Tom: Please standby, while we compile the Q&A roster.
Tom: Okay.
Unidentified Moderator: Our first question comes from the line of Marc Goodman of Leerink.
Speaker Change: Please go ahead Marc.
Tom: Okay.
Speaker Change: Mark Your line is open please make sure. Your line is muted if you can a speaker phone lift your handset.
Speaker Change: We'll go to the next question.
Speaker Change: Which comes from the line of Andrew Tsai of Jefferies.
Speaker Change: Your question please Andrew.
Hey, good morning, Thanks for taking the questions. Congrats on the nice progress. My first question is around the revised 2025 guidance at the midpoint is around <unk> 60, <unk> to $52 five in Q1, you're guiding to $61 five at the midpoint for Q2, so that 115 million for first half 195.
Speaker Change: Is it fair to assume to get to your guidance sales should be growing at a similar pace in Q3, and Q4 or could there be bumping along the way and if you had to rank order all of the reasons why youre growing such as in premium question that less drop out it's more patient at what would that growth.
Speaker Change: Based on exactly thank you.
Speaker Change: Hey, Andrew it's Tom Thanks for the question, Yes, Youre exactly right. The first half of the year at the midpoint of the guidance.
Speaker Change: It's about 114 million in the first half of the year, which obviously leaves plenty of growth for in the second half of the year.
Speaker Change: In terms of your question around sequence or sort of the cadence of quarterly net revenue our goal as always is to grow quarter over quarter.
Speaker Change: And with leaving plenty of room to grow in the second half of the year, we would expect sequential growth quarter over quarter for the remainder of the year yes.
Speaker Change: Yes, Andrew this is Greg. Thanks in terms of your second question about like what are the drivers and can we pinpoint their point to the major.
Speaker Change: Sure.
Speaker Change: Initiatives that have driven some of the improvements.
Speaker Change: In short we've seen every key metric improved versus Q4, so I can correlate the expansion of our sales team and the expansion of our switch and some modifications to our our commercial execution that have driven more demand at the top of the funnel our expansion of our field reimbursement team certainly has pulled through.
Speaker Change: Patients faster to get more patient starts and then the early signs of our work on persistency certainly.
Speaker Change: Has trended very well to start the year I think in all cases, we expected to see most of that improvement to begin to kick in in Q2 and beyond as we were getting our teams up and running so we're pleased that we've jumped off pretty fast from that perspective and have continued that momentum here.
Speaker Change: In the first month of Q2, so we're excited about those prospects and I think all aspects of it are advancing in the right direction and but recognizing we've got a lot more to accomplish in a lot more to deliver.
Speaker Change: Right makes sense and then.
Speaker Change: Congrats on winning the appeal case yesterday.
Speaker Change: Was the precise nature of that ruling aligned with your base case scenario or was that.
Speaker Change: Perhaps the best case scenario for you and then where do we go from here.
Speaker Change: Would be the next clinical litigation update is it basically when our F. <unk> improved NIH later in 2027, Yes, I think the short answer is that was our base case assumption and we're pleased with the results that that.
Speaker Change: That came out as it is a clear and favorable and critical decision for us and for patients. So given the fed circuit overturned some key aspects important parts of that injunction.
Speaker Change: In terms of what's next in that regard.
Speaker Change: That will be dependent upon others from that perspective.
Speaker Change: It just gives us a clear path to continue to execute our plans.
Speaker Change: That we had been planning to execute and in advancing toward an NDA submission NIH as we complete the trial from that standpoint. So we're pleased with that decision and look forward to continue moving forward.
Speaker Change: Great. Thanks again congrats.
Speaker Change: Thank you. Our next question comes from the line of David <unk> Piper Sandler. Please go ahead David.
David: Thanks, So just a couple for me.
David: With with IH.
David: Your competitor announced patient metrics last night for their product and I'm. Just wondering how are you thinking about.
Speaker Change: The patient footprint potential patient footprint for <unk>.
David: NIH do you think it will look similar to what we've seen for your competitor.
David: That's number one and then number two just taken a step back being.
David: Being a single product company.
David: It certainly has its pitfalls.
Speaker Change: <unk> in this macro environment I guess my question is this.
Speaker Change: Alumina is notwithstanding what's your appetite for bringing in another asset or assets.
Speaker Change: To further drive growth of the company yes.
Speaker Change: Yes.
Speaker Change: To your first question on how we view the IH opportunity.
Speaker Change: We view it as highly untapped and.
Speaker Change: And bright for <unk>.
Speaker Change: New treatment options that offer.
Speaker Change: Our own unique and differentiated clinical value proposition and we believe from that standpoint, like we've seen with narcolepsy. We can be successful sourcing patients from all segments right patients who are diagnosed and not being treated today with with an oxidate patients, who may want to or who struggle with waking up in the middle of the night to take it.
Speaker Change: A treatment that for a condition, where deep sleep inertia it makes it very challenging.
Speaker Change: Or or four.
Speaker Change: New patients who are coming into the fold so to speak. So we believe it's it's right for all of those all of those positions all those opportunities and <unk> is well positioned in that regard for this patient population as we've heard extensively time and time again from our physicians and.
Speaker Change: Alike, who are looking for a treatment option, where you can get the consistent predictable full therapeutic treatment night after night.
Speaker Change: And Thats, what <unk> offers in terms of your comment or question about IAA about kind of as a single product asset we view it as a pipeline and a <unk>.
Speaker Change: Program from that perspective, we believe theres multiple shots on goal to leverage the innovative technology that we've developed with <unk> in our platform to potentially possible benefit more patients who are pursued through lifecycle management and other related initiatives. So when you think about capital allocation and whats most important focusing on the long.
Speaker Change: Deploying our capital to drive the commercial execution and launch of <unk> number one in executing these initiatives from a lifecycle management number is number two for sure. It doesn't mean, we don't have we wouldn't be in the appetite or have the appetite to add assets or programs to our portfolio that is strategic and aligned with what we're doing today and that.
Speaker Change: Key but from that perspective, our priorities are as I've just laid out.
Speaker Change: Okay. Thank you.
Speaker Change: Yes.
Speaker Change: Thanks, David.
Speaker Change: Thank you. Our next question comes from the line of Marc Goodman of Leerink. Please go ahead, Marc Hey, guys, sorry about that before Tom can you give us a sense of the average selling price in the quarter and how youre thinking about that for the rest of the year have there been any changes with respect to the guidance and stuff.
Speaker Change: Yes, Mark Thanks for the question.
Speaker Change: Just as a reminder, Q1 is always heavily affected by gross to nets and if you just work through the math of our net revenue and average patients on therapy.
Speaker Change: Average net revenue for all patients, including patients on free drug average a little under $80000 annualized.
Speaker Change: But again with a reminder, that Q1 is always impacted by gross nets. Our expectation is that net revenue is going to improve throughout the year.
Speaker Change: And so for the full year, you're expecting it to be.
Speaker Change: What last year was around 96000, what do you think in this year, yes. It is hard to predict the full year Mark.
Speaker Change: I'll just reference last year as an example.
Speaker Change: From Q1 to Q2, we saw an improvement in net revenue per patient of about 5% from Q1 to Q2.
Speaker Change: I think that we're looking right now because what we see today the same sort of improvement from Q1 to Q2 this year.
Speaker Change: But again the full year is always hard to predict but we're expecting improvement net revenue certainly for the full year versus what we saw in Q1.
I think a major driver of that over time, Mark will be more patients on therapy longer it stayed steady doses.
Speaker Change: Relative to the number of new starts, which obviously you started a lower value from that perspective.
Speaker Change: Thanks.
Unidentified Moderator: Thank you. Our next question comes from the line of David Wong of Deutsche Bank. Please go ahead David.
David Wong: Hi, Thanks, so much for taking the questions and congrats on the quarter. So just a couple on I guess kind of what youre seeing in terms of the patient mix.
David Wong: So did you get I guess, a better mix of switch versus new to Oxidate patients. This quarter I seem to remember last quarter, you talked about moving it in a more favorable direction and then can you just talk a little bit about the tactics, which were used to improve persistency, especially among the new oxygen patients and whether you think there is room to further improve.
Speaker Change: Assistance. Thank you.
Speaker Change: Thanks, David on your first question about mix I think most importantly, we saw every patient segment improved in Q1 versus Q4 with an acceleration in in and switch patients from that standpoint. So we did see on a percentage basis, we saw an improvement in switches and overall relative to our patient starts in Q.
Speaker Change: <unk>.
Speaker Change: In Q1, so we're pleased with that progress that's in large part driven by our commercial execution and both the combination of expanding our reach and how we've layered in some additional initiatives and focus for our organization to really drive that demand across the entire universe of potential prescribers, which is where we saw a lot.
Speaker Change: A growth coming.
Speaker Change: In Q1 from physicians, who I would say have prescribed or marginally prescribed but not consistently prescribed or hadn't prescribed at all we saw a lot of improvement in that area as a function of us expanding our reach from that perspective.
Speaker Change: In terms of your question around persistency related matters.
Speaker Change: I think most important what we've done is we've expanded our nurses. So their caseload can really allow them to have a more in depth kind of engagement with the patient not only at the at the beginning of the process, but all the way through the process and as a result of that we've implemented a number of initiatives in terms of initial AD initiation of treatment.
Speaker Change: And post initiation of treatment to continue to engage the patient of regulatory in particular during these first kind of 90 days and again.
Speaker Change: By no stretch do I think we've gotten to be the floor I think theres opportunities to continue to do better and our programs and initiatives operating at even a more efficient and effective level, but we're really pleased to see that as early as Q1, we saw a.
Speaker Change: Trend going the other direction, which was something that we thought was possible, but we thought was more unlikely and we thought we'd start seeing that impact later this year, but we've seen it from the get go and again that has continued through the first month of Q2, let's maybe I'll just add to that persistency and <unk>.
Speaker Change: Switch patients are important from a revenue per se.
Speaker Change: Perspective, certainly.
Speaker Change: But really all patients are important to us and as I commented during the prepared remarks.
Speaker Change: I would characterize we sort of reached that critical mass of patients on therapy for every patient. That's added at this point is a drop to the bottom line for us.
Speaker Change: Okay.
Speaker Change: Thank you our next.
Speaker Change: Question comes from the line of Miriam buggy of LSC greenish go ahead Miriam.
Miriam Buggy: And congrats on the quarter. Thank you for taking my question.
Speaker Change: Just on the news from yesterday.
Speaker Change: Like the federal client kind of benign.
Speaker Change: To the district.
Speaker Change: Consideration on the patent infringement issue could you just explain what that entails exactly and we're doing engine.
Speaker Change: Possible. Please given the news there.
Speaker Change: Yes.
Speaker Change: Without trying to get.
Speaker Change: Sure.
Speaker Change: They are turning from that perspective in totality on this matter where.
Speaker Change: The federal circuit vacated.
Speaker Change: The notion of <unk> and joining us from seeking approval with the district Court.
Speaker Change: Or what the what the fed circuit basically said is theyre, sending it back to the district District court on the basis that the analysis that.
Speaker Change: The district court had in making that enjoined and joining us on seeking an approval was too speculative and and tenuous to reasonably conclude that.
Speaker Change: And joining Abbott al from applying for FDA approval is necessary to prevent future infringement right. So what in essence.
Speaker Change: The fed circuit, Dennis remanded it back to the district court to consider that.
Speaker Change: In the future from our perspective, right, but for us, it's very clear and very straightforward that that vacant you're gives us a pathway to file and secure and seek FDA approval and that is in a very important next step in our strategy here to be able to.
Speaker Change: We pursue that because I'll remind everybody 24 hours ago.
Speaker Change: We were enjoying from doing that and now we're not right, which is really really important from that perspective.
Speaker Change: For us as we think about our strategy to advance loom rise NIH or even other potential indications as we as we do that works. This.
Speaker Change: This is an important win for us and we're very pleased with the outcome.
Speaker Change: Thanks, and congratulations on that way. Thank you.
Speaker Change: Thank you. Our next question comes from the line of Ash Verma of UBS. Please go ahead.
Speaker Change: Hi, Good morning, this is D.
Speaker Change: On behalf of <expletive>, all congrats on the news yesterday.
Speaker Change: I have a two and a follow up question if I may so.
Speaker Change: So the first one for the IAA, how I guess, how confident are you that your competitor may not attempt to block you with another.
Speaker Change: When that injection when you ultimately tightened.
Speaker Change: The approval.
Speaker Change: And then second one on the <unk> Pacer Meg.
Speaker Change: Do you have any specific all footwear you want the split to be in terms of like a naive versus does switch patients like how are you tracking towards backhaul and have a follow up after that yes. So I'll take the first part of the question and then we can certainly Tom can comment on mix a little bit I think it's really important.
Speaker Change: To again remind everyone that.
Speaker Change: Well first of all I won't speak for what other parties may or may not do that's not for me to to predict or or or or.
Speaker Change: Our <unk>.
Speaker Change: Provide commentary on what others may do.
It's our responsibility to be prepared for any situation that can occur, which I can assure you we happen and.
Speaker Change: There's been a lot of historical commentary that we would be denied from getting an approval in narcolepsy, we'd be blocked from getting the orphan exclusivity all of those things occur and I'll remind you that we have we got an approval with orphan drug exclusivity in narcolepsy twice for adults and for pediatrics and that was confirmed by a district court.
Speaker Change: From that standpoint, so the district court along with the FDA.
Speaker Change: Has a clear understanding of the clinical superiority and differentiation of <unk> in narcolepsy and was recognized.
Speaker Change: That the public interest would be served having that are superior drug available for people with narcolepsy right. We're prepared to continue to develop <unk> and other indications like age through the same lens from that perspective, and we believe the opportunity to bring <unk> to those patients is really really important what anyone else trying to do.
Speaker Change: They'll do from that perspective, we'll be prepared for it and we have we believe.
Speaker Change: A track record that shows that we can be successful.
Speaker Change: Yes with regard to your question on patient mix again, we're really pleased with the results. We saw in Q1, including one of the metrics, which was an improvement in the percentage of our patients who started therapy remained on therapy.
Speaker Change: We are switch patients that was off from Q4 going into Q1.
Speaker Change: But just a reminder, the oxalate market is a large market and we're focused on growing all patient segments, whether it be switch patients or new Documentations are returned to occupy patients and for US is on account of just a few minutes ago.
Speaker Change: We have reached that critical mass of patients on therapy.
Speaker Change: Patient growth, regardless, which patient segment is going to contribute to our profitability and our cash flow I think it's a really important comment that I'm just going to reemphasize that our source of patients we're not relegated to only seeking patients from new to OXXO based patients where not only competing in the three or 4000 5000 patients who are coming in every year to get.
Speaker Change: New docs as a new to Octavate patient, although we're getting we're getting patients in that segment, we're sourcing patients from switch and previously treated who are returning to Oxford base and that pool is.
Speaker Change: Multiple times larger than that of the new to occupy patients. So we're confident in our prospects to continue to grow and to continue to build numerous.
Speaker Change: Thanks for that and just a follow up wanted to understand more on the 26 implication for our narcolepsy market pricing.
Speaker Change: Based on the potential Xyrem full generic entry. Thank you Sir.
Speaker Change: Are your latest thoughts on that.
Speaker Change: Setting up the rent cost are ahead.
Speaker Change: Ahead of that prohibited.
Speaker Change: And thus you see.
Speaker Change: Very low test of that happening.
Speaker Change: Yes, Thanks, I would say, our overall kind of macro view on the potential for additional generics in 2026 months.
Speaker Change: Much like what we've seen with the current authorized generic.
Speaker Change: It has had very little if at all impact on pricing or opportunity and formulary positioning and uptake.
Speaker Change: For any branded Octavate in that Matt for that matter and in particular in our case loom rise. So I think we have to be prepared and I can't comment as to whether or not the wherewithal of potential generic suppliers will or won't invest in <unk>, they're going to have to if they want to be in it we're going to have to invest in it and theyre going to have to manage it accordingly, but.
Speaker Change: We do we have done a lot of work in this regard and.
Speaker Change: In dealing with our payers and what we can expect could potentially be.
Speaker Change: Net impact of this if it does come and pricing does collapse for the relatively speaking for the multi source generics in this case and our view is that where are those likely to be position is going to be in the case for if you will new to akshay patients. So in that case, if they are positioned.
Speaker Change: As in some cases, a step edit for new to Octavate patients have to fail or twice nightly generic if you will from that standpoint. We're think we think we're very well positioned to capture the switch patients coming off of that start in particular under the our view that the investments that we have to make them.
Speaker Change: Other companies have made to try to help patients stay on therapy is high and it cost a lot of money I'm not sure that that debt that every generic company will do that but from our perspective.
Speaker Change: We think we're well positioned to continue to grow loom right in the face of more generic in particular like I. Just said the largest segment, we're getting patients from our switch and previously return previously treated in discontinued and we're well positioned to get continue to get those as well as.
Any steps through from a new document patients.
Speaker Change: Great. Thank you and congrats again.
Speaker Change: Thank you. Our next question comes from the line of Amit <unk> need.
Speaker Change: Needham. Please go ahead.
Speaker Change: Good morning, Thanks for taking my question.
Speaker Change: It's nice to see the progress that's been made in the quarter with all the changes that you've made effective India.
Speaker Change: Can you give us some color on and then maybe any specifics you can share around the discontinuation rates.
Speaker Change: How they have evolved and.
Speaker Change: What assumptions you've made in your updated guidance for the gap.
Speaker Change: Yes, and I just wanted to ask the questions yes. Thanks Tommy.
Speaker Change: I think the best way to think about how we think about.
Speaker Change: And to share with you, how we think about the improvements in discontinuation or our lack or decline in those or and or the improvement in persistency is when you look at how we think about those.
Speaker Change: Those rates inside of inside of a quarter in Q4, we had calculated that discontinuation rate to be about 14% and in Q1, Although we had assumed that maybe that would keep stay flatter tick up in Q1 because of our patient mix in Q4, we saw that number go down so our number is lower than 14%.
Speaker Change: And we saw that occur across all patient types with the most pronounced impact on new to OXXO Bates and in particularly in the first 90 days. So our expectation is that we should continue to see some improvement in that regard as we continue to move forward in our systems and our programs get even more effective from that perspective, it will never get to zero, but we.
Speaker Change: We'll continue to drive it as well as we can get from that standpoint, yes, and army on your question regarding I'll say applications to guidance on the approved some persistency as part of the reason we raised the guidance, yes, we have.
Speaker Change: Certainly increasing levels of confidence and conviction in the programs we put in place.
Speaker Change: Our goal is to continue to move forward continue to improve in.
Speaker Change: State the obvious the longer we keep patients on therapy.
Speaker Change: The higher revenue is going to be so it's an important initiative for us and again, we're just very pleased what we saw in Q1 and what we're seeing for continuing trends in very very early.
Speaker Change: Part of Q2.
Speaker Change: Got it.
Speaker Change: Can you also talk about.
Speaker Change: Some of the.
Speaker Change: Fences lawsuits that you highlighted in your prepared remarks NIH.
Speaker Change: Can you elaborate on that it sounds like that that's a new lawsuit and then with regards to the.
Speaker Change: Second quarter decision that will send back to the district Court can you talk about the timelines around next steps back.
Speaker Change: Yes on your on your first question around the off the other suits that we have filed this is us just asserting our innovation and our.
Speaker Change: And our.
Speaker Change: <unk> that we've developed in the form of whom rise and related formulations and products for hypersomnia related disorders, and so we have taken our own actions against jazz in this regard and that in our view that their label and their IH label, specifically around once nightly.
Speaker Change: <unk> dosing for a small percentage of their patients.
Speaker Change: Infringes, our intellectual property. So it's very straightforward from that perspective, we have five patents that have been allowed and granted that that we believe they are infringing and so we've asserted our rights as as we.
Speaker Change: As we have the right to do from that perspective.
Speaker Change: Again, I think as it relates to the decisions that came out of the court yesterday I think most most important from that standpoint is is is that we're obviously pleased with that decision right. We're pleased we think it is a clear concise straightforward and an important win for us in.
Speaker Change: In terms of what happened next there is I would just say administrative.
Speaker Change: Steps that have to occur parties need to meet and confer with theirs.
Speaker Change: The Delaware Court has set a timeline to report back to them by I think its may and May 20 <unk>.
Speaker Change: So there are things that are going to begin to occur between both parties from that perspective, but at the end of the day. We're very pleased with this decision to put us in a pathway to go forward.
Tommy: Thanks, Tommy got it maybe.
Speaker Change: If I can squeeze in one quick question is that okay.
Speaker Change: Sure.
Speaker Change: Okay. Thanks.
Speaker Change: Just with regards to the low 30 once nightly formulation.
Speaker Change: <unk>.
Speaker Change: Instead of welcome that any.
Speaker Change: The color or timeframe you can put on that that would be helpful. Thank you.
Speaker Change: No I think our expectation is we'll have we'll have more to say this year in this regard based on the work we have.
Speaker Change: The efforts our team has deployed during the first part of this year.
Speaker Change: Sure.
Speaker Change: That's an important.
Speaker Change: For us as well.
Speaker Change: We will look forward to providing updates in the future on it.
Speaker Change: Thanks Tommy.
Speaker Change: Yes.
Unidentified Moderator: Thank you once again to ask a question. Please press star one one on your telephone.
Unidentified Moderator: Our next question comes from the line of Chase Knickerbocker of Craig Hallum. Please go ahead chase.
Chase Knickerbocker: Good morning Congrats.
Speaker Change: Congrats on the nice results here I'll share mine as well.
Chase Knickerbocker: Just first for me.
Chase Knickerbocker: As we await some data on the Orexin agonist this year.
Chase Knickerbocker: Can you just remind us on how you see the market Flushing out over the next couple of years.
Chase Knickerbocker: As it relates to enemies and.
Chase Knickerbocker: How you see the competitive environment, how you see.
Chase Knickerbocker: Kind of the split of the market and how these drugs can work together et cetera.
Speaker Change: Yes, I think first and foremost.
We like everyone are paying close attention to this and following.
Speaker Change: Accordingly, and there is clearly a lot of investor enthusiasm about their prospects, but for us what we're most interested in is the clinicians and our prescriber perspective.
Speaker Change: So I would do.
Speaker Change: Done a lot of work in this regard we come up come off of a fairly large recent comprehensive research project talking to both key opinion leaders and a broad base of sleep expert.
Speaker Change: Specialists to treat a lot of these patients and there are certainly.
Speaker Change: Excitement about this mechanism of action because of the nature of their wakefulness or wake promoting prospects I think there is less clear view in terms of what impacts that may have on the night time, and what physicians tell us very clearly is that.
Speaker Change: Narcolepsy in these disorders are both daytime and nighttime conditions from that standpoint, and so the view we get.
Speaker Change: Should the erections navigate all the different regulatory and clinical and regulatory related matters that they have to navigate to get to a final and full approval at some point in the future.
Speaker Change: The feedback we receive from physicians is they certainly see an important role for OXXO, Bates and particularly because of its benefit in the nighttime.
And the opportunity for that to have complementary benefit Tuesday time, but when you think about the disrupted nighttime sleep hallucinations sweep paralysis. These things are important to be considered and ox abates or.
Speaker Change: The standard of care in that regard so we're quite.
Speaker Change: Bullish on the prospects of Bloom rising the oxalate category in a post erection world from that standpoint, and it's something we'll continue to stay close to as we as their development programs continue to move forward.
Tom: Chase This is Tom maybe I'll just add to that.
Tom: It's very exciting technology and the Investor community is obviously very interested in <unk>.
Speaker Change: But it's a long road right from going from a controlled clinical setting to an FDA approval and ultimately to commercialization, it's a long path and sometimes difficult path.
Speaker Change: And we're probably two to three years away from seeing Orexin has come on the market.
Speaker Change: If they do get through the approval process and commercial launch process.
Speaker Change: Thanks for the thoughts guys and then Tom maybe one more for you.
Speaker Change: Thanks for all the comments on the on the manufacturing side, but just to kind of put a finer point to it can you just as.
Speaker Change: As we await kind of the pharma tariffs in the next couple of weeks can you remind us let us know kind of how you treat transfer pricing within your.
Speaker Change: Organization, and whether or not there could be any potential exposure there depending on how these tariffs are struck.
Speaker Change: Thanks.
Speaker Change: Yes, I don't want to <unk>.
Speaker Change: Or too far into the theoretical and hypotheticals on that question, but we are an Irish domiciled company.
Speaker Change: But I want to reiterate the point that we have domestic U S manufacturing throughout the supply chain that's available to us.
Speaker Change: Really.
Speaker Change: <unk> mitigates.
Speaker Change: Substantially if not altogether the potential impact of tariffs.
Speaker Change: So I don't really want to get too far into the question around transfer pricing, but I feel like we're really well situated right now.
Speaker Change: And we're prepared for whatever may come down the road with respect to tariffs.
Speaker Change: Thanks, guys.
Speaker Change: Thank you I would now like to turn the conference back to Mr. Davis for closing remarks, Sir.
Speaker Change: Thank you very much. We appreciate all of you joining us today and we look forward to providing you additional updates throughout.
Speaker Change: Throughout the balance of this year as we as we continue to make progress. Thank you very much have a great day.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change: Alright.
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