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spk16: Greetings and welcome to the Avidel Pharmaceuticals Third Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Courtney Turiano. Thank you. You may begin.
spk06: Good morning, and thank you for joining us on our conference call. This morning, we issued our press release providing a corporate update and financial results for the quarter ended September 30th, 2021. The release can be accessed on our website, www.avadel.com. As a reminder, before we begin, the following presentation includes several matters that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward looking statements. These risks include risks that products in the development stage may not achieve scientific objectives or milestones or meet stringent regulatory requirements. uncertainties regarding market entry and acceptance of products, and the impact of competitive products and pricing. These and other risks are described more fully in Avidel's public filings under the Exchange Act included in the Form 10-K for the year ended December 31, 2020, which was filed on March 9, 2021, and subsequent SEC filings. Except as required by law, Avidel undertakes no obligation to update or revise any forward-looking statements contained in this presentation to reflect new information, future events, or otherwise. On the call today are Greg Divis, Chief Executive Officer, and Tom McHugh, Chief Financial Officer. Dr. Jennifer Goodman, our VP of Medical and Clinical Affairs, and Richard Kim, Chief Commercial Officer, will additionally join us for Q&A following the call. At this time, I'll turn the call over to Greg.
spk14: Thank you, Courtney. Good morning, everyone, and thank you for joining us on our third quarter 2021 conference call. I will begin by providing an update on our business, highlighting the progress we continue to make towards the potential approval and commercialization of FT218. are once-at-bedtime treatment for managing cataplexy or excessive daytime sleepiness, or EDS, in adults with narcolepsy. I will then turn the call over to Tom to review the financial results for the quarter, and we will conclude with a Q&A session, where we will be joined by Richard and Jennifer. I'll start with an update on the status of our FP218 NDA, which undoubtedly is top of mind for everyone. As a reminder, in mid-October, we received notice from the FDA that the review of our NDA for FT218 was still ongoing, and they would be unable to complete the review by the previously assigned target action date of October 15th. The agency also informed us that there were no information requests at that time. Over the last three weeks, we have had interactions with the agency which have been confirmatory with what was communicated October 15th. and that the review of our NDA is ongoing and it is progressing. As an example, we have had exchanges on review matters which are consistent and ordinary course in terms of substance and topics for a company like ours in the late stages of regulatory review. Although we don't believe it is appropriate to discuss specifics, we are pleased the review has continued to progress and look forward to continuing to work with the agency throughout the remainder of our review process. Furthermore, Consistent with what we have said for the past 10 months, to date, we still have not been asked by the agency to certify paragraph 4 against any Orange Book listed patents. And we continue to believe, based on the data we have generated and our regulatory filing strategy, there is no basis to request such a certification. Additionally, in October, we filed an 8K regarding a U.S. patent application that published on October 21st. The question of a drug-drug interaction, or DDI, is a question that has often been asked over the past few years, and that published patent application clearly discloses there is no material PK drug interaction between FT218 and divalproxodine. In particular, in the disclosed studies, the systemic exposure ratios of sodium oxidate measured after administration of FT218 with and without dalvopraxodium, stayed within the 80 to 125% no-effect boundary. This is not meant to imply what will or will not be included in the label for FT218, but simply put, our PK studies indicate there is no material drug-drug interaction. We remain confident in the approvability of FT218 and look forward to continuing to work with the agency to bring this important therapy to patients as quickly as possible. We're motivated and excited by the tremendous potential of FT218, if approved, to offer a meaningful treatment option for patients living with narcolepsy, which is supported by a strong and growing body of clinical evidence. In this regard, under the leadership of Jennifer, along with her medical team, we have now published our primary manuscript in the leading peer-reviewed journal, Sleep, describing the unmet need for a single bedtime dose, and the data supporting the clinical effectiveness and tolerability of FT218. Additionally, this quarter, we presented new clinical data from our pivotal Phase III rest-on clinical trial just last month at CHEST 2021. These data presented further confirmed the potential benefits that FT218, if approved, can offer patients and continues to demonstrate that FT218 has a compelling clinical profile. Specifically, when treated with FT218, a significantly greater proportion of participants experienced 25%, 50%, and 75% reductions in the number of weekly cataplexy episodes with once-at-bedtime FT218 at all doses and at all time periods studied compared to placebo. We also presented the results of a discrete choice experiment, or a DCE. which are increasingly used in healthcare decisions, including regulatory submissions, to understand the specific attributes that drive a patient's treatment preference. For this IRB-approved study, 75 participants with narcolepsy, including 50 current twice-nightly sodium oxidate patients and 25 past users of twice-nightly sodium oxidate, were evaluated to understand the drivers of patient treatment preference for sodium oxidate. The results of this study demonstrate that dosing frequency is the single most important attribute of an OxyBait treatment, with once nightly dosing being significantly more preferred than twice nightly dosing. In addition, the DCE also asked participants to consider the likelihood of taking the medication exactly as directed and which regimen could reduce anxiety or stress associated with their OxyBait treatment. For both questions, once-nightly dosing was again identified as the most important driver of a preferred sodium oxibate treatment. These data continue to underscore the importance of once-at-bedtime dosing supported by the proven clinical efficacy of FT218 to improve both cataplexy attacks and measurements of excessive daytime sleepiness. Our vision at Avidel has always been centered around patients and to improve the treatment of their narcolepsy. and we are confident that FT218, if approved, will not only be effective, but also preferred by patients and healthcare professionals. As the review of the FT218 NDA continues, our launch preparation readiness plans also are progressing to support the commercialization of FT218. Over the past six-plus months, the progress Richard and his team have made is both significant and exceptional. They continue to build a strong team of highly experienced orphan drug launch leaders, and key operational team members who, in short order, have really accelerated our launch readiness across all critical commercial functions. As we have stated previously, the largest addition to our growing commercial team will be our field sales team, which we are prepared to complete following potential FDA approval of FT2 and 8. We also continue to advance work with our external partners to build out our distribution strategy as we are now finalizing our specialty pharmacy network following the selection of our REMS and patient services partners, respectively. We recently launched our disease education website, narcolepsydisrupts.com, and continue to build out other patient, provider, and payer engagement tools and programs to support our launch and launch readiness. On the payer front, we continue to make strong progress and are pleased with the level of engagement payers have had with our team to date. Our market access team was well represented at the PCMA annual meeting for the PBMs and their GPOs, as well as at the recent Asymbia meeting for specialty pharmacy. I personally was able to join our team at PCMA and saw firsthand the high level of interest in the potential future collaboration with us to help serve the narcolepsy patient community. Our launch strategy and preparations are supported by our ongoing market research, customer insights, and data analytics, all of which continue to demonstrate that the FT218 value proposition is clearly understood and is highly valued across patients, prescribers, and payers. We believe that once-at-bedtime FT218, if approved, has the potential to not only help patients manage their EDS and their cataplexy, but also potentially enable patients to do this while enjoying a more natural sleep-wake cycle, which includes the possibility of a desperately needed uninterrupted night's sleep that current twice-nightly OxyBait simply cannot offer. Overall, from a launch readiness perspective, we continue to make great progress and plan to provide more details of our launch plans, including our views on the market and the subsequent commercial opportunity following the potential approval of FT218. I'm extremely proud of the dedication of our team, getting us to where we are today. And we're excited about the future for Avidel, the future for our shareholders, and as importantly, the future for patients living with narcolepsy, as we continue to advance our vision of bringing once-at-bedtime FT218 to market. With that, I will turn the call over to Tom to review our financials for the quarter. Tom?
spk10: Thank you, Greg. I'll provide a few highlights for the quarter and also note that full financial results are available in the press release and the 10Q. From a balance sheet perspective, we ended the quarter in a strong cash position with $181.1 million of cash, cash equivalents, and marketable securities. And as a reminder, we have $143.8 million of convertible debt that matures in February of 2023. Total operating expenses in the quarter ended September 30th, 2021, were $25.7 million, which is a $12 million increase versus the prior year. The increase is primarily due to a $12.9 million increase in SG&A costs that were offset by a $1.2 million decrease in R&D costs. R&D expenses were $4.4 million in the quarter end of September 30th of 2021, compared to $5.6 million for the same period in 2020. The $1.2 million year-over-year decrease resulted primarily from fewer purchases of raw materials, as well as a decrease in clinical study costs versus the prior year. SG&A expenses were $21.3 million in the quarter end of September 30, 2021, compared to $8.4 million for the same period in 2020. The $12.9 million year-over-year increase is attributable to a number of factors, including market research costs, medical education costs, implementation costs associated with preparations for a launch of FT218, and compensation-related costs associated with increased headcount. In total, the number of people at Avidel has doubled from 30 at September 30th of 2020 to a little over 60 people as of September 30th of 2021. Income tax benefit was $5.1 million in the third quarter of 2021 compared to benefit of $5 million in the prior year. Net loss for the third quarter of 2021 was $22 million or $0.38 per diluted share compared to net loss of $11.7 million or $0.20 per diluted share in the same period in 2020. The year-over-year increase in net loss and loss per share was a result of the increase in operating expenses. Finally, as a review of our NDA for FT218 is ongoing and our preparations for launch continue, we believe we're in a strong financial position with over $180 million of cash on hand to fund the financial investments needed to prepare for the potential launch of FT218. I will now turn the call back to the operator to open the line for Q&A.
spk16: If you would like to ask a question, please press star then one. If your question has been answered and you'd like to remove yourself in the queue, press the pound key. Our first question comes from Chris Howerton with Jefferies. Your line is open.
spk08: Hi, good morning. Thanks so much for taking the questions and look forward to the exciting times for FT218 soon. So to that end, Greg and team, maybe the Two questions for me would be, you know, how could you describe any communication that you've had with the FDA between kind of the initial notification and now and, you know, just any kind of information you can provide to us around what might be holding things up and, you know, some timelines moving forward to the extent that you can. Obviously I know that information likely is limited. But for the second question, maybe you could provide a little more meat here. You know, in the absence of an official approval or FDA decision, what pre-commercial activities can you do ahead of time, like what things can you do to implement the REMS or things of that nature? Thank you very much.
spk14: Thanks, Chris, and thanks for the questions. Regarding the communication to date, since our disclosures and our communication in mid-October, I think we would characterize them fairly ordinary course relative to a company like ours in the late stages of a regulatory review. The work has continued. The agency, as we stated back in October, requested they needed more time. That's exactly what has occurred. Again, I think the way we would characterize it as our back and forth with them are things that are typical at this stage of an NDA review. As it relates to timelines, again, there's nothing we have to share at this stage with regards to timing. We're very pleased that the activity has continued on the NDA and are excited about the prospects of bringing it to a successful conclusion here, hopefully sooner. As it relates to the pre-commercial activities, maybe I'll ask Richard to comment on that initially, and then I'll add some additional color as necessary. Richard?
spk12: Yeah, thanks, Greg, and thanks, Chris, for the question. So first, you know, for us, our launch and commercial preparations really remain on track, and we're really pleased with the progress that we've made over the last several months. And again, we're really using the time very well. Our teams are very busy, and first and foremost, we're doing a lot to focus on disease education and really connecting with our customers. As Greg mentioned, we just rolled out our first disease asset called narcolepsydisrupts.com, And, you know, we continue to be engaged with patient advocacy groups and clearly continue to learn about the marketplace, in addition to having live meetings with sleep specialists and clearly with the payers across the country as well. Operationally, we're using this time, as Greg mentioned, we are now in the final stages of choosing our pharmacy, especially pharmacy network, in addition to the fact that we've already chosen our REMs and especially hub providers as well. And, you know, we're getting as much work as we can get done. Some work will depend on getting that final approval. but the work besides that has really progressed in a very nice manner over the last few months.
spk14: Yeah, thanks, Richard. I think, you know, to your question specifically on REMS, there's only so much that we can do at this stage until we have a final label. So, you know, I would describe the heavy lifting, if you will, of the build-out of our REMS, and it's interconnectivity with our entire distribution and patient services model really begins predominantly post an approval with a final label. And of course, aside from building it from kind of, you know, scratch, so to speak, you know, we'll also need to go out and train and certify physicians on it as well once that's complete. So thanks, Chris.
spk08: Absolutely. And Greg, if I may, maybe just another just slight clarification to that as well. What about drug supply? Sometimes there's things like labeling that's printing and all that kind of stuff. Is there additional gating materials on that side of the equation as well?
spk14: Yeah, thanks, Chris. There is, to a certain extent, the way our product is configured and packaged, we have daily doses that have approved labeling on them that will be subject to our final and approved label. So some of that work that supports our dosing configuration and the way our product is packaged is dependent upon a final approval as well. If at any point in time, and if you will, the exchanges with the agency on these sorts of matters that are at the latter stages of your regulatory review, we believe we're far enough along to begin to do some of those things, if you will, at risk, we certainly would do that, recognizing that we'll still be subject to whatever the final approved label and information is that will be required to represent our product from a packaging and labeling standpoint.
spk08: That's perfect. Okay. Well, thank you so much, Greg. Appreciate it.
spk16: Our next question comes from Francois Brisebois with Oppenheimer. Your line is open.
spk03: Hi. This is Dan on behalf of Frank Brisebois. Thanks for taking the questions. Thank you for... adding some color on the launch readiness activities. Just one from my end. On the RESTORE study, if you're sharing anything on that, what are you hoping to see on the trial besides safety, any color you can add on the upcoming data?
spk14: Yeah, thanks, Dan. Maybe, Jen, I'll turn it to you.
spk04: Yes, absolutely. Thank you for the question. The deadline for spring congresses to submit abstracts are on us, and we're submitting information beyond simply the safety that's been generated and is assuring from the RESTORE study. One of the most important aspects of the RESTORE study is understanding for switch patients after they have been on three months of FT218 which dosing regimen they prefer, once nightly or twice nightly. We're very pleased with the responses that we're receiving, and those data will debut in the springtime. We're also seeking to understand patient experience from taking twice-nightly immediate-release OxyBates, and that data as well will be presented in the springtime.
spk03: Thanks. And is this, just as a follow-up to that, is this similar to the discrete choice experiment, or are you sharing anything on that?
spk04: So with the discrete choice experiment, that, while it is an IRB-approved study, is hypothetical. With Restore, this provides the actual real-life experience, both from patients describing their experience in taking twice-nightly immediate-release OxyBase, as well as the all-important question, once a patient has received both a once-nightly and has prior experience with Twice Nightly, which do they prefer? So this is going to be more aligned to actual real-life evidence.
spk03: Great. Thank you for taking the questions. Thanks.
spk16: Our next question comes from Ami Fadia with Needham. Your line is open.
spk05: Hi. Good morning. Thanks for taking my questions. Just with regards to your meeting with the FDA following the October 15th date, can you give us any color on why the FDA was unable to meet that PDUFA date? And if at all there's going to be any new PDUFA date, it sounds like the review is continuing and at some point they will complete the review without necessarily assigning a PDUFA date. And I have one more question, but if you could answer this first. Thanks.
spk14: Yeah, thanks, Ami. Again, I think what we've shared with everybody is what was shared with us, which was that they weren't finished and they needed more time to complete the review. They didn't offer a lot of specificity other than that they needed more time. And in our subsequent discussions and exchanges, if you will, we've seen the review continue and progress, you know, in many ways from where we were back in mid-October. They did tell us that it was unlikely they would be completed in October, and that certainly has been the case. And we've certainly seen activity, you know, and exchanges with the agency continue into November as well, for sure, over the last number of days. So in terms of what other color we got, we've tried to share everything that's been communicated with us. And I think, again, our context around what we've been exchanging on is really matters that we would describe, based upon our experience, much more ordinary course for things late stage in the review process. As it relates to an official target action date or a new PDUFA date, the agency has not yet at this stage given us a new target action date. And based on where we sit today, really we don't see any basis for any sort of formal action that would actually result in a new PDUFA date. For instance, a major amendment that would kick it out 90 days or whatever, you know, from that standpoint. So at this stage, you know, the review progresses. It's continuing to go on, and we're happy about that and believe we're, you know, hopefully, and based upon the matters that we're reviewing with the agency now, we're in the later stages of this review.
spk05: Great. That was helpful. Just a follow-up question to the launch preparations question. Perhaps can you give us a sense of, you know, whenever the approval comes, how many weeks post that approval do you think you would be ready with, you know, packaged product that's ready for launch? Of course, also if you could help us understand the DEA approval timeline as well and how that would drive, you know, a launch date post-approval. Thanks.
spk14: Yeah, I think from a launch timing perspective, I would measure the work that has to be done that really kicks off after a final approval and a label. I would measure that more so in the form of months than I would in weeks. You know, we've always talked that the analog, one of the basic kind of analogs here is, you know, the recent mixed salt product, which was, you know, a little over four months, we believe, from approval to launch, which was DEA. Our view was probably DEA-centric and probably a little bit of REMS as well that needed to be updated without having all the color. I think the difference here is we have the same DEA matters at hand for sure. but we also have to really build the REMS from the start And then once that's completed, we need to go out and train and certify physicians accordingly for them to be able to prescribe our product. So I think when you layer in that with kind of the other, if you will, matter that likely will take a little bit more time as well around commercial supply, there's some of that that we can start now based upon what we can do in 2021 and But some of that also will have to carry over into 2022 as well to ensure we have adequate supply. So I think from a launch timing perspective, no one wants to launch sooner than we do, for sure. And I think the two, you know, kind of drivers of timing center around when do we have an approval so we have the kind of jumping off the starting point. and then the execution of all the things that we need to deliver on to be ready to launch fully in 2022. And that's something we'll certainly communicate more specifically as we get past the approval and are executing all of our launch readiness activities. And, again, from our standpoint, no one wants to come to the market faster than we do. However, we need to make sure we do it right with obviously right and fast really being the goal.
spk05: Understood. Thank you.
spk14: Thanks, Anne.
spk16: Our next question comes from Mark Goodman with SBB Lyric. Your line is open.
spk09: Hi. Thanks for taking my question. This is Rudy on the line for Mark. I have two questions. First, can you walk us through the litigation process with JADS and the expected timeline? Any additional color would be helpful here. And secondly, can you talk about your view of the market dynamics for narcolepsy especially for the past several months since the launch of DiveAve. And did you notice any changes that may impact your commercial strategy here? Thanks.
spk14: Yeah, thanks, Rudy. I'll take the litigation question, and then I will ask Richard to answer or comment on the market dynamics. post the launch of the Mixol product. With regards to the litigation, it's really, I would say, status quo from what's been communicated to date. We have a full trial hearing scheduled for towards the end of 2023 to hear the full patent case. The court had arranged preliminarily timing for a potential PI or preliminary injunction should one have been filed. At this stage, one has not been filed, so there is nothing scheduled currently from a PI perspective. Our expectation continues to be that, based at least on the prior schedule that was put in place, that A PI hearing should actually, one, be filed, we would expect to occur in a timely enough manner to not be a deterrent to our launch timing. And, again, I think when there's something more specific to provide, we certainly will. But in the meantime, I think our only commentary around the litigation is we remain highly confident in our innovation of one to bedtime FD218, and we don't see this litigation as a barrier for us coming to market. Richard, do you want to answer market dynamics, please?
spk12: Sure. Thanks for the question. So I'd say, you know, first and foremost, we don't really comment on the specifics of other companies' launches. However, maybe a couple observations from us. One, with the introduction of the mixed salt formulation, it does not appear at this stage that there's been a large influx of new patients coming into the marketplace. Obviously, we're all waiting on more data to sort of check into those dynamics. But additionally, it doesn't appear like the market is going all towards the sodium oxibate or all towards the mixed salt version as well. It looks like there will likely be a good mix of both types of patients by the time we go into 2022 as well. So I think for us, we just sort of will understand that there are patients who have been motivated to switch to the mixed salt version, but there are also patients who have clearly been staying on the sodium-oxidate twice-nightly version as well. So I think those are really the underlying dynamics that we see so far.
spk09: Good call. That's very helpful. Thank you.
spk16: Our next question comes from David M. Selim with Piper Sandler. Your line is open.
spk15: Thanks. So just a couple. So first, on the review process, I wanted to touch on the orphan drug exclusivity for ZyWave and wanted to ask if it is at all possible that the reason we haven't gotten a decision has anything to do with the ODE for ZyWave, or is that a parallel process that doesn't have any bearing on the review? Can you just talk to that and then also just your general level of confidence that there won't be an issue regarding the ZyWave ODE? So that's number one. And then number two, just a clarification question. So to the extent that you do gain a full approval in the near term, What is your sense in terms of timing of launch? In other words, how many months do you think you'll need to implement the REMS? And this is sort of bearing in mind that when Zyra got approved, there was a several-month lag time between its approval and its launch. So should we think about a several-month timeline between approval and launch for FT2 and 8? That would be helpful. Thanks.
spk14: Yeah, thanks, David. On the latter question, I would say that your characterization is how we would describe it. I think that recognizing that what the McSalt product had to go through is a certain level of work that we just, quite frankly, have more to do, given we don't have an existing program in place that has to be you know, based upon our final label and that, and then we have to go out and train and certify physicians. So I think your characterization is correct in terms of months. And, again, I think we certainly have every interest and desire to want to come as quickly as we can, recognizing we need to do it right, and we'll certainly want to update that as we go along. And as we've said always, you know, we certainly have always expected it to be a 2022 event. With regards to your question about orphan drug exclusivity, is this a potential reason for the review issue? Is it running parallel paths? Again, we try to be as transparent as we can be based upon what's been communicated with us to date. We are currently unaware at this stage if ODE is a topic that's of issue here or not. We can say that we certainly have no current information requests or outstanding data requirements asked of us relating to this topic specifically. And I think what we would say relative to our exclusivity requests and the robustness of our data, there's a number of things I think that's important to share. One, we are confident that a single bedtime dose of sodium oxovate provides both a greater safety and a major contribution to patient care. Because we all know for nearly 20 years, patients with a sleep disorder have been required to forcefully awaken in the middle of the night to take a second dose of an immediate release medication. And we believe by eliminating that will substantially improve patient's care. So, you know, what I will say is that when you think about our designation that was granted, it was granted on that plausible hypothesis that FT21A could be clinically superior from a safety perspective, right? And the basis for this goes back earlier, quite frankly, than our submission in 2018. It goes back to as early as 2013 when the FDA met with key stakeholders from the narcolepsy community, and they actually identified that the wakening of patients due to the middle-of-the-night dosing as a potentially significant issue and a potential safety issue. So, again, we feel like the robustness of our submission certainly supports its own orphan drug exclusivity based upon demonstrating clinical superiority over the middle-of-the-night dosing, both from a safety perspective and a major contribution to patient care.
spk15: Okay, that's helpful. Thank you. Thanks, David.
spk16: Our next question comes from Paul Matisse with Stiefel. Your line is open.
spk13: Great. Thanks so much. I just had two follow-ups. One, on orphan drug exclusivity, I thought that was a good question because I guess from our seat, it feels like ahead of filing and since, you've really had direct engagement with the FDA as it relates to certification, CMC, the strength of your data and have confidence that there's no outstanding questions there. But have you talked in the past with FDA about what it would take and whether or not your package is sufficient, not just to get ODE in a vacuum, but also to break ZyWave's orphan drug exclusivity? And then separately, I was wondering if you could just kind of clarify a little bit more specifically, you said that your engagement with the FDA is consistent with the late stage of a regulatory review. Given that there's no questions, what exactly does that mean? Are you sending back and forth draft labels? Maybe a little bit more detail there would be helpful. Thank you.
spk14: Yeah, thanks, Paul. Again, on the latter topic, again, without getting into any specifics, because we don't necessarily believe that that's necessarily prudent to talk specifically, but it could be things that you can imagine from exchanges on draft languages relating to partner containers relating to your IFU or your instructions for use or your medication guide for that matter, and of course your label or your prescribing information. So again, I would characterize those as matters that are late stage. You know, the agency doesn't ever exactly tell you where you are in any one area, so those exchanges can go on for a period of time. You may think you're finished with an area and then get more questions at a later date, but again, I think based upon our experience and our history here, that the topics that we've been engaged with since October 15th have been consistent with these sorts of later stages of the review. With regards to your question on ODE, again, the basis for our submission centers around twice-nightly dosing. That hasn't changed relative to the introduction of the McSalt product, and again, that product got approved twice. shortly before we actually filed our NDA. So, you know, given that context, I think it's safe to assume that where we could provide information or relevancy to all formulations of twice-nightly sodium oxibate in our In our submission, we did. I would also say that in our leading up to that and in terms of crafting our orphan drug exclusivity strategy in total, yes, there are opportunities to ask the agency questions about your approach, which I think is fair to say you should assume we've done that, and that, again, it all centers around the middle-of-the-night dosing and the complications and implications associated with that, and the data that we've generated to support that, which hasn't changed relative to any other sodium oxibate or oxibate-related formulation in the marketplace.
spk13: And, Greg, thank you for that. Now, just as it relates to breaking ODE, or I guess not breaking it, but, you know, more of a – you get my sense, right? Transcending someone else's ODE, is that the division that determines that, or do they need to get input from, you know, a separate orphan office at the agency?
spk14: Yeah, the Orphan, you know, the Office of Orphan Products would be, you know, the part of the agency that is acting on that part of the review.
spk13: Okay. Okay. Thanks for clarifying.
spk14: Thanks, Paul.
spk16: Our next question comes from Oren Livnett with HC Wainwright. Your line is open.
spk01: Thanks. I have a few questions. I'm going to keep beating the drum here. I apologize. Answer what you can on the orphan situation. But just to clarify, you know, you've mentioned a few times that obviously Zywave was approved before you filed your NDA. So, of course, you know, that was taken into consideration with whatever materials you filed on the orphan front. But they didn't actually get their exclusivity until, you know, almost nine months after their own approval. So, you know, well into your review. So are you in a position to confirm or not whether you had... any post-XyWave orphan exclusivity granting interactions on your end with OOPD or your reviewer to address any potential issues that may or may not have come up then? And also on the orphan front, can you just confirm, you know, obviously you got your ODE on the plausible hypothesis, I think that's what they call it, that you're safer. I think most of us agree intuitively that there are safety and material contribution, you know, advantages for your product. But is there a hurdle to actually prove it? You've mentioned data. What data do you have to generate to satisfy that theoretically, and what have you submitted? And I have follow-ups.
spk14: Yeah, again, you know, regarding our submission, the basis of our submission is centered around the challenges associated with the middle-of-the-night dosing. If we will have generated additional data during post-our-submission in December, through the point in time of which the NDA has acted on, if we uncover or learn of additional information that we thought was relevant to share with the agency, we certainly would have done so as part and parcel to ensure our submission is as robust and complete as possible if new insights were gained from that standpoint. So whether we did or didn't is not something we're going to comment on. but I would say that that's work that's always ongoing with us in terms of assessing what's happening in the marketplace and the challenges patients may or may not be experiencing or insights that we've learned based upon trying to understand those challenges specifically. With regards to... your second question in terms of what data could you generate, right? I would say that, you know, the way you look at it, the way we've looked at it is a couplefold. It's not necessarily when it comes to orphan drug about head-to-head data or comparative studies, right? There's really two components here. One is to really ensure that we've done the work to identify the issues that manifest itself to patients from an adverse event or risk perspective or safety perspective as a result of the middle-of-the-night dosing. No other company has any incentive or motivation to disclose that data, but we've done the work to try to uncover, for the last number of years, what adverse events or risks are associated with that middle-of-the-night dosing And that would be information that we use as part of our submission to highlight specifically the challenges therein that are associated with the forcible waking in the middle of the night. And then, again, what data we can provide relative to ones at bedtime FT2 and 8 that potentially could reduce or mitigate some of those potential issues that have been identified based upon the data that we've generated. So, again, that's, I think, how we would describe it generally. I don't know, Jen, if there's anything you want to add to that.
spk04: Completely agree. Nothing else to add at this time.
spk14: Okay. Thank you.
spk01: Okay, and if all else equal, your filing was good to go and orphan was the only issue, if they had already decided that you were blocked but otherwise an approvable product, should you have received a tentative approval?
spk14: You know, when you go back to October 15, there's a number of decisions that could have been taken on that day by the agency. If they were in the place that you've described, Oren, yes, they could have granted us a tentative approval subject to the orphan exclusivity. They could have granted us a CRL if there was something wrong with our India. They had an issue at that point in time. So, you know, and yes, they could have granted us a full approval, which they didn't. But Again, what we said is what they told us, but the short answer to your question is yes, we could have gotten a TA at this point in time, and we haven't.
spk01: Okay, and just quickly, maybe a bit of a modeling question. SG&A, you know, even ahead of the PDUFA date, this 3Q deadline, ramping pretty substantially. I think it's, you know, already at almost a run rate where most of us were for 2022, you know, in the commercial launch year. So can you just talk about, you know, one, how much litigation costs is maybe already baked into this SG&A number? And, you know, does this keep going up in 4Q? And, you know, how fully baked is this number? I know there's different pieces. Some things go away. Some things come in. But, you know, with only a 50 to 60 person sales force like most of us anticipate, you know, how close to a fully baked commercial number quarterly spend might we already be at at this level? Go ahead, Tom.
spk10: Yeah, thanks, Warren. So without getting into specifics of, you know, what's in or out of the SG&A number, it certainly includes, you know, legal costs, you know, associated with FT218. You know, with respect to, you know, how close to fully baked, you know, I think there's puts and takes in any of our quarterly numbers at this point. We have implementation costs associated with preparing for launch and things like building the REMS program, building a patient health program. And then the last major component of spend that we haven't committed to yet and will certainly be dependent upon approval of the NDA is the addition of the sales force. That will certainly ramp up our costs, but from our perspective, I think our costs are in line with what we would have expected. We've commented previously that our costs will increase quarter over quarter, particularly as we approach approval. And again, the last major spending component is to bring on board the sales force.
spk01: All right, thanks, guys. Good luck.
spk16: Our next question comes from Matt Kaplan with Leidenberg Bauman. Your line is open.
spk02: Hi, good morning, and thanks for taking the question. I just wanted to make sure there's clarity on kind of the next steps in the process with FDA given, I guess, the late-stage nature of the review, which is still ongoing, in terms of can you give us something in terms of timing and next steps on your end in terms of, getting information to the FDA or kind of addressing what items are outstanding to facilitate approval.
spk14: Yeah, thanks, Matt. I would say that we're quite timely in our response back to the FDA, and any question or any exchange we have on any of the matters, we're under discussion with them at this stage of the game. So we certainly respond quite quickly from that perspective. Again, our expectation is the review will continue to progress. It will progress at the rate that the FDA decides it's going to progress. What we have always said is that as we go forward, if we learn something that we believe should be disclosed to shareholders and investors, we certainly will for sure. And we're just pleased that the review has continued during this period of time and and the fact that they needed more time certainly appears to be the case. So if we learn something that we think warrants public disclosure around timing, believe me, we certainly will, and otherwise we'll continue to execute and proceed as efficiently as we can in responding to whatever information or exchanges of documents we have with the agency with what we're going through right now. Okay, that's helpful.
spk02: And just a quick follow-up on that in terms of how should we think about this? Is this something that should take weeks or, in your experience, is it months that you're thinking of in terms of reaching inclusion?
spk14: Yeah, Matt, I just think it's really, you know, it's impossible for us to answer that question at this stage. only because the agency hasn't communicated to us an official timeline, you know, formally. And if they, you know, absent them taking an action that really gives us a PDUFA date, that would be something we would disclose. If the agency came back to us or if they have already come back to us and said to us, we intend to be done by this date, It's really, if you will, not a formal or an official deadline. It would be an internal target, just something that not likely we would disclose just because it wouldn't be something that you know, that they would be held – they could really be held accountable to and certainly don't think it's in our best interest to put that kind of information out into the public. That being said, we're pleased that, you know, the activity has continued on the topics that we're engaging on, and we stand ready to respond as quickly as we can if they have any more questions for us. Thanks. We have a caller.
spk16: Our next question comes from Robin Garner with Craig Hallam. Your line is open. Good morning and thank you.
spk07: You mentioned a doubling in your headcount. Has any of the sales force been hired at this point? And other than the sales force, do you anticipate substantially more hiring in general?
spk14: Yeah, you know, we haven't hired any of our sales representatives who would be those customer facing. We've begun to build out the sales leadership team as they are required to do all the screening and the profiling and identification of candidates that we can hire post an approval. So some of that, you know, the leadership and management of that organization is in place. I would describe the additional headcount that would likely come on board, in addition to the sales force, would be other, you know, either customer-facing roles that would support, you know, access and coverage-related and reimbursement-related activities. And then beyond that, it's primarily really kind of internal headcount just to make continue to, you know, manage the infrastructure of the organization that has gotten larger, right? So more support functions to ensure that we can keep up with the pace and the size of the organization as we go forward, but not materially incremental over and above, you know, the large number of reps that we would additionally add, you know, at around 50. Tom, did anyone add to that? No, I wasn't. Okay.
spk07: Okay, thank you. And maybe this is a question for Tom, but with the convertible debt coming due, what is your cash management plan for early, for that time?
spk10: Yeah, thank you for the question. We, you know, we're in a constant planning mode, if you will, and we look at a lot of different scenarios, Rob, in terms of future cash needs, you know, potential capital raises, and, you know, whatever the organization might need to both support the launch of FT218, you know, as well as other, you know, growth opportunities for Avidelth. So without, you know, getting into specifics about what we may be doing in the future or particular strategies around the convertible notes, you know, we do view the approval of FQ218 as a catalyst force, if you will. And, you know, the convertible notes and, you know, addressing those prior to maturity is certainly in our planning horizon.
spk07: Okay, thank you. And if I may, my last question is... It's just around the FDA and whether you're aware of any other companies that have had a similar delay with no further questions or data being required by them.
spk14: Well, you know, I would say that, you know, I guess if you look hard enough, you can probably find an example of every situation within the FDA from that perspective. You know, we've been more focused on what's happening more real-time relative to the timing of our NDA. And we certainly know that, you know, on the day of October 15th, there were at least four other decisions that occurred that day. with two CRLs and two of us got, you know, basically no action taken with one being driven by a PAI not happening and us saying they just need more time for the review from that standpoint. And as we sit here today, I mean, that's the context that we've been trying to understand where we sit from that perspective. And And, again, the agency has picked up and continued to do the work. So from our perspective, they needed more time, and that's where we're – and it continues to progress and advance accordingly. We know of no outstanding questions. We know of no outstanding requirements from a CMC perspective at this stage. And, again, like we said, you never know exactly where they are in the review because they never tell you when they kind of check a box and move on to the next one. So we stand ready to react to anything with, you know, immediately to be able to advance this to a full approval.
spk07: Okay. Thank you.
spk14: Thanks, Rob.
spk16: Our next question comes from Jason Gerberry with Bank of America. Your line is open.
spk11: Hey, morning, guys. Thanks for taking my questions. I guess first is for me just thinking about payer contracting and how that evolves next year. Mindful, it's a very fluid situation, but I would assume, I guess at a minimum, that REMS finalization for FD218 would sort of be needed before you could enter into substantive discussions and having contracts struck. And I guess it would seem logical to me that potentially payers may want to slow play things to pit Avidel against the Hikma generic from a pricing competition perspective. So my question really is, do you think there's an opportunity if you can get out in front of generic approvals and make strong offers to payers if that can drive better access for FT218? And then my second question is just, I'd love to get your thoughts on Jazz's REMS patent as a gating factor. I think in the past you've talked about a two-pronged strategy with the courts and FDA and your non-infringing REMS. So I guess how important, I think there was a recent court ruling that the courts declined to sort of address this issue and pathway. So just curious how important you think that is and if you can put any context around that, that'd be great. Thanks.
spk14: Yeah. So Richard, do you want to start with the payer? Comments? Sure.
spk12: Absolutely, yeah. No, thanks for the question, Jason. So, you know, for us, our plans with the payers has been made with or without an authorized generic coming to this marketplace. So we're clearly aware that the event could occur in the not-too-distant future. But we would also argue, you know, it's still a twice-nightly sodium oxidate in the marketplace. And we've really been focused with our payers and really describing, especially with Jennifer's team's help, really the clinical value proposition that we have with once-at-bedtime FT218. As far as the timing for contracts are concerned, to your point, we prefer to have as many done as early as possible. The REMS is not really technically a gating factor for us in those conversations. It's really getting through the approval first. And, you know, we've been really pleased with the fact that as a small company, we've had a seat at the table with the largest payers with the key decision makers. So, no, we're really focused on making sure that our value proposition from a clinical perspective is really understood. And then we will work with the payers to ensure that our goal is to make sure that people with narcolepsy who are in need of FE-218 have the opportunity to really access it. So, Greg, I guess I'll turn the next question back to you.
spk14: Yeah, thanks, Richard. Jason, regarding the REMS patents, if you will, and the one remaining REMS patent with a handful of claims that are remaining, we're obviously very aware of that intellectual property. It's matters that we have to deal with relative to our regulatory submission and relative to our build-out. from how our own REMS will operate. And I'll just remind everyone that, again, there has been a prior approved REMS program designed by the FDA to effectively meet the FDA standards and be an alternative in the marketplace from an FDA perspective. And although no one's using it, it certainly provides a roadmap for parties like us as a means in the development and crafting of our REMS program. We're keenly aware of their intellectual property and believe we have effectively developed a REMS program that will become obvious and clear through the matter of the courts that we're not infringing it from that standpoint. And that will play out in due course relative to the patent case that's pending currently. So we don't view it as, again, that patent or any of the other patents as a deterrent or a blocker to us coming to market. And relative to the court's recent decision to not, you know, to not hear our motion to delist that from the Orange Book, we don't think it's relevant to the merits of the case whatsoever.
spk11: Okay. Thanks.
spk14: Thank you.
spk16: Thank you. At this time, I'd like to turn the call back over to Greg Divis for any closing remarks.
spk14: Thank you, Operator, and thank you all for taking the time to join us today and your continued support of Avidel. I want to provide my assurances to the Narcolepsy community, to our shareholders, to key stakeholders, and our employees that there is nothing more important to Avidel than doing whatever is required to get FT218 approved as soon as possible and progress to a launch in 2022. As our NDA review continues, and given the recent interaction with the agency on the NDA, we remain confident in our regulatory filing strategy and the robustness of our complete NDA package. We are continuing all launch and commercial preparations to ensure we are fully ready to offer one-step bedtime FT218 if approved to all eligible patients living with narcolepsy. We look forward to providing you more updates as we continue to make progress. We thank you for your time and wish you all a great day. Thank you.
spk16: This does conclude the program. You may all disconnect. Everyone, have a great day.
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