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spk15: Greetings and welcome to Avidel Pharmaceutical's second quarter 2022 earnings call. At this time, all participants are in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. It is now my pleasure to introduce Brandy Robinson. Thank you. You may begin.
spk16: Good morning, and thank you for joining us on our conference call to discuss second quarter 2022 earnings. 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 risk 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 31st, 2021, which was filed on March 16, 2022, in 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 Divitz, Chief Executive Officer, Dr. Jennifer Goodman, Vice President and Medical and Chief, excuse me, Vice President of Medical and Clinical Affairs Richard Kim, Chief Commercial Officer, and Tom McHugh, Chief Financial Officer. At this time, I'll turn the call over to Greg.
spk10: Good morning, everyone, and thank you for joining us to discuss our second quarter 2022 results. This was an important quarter for Avidel where we continued to make progress in our mission to bring LumeRise to all once-at-bedtime eligible patients living with narcolepsy. which included the receipt of a notable and important regulatory milestone for LUMRISE in the form of a tentative approval, the active pursuit of additional legal and regulatory strategies to accelerate a final FDA decision for LUMRISE prior to June of 2023, or when the REMS patent we certified on will expire, and the continued execution of our commercial preparations with a focus on shortening the time between final approval and launch while we took the necessary actions to ensure, as required, we have the liquidity to carry us to the potential outer date of a final FDA approval decision. With that, I will start by commenting on our most recent company update. On July 19th, we announced that the FDA granted tentative approval of Lumerize, formerly known as FT218, our investigational once-at-bedtime oxibate therapy for the treatment of cataplexy or excessive daytime sleepiness in people with narcolepsy. Receiving tentative approval is an important step toward a final approval. By granting tentative approval, the FDA has validated the clinical and safety profile of LumeRise and confirms that LumeRise is approvable as a once-at-bedtime therapy for eligible patients living with narcolepsy, which we believe is a meaningful, de-risking regulatory event for the company. LumeRise has a demonstrably strong clinical profile with an improved dosing regimen and that per our extensive research, is preferred by patients and sleep specialists. This, along with our comprehensive launch strategy, gives us the confidence in the potential significant role Lumerize can play in the $3 billion-plus market opportunity. Further, and perhaps most importantly, receiving tentative approval confirms that the potential latest date we could receive a final approval decision for Lumerize is after expiry of the REMS patents. which is June 17, 2023, or just 10 months and eight days from today. As previously stated, we are and will continue to aggressively pursue legal and regulatory strategies with the clear objective of potentially leading to a final approval decision prior to June 2023, and depending on timing and results of these legal actions, possibly by the end of this year. In this regard, we filed a motion in the U.S. District Court for the District of Delaware to delist the REMS patent from the FDA's Orange Book on June 23rd, as we do not believe the substance of the REMS patent qualifies as an eligible Orange Book listable patent. A court order requiring the patent holder to delist the REMS patent from the Orange Book could provide a pathway for a final approval of Lumerize prior to June 2023. As the court previously stated that a claim construction hearing is required before ruling on the motion to delist. The next step in this process is the Markman or claim construction hearing, which is scheduled for August 31st. Additionally, we recently announced that we filed an administrative procedure act lawsuit against FDA alleging that their decision requiring us to file a patent certification on the rents patent was arbitrary, capricious, and contrary to applicable law. In this lawsuit, we are asking the court to vacate the FDA's patent certification decision and order FDA to take final action on the Lumerise NDA within 14 days after vacating their decision. A successful outcome in this APA suit could also lead to a potential final approval of Lumerise prior to June of 2023. An accelerated briefing schedule order has been approved by the court, and we currently expect this case to be heard at the end of September 2022. In addition to these opportunities to accelerate a potential final approval, we are also focusing on launch preparation activities that will shorten the time to launch following final approval. This includes completion of manufacturing and primary packaging for our commercial supply, in operationalizing our REMS program, both in advance of a final approval and before the end of this calendar year. In summary, we are well-positioned to execute on all of these priorities to potentially accelerate bringing LoomRISE to a final approval prior to June 2023 and subsequent launch as soon as possible thereafter. As you will hear next, Jennifer will provide details on the data we presented this quarter at SLEEP 2022. And following Richard, we'll give an update on our launch readiness actions now with the tentative approval in hand. With that, I'll turn the call over to Jennifer.
spk17: Thanks, Greg, and good morning. As Greg said, this was an important quarter for Abadel. Tentative approval for Loom Rise is a significant milestone that validates its efficacy and safety profile. and also has facilitated us starting our RIMS build out, which will shorten our time to launch following final approval. Furthermore, we had a strong presence at sweep 2022 with considerable interest in the body of evidence supporting Lumerize as described in our nine posters. The poster that we had the most engagement with described new interim data on dosing and titration from the ongoing restore open label extension switch study of our Lumerize drug candidate. Sixty-two percent of participants switching from twice-nightly oxibate formulations had a stable dose equal to their starting dose, which will help clinicians understand that switching to Lumerize is a straightforward process. Additionally, participants not currently taking oxibate formulations or oxibate-naive participants reached a stable dose with two to four dose titrations within four weeks. This is particularly relevant as we hear anecdotes of patients having to spend months trying to find a stable and consistent dosing regimen of twice nightly oxibates. We also presented updated results from patient preference and the nocturnal adverse event questionnaire with patients switching from twice nightly oxibates in the RESTORE study. These interim data confirmed previous data we have presented showing that a high proportion of patients switching from twice-nightly Oxibate formulations experienced difficulty in taking the second dose, with nearly two-thirds reporting accidentally missing their second dose at least once in the past three months, and more than 80% of those reporting that they experienced worse narcolepsy symptoms the next day. Also consistent with data we have previously presented, 92.5% stated a preference for the once nightly dosing regimen. As we talk about Restore, I want to highlight that we have extended this study so participants can stay in Restore through FDA approval and up till launch of Lumerize to then transition to commercially available product. I have had the opportunity to speak directly with a number of participants in Restore who have expressed their gratitude for this extension specifically because they don't want to go back to waking up in the middle of the night after successfully taking Abadel's investigational one-set bedtime sodium oxibate. Going back to our posters, we had five post-hoc posters from Reston, which continue to reinforce the strong efficacy demonstrated in this pivotal trial, including in subgroups of both NT1 and NT2, and those with and without concomitant stimulants on measures of disrupted nighttime sleep. Lastly, we published results from our second discrete choice experiment, or DCE. As some may recall, we have published the results of our first DCE in patient preference and adherence, which clearly showed that the most important driver of patient choice for sodium oxibate is a single bedtime dose. The second DCE was expanded to include clinicians and the mixed salt oxibate and affirmed our first DCE. Patients clearly placed the highest priority of treatment selection among the three oxibate profiles for once-at-bedtime dosing. For the 100 clinicians participating in the DCE, the data also demonstrated that the most important driver of clinician choice is once at bedtime dosing. The sleep meeting provided us the opportunity to connect directly with KOL and explain the delay in FDA decision on approval of Lumerize. We have been communicating extensively with both the medical and patient communities following the tentative approval, including a fact sheet available at avidel.com about what this means and a letter to the community reiterating our commitment to bringing Lumerize to patients. We recognize patients with narcolepsy will be critical in shared decision-making with their clinicians. To that end, we were thrilled to publish a plain language summary in future neurology describing the primary results from our pivotal trial so people with narcolepsy can access these results. The totality of the data we continue to present supports the robust clinical efficacy, the well-established safety profile, ability to switch from twice-nightly Octavate, and patient preference of Lumerize. Now that we have the tentative approval secured, the community is even more eager to see this potential treatment option receive final FDA approval and made available to patients. We are proud of all of our hard work that continues to drive Lumerize forward. I will now turn the call over to Richard to provide details on the commercial opportunity and our preparations for launch. Richard?
spk06: Thank you, Jennifer. With the tentative approval in hand, we are well positioned to continue to advance our launch preparations as we work towards bringing once-at-bedtime Lumerize to adults with narcolepsy. Despite a longer-than-anticipated time for the final approval of Lumerize, one thing that has not changed is the fundamental belief in the potential for this drug candidate to help patients manage their excessive daytime sleepiness, or cataplexy, while also providing them with an opportunity for a more natural sleep-like cycle. It has been an amazing journey spending time with the narcopsy community, sleep specialists, medical societies, and patient organizations. Throughout the year, we made significant progress in expanding our reach with sleep specialists through major Congresses like World Sleep in March and the Sleep 2022 Conference in June, along with one-on-one meetings. This year alone, we estimate that we have been in front of over 1,000 people from the narcolepsy community. As a reminder, less than 1,600 sleep specialists make up 80% of the current overall OxyBait prescription volume. As we get ready to transition from the summer to the fall, we are also preparing for a number of meetings and conferences that will give us continued exposure to patient organizations and sleep specialists. We have both the American Neurological Association and CHESS meetings to continue to engage with sleep specialists this October, along with key patient advocacy organization meetings in the next couple of months. We also continue to see strong interest in our disease education campaign narcolepsy disrupts. In June, we began to make a sleep diary available that helps patients chart how they are managing their narcolepsy. And we have already shipped more than 3,000 to individuals across the country. After assessing all that we've accomplished to date with narcolepsy disrupts, we anticipate launching additional enhancements in the early fall. Our actions this year have really put Abdel on the map with our key stakeholders as a patient's first company who will not relent until we can bring a new treatment option to people with narcolepsy. For the payers, we have made very good progress in our conversations this year. Now, with the tentative approval in hand, and more importantly, the outer boundary of a final approval decision now just over 10 months away, we are accelerating our actions with payers, including the three GPOs and the affiliated PBMs that represent over 85% of commercially insured lives. Our team has done excellent work in establishing the clinical value proposition of once-at-bedtime womb rise, and now we look forward to advancing contract discussions. The reception has been very positive as the pairs look to gain post-approval access to a new therapy that we believe can go beyond the limitations of the current standards of care. Now, we continue to be nimble and dynamic in our readiness planning, to ensure that we are ready to fully launch at the earliest time after receipt of a final approval. We retain relationships with our key partners where the work takes the longest to prepare for launch. With the REMS requirements from the FDA not finalized, our program build-out is in full motion. The same can be said for the work being done by our team in advancing our commercial launch supply. For product fulfillment, our Patient Services Center will be ready to go live upon final approval And now, we will look to finalize our specialty pharmacy distribution agreements as we head towards a potential final approval. In summary, the collective work that we have done across REMS, supply, distribution, and fulfillment has put us on track to launch as soon as we can once we have final FDA approval for Lumerize. We know that once-at-bedtime Lumerize has the potential to address significant unmet need with patients. and that our market research and data analytics shows the market potential for lumerize to be roughly double that of the current twice-nightly oxibate market with more than 30,000 potential eligible narcolepsy patients. Recall, the total patient population consists of three key segments. First, approximately 16,000 actively treated twice-nightly patients. Second, an estimated 10 to 15,000 potential patients previously treated with oxibates who have discontinued therapy. And third, roughly 3,000 new oxibate patient starts. And in this segment, we expect robust yearly growth of 25% to 50% per year in the future. All three patient segments have expressed high levels of interest in Lumerize, and physicians and patient groups both have indicated that once-at-bedtime dosing is the most important attribute in choosing an oxibate. We are a forward-looking team. And now, with the outer boundary timing for a final approval decision just over 10 months away, we are fully focused on executing our plans to deliver Lumerize to patients as effectively and as quickly as we can. I look forward to providing more updates on future calls. Now, let me turn the call to Tom for an update on the company's financials. Tom?
spk04: Thank you, Richard. 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. I'll start with the balance sheet where we reported 104.1 million of cash, cash equivalents, and marketable securities as of June 30th, 2022. Also as of June 30th, we had approximately 17 million of tax refunds pending, of which 10 million was received in July. We currently expect that the remaining 7 million will be received in the second half of 2022. As a reminder, Earlier this year, we completed an exchange and eight-month maturity extension of approximately 80% of the $143.8 million of convertible notes. As a result, $117.4 million now matures in October of 2023, and $26.4 million will mature in February of 2023. R&D expenses were $4.5 million in the quarter end of June 30, 2022, compared to $6.8 million for the same period in 2021. The period-over-period decrease was due primarily to lower purchases of active pharmaceutical ingredients used in the manufacture of Lumerize. SG&A expenses were $21.8 million in the quarter ended June 30, 2022, compared to $15.2 million for the same period in 2021. The period-over-period increase is primarily the result of fees associated with the exchange of the convertible notes. Higher legal and compensation costs were mostly offset by the reversal of previously accrued expenses due to the restructuring. This quarter, we recorded a restructuring charge of $3.6 million, primarily for severance benefits associated with the reduction in the company's workforce. The workforce reduction will be completed during the third quarter of 2022, and we expect to reduce quarterly cash operating expenses, excluding inventory purchases, to $12 to $14 million. Income tax expense was $30.2 million in the quarter ended June 30, 2022, compared to income tax benefit of $3.8 million for the same period in 2021. Income tax expense this quarter is due primarily to a valuation allowance recorded against deferred tax assets. The valuation allowance is non-cash and does not impact our ability to utilize NOLs in the future when the company begins to generate taxable income. Net loss for the second quarter of 2022 was approximately $63.4 million, or $1.07 per diluted share, compared to net loss of approximately $19.6 million, or $0.33 per diluted share in the same period in 2021. Finally, with $104 million of cash on hand at June 30th, the $10 million of tax refunds received in July, and the $7 million of tax refunds still to be received, together with the cost reductions we implemented, we believe that the company's cash runway extends to at least the middle of 2023. And with the tentative approval now granted, and as we progress toward a final approval decision that could occur by June 2023 or earlier, we will seek opportunities to strengthen the balance sheet and ensure we have the capital resources available to prepare for the launch of Lumerize into what we believe is a greater than $3 billion market opportunity. I'll now turn the call back to Greg for closing remarks.
spk10: Thanks, Tom. To summarize, we are pleased but certainly not satisfied with our recent milestone of receiving tentative approval for Lumerize, marking a critical step for Avidel. With tentative approval in hand, we are committed to keep moving forward to unlock Lumerize's clear and intuitive value proposition with a once-at-bedtime treatment that could be transformative for people with narcolepsy by providing the potential of an uninterrupted night's sleep while also managing daytime symptoms of narcolepsy. We look forward to keeping you up to date on our continued progress with our regulatory and legal actions, as well as our ongoing efforts to prepare for and shorten the time to commercial launch upon receipt of final approval. With that, we'll open the call for questions and I'll turn it back to the operator.
spk12: Thank you.
spk15: We will now begin the question and answer session. To ask the question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster.
spk12: Our first question comes from Francois Brissaboy with Oppenheimer.
spk15: Please go ahead.
spk05: All right, thanks for taking the question. All right, so the timelines have changed a little bit. We've been tracking. We've got the potential, you know, REMS expiration. But you mentioned just, you know, between the filing of the lawsuit and the Markman hearing and what can come of that, you mentioned possibly having news by the end of 22. I just wanted to make sure I understood what that referred to and also maybe hearing the about I believe it was the lawsuit by the end of September. So maybe if you could just kind of put it all together and just make sure we know what to expect for a potentially earlier approval decision than June of 23.
spk10: Yeah, thanks, Frank. So both of them on both of them being the Markman hearing leading into the motion to do list on one track. And on the other track, the APA action against FDA. So taking the first one, again, in that proceeding, you know, in that case, we have asked the court, you know, assuming they agree with our position on the actual REMS patent not being eligible, not being, you know, listed eligible, Orange Book eligible to be listed. we are asking the court to order the delisting of that. Upon receipt of that delisting, we would then facilitate the process to, in essence, refile the necessary documents with FDA seeking their approval to move from a tentative approval to a final approval. So obviously the Markman hearing is on August 31st. We certainly are seeking to have the motion to delist heard immediately. as quickly thereafter as possible. And depending on the timing of those decisions, whenever that occurs, that will set the timeframe for us to then file the necessary documentation with the FDA to convert the tentative approval to final approval, which again, per FDA guidance, generally speaking in that situation, is recommended anywhere from two months to six months. So depending upon when that occurs and how quickly the FDA acts, and that setting could create a situation where a final approval decision could be had depending on when that final delisting motion occurs. On the APA case, what has occurred is a briefing schedule has been agreed to, which will go through basically the middle of September, and currently tentatively that hearing is expected to be heard at the end of September. And again, what we're requesting from the court there is if they agree with our position, that they vacate the requirement, the decision to require certification, and ask the FDA to make a final decision within 14 days. So depending upon how long from the hearing to when the judge makes a final decision or ruling on that, if they rule in our favor, then a final decision could occur as early as 14 days after that point in time. So again, both of those potentially provide windows where if the decisions happen relatively efficiently and they go in our favor, a decision could potentially occur prior to the end of the year. Perfect.
spk05: Thank you very much. That's very helpful. And then just maybe more for Richard on the payer side. You guys obviously are doing a lot of work there. I was just wondering, any thoughts, would you share any thoughts strategically of maybe giving out, you know, samples for free just to make sure that, you know, based on the fact that you have to titrate this medication, it can take time in these patients. There is a high discontinuation rate for these types of medicines. Any thoughts about, you know, from the script being prescribed to getting in the patient's hand to make sure that happens as quickly as possible? Thoughts about just giving out some samples for free just to make sure the patients get access quickly?
spk06: Yeah, Frank, thanks for the question. It's an interesting thought. You know, the one thing we are absolutely focused in on is making sure we can get patients a great experience with Lumerize as fast as possible upon final approval. So through our patient services center, we will offer a bevy of services. If it's a quick start programs where you're waiting for insurance and other things for applicable patients. to ensure that patients can get the experience with Lumerize, obviously once they've been certified, as quickly as possible. So we do know those initial experiences are going to be absolutely pivotal for us. which is why we have invested so heavily in ensuring that our patient services center will have not only that, but other services aimed at both the patients themselves and the offices as well. So it's a good idea. Frank, there's obviously some legalities we'd have to work through, but we're working on making sure that we have a full suite of services to ensure that patients can get on therapy as fast as possible.
spk05: Okay, great. Thank you very much. That's it for me.
spk15: Our next question comes from Lauren Lidnack with HCBainRise. Please go ahead.
spk14: Thanks. I have a couple. Just can you remind us upon FC218 or LumeRise tentative approval, did you get or do you expect to receive in due course an indication regarding potential orphan exclusivity of your own product for, you know, that would apply to any future once nightly sodium oxybate? I have follow-ups, thanks.
spk10: Yeah, thanks, Oren. Again, as we've shared in the past, this is a topic we've had engagement with during the pendency of the review on the FDA and fundamentally believe that the orphan exclusivity review was by and large complete, although not decided upon formally because technically until there's a basis for a timing for a final decision, the FDA just isn't going to make that final decision, that formal decision, until the time is right. And there's a lot of reasons for that, including that things could change in the marketplace or whatnot between now and that point in time. That being said, what's been communicated to us in our tentative approval letter, which I do believe is online now, you'll see what was noted in that approval letter was the REMS patent, as we previously identified, as the issue that we need to climb over. So, again, from our perspective in our discussions with FDA, although not a formal decision, you know, this issue is the same as it was prior to missing the PDUFA date and whatnot. And we believe both in the context of the robustness of our submission on the basis of clinical superiority that we provided to be granted orphan drug diffusivity, but as we've also stated based upon the statute, we don't necessarily believe orphan drug exclusivity is required to be granted a full and final approval.
spk14: Okay. And as we think about the launch scenarios and the timing to launch, you know, Francois touched on this, uh, but what, uh, you know, how long do you think it would take to actually get this product out the door? You know, which includes having to enroll physicians and REMS, et cetera, uh, post-approval? And if you were approved in fall or year-end, you know, how many months do you think it would take to actually get some scripts rolling through the system and maybe even revenue producing?
spk10: Richard, do you want to start on that?
spk06: Yeah, you know, so, or in the great news with the tentative approval in hand under Jen's leadership, the REMS program is in full build-out right now as well. So, you know, previously that would have been viewed as sort of one of the long poles in the tent, but now With us having the TA, that's going forward. So our belief is our work will be shortly after, very shortly after our final approval. That will be up and going, and obviously once the REMS is up and going, we can actually begin to certify both physicians and patients. So depending on timing, we'll either have time to do that a little bit before product is out there, or it will be done concurrently. So that one element has really shrunk down a significant part of our pre-launch readiness here. But it will still take us potentially a few months from the final approval before the first product is shipped out. Greg, would you like to add on to that?
spk10: Yeah, I think that's right. I think, Oren, the best way to think about it is in the scenario where good news comes early – And, you know, we have that as tailwind and we're building toward a launch date on the back of an approval. There are certain things that will continue to be worked on that otherwise would have been completed if we go all the way until June of next year. So I think, you know, in the scenario where an approval comes by the end of this year, we may be launching, you know, you know, you know, a few months after that into, you know, the early part of next year into, you know, perhaps even depending on when the approval comes in the early part of maybe Q2, unlike if a launch, if it goes all the way until after June 17th, then we're likely, you know, towards the end of Q2 before final approval, we're obviously likely launching in the subsequent quarter.
spk14: Okay. And just if I may, you know, you've talked about you know, your increased optimism for the Oxford market growth potential, you know, with several different buckets. You know, given all that work you've done in the interim, what's the latest view on the resources necessary to successfully launch the product, realize, you know, sort of those ambitions? What sort of footprint, you know, marketing, I guess, just you probably wouldn't comment on total cost, but just as we try to understand the magnitude of an investment necessary.
spk10: Go ahead, Richard.
spk06: Yeah, no, Oren, it's a great question. I mean, the one thing that's always really key for us to think about for the narcolepsy market is it's relatively compact, right? You know, once again, we know that as far as the treater base of oxibate prescribers are concerned for narcolepsy, there's only about 5,000 and 1,600 make up 80% of the total oxibate volume. So for us, it's relatively compact. You know, our initial plans are still about the same where we'd probably be focusing on around 50 representatives that will allow us to cover that entire universe and add some. We've really invested very heavily in our data analytics platform so that we can really effectively target the right physicians at the right time. And a lot of the work that we've done up to this point is our foundation going forward, which is a great base for us. Everything from our disease education with narcolepsy disrupts to the engagement that we've had with patients digitally, we have this to build upon. So the great news for us is I don't think it's like we need a massive bolus We're just going to keep building upon what we have. Clearly, we're going to have to spend more to hire a sales force again and things like that. But the fact that this is a compact marketplace, and then from making good inroads into that core, there's clearly room to expand in the future. But that's what makes this marketplace, from my perspective, really attractive to execute on, is we don't have to do multiple things. We can really focus on the physician engagement, the patient engagement, and the payer engagement. And we've got great plans going against all three segments.
spk14: All right. Thanks. Good luck.
spk07: Thanks, Mark.
spk15: Our next question comes from Ami Fabia with Needham. Please go ahead.
spk02: Hi, good morning. This is Ethan Leon for Ami. Thanks for taking our questions. Just two from us. Maybe first, you know, I'm curious, ahead of kind of the August 31st Markman hearing, is there any read-through that we could get from that? in terms of y'all potentially getting a favorable ruling regards to the delisting counterclaim. And then maybe second, we'd just love your latest thoughts kind of on pricing of Lumerize and kind of in this market in general, given the entry of authorized generics looking like they'll kind of start off in the beginning of next year. Thank you.
spk10: Yeah, thanks. As it relates to kind of any read-through, From that perspective, it's probably not appropriate for us to speak on any of those specifics relative to this ongoing litigation, other than the fact that, you know, when it comes to this specific 963 brems patent. Again, I think what we believe based upon the components of the patent that it is a computer system patent, given it describes things such as processors and servers and screenshots and whatnot, and believe that that is not a orange book listable patent, which really is tied to formulation or method of use of that specific product. And therefore, again, we've asserted this because we believe in our position and we look forward to the first step in this process in just a few weeks from now to advance it. As it relates to pricing and the market dynamics, I'll turn it over to Richard.
spk06: Yeah, Ethan, thanks for the question. So, you know, obviously when it comes to the marketplace, first and foremost, we've seen that the occupant market be relatively flat as far as narcolepsy is concerned. And, you know, all of our plans that we've made in pre-launch and our post-approval plans have absolutely been contemplating an AG in the marketplace. Now, we don't really see the AG significantly impacting the potential for once-at-bedtime lumerize at all. You know, we've made plans whether or not they make some further inroads or not here as well. But regardless, you know, when it comes to the AG, it's always important to remember that it's still going to be a twice-monthly product, as are all the current oxidates as well. And we believe our work that we've done with the pairs has really been to establish the clinical value proposition of the ones that bedtime lumerize as well. So we've definitely take that into account as well. We don't anticipate them really having significant pricing erosion, but we'll adjust our plans with whatever goes on there. And also keep in mind, the AG is really generally not attractive to pairs as far as really increasing the uptake off of our assumptions today. And as far as your question on pricing, we've stated right from the beginning, our goal with payers is to be sort of in a parity access position with the best of the Oxibates overall. And so our pricing, we've always stated to be sort of in the zone of where we believe the branded Oxibates will be in the future as well.
spk13: Great. Thank you.
spk07: Thank you.
spk15: Our next question comes from Chris Howerson with Avido. Please go ahead.
spk07: Hi, this is AJ for Chris at Jefferies. A quick housekeeping question. Do you have a target budget for API stocking? I just see it was the only item excluded from your expenditure guidance.
spk10: Tom, do you want to answer that?
spk04: Sorry, you broke up a little bit. Your question was, do we have guidance on the amount of our API purchases? Yeah. Yeah, we're not providing a specific guidance around that. You know, the API purchases are included in our R&D costs at this point.
spk07: Okay, gotcha. And a quick follow-up question on the narcolepsy disrupts program. Do you have an update on what kind of engagement you're seeing with patients?
spk06: Yeah, no, we've seen really great enrollment so far. We're closing in about 6,000 individuals who have registered into our program. And I think, you know, as I mentioned during prepared remarks, what's been really cool to sort of see is we offered what we deem as a very simple but a very essential tool around a sleep diary. And in the first sort of month and a bit, we had over 3,000 individuals request getting it. So, you know, our discussions with the patients, our engagement has been very good. And as I mentioned as well, we're sort of looking to sort of have a larger revamp to sort of take that next wave of engagement as we go into the early part of fall. But so far, we're super pleased with the impact that the campaign has really had and the continued engagement and dialogue that we're having with patients online.
spk13: Baja, thank you.
spk12: Our next question comes from David Anselin with Piper Sandler.
spk15: Please go ahead.
spk18: Thanks. So most of my questions have been answered, but I did want to ask you a couple of questions on commercialization. Number one, can you talk through where you think early adoption is going to come from, and in particular, do you expect that most of your earlier patients will have had exposure to the Xyram authorized generic before they get on Lumerize? So that's number one. Number two is, as you look at your IP runway, does it make sense for you to run a registration quality study in idiopathic hypersomnia? Is that something that's in the cards? Thank you.
spk10: Thanks, David. Richard, do you want to take the first one?
spk06: Sure. No, great question, David. So, as far as early adoption is concerned, I mean, first, I sort of think about it from the prescriber base. And clearly, you know, our assumption is we'll have the earliest adoption from the most experienced OxyBait prescribers. We know that there's less than 500 physicians that account for over 50% of the OxyBait volume in the marketplace right now as well. And actually, what we see in our market research is a great opportunity for patients who are currently on twice-notly-oxidates discontinued and de novo. But if you think about the switch patients themselves, we actually know that current ZyWave patients tend to be the earliest adopters of innovative new therapies. So we absolutely do see, you know, a good opportunity for patients there to be attracted to the Lumerize value proposition, as are the current Serum patients were potentially that which makes the most intuitive sense. And as far as the AG is concerned, like I said, we still see it having limited impact in the marketplace. Now, clearly, we'll likely have some time to see that. But we absolutely do see the switch from existing twice-nightly OxyBase as being a relatively large segment in the OxyBase-experienced physicians. We also see that opportunity with patients who tried twice-nightlies but are no longer on them for various reasons. And we also do believe we're going to get a good share of the de novo patients because, as many physicians have told me, when you offer the chance to not have to wake up during the middle of the night to a de novo patient, it's a pretty clear value proposition as well. So we feel fortunate that we know that we have a great opportunity of the switch patients, but we absolutely sort of see the opportunity for growth in all three of those patient segments overall. And Greg, I'll turn the IT question back to you.
spk10: Yeah. Thanks, David. It's an important question, you know, because what's next is an important consideration for us in terms of how do we build a franchise around the innovation that is once-nightly Lumerize. And I think the short answer is there's a tremendous amount of interest from the clinician community to want to study a true once-nightly dose, once-at-bedtime administration for IH patients. So, yes, I think in short, we're evaluating that very seriously. We've done a tremendous amount of work in terms of understanding what that trial design could be like and whether or not we should consider a registration quality study or whatnot. I think you'll hear more about that. as we go forward, but it is an important consideration as one of the tools in terms of, you know, building out the full value of Lumerize, whether that's in IH or whether that's in the work we're doing with additional formulation work as well on our own low-sodium formulation, no-sodium formulation.
spk13: Got it. Okay. Thank you. Thanks, David.
spk12: The next question comes from Adam Everts with LifeSite Capital.
spk15: Please go ahead.
spk09: Thank you. Good morning. Question on the commercial side. On Jazz's earnings call, they reported that there are more patients on Zywave than Zyrem. Of course, part of that is the idiopathic hypersomnia indication for Zywave. Just curious if that impacts your commercial strategy, perhaps messaging or otherwise.
spk06: Yeah, and thanks for the question. Yeah, you're right. I think what they reported is more patients for Zywave overall, but if we actually look at the narcolepsy market, it's still slightly tilted towards Zyrum. The good news for us is we see the opportunity uniquely favorable for both of those segments. As I mentioned before, what our research tells us is, in general, Zywave patients with narcolepsy tend to be earlier adopters, younger patients who have been diagnosed with narcolepsy for less years seeking more new innovative therapies as well. So we believe that bodes very well for the value proposition of Lumerize once it's available in the market as well. And then once again, you know, so it likely will be a bifurcated market between Zyrum and Zyway patients as far as OxyBates are concerned. For the Zyrum patients, you know, our value proposition is probably the clearest and most intuitive overall there as well. So going from twice at night to a once at bedtime therapy, that in essence is the same sort of compound. So we believe we're really well positioned for both, and a lot of it is also going to be driven by some of the patient engagement that we have overall as well. So despite the fact that there's about a 50-50 split in the marketplace right now, we believe we're positioned for both of those segments very well, in addition to the discontinued patients and the de novo patients as well.
spk09: Fantastic. Appreciate that. And then one quick clarification. I think I know the answer to this, but Will we get any more color on the label, or we'll need to wait until full approval to see any more details there?
spk10: Yeah, it won't be released until final approval, Adam. But our view on it, where it stands today, it's in really good shape and I think gives us something really good to work with in the marketplace. Great. Thank you. Thanks.
spk15: The next question comes from Mark Goodman with SVD Securities. Please go ahead.
spk11: Hi, this is Maruan for Mark. Similarly to the previous participant, I think most of my questions have been answered, but maybe just a follow-up on the last question. Do you expect any additional edits to the label or REMS upon the request for final approval?
spk10: Not at this time, we don't. We believe that's complete. I would say that that's our expectation, unless, you know, new information or new data is learned during the pendency of the tentative approval period. But at this stage, we would expect that to be in its final form.
spk11: Thanks.
spk13: Thank you.
spk12: The next question comes from Matt Kaplan with Leidenberg-Talman.
spk15: Please go ahead.
spk01: Oh, hi. This is Raymond in for Matt. Thanks for taking our questions. Just two quick questions. Yeah, impressive data showing that dosing is a key factor in patient preference. I was just wondering to ask, just digging deeper, is there alignment between patients and clinicians on the relative preference for sodium content in making treatment choice? And is that something maybe a patient education campaign or that might be helped in aligning patients with clinicians? And my second question is, Do you expect any updates in your STOR study later this year or is that more of a next year thing? Thanks.
spk10: Jen, can you handle those?
spk17: Yes, absolutely. Thank you for the question. So the poster that we had presented at SLEEP on the discrete choice experiment shows that both patients and clinicians do not place the same value on the sodium content as they do on the dosing frequency. So that came through very clearly for both patients and clinicians that the number one driver of treatment selection is the dosing frequency in preference of a once-at-bedtime dose as compared to twice-nightly dosing. As far as it pertains to restore, yes, we will be presenting more data at the upcoming congresses, both the CHESS and ANA congress that are being held mid-October. We will have posters that continues to update our open label data from our store.
spk13: Appreciate that. Thanks. Thanks, Raymond.
spk12: The next question comes from Chase Knickerbocker with Craig Helen.
spk15: Please go ahead.
spk08: Good morning, everyone. Just first for me, can you speak a bit to how your REMS program and the existing OxyBates REMs would have to interact, and, you know, would there have to be some cooperation between the two of you to ensure OxyBate patients are properly managed between the two programs? You know, if you could just speak to any challenges here as you are building out your REMs program sort of around there, so that would be helpful here.
spk10: Yeah, thanks, Chase. I think the first answer to that question is that upon a final approval, both programs REMS programs are going to have to communicate with each other and cooperate. So it's not just theirs cooperating with ours or ours cooperating with theirs. Both companies are going to have the requirement to ensure a patient only has one active OxyBait prescription at a time. There is a process for which the FDA is approved and how that's going to work on our part. That's part of our REMS program and our design. And if you look at our tentative approval letter online, you'll see that components of the REMS document, the REMS program, has been provided by FDA. And inclusive of that is Section 9, which is a section that basically requires us to report how the other party is responding to, you know, and the timeliness of those responses. in our inquiries to determine if a patient has an active prescription or not. Our assumption is that will be reciprocal on their side as well, but don't know that for sure. But clearly, there's a mechanism to report the responsiveness of the other REMS program to FDA at their request.
spk08: Awesome. That's helpful, Culler. Thanks. Then just last for me. Can you provide some details of, you know, what specific business functions were cut or reduced in the workforce reduction and cost optimization or, you know, what will need to be added or added back upon full approval?
spk10: Yeah, I would say there was, you know, there was no area that was, you know, spared, so to speak, from that standpoint. And I would characterize it in really a couple of ways. The first way is, in part, it was part of the G&A organization that was built to prepare for an onboarding of a of a significant expansion of headcount in the organization, more than a doubling of it by far, as we were heading toward a potential final approval. And clearly, those aren't positions we need in place right now, although the infrastructure and systems have been built to support that in the future. And then secondly, I would say it's roles where there are certain roles that, you know, we've done a lot of work to get ready for launch and now it's ready to go. And there's no really active work that's required from those functions. So, you know, we've made the decision on those sorts of roles to let them go, but really keep critical roles that we need to continue to execute to shorten the time, you know, from approval, from final approval to launch.
spk08: Got it. That's it for me. Thanks.
spk13: Thanks, Chase.
spk15: The next question comes from Paul Maddow with . Please go ahead.
spk03: Hi. This is James on for Paul. Thanks for taking our question. I just wanted to understand the exact steps behind, you know, getting a full approval. It sounds like from the press release you'll receive full approval. kind of immediately following the expiry of the REMS patent? And I guess, is that the case? Or is there anything that needs to happen at the FDA first? For example, will they need to make a decision on ODE following patent expiry? And I guess, what's the risk that could cause a further delay? Thanks.
spk10: Yeah, James, as previously shared, there is a process. If we're heading toward the situation where June 17th is the expiry of the patent, and that's the last remaining item for us to move from a tentative approval to a final approval decision. We would begin the process in notifying FDA and filing all of our related documentation well in advance of that per FDA guidance, such that upon that expiry or shortly thereafter, we would expect a final decision to be made on loom rise. So I think the short answer to the question is, you know, not speaking directly for how long after June 17th that will occur, but we will take the necessary steps to file the necessary documentation and request the FDA to begin the process to make whatever final decisions need to be made to convert from a tentative approval to a final approval in advance of that, such that when that patent expires, the FDA should be in a position to do so. Great.
spk13: Thanks. That's helpful. Thank you.
spk12: This concludes our question and answer session.
spk15: I would like to turn the conference back over to Greg Divis for any closing remarks.
spk10: Thank you, Operator. Thank you, everyone, for joining us today. We look forward to keeping you up to date on our progress on a number of these fronts and these matters and wish you a great rest of the day and look forward to any follow-up necessary. Take care. Thank you.
spk12: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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