Avadel Pharmaceuticals plc

Q3 2023 Earnings Conference Call

11/8/2023

spk15: Greetings and welcome to the Avidale Pharmaceuticals Third Quarter 2023 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 Austin Murthoff with Stern Investor Relations. You may begin.
spk03: Good morning, and thank you for joining us on our conference call to discuss Avidel's third quarter 2023 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 risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. These risks and uncertainties are described in AVIDEL's public filings under the Exchange Act included in the Form 10-K for the year ended December 31, 2022, which was filed on March 29, 2023, 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 Givis, Chief Executive Officer, Richard Kim, Chief Commercial Officer, and Tom McHugh, Chief Financial Officer. Dr. Jennifer Goodman, Senior Vice President of Medical and Clinical Affairs, will join us for Q&A. At this time, I'll turn the call over to Greg.
spk06: Thank you, Austin. Good morning, everyone. And thank you for joining us to review Avidel's third quarter 2023 results. We're excited to share the progress we have made with the launch of LUMRA. Following my opening remarks, Richard will provide an update on our launch progress, Tom will provide a review of our Q3 financial results, and we will conclude with a question and answer session. The third quarter was transformational for Avidel, as we fully transitioned to a commercial stage company and are very pleased with the robust early demand generated and important emerging launch trends we are seeing. There is a tremendous opportunity for Loonrise and Avidel that lies ahead as we execute our launch. We believe the foundation we are building during these early months positions us incredibly well for continued success building on the momentum built during this first full quarter of launch. During Q3, this momentum resulted in growth across all key launch metrics, representing strong demand across all three patient segments of the eligible narcolepsy patient population, and generated $7 million in Lunarize net revenue. There's no better evidence of this than the early launch KPIs we announced this morning. Greater than 1,000 patients enrolled in Rise Up and more than 400 patients who initiated therapy during the quarter, the majority of which are fully reimbursed. Expanded luminized payer coverage with key health plans representing approximately 60% of all commercial lives, and this progress on the payer front continues to create even greater access for the 600 patients enrolled in our Rise Up patient services program and in process of obtaining coverage and getting on Lumerize as of September 30th. Additionally, there are nearly 1,400 healthcare providers who have now completed the Lumerize REM certification process, including providers who have never previously prescribed inoxibate. We're very encouraged by these early KPIs and believe they are indicators of the strong interest and positive engagement we have had with all stakeholders as we've advanced the launch of Lumer. Furthermore, to support the robust clinical data of Loonrise, our team recently attended World Sleep in Rio de Janeiro, Brazil, where we shared 15 poster presentations and two oral presentations detailing new and encore data, further demonstrating the clinical profile and clear benefit of Loonrise for potential eligible patients. Looking forward to the future, Our team is also advancing our lifecycle management opportunities as we believe this has the potential to expand the patient population who could benefit from LumeRise and provide long-term value to the company and our stakeholders. We are pleased to announce that yesterday we submitted a supplemental new drug application to the FDA for LumeRise in the pediatric narcolepsy population for the treatment of cataplexy or EDS. and currently expect an approval decision in the second half of 2024. Comprising approximately 4% to 5% of the current total activated treated narcolepsy population, expanding availability into the pediatric population not only increases the total addressable market for luminescence, but also has the potential to greatly alleviate the burden on families and caregivers who support children living with narcolepsy. We believe these families and caregivers will welcome a once-at-bedtime oxibate treatment option, as the twice-nightly dosing regimen of first-generation oxibates inevitably requires potentially multiple people in the household to chronically wake up night after night to administer the second dose for their children. Additionally, we're making progress with our clinical planning to initiate a multi-center randomized controlled trial for idiopathic hypersomnia, or IH. And we believe, based upon our interactions with key opinion leaders, that the value proposition of once-at-bedtime lumerize could be very compelling for those suffering from the deep sleep inertia associated with IH. And lastly, on the life cycle management front, we are continuing our preclinical development of our potential no or low-sodium once-at-bedtime oxibate formulation for the small subset of sodium-sensitive oxibate-eligible patients. As always, we intend to provide updates on these programs as appropriate. With a strong balance sheet to support ongoing operations and the significant progress achieved in the initial month of the launch, we remain hyper-focused on the Lumerise launch and expanding our reach and our impact. We are committed to and remain relentless in delivering on the promise of Lumerise for all stakeholders. And with this positive momentum coming out of Q3, we believe we are on track to command a meaningful share of the multi-billion dollar activate market and maintain our view that Lumerize is a greater than $1 billion annual revenue opportunity. With that, I'll turn the call over to Richard for details on our recent commercial progress. Richard.
spk05: Thanks, Greg, and good morning, everyone. It's so great to be on this call today to discuss our first quarter of launch. Let me start by saying it's a real privilege to bring Lumerize to the NARCEP community. Since August, our full commercial team has been in the field seeing these specialists across the country, and the overall feedback has been extremely positive. We've heard for a long time about the impact of a once-in-a-bedtime oxy that it could have for people with narcolepsy, and now we are proud to see that impact of Lumerize happening each and every day. We consistently hear from the narcolepsy community that Lumerize has the potential to take people with narcolepsy beyond their expectations of other available treatment options. I'd like to start with one example of the many interactions we've had with sleep specialists and the impact Lumerize is having. During a recent field ride, we met with a sleep specialist who enrolled his first person in a ride up in August. The patient started on Lumerize a few weeks later. Now this patient was previously taking the first-generation mixed salt product and switched to 7.5 grams of once-at-bedtime Lumerize. The patient has remained on 7.5 grams of Lumerize per night is consistently sleeping through the night, and she says wakes up more refreshed in the morning, ready to start her day. Lumerize has been an absolute game changer for this patient. While this is just one example of the journey to gain initial hands-on clinical experience, this lead specialist had great initial success with Lumerize, and subsequently committed four more patient enrollments into Rise Up. To echo Greg, we are super excited about this strong start we've had, and believe our progress reflects the clinical benefit of Lumerize, our strategic preparation, and the hard work and dedication of our team. We're pleased to share today that through our first full quarter launch, there were greater than 1,000 patient enrollments into RISE-UP, our patient support center. From our RISE-UP data, enrollments and patients on therapy are coming from all three of our target patient segments. Switched patients from first-generation octobates, patients who previously tried discontinued first-generation octobates, oxibate-naïve patients. Thus far, we are seeing an early trend that the majority are being sourced from first-generation oxibates, with slightly more coming from the twice-not-lead mixed-valves products compared to the twice-not-lead silicon oxibate products. Through the end of September, there were nearly 1,400 ACPs who were reg certified. As a reminder, our core target ACPs include the 1,600 high-volume oxibate prescribers who make up 80% of the total market prescription volume. The greatest penetration of RIM-certified ACPs has come from these high-volume OxyBase prescribers, and they account for about three-quarters of all RISE enrollments thus far. Although the transfer RISE up are early, with patients coming from previously-distinguished first-generation OxyBase patients, also OxyBase-native patients, and prescribers who have previously never prescribed an OxyBase, Our early data supports Lumerize growing the market beyond the limitations of where first-generation, twice-named octobates were used. Supported by the increasing number of rides with enrollment, today we also announced in the third quarter we had greater than 400 patients who initiated treatment on Lumerize. We saw the number of patients on Lumerize grow within a quarter as more payer coverage began to come online. The majority of patients initiated with Lumerize are commercially reimbursed. Additionally, and although early in launch, we're seeing discontinuation trends that are lower than the 25% discontinuation rate at one month from first-generation oxidizers. When we think about all the time it takes to fulfill enrollment and get patients shipped when they arrive, there are generally two main patient segments that are emerging. First, those who have coverage of prior operation criteria. These patients can be processed and shipped product on average in about a month. As our coverage of payers expands, this segment of patients will continue to grow. Now, for patients going through medical necessity without a formal coverage policy decision, this generally consists of payer denials and ACP appeals, a process that can take longer, more like a couple of months on average, with some occurring a bit sooner and some taking even a bit longer. This segment is getting smaller as our coverage grows. However, and very importantly, despite these cases taking longer to fulfill, We also see very few people dropping out of the RISE-UP process. At the end of September, approximately 600 patients were in the RISE-UP process though, going through the benefits investigation or pending their first shipment. Based on early launch trends through Q3, we currently anticipate that the majority of these patients will convert on to Lunarize as they complete their RISE-UP process. Product fulfillment is very dynamic. And we are in a fundamentally stronger place with the use of rise up and our services than we were just a couple months ago. More important is that these specialist offices are getting increased experience with the enrollment process and are beginning to send additional patients to rise up. Now that's a nice segue to transition to payers, where we continue to make strong progress in securing broad coverage for them. Currently, Lumerize has coverage policies with over 100 million insured lives, representing approximately 60% of the totally commercially covered lives. We recently added coverage of policies in place with key national insurers like Aetna and Cigna, in addition to several regional and state plans. We also completed the Zinc GPO contract, where importantly, Lumerize will be moved to a preferred status within CVS commercial formularies, effective January 1st, 2024. Currently, Lumerize is in a non-preferred position. We are very pleased with our payer progress, and importantly, feedback from sleep specialist offices has generally been very positive for the early success rate from reimbursement they've been seeing. These first few months have set a great foundation for our launch, as we see demand for Lumerize continue to grow, offices in our teams improving the efficiency for getting patients started and staying on Lumerize, and more covered lives of patient payers. We could not be prouder of the collective work of our team and in bringing Luminis in our subject committee, along with the progress and trends we've seen to date. We look forward to providing more updates on future calls, and now I will turn the call over to Tom to discuss our financials. Tom?
spk07: Thank you, Richard. I'll note that full financial results are available in the press release and the 10Q. We're pleased to report that we generated $7 million in net revenue for the third quarter ending September 30th, 2023, and $8.5 million in total revenue since our launch began in June of 2023. We're continuously monitoring inventory levels in the channel, and during the course of the third quarter, we estimated that it was consistently between three to four weeks of demand, including as we exited the quarter. Turning to operating expenses, we reported a total of $42 million of GAAP operating expenses during the quarter ended September 30th, 2023, which includes $39.2 million of SG&A costs and $2.8 million of R&D costs. Operating expenses includes $4.6 million of non-cash charges for stock-based compensation and depreciation and amortization. After adjusting for these items, cash operating expenses were $37.4 million for the quarter. And we are currently expecting cash operating expenses in the fourth quarter to be in the range of $38 to $40 million. With respect to the balance sheet, we executed Q3 in a strong position. As of September 30, 2023, we had $153.2 million of cash, cash equivalents, and marketable securities, which includes $30 million received in August from the first tranche of the $75 million royalty financing commitment we secured earlier this year. A second tranche of $45 million is available if we achieve $25 million of quarterly net revenue by June 30, 2024. And as a reminder, while the $45 million could be available, we are not required to draw the second tranche. As we look ahead, we believe, based on current plans and expectations, that we can achieve cash flow break-even from operations when there are approximately 1,300 to 1,500 reimbursed patients being treated with Lumerize. Our expectation is taking into account a number of assumptions, including capital resources currently available to us, patient demand, net pricing of Lumerize, and ongoing cost structure to support the launch of Lumerize. Actual results versus these assumptions, in addition to ongoing planning for growth initiatives, such as an IH study, could impact our expectations regarding future capital requirements. And on a final note, at September 30th, we had approximately $21 million of convertible notes shown as debt on the balance sheet. This last remaining tranche of debt was settled in cash at the beginning of October, and effective with that pay down, the balance sheet is now completely free of convertible debt. I'll now turn the call back to Greg for closing remarks.
spk06: Thank you, Tom. We believe our strong foundation has supported our successful initial launch of BloomRise, and we are laser-focused on continuing to execute on all our priorities. Our goal since the inception of Avidal has been to provide treatment that can transform the lives of those living with narcolepsy, and we believe we've made significant progress in this area and look forward to our continued launch execution and positively impacting even more patients. We thank you for your support and look forward to providing future updates on our progress. And with that, we will open the call for questions.
spk15: Operator? Thank you. In order to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. We do ask that you limit yourself to one question and a follow-up. Please stand by while we compile the Q&A roster.
spk12: Our first question comes from Amy Fadia from Needham.
spk15: Your line is open.
spk13: Good morning. Congrats on the nice update on the launch. I have one or two quick questions. Firstly, can you talk about the rate at which you're seeing enrollment in VICE-UP and maybe give us some more color on where these patients are coming from in terms of whether they're coming from Xyrem, Xyvae, or new patients, if you can give us some more color there.
spk05: Yeah, thanks Ami. Richard, do you want to? Yeah, thanks Ami. Yeah, it's really been fantastic to see the interest that has these questions about the neuromides. And we're super pleased that when we gave our first update about two months into launch, there were about 400 patients enrolled into RISE-F. And then in the next two months, about an extra 600 patients have come on board. So really good momentum. You know, maybe holistically as we start to think about the launch, the first thing we should say is when we see these specialists, we have really yet to see one who hasn't seen the clinical value proposition of neuromides. And, you know, when we think about the trends going forward, we haven't really sort of seen what I would describe as boluses in many offices, but really more of a sort of steady influx of patients being seen in their regular course of follow-up, which is about every three to nine months. So when we start to think about sort of going forward, we just continue to sort of see continued steady demand for Louderize. We also know that the holidays are coming up sort of as we get into November and December, so it's just something to account for. But our focus remains very much on the launch execution and obviously patient activation. I will also say in the future, we do think things, we've seen when coverage policy changes have occurred, they can act as catalysts as we saw for CBS earlier. That's going to prefer, should help us as we go to January and also the continued work that we have with our MSR GPO contract as well. Now speaking to the types of patients, We consistently sort of see sourcing from all three patient segments, which discontinued previously and naïve. And thus far through the launch, we're seeing the majority coming from previously experienced, or currently on-occupied patients, with more tending towards coming from the mixed salt and the twice-metallic sodium oxidase as well. So it's out there on me. It's real. It's been awesome to be in this field for all of us. There's always more that we can do, but we're super pleased with the progress we've made so far.
spk13: Great. And maybe just on the peer coverage front, you know, you talked about currently having over 100 million insured lives. How should we think about the remaining and when, you know, give us some sense of the timeframe into 2024 where we could see Coverage expand. Thank you.
spk05: Yeah, sure. We're pretty selfish. We want as many covered lives as we possibly can get, because that's really the gateway to getting patients onto therapy. So, you know, the general process is you get on, you get the GTO contract signed, then we have to pull through with major PBM or GSAP. So we've been doing that under both the ASCENT or the ESA by contract, now the Zinc CBS contract as well. The third one is the MSRR sort of Optum United Live. It always takes long, but we've made very good progress there. And we fully anticipate growing our covered lives as we go forward here as well. So, I mean, to be where we are sort of for our first full quarter launch and have this coverage has been pretty impressive. And I think what's really played on the marketplace is the general feedback we hear from providers being maybe pleasantly surprised with the reimbursement rates that they're seeing. So, sort of like many of our metrics, we're looking sort of upward into the right to go our
spk13: Great, thank you. Thank you for your question. One moment, please.
spk15: Our next question comes from Andrew Tsai with Jefferies. Your line is open.
spk01: Hey, I just wanted to say congrats myself as well. It's really great to see the launch going very well. So first question on the conversion rate. it looks like you got 1,000 signups in the quarter, 400 essentially getting treatment. So loosely speaking, seems like a 40% conversion rate, give or take. And I think you said in the prepared remarks, the majority will convert from rise up. So is it fair to assume that 40% conversion rate moves up meaningfully going forward? And then secondly, if you were to take another cut of the you know, KPIs as of today, November 8th, how would those leading indicators look? Just want to make sure these numbers are not a one-time bull is that you're seeing even more patients signed up and treated and things are moving up and to the right. Thanks.
spk06: Yeah. Thanks, Andrew. Here's how I would answer those questions. First off is in terms of your 40%, it's really apples to oranges a little bit. And the 40% is certainly not the majority. And our commentary is What we've seen for patients who have been in the system for, you know, for at least some period of time that our conversion rates to on therapy is certainly the majority of patients. So we would expect 40% not as the right proxy currently in terms of what we're seeing early on in the launch. And obviously that's a number we want to continue to improve on and pair coverage decisions and whatnot are really important advances, but the progress made on the payer front has certainly been beneficial to us in seeing a majority of patients converting onto therapy and the majority of those converting onto to reimburse drugs secondly to your comment about what are the you know how does the early part of q4 look again i think we've seen we've continued to see more enrollments and more people go on therapy and growth continue so um yeah i mean i think we feel really good where we sit and the progress we're making across all fronts And knowing that there's a whole lot more to do, but we're really pleased where we sit today.
spk01: Thanks very much. Thanks, Andrew.
spk12: Thank you. Our next question comes from Mark Goodman with Learing Partners.
spk15: Mark, your line is open.
spk02: Thanks for taking the question. This is Rudy on the line for Mark. So I have a question regarding your patient that I'm here. So you mentioned that most of patients switching from first-gen OxyBase products. Just curious, what are the feedbacks you've been hearing from these patients, especially those who switch from Zyvave? And what are your strategies to penetrate patients who are OxyBase-naive and who previously treated and discontinued? Thanks.
spk05: Yeah, no, hey, thanks for the question. Yeah, you know, as we talked about in our prepared remarks, when we think about the source of patients thus far, the majority are from those first-generation oxidates. You know, the patient narrative that I gave early on was one that represents many of the conversations we've had about patients switching from Zywave. And, you know, one of the insights we had from that, even a couple of years ago, were a lot of the patients who had gone on to the mixed salt version early on, they tended to be early adopters of product. They tend to be diagnosed for a shorter period of time, switching, looking for more to do for their treatment. So we haven't been horribly surprised, the fact that we've had mixed salt patients coming on to the rate that we have thus far. And as we think about going forward, you know, the really nice thing about our execution is when we think about NARC sub-treaters and prescribers, it's a very concentrated physician base. 4,500 make up the entire universe. 1,600 make up 80% of the volume. So those extra naive and discontinued patients generally are in the same offices as the people that we're seeing where these switch opportunities are as well. So I think what we've seen is it sort of depends where the physician is on their journey. We've also sort of seen a nice uptake in both the previously discontinued and the naive patients as well. So we're just very pleased to sort of see the pull through of our strategy and growth coming from all three patient segments.
spk06: Yeah, I think really to some extent it's also a bit of a math equation as well because there are just meaningfully more patients in offices who are on existing therapies today. than those who are truly newly diagnosed. If the average annual newly diagnosed rate is around 3,000 patients per year, and 80% of those are in our primary targets, the average target has one or one and a half patients per year. So again, those will continue to come in the ordinary course as they come in, and we certainly are messaging around the importance of lumerize for new starts as well, but I think also you're seeing just a manifestation of early in the launch, kind of the math equation of more intervention opportunities for those who are on therapy than those who are coming in as potential new students.
spk02: Got it. That's very helpful. Can you also talk about the growth tonight? Any color would be helpful.
spk06: On the growth in that?
spk02: Yes.
spk07: Yeah. So, listen, at this stage of the launch, you know, we're early. And, you know, we haven't quite reached a steady state in growth. And that's, you know, there's more payer contracting to be done. You know, pair mix is certainly going to affect the gross net, you know, but as we're looking forward, you know, what we think continues to be a reasonable target to assume really on a net revenue per patient basis is about $120,000 per year. You know, we're not there today, just to be clear. You know, we have patients that are, you know, starting therapy, going through a titration schedule on lower doses, but ultimately as we move forward to a steady state, we think that $120,000 per year per patient is a reasonable assumption.
spk02: Got it. Thank you.
spk15: Thank you for your question. Our next question comes from Matt Kaplan with Leidenberg Thalmann. Your line is open.
spk08: Hey, good morning, guys, and congrats on the nice quarter. Just wanted to dig a little bit more into the process of patients passing through or working their way through the Rise Up system. And can you give us a little bit more detail in terms of the percentage of patients that start and rise up that actually initiate therapy?
spk05: Hey, Matt, thanks for the question. As far as the process is concerned, it's really sort of broken up into three key steps. The first is really the enrollment form, which is almost anonymous with the prescription, really beginning the process. And that really gets things going where then the next phase is really the benefits investigation, really sort of checking out the insurance that the patient has. And clearly that amount of time is going to be very depending on whether or not there's coverage or not. But then the third step in the process is when the specialty pharmacies get to be involved and they begin to triage the patients to ultimately confirm the shipment date with the patients. So those are what we call our relatively standard processes. Maybe one that's a little bit unique to us is one last requirement that is aligned to our REMS process as well is, especially pharmacies for lumerize have to confirm whether or not there's an overlapping treatment with another oxibate. So that does take a little bit longer, adds a little bit to the process, but those are really the three key steps that go forward. And what we can say is our processes are working very well. We're seeing that with the fulfillment today. we do expect sort of the timelines to continue to improve as well. And your second question again, Matt?
spk08: And kind of the percentage of patients that actually that enter the rise up and then initiate therapy at this point.
spk05: Yeah, I mean, the way we can sort of maybe do the math right now, sort of go through where we are thus far is like, you know, we announce over 1,000 enrollments through September, 400 initiated, and I think Greg has had some commentary also on the 600 patients who are still in the process. What we would foresee first is we've seen very few of those drop out, and we do expect going forward that the majority of these remaining six-year patients to be initiated onto lumerize so so the numbers are some of the math is somewhere between those numbers there as well um we also expect the majority of those to be initiated on to reimburse product as well so uh once again i like it's these are probably the the parts that are the uh the most um uh
spk08: focus focal point for us early on the launch but we're really pleased with the uh the progress that we've made we're pleased that we're actually getting patients onto the rise and as we said we believe that our conversion rates will just improve as time goes on as well and and in terms of the time through to move through the rise up process do you expect that to improve as you know similarly with with the getting the preferred position with with cvs starting the beginning of the year with other with other uh payers coming online as well and moving to a preferred position? Or do you think it would kind of still remain the same in terms of kind of one month to treatment for prior off patients?
spk05: Yeah, it's a great comment, Matt. Yeah, I think you sort of nailed it. First is sort of that mix, the sort of patients coming through with coverage versus those who don't. And obviously, we sort of see the covered lives continue to improve as we go forward here as well. So, yeah, that should absolutely improve our overall timelines. And then, you know, what happens as well is the offices just get more experience and more familiar with our process. So, both of those are occurring. It's very dynamic, but we see both of those as drivers for us to improve our efficiency going forward.
spk08: And then, maybe last question. One of the goals you have is expanding the existing Oxibate prescriber base. Obviously, that's a longer-term goal. We are very early in the launch. But can you tell us a little bit about what you're seeing so far early in the launch in terms of expanding the prescriber base to new prescribers?
spk05: Yeah, sure, Matt. You know, right now at the beginning of the launch, we're much more hyper-focused on those with oxidative experience than the 1,600 who manage 80% of the total prescription volume. But here's what's been going on. First, you know, you go into office, there may be someone who had previously never prescribed that now you want to come to the MIPS when you've been going in to see one of the more highly experienced oxidative prescriber. But the other thing that's been going on is we've just sort of seen spontaneous people come into our REMS certification that we hadn't called on, who have put their hand up and have begun the enrollment process as well. So although it's not been a focal point for us, it's been nice for us to sort of see people coming into the woodwork that maybe weren't really our intention to call on as well. So, you know, we're going to stay hyper-focused on where sort of the Oxivate volume is today. But clearly, as time goes on, we see the opportunity to gain more people to come into the prescribing mix as well.
spk08: Okay, makes sense. Thanks.
spk15: Thank you, Matt. Our next question comes from Francois Brisebois from Oppenheimer. Your line is open.
spk11: Hi, thanks for taking the questions. Congrats on the early progress here. Can you maybe touch on, we talked about the three buckets of patients and where they're coming from, but can you maybe help us understand
spk05: how the ags are maybe affecting each bucket and and what you're seeing so far in terms of you know a patient going through an authorized generic first yeah hey brian thanks for the question so yeah super pleased uh with the progress so far and uh you know it's nice that we are seeing um enrollment it's the one coming from all three of the patient pockets as you mentioned so uh you know obviously what's been nice is reading uh them from all three segments, but the AG overall, we are actually also converting patients who are currently on an AG coming on to LeRise. And as far as discontinued, we haven't really seen that many AGs who have discontinued. They've been relatively new. So the source of the AGs is predominantly coming from those who are switching from an oxovate. And we are also seeing, clearly, naive patients never being exposed to any first-generation oxovate as well. So it's still a little bit early. But the real source for us, where AGs are concerned, are these switching from current oxovate patients. And we really haven't sort of seen what I would call seen as an impediment of AGs impacting the ability to get on some of the rides thus far.
spk11: Great. Thank you.
spk15: Thank you very much. Our next question comes from Marion Bell Giddy with LifeSci Capital. Your line is open.
spk09: Hi. Good morning. Thank you for taking my question, and congratulations on the progress. So my question is around payers, and congratulations again on gaining preferred status with CVS. Just can you provide a little more detail with regard to discussions with payers, and if you have any kind of what's your expectations for other payers when it comes to preferred status? Is this something you're actively trying to achieve? And a quick other question, just more color on the pediatric opportunity. What are the main reasons there for not taking Oxibid, and are the dynamics different from adults? when it comes to both sodium and middle-of-the-night dosing?
spk05: Sure. Thanks. I'll start with the payer question. So, yeah, our overall strategy with payers has been to sort of have unencumbered access through any oxidase to sort of be at the best sort of status with the So thus far, with the first three of the GTO contracts, that's what we've achieved. And that is our goal going forward as well. I mentioned the fact that we have ongoing conversations with MSR and the United Optimum Alliance. So whatever is the best status, which is generally a preferred status for the Oxfam, that is our goal. And thus far, we've been very pleased with what we've been achieving thus far. I'll turn the pediatric question over to Jack.
spk14: Thanks so much for the interest in pediatrics. We have heard for years now of the desperate need for a pediatric form of sodium oxibate that does not require waking up in the middle of the night. That has been the primary driver for us seeking this expanded indication. In regard to whether it's different, the clinical need compared to adults, While it's really important for adults to not have to chronically wake up, and it's true that sometimes in an adult patient waking up, they also wake up their bed partner, the reality is for children who are 7 to 17, they are typically having at least one parent, if not both parents, chronically waking up in the middle of the night to administer the dose. I've had conversations with parents who were happy to submit letters of support for the pediatric supplement describing how challenging it was to never have an uninterrupted night's sleep for both their children and for themselves. For the second part of the question in regard to sodium, what we see with clinicians is they may identify a very small subset of their adult population who they consider to be sodium sensitive. This has not been an issue as we've been discussing sodium with the many KOLs who implore us to bring this option to them as quickly as possible.
spk06: Yeah, the only thing I would add regarding pediatrics is really just that we characterize it as unbelievably consistent, albeit anecdotal, which is every time you talk to a physician about lumerize and narcolepsy, the next two questions you get from them universally is when are you going to get pediatrics and when are you going to study at NIH? So it's very consistent when we talk to doctors about that, so hence why we're going down those paths.
spk09: Thank you for the clarity.
spk15: Thank you for your question. Our next question comes from David Amselim from Piper Sandler. Your line is open.
spk10: Just a few here. One is, can you talk about Salesforce sizing longer term and also how you're thinking about any DTC spend review that your competitor disease awareness lay the groundwork for you with its initiatives. So let's talk about that. That's number one. Number two is, I may have missed this, but you talk about the mix between ARC1 and narcolepsy type 2. Are you getting any traction in one group versus another, and what's your expectation regarding the mix between the two going forward? Thank you.
spk05: Yeah, thanks, David. So as far as Salesforce is concerned, to your point, today we're at 49 sales representatives. We also have our field reimbursement team. You know, once again, we find it's really going against the opportunity for our space right now, that 4,500 prescribers. Our 49 representatives sort of allow us to cover up to about 6,000, maybe 6,500 positions. So that gives us the space to cover our current opportunity and benefits. I'd say longer term, I mean, for right now, that's really where our focal point is, is getting OxyVit experience prescribers comfortable with using Lumerize as well. Longer term, we'll sort of see what the mix is, but I would say for at least the foreseeable future, we really don't see the need to expand the size of our sales force. Now, when it comes to DTC, we would really call it more sort of patient activation and patient media here. First, any news and media on narcosis we think is a good thing for a rare condition. Secondarily, our plans have really been to try to meet patients where they are, and they spend a lot of time digitally being active as well. So we've been very targeted about placing media and engagement through the sources where they go, Reddit, Facebook, and other sources. And we have a couple other novel approaches that we're doing in and around sleep specialist offices as well. So our approach with patients is, I would say, a little bit more surgical than as opposed to shotgun approach. And then as far as the NT1, NT2 mix is concerned, and it's a little bit muddled from our data as we're looking at that, but what we know historically is even though the prevalence shows about a 30% NT1 to 70% NT2, for OXTA-based, it actually historically has been the exact opposite use of 70% NT1 usage and 30% NT2. So I think maybe in the future we can provide some insights into some of those trends as more usage of with lumeritis increases. Thank you.
spk15: Thank you. Our next question comes from Chase Knickerbocker with CH. Your line is open.
spk04: Good morning, guys. Thanks for the questions. Just first, I wanted to ask another question. Sorry to belabor the point here on pull-through from rise-up. Maybe just ask me in a different way. If we look specifically at the patients within the 400 that were on rise up that exited Q2 not on therapy. What was the conversion percentage specifically with those patients within Q3? Yeah, hey, Chase.
spk05: You know, The majority of those patients who were enrollment at the end of our Q2 or going into our Q2 earnings did convert onto product. Now, we haven't given specifics on the exact percentage because some of it is dynamic. I'll give you one example. We have patients who enrolled in June who just got reimbursed and shipped product in October. So, you know, when we think about those two sort of buckets of covered lives versus not, the covered lives going through will be quicker than those who aren't. Our general philosophy is if a physician prescribes Lumerize, we're going to go to the ends of the earth to get them on it if we see a care pathway forward. And like I said, we have examples of junior enrollment taking, unfortunately, several months, but actually getting them across the finish line as well. So I think it's still dynamic. So the majority did, and we just see with more time that that number increases.
spk04: Is there an amount of time where they're on, you know, within Rise Up that you do start to see some dropouts? Is there like, is it three months? Is it four months? And then just another quickly, any feedback from the field as far as anecdotal kind of experiences with how the titrating has gone for new patients and whether or not there's a difference for, you know, whether or not a patient's been, you know, experienced with the first-gen sodium oxibates for, you know, years versus, you know, they've been on for six months. Any sort of color there would be helpful.
spk05: Yeah, you know, starting with the titration for the new patients, I would sort of say from the position that tends to be a bit of a mix. Sometimes you have slow titrators who want to sort of take their time to sort of get up to that. And I think on the other side, you have people who get there a little bit more quickly. And I think that's predominantly physician dependent on sort of their approach. So it's been a bit of a mixed bag. And sorry, Chase, what was your first question again?
spk04: Just for the patients that you do see drop out of rise up, even if it is a small number, is there, like, in a number of months that, you know, you start to see some fallouts? Or has there not really been a clear trend there?
spk05: Yeah, no, no. I mean, we're sort of getting to that time where some of these early enrollment, they may tend to drop out a bit. Some of that may be after exhaustion of going through the medical necessity pathway or for the patient. So we will start to see some of those patients start to drop off as more time has gone by. From past launches, what may happen is they may revisit the conversation again in their next visit with their sleep specialist again. But definitely after some period of time, the success rate, you know, after sort of four or five months definitely starts to go down.
spk06: Yeah, I would just add that, you know, to your question around the 400 cohort, we're very pleased with the percent that has converted, we've described it as the majority. But I think across all cohorts, there's an opportunity to continue to get better. And when someone decides to, predominantly when someone decides to exit Rise Up, it really is one of two reasons. It's just a payer denial that we haven't been able to get over. Or that patient has gone through the process and then at the end decided they're not gonna go on therapy. Which happens, it happens for all therapies. But again, that's a relatively small percentage as we've described. And we're pleased with, you know, people sticking with it and the conversion rates we've seen early on and knowing that, you know, those opportunities will only get better and they're already coming from a really good place.
spk04: Great. Congrats again on the really nice progress. Yes. Thank you.
spk15: Thank you. This concludes our question and answer session. I would now like to turn it back to Greg Divis for closing comments.
spk06: Thank you, and thanks, everyone, for your time and for joining us today on our third quarter 2023 call. We wish you a great rest of the day and look forward to follow-up. Take care.
spk15: This does conclude the program. You may now disconnect.
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