Avadel Pharmaceuticals plc

Greetings and welcome to Avadel's Pharmaceuticals Business Update Conference Call. At this time, all participants are in a listen-only mode. Accompanying slides for this call can be found on Avadel's Investor Relations website. 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 Murtagh with Position AQ. Thank you. You may begin.

Good afternoon, and thank you for joining us on our conference call to discuss Avidel's business update and outlook for 2025. Moving to slide two. As a reminder, before we begin, the following presentation includes several matters that constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding the company's expectations on preliminary commercial metrics unaudited financial results, forward-looking patient metrics, revenue opportunity, and revenue estimates, and the success of the commercialization of Lumerize. 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 31st, 2023, which was filed on February 29, 2024, and subsequent SEC filings. The forward-looking statements made today are as of the date of this call, and 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. In addition, we may refer to certain non-GAAP measures during this call, and these measures should not be considered in isolation or as alternatives to or substitutes for financial measures determined in accordance with generally accepted accounting principles in the United States. On the call today are Greg Divis, Chief Executive Officer, and Tom McHugh, Chief Financial Officer. At this time, I'll turn the call over to Greg.

Welcome, everyone, and thank you for joining us today. As we're now 18 months into the launch of Loom Rise, we've decided to take a slightly different approach to our January business update and 2025 pre-announcement. As such, turning to slide three, today we will cover the following topics. We'll provide a Lumerize launch update and review priorities and actions being taken to accelerate the launch. We'll review our Q4 and full-year 2024 preliminary results, and for the first time, provide initial revenue guidance for 2025. We'll review the progress and a path forward toward achieving the $1 billion potential revenue opportunity for Lumerize, And lastly, provide an update on our lifecycle management programs and our 2025 key milestones. Moving to the next slide, as a company, we've made tremendous progress over the last few years, building our business and capabilities to enable our transformation of the sleep space for patients, for their families, and their healthcare providers, while overcoming attempts by our competitor, Jazz, to delay loom rise coming to market. Our progress has been brought to light for me recently with a patient story from Texas. A nurse practitioner working in the emergency room was really struggling with the dosing of the first-generation mixed salt product. And as such, in a discussion with her physician, made the decision to switch to Lumerize. And according to her sleep specialist, she is functioning better and has also been able to decrease her daily dose of stimulant. Most importantly, she has expressed how happy she is with her now simplified and effective treatment regimen. This is just one of many examples of the feedback we regularly receive from physicians and patients alike. Based on this feedback, the impact we're having, and the progress made to date, we remain confident in our belief that Lumerize is a best-in-class therapy for people with narcolepsy and is on its way to market leadership. Like other rare disease products at this early stage of launch, we are in a critical period of establishing the initial foundation upon which the continued and future success of Lumerize will be built. On slide five, as we move into 2025 and our foundation continues to strengthen, our LUMARISE launch priorities are threefold. First, expanding our physician reach and impact across all patient segments. Second, accelerating our investments in activating switch patients. And finally, driving improvements in patient persistency. 2025 will be a year of growth and a year where we can and will go further and faster. So let's review our launch-to-date results and our key priorities for this year. Moving to slide six. Since launch, we have delivered strong and consistent demand in our initial primary targeted audience, resulting in nearly $200 million in net sales, more than 3,700 patient starts, and greater than 2,500 patients on therapy today. From a patient perspective, we have generated demand from all patient types, which was initially led by switch patients at approximately 50% of all patient starts. More recently, on slide seven, we have seen a shift in our patient mix with the rapid growth of new-to-Oxibate patients, who, when combined with previously treated patients in Q4, represented 62% of all starts. Importantly, reimbursed patients now represent nearly three-quarters of all patients on therapy. As stated on slide eight, these results have been primarily driven by two physician segments. First, we have seen successful Lumerize uptake with a segment of physicians who have become our early adopters and are core to the foundation we are building. This group of less than 500 early adopters have delivered nearly two-thirds of all Lumerize patient starts. It only represents a quarter of the total Oxibate market opportunity. The second group of physicians are those who have previously never prescribed an Oxibate before. This group now represent approximately 15% of our patient starts, further validating the emerging market expansion opportunity Lumerize offers. These early successes are the result of focused commercial execution against important segments of prescribers, which validates that we can generate significant Lumerize demand. This also demonstrates that we have much more work to do in this highly competitive and concentrated rare disease market. With the same level of focus and consistent execution during 2025, we believe we will achieve significant results with the remaining 75% of the existing oxibate market we have not yet materially penetrated. This group of under-penetrated prescribers is a key pathway to continued growth and, in particular, switch patient growth, a primary focus for us in 2025. Based on our ongoing physician and patient market research, which is supported by our promotional response analysis, these physicians are typically slower adopters and require more consistent and improved commercial execution and impact, which is something we have addressed. In addition, we are deploying programs and initiatives to unlock future switch patients. This is important, as some patients, based on research, can be concerned about reimbursement matters, such as out-of-pocket costs, or even losing access to OxyBates if they consider switching, all of which are being actioned. Turning to slide nine, switch patients are and will remain a critical focus, as they typically have an easier path to securing reimbursement and initiating loom runs. They have proven to have meaningfully higher persistency rates. and on average represent a greater revenue opportunity. As such, as stated on slide 10, our demand-based priorities for this year are focused on accelerating the growth of patients on therapy, and in particular, switch and reimburse patients. We will do this by expanding and upgrading our sales force and deploying tools and tactics to drive greater switch patient focus and impact on this under-penetrated market opportunity. We're increasing our direct-to-Oxibate patient marketing efforts to accelerate Oxibate patient education and activation to ask for Lumerize, while continuing our pursuit of market leadership in the new-to-brand Oxibate patient segment and capitalizing on the market expansion momentum we are building. And lastly, we'll continue our focus on increasing our reimbursed patient mix toward 80% and beyond with an account and channel-specific strategy. If patient demand is priority one, persistency improvements are priority 1A. Moving to slide 11, the narcolepsy market has had long standing challenges with successfully keeping patients on OxyBait therapy. First generation OxyBaits have historically experienced more than 50% of new patients discontinuing therapy each year, with approximately half of that in the first 30 days. More recently, based on data we have reviewed, the 12-month discontinuation rate for new first-generation oxibate patients is now approximately 65%. This is something we believe hasn't received the attention it deserves, as there wasn't any competition. But now there is, and for us, it is a priority. Just as we believe Lumerize will become the treatment of choice for oxibate-eligible people with narcolepsy, we're equally committed to being the leader in persistency as well. helping ensure patients have their own personal optimal Lumerize treatment experience and the associated benefits they deserve. For Lumerize, we expected persistency would be impacted as our patient mix became more heavily weighted to new to Oxbay patients and our cumulative cohort of existing patients grew. This expectation has materialized as our new to Oxbay patient cohort is growing, which from a persistency perspective is being addressed with actions we believe will improve this important metric. As it states on slide 12, specifically what we know is adverse events are one of the primary reasons for discontinuations. These tend to be common oxybate-specific side effects, such as nausea, dizziness, and vomiting, that typically occur when starting or increasing a dose, and depending on severity, can lead to potential discontinuations. However, they generally subside within one to two weeks. providing an opportunity to impact this by ensuring expectations are appropriately set with patients and deploying timely patient-specific interventions. This is important because as patients progress to their steady-state dose and efficacy increases, satisfaction with their treatment increases and the likelihood of discontinuation declines, especially early in a patient's treatment as nearly two-thirds of discontinuations occur in the first 90 days. thus providing a very clear window and opportunity to deploy patient-specific tailored messaging. And even though Lumerize's persistency rates are higher than that of the first-generation OxyBates, that is neither good enough nor the appropriate standard. This year, we believe there's an opportunity to improve the overall persistency rate, which begins by impacting the first 90 days of treatment and stabilizing the overall discontinuation rate. Transitioning to slide 13, to address this, we have recently made meaningful changes to both our strategy and our resources, including doubling our nursing team and our patient services center, allowing for more frequent and tailored patient interventions, including prior to the start of therapy, to better set treatment expectations. Increasing our field support team to deliver physician-specific interventions in advance of their patient's Lumerize refill. expanding our partnership with our specialty pharmacies, deploying custom pharmacy-based compliance and persistency programs, and lastly, progressing additional field-based patient support services that can go beyond the traditional telephonic and digital intervention tools to a more direct, personal, high-touch intervention at the patient and physician office level. All these investments are designed with the goal of improving persistency both early in and throughout a lumarized patient's treatment experience by delivering the right message to the right patient at the right time. So wrapping up, we are committed to leading the way for patients in persistency and beyond, all the while providing the opportunity to free OxyBait-eligible people with narcolepsy from forcibly waking up in the middle of the night, night after night, for a condition that, as FDA stated, is antithetical to the goal of improving sleep. Now, to translate this into our Q4 results in 2025 financial expectations, let me turn it over to Tom.