OptiNose, Inc.

star one on your telephone. Please be advised that today's conference is being recorded. Should you require any further assistance, please press star zero. I would now like to hand the call over to your host, Jonathan Neely, Investor Relations. Please go ahead.

Good morning, and thank you for joining us today as we review Optinose's first quarter 2022 performance and our plans for the remainder of the year. I'm joined today by our CEO, Peter Miller, President and Chief Operating Officer, Rami Mahmoud, our Chief Commercial Officer, Vic Covelli, and our CFO, Keith Goldan. The slides that will be presented on this call can be viewed on our website, optinos.com, in the Investors section. Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements. All statements that are not historical facts are hereby identified as forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated by such statements. Additional information regarding these factors and forward-looking statements is discussed under the Cautionary Note on Forward-Looking Statements section of the earnings release that we issued today, as well as under the Risk Factors section and elsewhere of Opti-Nose's most recent Form 10-K and Form 10-Q that are filed with the SEC and available at their website, sec.gov, and on our website at optinose.com. Your caution not to place undue reliance on forward-looking statements during this conference call, speakers. only as of the original date of this call or any earlier date indicated in such statement, and we undertake no obligation to update or revise any of these statements. We will now make prepared remarks, and then we will move to a question and answer session. With that, I will now turn the call over to Peter Miller. Peter?

Thanks, Jonathan, and good morning, everybody. We appreciate you joining us today. We continue to be very encouraged by our progress and are excited about the upcoming data readout of our second pivotal trial for chronic sinusitis, a label expansion that we believe has the potential to be transformative for our business. Starting on slide four, we'll go into more detail in a moment, but I'd like to highlight four key takeaways from today's presentation. First, we reported strong financial performance in the first quarter with 35% year-over-year growth in quarterly revenue. In addition to demand growth, An important driver of this revenue growth has been a favorable shift in the mix of our business, resulting from modest changes in our copay assistance program at the start of the year. Specifically, a greater percentage of our prescription fills are profitable, with a smaller percentage having negative profitability. After making these changes to our copay assistance program, we've continued to see prescription volume growth in the large profitable segment of our business, while also seeing a desirable reduction in volume in a smaller segment of our business, which is unprofitable. This first quarter dynamic has dampened apparent near-term growth in volume for both total prescriptions and new prescriptions, but we expect this change to have enduring benefit to the business, as already reflected in the strong 1Q year-over-year growth of 21% in average net revenue per prescription. As I noted, We believe this is a desirable shift in business mix that will yield continuing benefits throughout this year and beyond. Keith will provide some additional details later in the call. Second, our first quarter 2022 revenue growth was aligned with our full year 2022 guidance. Our guidance of at least $90 million implies year-over-year growth of at least 22%. As I mentioned, we're off to a good start with 35% year-over-year growth in Q1, which will enable continued strong focus on our two core business objectives, driving enhanced revenue growth and successfully completing the chronic sinusitis pivotal trials. Third, as promised, we reported top-line results from Reopen 1 in the first quarter and were pleased with the positive results. REOPEN-1 is a landmark trial in chronic sinusitis and we believe is the first Phase III study of a nasal treatment for this common disease to show improvement inside the sinuses. Briefly, in a population where all patients had proven disease inside the sinus cavities at baseline, REOPEN-1 found that treatment with EXHANCED produced a statistically significant improvement relative to EDS placebo on both a combined symptom score and on a CT scan measure of the amount of disease inside the sinuses. We view this as an important development for the approximately 30 million adults in the United States who suffer from symptoms of chronic sinus disease. Fourth, we continue to expect top line results from re-open two before the end of this quarter. The last patient in the trial recently completed their final study visits and our clinical team is working diligently on the audits and data cleaning necessary to enable database lock and production of top-line results. EXHANSE has achieved an important place in standard of care for nasal polyp disease by helping patients with these serious symptoms, and we're producing nice EXHANSE revenue growth with the current indication, which we expect to continue. Nevertheless, we are very enthusiastic about the incremental opportunities for growth that successful chronic sinusitis trials could create. We believe this data has potential to increase product differentiation, improve the prescribing environment for Xhance, be a basis for new partnerships, improve ex-U.S. opportunities, and drive significant incremental enterprise value. As we highlighted in our fourth quarter earnings call in March, an approval could roughly triple the number of target patients for whom we can promote Xhance in our currently called on ENT allergy specialty universe from approximately 1 million diagnosed nasal poly patients to 3 million diagnosed chronic sinusitis patients. It is also important to consider how the indication will impact the insurance and promotional environment for Xhance. As we have previously described, insurance coverage for Xhance is very good, with approximately 80% of commercial lives in a plan that covers Xhance. However, approximately half of those lives are in a plan that constrains prescribing by requiring physicians to attest that they are prescribing ex-hance for the approved indication, which is currently nasal polyps. This is important because we found that many physicians who routinely diagnose chronic sinusitis do not often make the diagnosis of nasal polyps. Approval of the additional indication would also enhance potential for a partnering opportunity to reach out to primary care physicians who treat roughly seven million additional patients With an average value per patient of approximately $1,000 per year, each of these opportunities has the potential to be substantial. Turning to slide five, we had strong performance in the first quarter of 2022, and I will briefly touch on year-over-year growth highlights on this slide and the next. In the first quarter of 2022, there were approximately 28,200 new prescriptions for Ex-Hance, a 9% increase compared to first quarter of 2021. The total number of enhanced prescriptions in the first quarter of 2022 was approximately 80,600, which represents 11% growth over the first quarter of 2021, in a market environment that increased 8% over the same period. As I noted a moment ago, we made intentional changes to our copay assistance program at the start of the year. By reducing the segment of loss-generating prescriptions, these changes dampen near-term growth and overall volume of new and total prescriptions, that are already increasing revenue growth and short-term and long-term profitability potential. Regarding our environment, I would also like to note that our territory managers continue to work through challenges to their ability to meet in person as frequently with and as with a broader audience of physicians as they did pre-COVID. While we've seen improvement in this regard, we believe the market environment has potential to continue to improve. Importantly, and as reflected in our first quarter results, our territory managers are currently driving trial and adoption that is consistent with our stated financial objectives for 2022. Turning to slide six, enhanced market share increased from 5% in first quarter of 2021 to 5.4% in first quarter of 2022. It is worth noting that we updated the definition of our target physician universe to track progress in the audience to which we promote. Previously, we tracked SHARE against an audience of approximately 18,000 physicians, including physicians detailed in person by our former co-promotion partner. Moving forward, we are including 21,000 physicians, primarily ENT and allergy specialists that fit within our targets for in-person and or digital promotion. SHARE under this new definition is consistent with past performance and we remain excited about the headroom for future growth as more physicians incorporate Xhance into their practice of medicine. Breath and depth of physician prescribing is measured by the total number of physicians who have patients filling ex-hance prescriptions increased from first quarter 2021 to first quarter 2022 as well. Regarding breath, in first quarter 2022, approximately 7,690 physicians had a patient fill at least one prescription for ex-hance, an increase of 11% compared to first quarter 2021. Regarding depth, the number of physicians who had more than 15 enhanced prescriptions filled by their patients in a quarter grew slightly faster, with that number increasing by 14% from first quarter 2021 to first quarter 2022, with nearly 1,500 physicians now in this segment. In a few moments, I'll provide some closing remarks, but I'll first turn the call over to our CFO, Keith Goldan, for comments regarding first quarter 2022 results and perspectives regarding our corporate guidance.