OptiNose, Inc.

Good day and thank you for standing by and welcome to the OPNO's fourth quarter 2023 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jonathan Neely, Vice President, Investor Relations and Business Development. Please go ahead.

Good morning, and thank you for joining us today as we review OptiNose's fourth quarter and full year 2023 performance and our plans for the year ahead. I'm joined today by our CEO, Dr. Rami Mahmoud, and our Chief Commercial Officer, Paul Spence. The slides that will be presented on this call can be viewed on our website, OptiNose.com, in the Investor 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 in OPTINO's most recent Form 10-K that is filed with the SEC and available at their website, sec.gov. and on our website at opti-notice.com. Your caution not to place undue reliance on forward-looking statements. The forward-looking statements during this conference call speak only as of the original date of this call or any earlier date indicated by 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 Rami.

Great. Thank you, Jonathan, and thank you to everyone listening for joining us this morning. We appreciate you joining us for our fourth quarter and full year 2023 update. So starting on slide three, and we're going to more detail in a moment, but I'd like to highlight four key takeaways from today's presentation. First, I'd like to commend our team for successfully executing our 2023 operating strategy. That strategy was to greatly increase our operating efficiency and to stabilize enhanced revenue while preparing our organization to seize the greatly expanded opportunity created by potential approval of Exhance as the first prescription treatment for one of the most common diseases diagnosed in adult outpatient medicine. We successfully met or beat the financial expectations we set for 2023, including the last four consecutive quarters of revenue achievement, aggressive operating expense reduction targets, and improvement in our average net revenue per prescription, while preparing our organization, if we receive approval, to launch EXHANCE as a treatment for chronic sinusitis, also called chronic rhinosinusitis without nasal polyps. Second, I'd like to reiterate the significance of the opportunity in front of us, which we believe has potential to reshape our business in the last three quarters of 2024 and for years into the future. Claims data suggests that chronic sinusitis is currently being diagnosed by healthcare providers at least 10 times more frequently than nasal polyps. Third, I'd like to remind you that our supplemental new drug application for the new indication for exams is far along in the FDA review window. We're rapidly approaching the FDA target action date, which is set for the end of next week. And last, if the SNDA is approved, we believe the new launch opportunity can enable us to build a profitable ENT and allergy focused business by accessing greatly expanded net revenue potential through an existing efficient base of commercial capabilities. In addition to that, we expect approval of the greatly expanded new indication, which facilitate commercial partnerships in primary care and other approaches to accessing incremental value in the large physician segments beyond the universe we currently access on our own in the specialty segment where we're currently deployed. Turning to slide four, we believe future approval of XANTH as the first and only FDA-approved treatment for chronic sinusitis has potential to increase the number of patients for whom the product can be promoted by at least tenfold because medical claims data indicate that an order of magnitude more patients are currently being diagnosed with chronic sinusitis than are being diagnosed with nasal polyps. Given published prevalence rates relative to the rate of reported claims, we do believe that nasal polyps could be diagnosed more frequently than it is being diagnosed today. However, the rate of diagnosis of nasal polyps may not be a concern if Exhance is approved for chronic sinusitis, which is already being frequently diagnosed in office by a broad range of physicians who do not perform the nasal endoscopic procedures that are often used to confirm the presence of nasal polyps. The new indication would create opportunity for strong growth within our existing commercial footprint, promoting largely to ENT and allergy specialists who see a large number of patients with chronic sinusitis. The newly expanded universe of patients would also include patients cared for by physicians outside our current commercial reach. And with the new approval in hand, we would continue to actively explore commercial partnerships, alternative selling models, and other ways to facilitate future outreach to those physicians and patients. Turning to slide six. Previously, we announced that the FDA accepted our supplemental new drug application in pursuit of an enhanced indication for treatment of patients with chronic rhinosinusitis. This is a novel indication for which the agency has never previously approved any drug product, the FDA action goal date is March 16 2024 next week Saturday. In January, we announced the publication of peer review results from the reopen program in the Journal of allergy and clinical immunology and practice. We invite this audience to review the complete results via the link in today's presentation, but I will share a pair of important points that were noted in the peer review publication. First, Exhance is the first non-surgical treatment shown to improve symptoms and sinus opacification and reduce acute exacerbations for patients with chronic rhinosinusitis with or without nasal polyps, including patients with CRS who report that their symptoms persist with use of standard delivery nasal steroids. And second, Exhance is an appropriate first-line treatment for CRS, including when symptoms persist with over-the-counter medications before escalation to surgery or systemic therapy. Turning to slide eight. As a reminder, our objective in 2023 was to stabilize demand trends in our current nasal polyp specialty business with a reduced commercial footprint and to materially reduce expenses while both preserving the necessary launch capabilities and improving our operational efficiency and effectiveness, particularly for our commercial resources. Our efforts in the first half of 2023 drove stronger than expected demand and created an opportunity for us to further increase the efficiency of our business in the second half of 2023. We completed various analyses that enabled January 2024 optimization of our Salesforce alignment and we thoroughly re-evaluated our distribution strategy, again allowing optimization actions in January of 2024, both aimed at best supporting pursuit of the new chronic sinusitis opportunity. We also made important adjustments to our copay assistance program with the intent of reducing both the number and the proportion of prescriptions being filled that were unprofitable for our business. We believe these changes had the intended effect, as evidenced by our fourth quarter results in which we produced relatively stable revenues with fewer overall prescriptions at a substantially greater average net revenue per prescription than in the prior year period. Turning to slide nine, With the 2023 objectives in mind, we are pleased by Ex-Hance prescription demand results in the fourth quarter of 2023. There were approximately 26,500 new prescriptions filled for Ex-Hance and 79,500 total prescriptions filled, both of which are a decrease compared to the total numbers in the fourth quarter of 2022. This is consistent with our emphasis on decreasing unprofitable prescriptions while focusing on profitable prescriptions. and it has driven significant improvement in the average net revenue per prescription. Turning to slide 10. As discussed previously, in 2023, we were successful in stabilizing demand trends in our current nasal polyp specialty business with a reduced commercial footprint and materially reduced expenses. There were approximately 115,000 new prescriptions for ExHance and 339,000 total prescriptions. both of which are low single-digit percentage decreases compared to full year 2022. Again, these numbers are influenced by intentional actions that we took to reduce the number of unprofitable prescriptions in the second half of the year, and particularly in the fourth quarter, and are consistent with the fact that we observed improvement in average net revenue per prescription. I'd like to note that all the data on this slide and the prior slide are estimated based in part on monthly prescription and inventory data from third parties but also on data directly reported to us by pharmacies that are part of the Ex-Hands Preferred Pharmacy Network. I'll also note that the fourth quarter 2022 data that we're showing today reflect our current 2023 methodology. And for reference, we footnoted prior estimates based on the prior methodology. I'll now turn the call back over to Jonathan to discuss our fourth quarter financial performance.