OptiNose, Inc.

Good day, and welcome to the Opti-Nose third quarter 2024 earnings 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. Instructions will be given at that time. As a reminder, this call may be recorded. I would now like to turn the call over to Jonathan Neely, Vice President of Investor Relations. Please go ahead.

Good morning, and thank you for joining us today as we review Opti-Nose's third quarter 2024 performance and our plans for the year ahead. I am joined today by our CEO, Dr. Rami Mahmoud, our new CFO, Terry Kohler, and our Chief Commercial Officer, Paul Spence. The slides that will be presented on this call can be viewed on our website, OptiKnows.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. are subject to risks and uncertainties that can 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 Opti-Nose's most recent Form 10-K and 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. The forward-looking statements during this conference call speak 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 Rami.

Thank you, Jonathan, and thank you to everyone listening for joining us this morning. We appreciate you joining us for our third quarter 2024 update. Before we get into the call, I want to offer a warm welcome to Terry Kohler, our new chief financial officer. Terry brings significant expertise in leading financial strategy for commercial stage branded pharmaceutical products and is a strong new addition to our leadership team. Welcome, Terry. Starting on slide three, we have a lot to unpack on the call today. I'll start with a brief outline of what we'll cover during our call. First, I'll provide a high-level overview and key takeaways from today's call. Second, our Chief Commercial Officer, Paul Spence, will provide a commercial update with a focus on what we've learned during the CS launch, how we've adapted business practices during the third quarter, and on recent data that suggests we've now begun to observe an inflection in enhanced prescription growth. Next, Terry will walk you through our financial performance and our financial guidance for full year 2024. Finally, I will return to wrap up the call and take your questions. Turning to slide four, I'd like to cover three key topics in today's presentation. First, I'd like to reiterate the significant long-term opportunity in front of us and provide high-level context for our commercialization activities in 2024. We believe peak annual net revenue will exceed $300 million with our specialty-focused efforts, a magnitude of opportunity that we believe has potential to reshape our business for years into the future. Claims data suggest that chronic sinusitis is currently being diagnosed and coded for by healthcare providers an estimated 10 million or more times per year, which is more than 10 times more frequently than nasal polyps. While our revenue in third quarter was not in line with our expectations, we believe we are now observing a clear inflection in new prescription demand. We believe the recent accelerating trend in new prescription demand reinforces the magnitude of the longer-term opportunity. In addition, we believe that our experience in the initial phases of the launch has improved our understanding of the key drivers of adoption and that this experience will help support achievements of our peak year objective. As a reminder, in 2024 we commercialized Xhance without any change in the size of our prior Salesforce infrastructure. Since launch and with evolution in recent months, we have provided enhanced HCP targeting and call frequency plans, sharpened HCP messaging, created and then expanded our suite of chronic sinusitis-focused promotional materials, increased the quality of enhanced payer access, and continued enhancements in our specialty pharmacy and hub operations to improve HCP and patient experiences with prescription fulfillment. Our objective was and remains to attain peak year net revenues of at least $300 million with a specialty-focused field force calling on ENTs, allergists, pulmonologists, and a limited number of call points within primary care. In addition to that, we continue to believe there is a significant incremental revenue opportunity for the new CF indication within the traditional primary care market, which is largely outside of our existing call points. And we are actively exploring ways to enter that market in the coming year. Our focus on growing profitable prescriptions, rather than simply overall prescription volume, and on building a broader base of prescribers who are new to exams in the context of the launch, rather than focusing only on the historical base of high prescribers for nasal polyps, are among the factors that have shaped 2024 performance. Eventually, we believe the business we build with attention to profitability and to breadth of prescribing will be more robust. Second, earlier today we reported $20.4 million of exams net revenue for the third quarter. While this is less than our expectations for the quarter and may reflect a slower than initially anticipated uptake, we believe we are now seeing clear progress towards our peak sales expectations. As context, I'd like to remind you of the strategic direction of our commercial efforts since our launch in April. In order to achieve the full commercial potential of Ex-Hance, we felt it was necessary to make changes to our call point messaging to emphasize the important new clinical efficacy profile, To modify our prescriber targeting towards those with potential in the new indication and to modify our previous distribution and fulfillment strategy to allow scalability involving which involved implementation of a new hub services platform. The hub platform was also intended to improve patient access and improve prescription fulfillment service levels for both patients and prescribers by standardizing reimbursement and fulfillment processes. and increasing visibility to performance metrics to allow a continuous improvement. Since the launch of the CS indication, we also felt it was important to focus on improving the quality of Ex-Hance insurance coverage, including the inclusion of new indication in utilization management schemes and other improvements in coverage, such as inclusion of the product in preferred formulary positions, as we saw with the addition of Ex-Hance to large Express Scripts national formularies in July. In addition, we felt it was important to focus on consistent and repeated communication over time of our new clinical data through our sales force, a cumulative effort that we believe is an important driver of trial and then adoption by physicians. During the first months of launch, we have focused on field performance against core elements of this plan and our prescription fulfillment related efforts, including migration to the new hub. We monitor performance and, as we learn from experience, our commercial team has taken actions to improve sales execution and increase efficiency of prescription fulfillment. We believe leading data suggests that these actions are having an effect, and we are beginning to see a corresponding inflection in performance. Paul will provide additional color during his update on how we believe we are now progressing up the launch curve in the chronic sinusitis market as we advance healthcare provider knowledge and confidence in the efficacy of exams and address the overall prescribing experience. He will also speak to the improvement in enhanced insurance coverage in the third quarter and how we believe that has contributed to recent positive trends in our business and why we continue to seek to further improve the quality of our coverage heading into 2025. Finally, as Terry will cover in more detail, the delayed inflection of prescription growth trends, although not changing our expectation for at least $300 million in peak revenue, has resulted in a reduction in our guidance for calendar year 2024 enhanced net revenue. We now expect revenues in a range from $75 million to $79 million, compared to prior expectations of $85 to $90 million. The new range implies 6% to 11% growth compared to full year 2023 enhanced net revenue of approximately $71 million. While the road we traveled in the third quarter had some bumps, and our trajectory has been a bit delayed as a result, I am pleased with the team's focus on continuous improvement. We believe their efforts have placed us on a growth trajectory in chronic sinusitis. Recent data now indicate growth trends that reinforce our belief in the significant long-term potential of exams as it penetrates a total addressable market of over 30 million patients. I'd now like to turn the call over to Paul Spence to review initial launch performance and some recent commercial highlights.