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spk12: Based on O2VAR's novel mechanism of action and compelling -to-risk profile, our market research shows HCPs have significant interest in prescribing O2VAR broadly across all symptomatic COPD patient types. Initially, our launch efforts are focused on promoting O2VAR to the most active HCPs that treat COPD patients, which our market analysis shows is approximately 14,500 providers. These providers include pulmonologists, primary care physicians, nurse practitioners, and physician assistants. Our sales and field reimbursement teams are fully hired and have been in the field since late July. During that time, they have interacted with over 2,000 HCPs with over 85% being top prescribers. Although it has just been a few days, over 100 HCPs have prescribed O2VAR. In addition to the US launch of O2VAR, we plan to initiate two new phase two programs in the third quarter. First, we are developing a fixed dose combination formulation with -D-fencin and glycopyrrolate, ALAMA, for the maintenance treatment of COPD delivered via a standard jet nebulizer. In July, we submitted an IND to the FDA, and subject to clearance, we plan to start a phase two dose ranging trial in the third quarter. The trial is a randomized double-blind, placebo-controlled, one-week crossover trial to assess lung function, safety, and the pharmacokinetic profile of glycopyrrolates in the novel formulation delivered via a nebulizer in approximately 40 patients with COPD. Following identification of an appropriate glycopyrrolate dose range, a phase two trial assessing the fixed dose combination of -D-fencin and glycopyrrolate compared to placebo and individual components will be conducted. Additionally, we plan to initiate a phase two trial to assess nebulized -D-fencin in patients with noncystic fibrosis proctiectasis in the third quarter. The randomized double-blind, placebo-controlled, parallel group trial will enroll 180 patients with a recent history of pulmonary exacerbation. The trial will assess the effect of three milligrams of -D-fencin twice daily on the rate and risk of pulmonary exacerbation in addition to symptoms and quality of life. To ensure robust powering, the trial is planned as event-driven where all patients enrolled will be treated for at least 24 weeks and until the required number of exacerbation events are observed. Lastly, our balance sheet remains strong with over $400 million of cash on hand and optionality for future draws under our Oak Tree facility. I will now turn the call over to Mark to review our financial results for the second quarter. Mark, please go ahead. As Dave mentioned, our balance sheet is strong with in excess of $400 million in cash and equivalents at June 30, 2024. This includes $70 million drawn under our debt facility and $100 million drawn under the RPSA at approval. With the cash currently on hand and potential future access to the remaining $425 million under the Oak Tree facilities, we expect to have sufficient cash runway beyond 2026, including the commercial launch of O2VAR in the US and our two new phase two clinical programs. Total operating expenses for the second quarter of 2024 were higher than historical levels as a result of the recognition of one-time expenses for milestone payments due to Ligand and performance-based RSUs. Excluding these one-time costs, our quarterly R&D and SG&A expenses would be approximately $37 million for the quarter in line with our previous guidance. Research and development costs were $19.4 million for the quarter compared to a net reversal of costs of $2.5 million reported for the second quarter of 2023. This increase was primarily due to a cool of the $6.3 million approval milestone to Ligand, a $2.5 million increase in share-based compensation largely driven by the recognition of expense related to performance-based RSUs, $1.7 million of expense related to pre-approval inventory production, and an $8.8 million increase in clinical trial costs from Q2 2023 to Q2 2024. Selling, general, and administrative expenses were $49 million for the quarter and in June 30, 2024 compared to $12.4 million reported for the same period in 2023. This increase was driven primarily by an accrual of the $15 million first sale milestone due to Ligand, an increase of $7.4 million from marketing and other commercial launch-related activities, $4.3 million in people-related costs as we built out our commercial organization, as well as an increase in share-based compensation of approximately $8 million, largely driven by performance-based RSU expense. I'll now turn the call back over to the operator for the Q&A.
spk07: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster.
spk03: The
spk04: first question comes
spk07: from Andrew Tsai with Jefferies. Please go ahead.
spk09: Hey, thanks, good morning, and congratulations on the execution launch. Thanks for taking my question. So first one is as we tweak around our models, what kind of payer rejection and patient abandonment rate should we be modeling for -to-end treatment? And can you remind us if there will be free drug? Thanks.
spk12: Good morning, Andrew. Thanks for the questions. With regard to free drug, we do have programs in place to support patients based on economic need, for example. And also we do have what we would call a bridging program for those patients that may have delayed benefits and allowing them to start on drug in the short term while those benefits become in effect. So there is not a sampling program per se, but there is an ability to provide O2VAR to those patients that need it and to support them through any short term benefit verification. With that, I guess I'll turn it over to Chris on payer dynamics, at least from a modeling standpoint. And as you know, it's incredibly early in the launch to understand that based on current descriptions that have been written. Andrew, this is
spk02: Chris. Thank you for the question. When we think about the overall payer abandonment and rejection, as Dave mentioned, we're very early in the launch here, but I'm gonna go back to using older analogs within the nebulizer space. And what you see within those spaces, keep in mind that O2VAR will be primarily reimbursed under a medical benefit. Within our historical analogs that we've looked at under a medical benefits side, which can either be under traditional MedB or through Medicare Advantage, those abandonments are lower than what you see in Medicare Part D and commercial, but they do exist early on. There's just a natural patient dynamic that some patients, regardless of copay, even if it's low and zero, may walk away from a prescription. But we believe that everything that we have from a patient assistance program through Verona Pathway Plus provides access to the medication in a variety of different ways. Additionally, if you think about rejection rates and how rejection works, I'll go back to the same statement there around medical benefit versus pharmacy benefit. We believe the majority of our prescriptions will run through the medical benefits side of the business. And within that medical benefits side of the business, we have data on what those rejection rates look like. We also know that during this time, we'll be using a non-specific JCODE. That non-specific JCODE exists, the local coverage determination exists, and we believe that the product is able to flow through that channel very freely. Additionally, as we talked about on the approval call, we have submitted our JCODE application in LCD. We did that on June 27th. It is currently under review at CMS, and we would expect a product-specific JCODE at the beginning of 2025 to be in effect. So I hope that helps with your questions, and again, appreciate it.
spk09: No, yep. And secondly, consensus for Q3 is 1.5 million. If we assumed patients who get reimbursement quarter maybe get treated for an average of half a month, then by my calculation, the number of patients needed is 1,400 or more. Would you feel comfortable meeting or exceeding that patient number in Q3 or exiting out of September 30th?
spk12: Thanks. Yeah, maybe I'll take that one, Andrew. I don't think we're prepared to talk about patient numbers. I will note, however, that in doing your math, you do have to consider there will be some inventory making its way to the channel, not actually getting the patients quite yet. That will impact
spk04: revenues. Okay, great. Thank you.
spk12: Thanks,
spk04: Andrew.
spk07: The next question comes from Yasmeen Rahimi with Piper Sandler. Please go ahead.
spk05: Hi, this is Emma on for Yas. Thanks for taking our questions. Firstly, do you provide any color on patient starting forms and how that ties into how you're thinking about patient uptake? And with that, what type of matrix do you plan to share at next earnings in November to help us track the launch progress and guide future expectations?
spk12: Yes, good morning, Emma. Thanks for the question. You know, I think I'll start with the latter part. You know, clearly, as you've seen in our history, we're as transparent as we can be as we progress. We expect our metrics to continually evolve as we get further into the launch. And we'll still assessing which those are for the next quarterly call. As you can see, just in a few days, the uptake is quite strong for those who bear with over 100 HCPs already writing for it, and we've barely just begun. And so we will, of course, again, be informative, be transparent, and give you metrics to understand the launch dynamic. And we expect, again, that to
spk04: change over time. Thank you.
spk07: Our
spk04: next
spk07: question comes from Tom Schrader with BTIG. Please go ahead.
spk10: Good morning and congratulations. I have what's probably an annoying question, but you've written 100 prescriptions. Do you have any read on who they're for? Are they all patients unhappy on triple, or are you already seeing people try the drug earlier?
spk12: Again, I'll have Chris comment, but keep in mind that we're just a few days into this, and so all the analyses that you'd expect on a maturing launch haven't quite started yet. But with that, I'll have Chris comment.
spk02: Yeah, Tom, thanks for the question. Just for clarity, we have over 100 writers of prescribers of O2 there. What we know about those prescribers is they come from our target list. So if we think back to our other calls, these are the highest prescribing physicians, both what I would call segment one and segment two physicians that our reps are calling on. We're also hearing very clearly from our early field conversations is the unmet need that we've expressed throughout the last year, year and a half is very high within these offices. The doctors are reporting back to our reps. They have significant numbers of patients who continually have persistent symptoms, and they look at O2 there as a new tool in their toolkit for treating these patients, and it allows them to use it in a variety of different ways. As Dave said, it's very early to kind of give an analysis of what the patient profile looks like of the ways that these doctors have prescribed it. However, what we do know is that they are telling us every single time our reps go into the office that these patients continue to have persistent symptoms, and that will drive utilization as we move through the third quarter and into the fourth quarter as well.
spk10: Okay, and then a quick question on the fixed dose. To try a fixed dose in a handheld device, do you have to get the monotherapy approved in a handheld device first, or could you in fact try that combination in a different device?
spk08: Yeah, I think the way that the programs are typically designed for a fixed dose combination, you actually, one way or another, work through the entire development of a model therapy in that formulation, whether it's in a handheld device or a nebulizer.
spk10: Got it, okay, thank you very much. Yeah. Thanks,
spk07: Dan. The next question comes from June Lee with Truist. Please go ahead.
spk06: Hi, thank you. This is Jingho Jun, and thanks for taking my questions, and also congratulate on your progress. So I have other questions regarding about your, can you give more color on the drug compared with treating the non-CF branch test test, especially compared with your competitors like ENZOMED, PRENSO testes, and then also could you provide some unique of this mechanism for this drug can be offered better, a competitive edge over other drugs? Thanks.
spk08: Yeah, so we think encephentrine has the potential to make a difference in patients with non-CF bronchiectasis because it targets neutrophilic inflammation, including both neutrophils and macrophages based inflammatory processes. It also works through increasing filiary function and cough and sputum. Sputum in particular is one of the most problematic issues associated with bronchiectasis, and it's that dysfunctional mucosiliary processes in these patients that cause continual infections and further pulmonary exacerbation. So our trial of course is designed to assess the effect of encephentrine on pulmonary exacerbation. We saw very strong data against pulmonary exacerbations and reducing rates and risk of exacerbations in the COPD population. We certainly think that based on the mechanism, this will extrapolate to a bronchiectasis population. Regarding how encephentrine might impact patients with bronchiectasis compared to other competitor drugs that are out there, we really think that encephentrine has the opportunity to actually make these patients feel better rather than just reducing exacerbation rates. And so that's the goal, and those are some of the endpoints that we'll be assessing in this first trial.
spk06: Great, thanks. But do you have any pre-clinical data to support what you have for this indication?
spk08: Well, I'm not aware of any models specifically relating to bronchiectasis, but certainly we have a wealth of data with similar pathophysiological processes in patients with COPD, including reduction in COF and sputum that was important in the phase three program.
spk06: Okay, thank you so much. Thanks for taking my question.
spk07: The next question comes from Bram. Sal DeJarro with HC Wainwright. Please go ahead.
spk11: Thanks so much for taking my questions. On the commercial front, this is probably for Chris, I wanted to see if you could provide us with some more granularity on what you are currently engaged in doing on the social media front and what you plan to do in the course of the coming months with respect to marketing outreach, and also when you anticipate involving direct to consumer advertising as part of the overall commercial process for O2VAR. And if so, what forms that might potentially take and what you might think about doing on, for example, the speaker program side with physicians, as well as what you're seeing in terms of patient advocacy involvement in support of O2VAR within the COPD community.
spk02: Thanks, Ram. Thanks, Chris. Yeah, thanks, Ram. I'm gonna take these kind of step-wise on just our promotion through a marketing standpoint. One of the things that the team did a very good job of, and we talked about this throughout the commercial launch preparation, was setting up our infrastructure, specifically from a data side, to be very flexible for marketing programs and digital programs to HCPs and patients. And we've seen that in execution already. I'll give you a good example here. Our marketing team through Digital Avenues have reached out to over 50,000 physicians multiple times through emails, banner ads, and other types of channels to engage with physicians. And what we've seen over the course since approval is we have over almost 7,000 physicians that are highly engaged with our marketing content over the last month. And what I mean by highly engaged means they're clicking on emails, they're going to our website, they're interacting with the communications the marketing team is doing. Additionally, what that's allowing our reps to do is give them high-profile leads so that they can go into offices with physicians that are ready to prescribe O2 there very quickly. So it's been a really nice process and system in place from a marketing perspective. I think as we think about the future from the HCP side, we will continue to support our field messaging with what I would classify as omni-channel promotion. Omni-channel promotion is not only digital, but as you talked about some speaker programs and other things. Today, if you go on the O2 there HCP website, it is fully updated and launched, as well as the O2there.com website for patients is fully launched as well. So those are avenues to continue to reach physicians outside of the traditional rep standpoint. From a speaker program standpoint, we will have speaker programs, our reps have the ability to have speaker programs. We have trained a group of speakers already, and the reps have already started scheduling future speaker programs with physicians in their location. So that is part of that omni-channel plan. When I think about patients, patients have always been part of our plan. It's the reason why we have a patient website today. It's also a reason why we collect patient data through our interactions on social and other channels. We also think that in the future, there's very good avenues of point of care patient marketing where we're able to interact with the patient in physician offices where the doctors are already prescribing. So the team has put together a very robust both physician and patient marketing plan to ensure that we support our field force as they're out there interacting with these physicians.
spk11: Great, and then just very quickly on the non-CF bronchiectasis, I was wondering if you could give us some additional color on the timeline to reach full enrollment and potentially the timeline to data, or if you don't have that great a read on that yet.
spk08: Sure, this population's not a real easy one to project out, but we do anticipate this could take around two years to get to the end of the study. Remember the population is essentially just somewhat larger than a rare disease, so the patients are a bit harder to find.
spk04: Thank you.
spk03: Again, if you have a question,
spk07: please press star then one. Our next question comes from Edward Thomason with Kempin. Please go ahead.
spk01: Good afternoon, good morning. Thank you for taking my question. I had a quick question just about the pricing. There was in recent weeks we've seen news how the pricing differences from the ICR cost-effective pricing on an annual basis. Does that have any implications on reimbursement and how does that play into your strategy for the O2VAR launch?
spk02: Edward, thank you for the question and appreciate that. Yeah, I think we believe that we have priced O2VAR as the appropriate value to both the healthcare system and the patient. If we look, we've done significant pharmacoeconomic analysis on O2VAR and the benefits it provides the system. We've had ranges of prices per month upwards of $5,000 a month that you could have charged for O2VAR. As you know, our WAC price is $22,950. We feel like that represents an appropriate value for what O2VAR brings to the overall healthcare system. When it comes to reimbursement, we don't believe that and we haven't seen anything from an indication standpoint from any of our interactions with payers that that price is dictating how it will be covered. Keep in mind, O2VAR is reimbursed under a medical benefit and that is different than how traditional pharmacy benefit drugs work. Again, from all the work the team has done across the pricing and payer community, we believe that price appropriately reflects the value but also appropriately allows the patient to get access to the medication long-term as
spk01: well. Okay, thank you. And then I just had a follow-up question actually on the data that we might be expecting at ERS and CHESS later in the year. Can you just give us a flavor on what we might expect from those releases, whether it'll be subgroup analysis or patient populations or background therapies just so we can whet the appetite ahead of that.
spk08: Sure, and all of those things actually. At the ERS, you'll see some analyses specifically on the European population that was enrolled in the ENHANCE program, additional analyses on the effect of M-susentrin on cough and sputum from ENHANCE, Poole's patient reported outcome assessment and a look at exacerbation effect by COPD phenotypes, so chronic bronchitis or not chronic bronchitis. At CHESS, you'll see some additional data additional analyses on COPD severity, on smoking status, again on data from COPD phenotypes, chronic bronchitis or emphysema, an analysis of pooled lung function and also a look at healthcare resource utilization over 48 weeks.
spk04: Okay, that's very
spk01: clear, thanks so much.
spk07: This concludes our question and answer session. I would like to turn the conference back over to Dr. David Zaccardelli for any closing remarks.
spk12: Thank you everyone for joining today's call. As you can see, we're very excited about O2VeR's launch in the US. I think we're off to an incredible start just a few days into it and we look very much to updating you in the future. So I look forward to seeing you all soon at various meetings and investor conferences.
spk04: Thanks very much.
spk03: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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