Zevra Therapeutics, Inc.

Good morning, everyone. Thank you for joining the Zebra Therapeutics First Quarter 2024 Corporate Updates and Financial Results Call. Today's call is being recorded and will be made available on the company's website following the conclusion of the call. With that, I will now turn the call over to Nicole Oshner, Vice President of Investor Relations and Corporate Communications at Zebra Therapeutics.

Good morning and thank you for joining us today to review Zebra Therapeutics progress in the first quarter of 2024, outlining our clinical advances, operational achievements, and financial results. Before we get started, let me take a moment to provide some important information. I encourage you to access the news release which was published this morning and is available in the investor section of Zebra's website. As we begin our call, it's important to highlight that today's discussion will include forward-looking statements. Forward-looking statements are not promises or guarantees and are inherently subject to risks, uncertainties and other significant factors that may lead to actual results differing materially from the projections made. Please refer to the risk factors section in our most recent quarterly report on Form 10Q and other filings with the SEC on annual reports on Form 10K. I am pleased to welcome Zebra's management team members participating in today's call. I'm joined today by Neil McFarland, President and Chief Executive Officer, LaDwayne Clifton, our Chief Commercial Officer and Executive Vice President of Business Development, Crystal Mickel, our Chief Development Officer, and Adrian Quartel, our Chief Medical Officer. Now I'll turn the call over to Neil.

Thank you, Nicole, and thank you all for making the time to join us today. During the first quarter, we made steady progress in executing on our strategic objectives. On our last earnings call, we announced that we were focused on three key priorities. First, to successfully launch approval and ensure access for patients. Second, to prepare for the potential launch of Aramaka Law. And third, to advance the KP1077 program in sleep disorders. I'm pleased to report that we are executing on all of these objectives. And today, we'll share with you a summary of our key accomplishments in the first quarter and the reasons we were optimistic for 2024 and beyond. In addition to executing on our three key priorities, we refinanced our existing debt with up to $100 million in committed capital, led by premier biotech investors, including perceptive advisors and healthcare royalty partners. This new credit facility, which LaDwayne will cover in more detail, has further strengthened our balance sheet and provides added capital flexibility to support our mission. The company continues to work through a period of significant growth and transformation, with the addition of talented people and capabilities from each of the three companies that have now come together to become one zebra. The team is making significant progress advancing our rare disease portfolio. And in Q1, we initiated a long-range planning process, including a portfolio prioritization review with a focus on building a sustainable business with reliable cash flows. Achieving our strategic objectives to commercialize Olprova and then upon approval, successfully launching Aramothamol, our key to reaching that seminal inflection point. We initiated the full commercial launch of Olprova at the end of January 2024. As a reminder, Olprova is indicated for the treatment of certain urea cycle disorders, or UCDs, which are a group of rare genetic disorders that can cause harmful levels of ammonia to build up in the blood, potentially resulting in neurocognitive impairments, brain damage, and in some cases, coma or death. We estimate that there are approximately 2,000 people in the U.S. with UCD, of which roughly half are diagnosed and treated. The UCD market in the U.S. is estimated at approximately $350 million annually. Despite the availability of therapies, unmet needs for people living with UCD persist. We believe that Olprova is well suited to address these needs as it provides personalized doses for each patient's requirements, is portable and easy for a patient to take, and most importantly, it is palatable as it was formulated to overcome the challenging taste and smell associated with other formulations of sodium perphenylbutyrate. Since launch, we've been focused on raising the awareness of Olprova and demonstrating our commitment to UCD patients. In the quarter, we had four new patient enrollments, which we defined as a prescription for a patient eligible for benefits investigation or a quick start program. We are encouraged by the progress that our rare disease specialists accomplished in the first few months of launch, meeting with more than 90 percent of the specialists at the 40 centers of excellence that treat people with UCD. We've also assembled a team of marketers, patient services, and market access professionals, as well as medical science liaisons and patient advocates who are engaging with key stakeholders at patient events and medical conferences. Our managed care team has been working with government and commercial payers to ensure broad access for patients. We have seen meaningful growth in reimbursement coverage, which was 55 percent at the time we acquired Olprova to nearly 75 percent of covered lives as of May 1st. Overall, I'm pleased with the products we've made in the first few months of launch and look forward to reporting more details as the launch matures. Debra's commercial footprint was established to provide a high strategic fit between Olprova and Arimothamol, given that the majority of prescribers for both products work within the same centers of excellence. If Arimothamol is approved, we believe this close proximity and overlap in patient care will allow us to realize synergies and scale with our commercial infrastructure. In fact, our team has already begun to identify and compliantly engage with key opinion leaders and prescribers who treat UCD and Neiman-Pick disease type C or NPC. Our market access team has initiated clinical discussions with payers regarding NPC and Arimothamol. These and other synergies across our brands will allow us to accelerate the launch of Arimothamol and ensure patients have access to this much needed therapy. As a reminder, Arimothamol is our investigational drug candidate in development for the treatment of NPC, a rare, genetic, progressive, and potentially fatal neurologic disease. If approved, Arimothamol would be the first drug indicated for the treatment of NPC in the U.S. Currently, there are approximately 900 people living with NPC, of which roughly 300 are diagnosed. Of those, approximately 70 are enrolled in our expanded access program or EAP. During the quarter, the FDA assigned a new paducah date of September 21, 2024, and reaffirmed its intent to present the resubmission for discussion at an advisory committee meeting for which we are thoroughly preparing. The National Neiman-Pick Disease Foundation, known as MNPDF, spearheaded efforts with six other advocacy and research organizations to compile a petition of nearly 1,000 signatures from NPC patients, caregivers, and physicians with direct experience utilizing Arimothamol that was submitted to the FDA in Q1. We were overwhelmed by the outpouring of support for Arimothamol within the community. As the FDA review continues, we will maintain our EAP and continue working tirelessly to bring this potential therapy to patients living with this devastating rare disease. We continue to work closely with key opinion leaders to educate on Arimothamol's disease-modifying clinical profile and raise awareness of the heterogeneous presentation of NPC. In April of 2024, we presented new long-term real-world data during the Society for Inherited Metabolic Disorders. The presentation included data from EAP patients from the U.S. Centers, and it demonstrated that adults treated with Arimothamol, including those with and without myglycerin use, had stable disease course, which is defined as not showing disease progression over the two years of treatment. The safety profile was consistent with that observed in the Phase 2-3 study. If approved, we intend to utilize our clinical data as well as emerging real-world evidence from our EAP to establish Arimothamol as foundational treatment for people living with NPC. Now I'd like to turn your attention to KP1077, our clinical candidate being developed as a treatment for idiopathic hypersomnia, or IH. IH is characterized by excessive daytime sleepiness or uncontrollable need to sleep and difficulty waking. There remains an unmet need, and we estimate 37,000 people in the U.S. are currently diagnosed with IH. As you may recall, KP1077, SIRDEX methylphenidate, or SPX, was designed to steadily release demethylphenidate, its active ingredient. This unique pharmacokinetic profile allows for flexible dosing to overcome these primary IH symptoms. This profile ensures that patients receive the optimal drug concentration during waking and active hours. SPX is currently designated as a Schedule 4 control substance by the U.S. Drug Enforcement Administration. During the quarter, we reported top-line data from our Phase 2 study of KP1077 in patients with IH. We are encouraged by the results, which show that KP1077 is well tolerated and demonstrates early signs of differentiated and clinically meaningful benefits. The study successfully fulfilled the objectives of informing the design of a pivotal efficacy trial, and we are planning for an end of Phase 2 meeting with the FDA in Q3. Since completing the trial and reporting top-line results in March, we have been working closely with the sleep community to interpret these results. With only one approved treatment, there remains a large unmet need for therapies with different mechanisms of action to address the symptoms of IH. We look forward to presenting the full data package from our completed study at the upcoming Sleep 2024 conference in early June. As part of the strategic planning initiative kicked off in January, we completed our preliminary evaluation of the Solipolol program for the treatment of Vascular Eilers-Danlos Syndrome, or VENTS, which impairs Col 3A1, connective tissue, and leads to vascular and hollow organ ruptures. Solipolol's mechanism of action is designed to reduce the mechanical stress on collagen fibers within the arterial wall through vascular dilation and smooth muscle relaxation. Solipolol receives open drug and breakthrough therapy designations from the FDA. The Phase 2 protocol is being conducted under a special protocol assessment, or SPA agreement, with the FDA. We recently restarted recruitment of the Phase 2 trial, also known as the Discover trial, to support patients currently enrolled and to preserve the value of the program while we complete our portfolio review. This is a decentralized event trial designed of Solipolol on VEDS-related event reduction. Solipolol is a primary treatment option in various European countries, and we believe that it could address the significant unmet need in the U.S. as there are no approved treatments for the 7,500 diagnosed patients with VEDS. Looking ahead, we have three areas of focus. First, continue to drive the launch of Olprova. Second, to prepare for a potential adcom and launch of Aramakumal. And third, to advance KP1077. Now I'll hand the call over to LeDwane, who will provide an update on our financial results.

Thank you, and good morning. Before I begin, I would encourage you to refer to our quarterly report on Form 10Q, which we intend to file Thursday post-market for more detailed information. As Neil has already outlined, first quarter was a time of solid execution as we drive the business towards the accomplishment of our strategic objectives. Our financial results for the first quarter reflect our foundation of financial strength as we continued our investments in building out our commercial capabilities and in the advancement of our development programs. Net revenue for the quarter was $3.4 million, which includes $2.2 million in net reimbursements from the French EAP for Aramakumal, and $1.2 million of royalties and other reimbursements under the Astaris license. Currently, we recognize commercial product revenue when shipments are received by our specialty pharmacy. Based on the early stage of launch and inventory in the channel, Olprova sales were de minimis during the quarter. R&D expenses for the first quarter increased to $12.3 million, which was primarily driven by the KB 1077 Phase II trial NIH that has since been completed, as well as our work to support the Aramakumal NDA during the ongoing review cycle and to prepare for a potential ad-com sometime prior to the upcoming PDUFA date. Selling, general and administrative expenses were $9.9 million and reflected increase in personnel costs and professional fees associated with our commercial infrastructure. Net loss for Q1 2024 was $16.6 million, or $0.40 per basic and diluted share. As of March 31, 2024, total cash, cash equivalents and securities were $52.7 million, which was a decrease of $15 million compared to December 31, 2023. Total shares of common stock outstanding were $41.8 million, and fully diluted shares outstanding decreased by $1.4 million to $56.8 million, which includes approximately 5.6 million shares issueable upon exercise of warrants. As Neil mentioned, on April 10, we announced the refinancing of our existing debt with a new credit facility which provides up to $100 million in committed capital. With the initial draw of $60 million, we have refinanced our existing debt of approximately $43 million and added an incremental $14 million in net cash proceeds to the balance sheet after fees and discounts. A second tranche of up to $20 million is available until October 5, 2025, and a third tranche of up to $20 million will become available upon approval of Aramacamal, in each case subject to certain terms and conditions. By restructuring the amounts previously outstanding on two different facilities, we have simplified and extended the maturity while also providing additional non-dilutive capital to support our mission. As a result of this transaction and based on our current operating plan, available cash, cash equivalents, and investments are expected to extend our cash runway further into 2026, subject to continuing compliance with our debt covenants. Our forecast includes commercial revenue from sales of El Prova, reimbursements from the French EAP for Aramacamal, and ongoing royalties under the Astorus License Agreement. It does not include commercial revenue from the sales of Aramacamal, nor the sale of the Priority Review Voucher which would follow an FDA approval. Discipline utilization of resources will continue to be our guiding principle as we make prudent investments in our commercial and development operations, while matching those investments to our operating requirements. We are optimistic about the opportunities we have in store during 2024. Our focus is on creating long-term value for shareholders by executing against our plan in support of our mission to become a leading rare disease company. We will now turn the call over to the operator for questions.

Thank you, and at this time if you wish to ask a question, please press Start 1 on your telephone keypad. You may remove yourself from the queue by pressing Star 2. We'll take our first question from Tim Lugo with William Blair. Please go ahead.

Thank you for taking the question. For Aramacamal, I know the data submitted to the agency included use of Aramacamal alone and a combination of NiglaSat. Can you just clarify how you expect the product to eventually be used by patients? Is combination going to be more, is it going to be used alone more? What do you view the strength of data for both of those approaches?

Tim, thanks for that question. So in clinical trial, that was before we indeed had patients that were both in NiglaSat and not in NiglaSat. And what we found is that patients, whether they were in NiglaSat or not in NiglaSat, improved while on Aramacamal. What we saw overall is that there was not a big difference between the improvement in patients with NiglaSat or without NiglaSat. So we believe that once we go to market, that Aramacamal will be the foundational therapy. It is a disease modifying treatment. And whether physicians and patients want to add on NiglaSat to that foundational therapy is really up to them. I think it needs to be noted that NiglaSat is not approved for treatment of the pneumatic C, and Aramacamal will most likely be the only approved foundational therapy for patients with pneumatic C.

Okay, thank you. And can you discuss, it sounds like the patient advocacy groups are, I guess, kind of rallying around the filing a bit. Can you maybe summarize your interactions with those groups or some of the patient advocacy you've heard in the past quarter? It seems like it's really ramping into the, I guess, after the submission.

Yeah, hi, Tim. This is Josh Schoekart. And we have been very engaged with the patient advocacy community for several years now. And they have demonstrated their support of Aramacamal, most recently signing a petition with a thousand signatures of patients, caregivers, and physicians who were in support of Aramacamal's submission and eventual and hopeful approval. So that certainly demonstrates their support for Aramacamal and for Zebra. And we remain very committed to that patient community. It's a very well organized community. They have helped to build a lot of the awareness for Aramacamal that we hope will help with the launch at approval. And as you know, there are about 70 patients in our Extended Access Program in the United States, plus another approximately 300 patients in the U.S. that are actively being treated. And we hope to be able to make Aramacamal available for all of those patients.

All right. Thank you. And I guess one last question. I believe you mentioned 300 MPC patients were diagnosed, but there is an expectation of 900 here in the U.S. Can you just talk about that difference in the differential between diagnosed and expectation?

Sure. 900 is the estimated prevalence of the disease. Not all of those patients are confirmed diagnosis. That is based on some claims data that was published in 2021, I believe. And of those 900, there are about 350 who have been diagnosed and are receiving some form of treatment, whether that's miglostats today or treatment for symptomatic disease.

All right. Thank you.

Thank you. We will take our next question from Jonathan Ashkov with Roth MTN. Please go ahead.

Thank you. Good morning. I was curious if you might be able to help us out a little with the minimum alphabets of revenues. Is there any help there or you just wish to keep that quiet for now? Good morning, Jonathan.

It's really a function of sort of the product that's already at the specialty pharmacies. And therefore, we had modest shipments during Q1. So our main focus during Q1 has been to build awareness, to get out and make contact with the key opinion leaders, and the prescribing physicians. And we've touched actually over 90 percent of those folks at this point. So in future quarters, as enrollments continue to build, we'll see more pulls into the pharmacy and therefore revenue will go up. But de minimis is de minimis.

Okay. How about time to slip through all data if you can venture a guess there at all or maybe help us out with the enrollment percentage at present? I think that's something that will give us a sense of at least when the data will come. I know it's several years.

Yeah, Jonathan, thank you for that question. So we started recruitment to support patients that are currently enrolled. We are looking at Nepal as part of our whole portfolio. It's part of a primary portfolio review. We understand the value in the programs and we restarted this program. As said, this is a Roman ReSpa agreement with the FDA and we're looking at 48 events. We currently have 17 patients enrolled and we continue to enroll throughout the rest of the year.

Okay. And also, have you noticed anything on the part of Amgen regarding marketing strategy with Reviki or is it just absolutely not a needle mover for them?

So, you know, we can't really comment on what Amgen is doing, but we know that there are roughly 800 patients today that are receiving some therapy for UCD and about 25% of those patients still have some hyperammonia-like events. And that's probably due to poor compliance as a result of patients not being able to tolerate current therapies. We believe that L-Pru is going to help solve that problem with its ability to be personalized in its dose, to be portable in the way that it's delivered, and most importantly, the palatability that we think will lead to better outcomes for these patients.

Okay, thanks. And lastly, just a weird little detail. On your 10K, it says on 330, you had 43.4 million shares. Then a day later in this press release here today, it says you have 41.8. So did you buy back 1.6 million or what happened?

There was no repurchases during Q1. And so shares outstanding at the end of the year was at 41.5, and shares outstanding as a 331 is 41.8. So are you referring to the fully diluted share count, Jonathan? It's just whatever's on page 1 of the 10K.

It's never a fully diluted number. Okay. 43

.4. Yeah. It's a weird little detail. Yeah, I'm not sure. But shares outstanding. When you see the 10Q tomorrow, it'll be 41.8. Okay. Thank you very much.

Thank you. And once again, that is star and one for your questions. We'll go next to Louise Chen with Cantor.

Please go ahead. Hi. Thanks for taking my question. Congrats on all the progress this quarter. So I wanted to ask you on peak sales for El Pruva, how do you think about that, and how long do you think it'll take you to get there? And then another question we get a lot is just on KP1077, comparing it and contrasting it to other products in the market and where your competitive advantage is. And then lastly, just on your new opportunities here, the Soliprolox product, what is the market opportunity and how do you think about it? And what makes you excited about this opportunity? Thank you.

Sure. This is Josh, and I'll address the El Pruva question. So as we noted, you know, the first quarter was really focused on building awareness of the drug. We have been really pleased with the performance of the team. I mean, I'd like to remind you that in the first quarter, we built an entire commercial organization of really talented, experienced, really talented people. They're disease experts who've been out talking with the specialists. They've been able to engage with about 90 percent of the prescribers. Also importantly, we've been engaged with the patient advocacy groups and the payer community, and we now have 75 percent of covered lives. So all of that really goes well for what we think will be in some momentum as we build into the launch. It's also important to note that these patients, like many rare disease patients, really only go in to see their physicians every six to nine months. So, you know, we're pleased with the progress that we're seeing now, but we've got more to do. And really not, yeah, leave it at that.

I'll ask Adrian to see if he can talk a little bit about the KP1077 differentiation.

Yeah, thanks for that question. And so obviously, if you've got a carbosomia, that is actually a fairly large patient population that also does that. So we're talking about 37,000 patients. There's still a significant medical need in that large population. We believe that KP1077 provides a unique motivation addressing specific symptoms of a carbosomia. So we believe we have a differentiated product specifically when it also is PK profile, and it provides more protection, which is scheduled for a drug that has proven cardiovascular safety. So we believe that it's a plant-only space within the diabetic heart-osomia population.

I think you also asked a little bit about the Soliprolol market opportunity, if I understood it as well.

Yeah, Soliprolol is used for the treatment of vets, of which there are about 7,500 patients in the U.S. In some European countries, it is currently being used as a standard of care for those patients. But other than that, there really is no treatment option for these patients other than surgery. So we think that if approved, Soliprolol would really offer some benefit for these patients who have no other available therapies.

Thank

you. Thank you. And once again, if you would like to ask a question, please press star 1 on your telephone keypad. You may remove yourself by pressing star 2. Once again, that is star and 1. We'll go next to Oren Livnet with HD RainRat. Please go ahead.

Thanks for taking the question. And so I'm going to follow up on Ol' Prova. So I know it's very early and you've only had four patients enrolled that you've called out here. But can you talk about where those patients come from? Are those de novo patients or switchers from a less palatable product? And what experience are you having very early on here with trying to adjudicate to reimburse therapy with these initial patients? Are you getting any pushback regarding February pricing, relative pricing? And how fast do you think you can convert these and then hopefully future enrolled patients to paid therapy?

Thanks. Thanks for the question, Oren. First of all, it's important to note that the four patients that we reported were just those new enrollments for the quarter. There are more than that currently on Ol' Prova or who have been prescribed Ol' Prova. And these patients are coming from a variety of different places, either switches from current therapy. We also do have some patients who are new to therapy and have not received any treatment. Like all rare disease products, there are step throughs and step edits that take place in order for patients to receive treatments for their rare diseases. But we've been really pleased with the progress that we're getting from our reimbursement and covered lives. We've been able to get 75% covered lives. And again, reflecting back when we closed the transaction, it was at 55, so we've made great progress there. So I think we feel like we're in a good place right now and on par to be able to compete with severing angina 50.

If I could just follow up on what you said there, can you help us understand, I guess, how many patients were already on therapy? Was that under the prior ACER launch? And are those paid subjects or are they getting free drug now and you're hoping to convert them to therapy? Or is the reason that revenue is de minimis just that there are paid therapy patients now, but they're just already from before your time, so to speak, there was already enough supply in the channel, especially you didn't need to ship?

Yeah. So it's a little – it's kind of a combination of all the things that you just offered there. There were a handful of patients who had received El Prova and were enrolled prior to the close of the transaction. However, most of them came late in 2023 into the first quarter and now into the second quarter. And again, they're coming from a variety of different sources, whether those are switches or naive. And those – and sorry, I was just thinking about the rest of your question here. And those are a combination of both paid patients as well as those who have gone on to our Quick Start program, which allows us to get patients on to therapy while we're investigating their benefits and attempting to convert them to paid patients as well.

All right. I'll follow up with you guys afterwards.

Yeah. Now,

go

ahead. Oh, I think there was a third part to your question, which was really around the de minimis revenue. And that – it's important to note that there is a disconnect, as Wayne mentioned, between the revenue recognition and the enrollments due to the way that we sell El Prova into our specialty pharmacy. So that is kind of a reflection of just that dynamic.

All right. And are you hearing anything regarding relative pricing of these drugs, or are they all expensive enough and presumably some unmet need with these patients if they're even considering their product, that it's not an issue, potentially slightly cheaper nature of a competing product?

Yeah. So as you probably know, we've seen a lot of payers begin to put Revicti on its exclusion list as a result of Revicti's high price. We are benefiting from that, given that we have, in a way, significantly less – a lower cost, but more importantly that we are able to compete on the clinical benefits of El Prova. And so that dynamic is certainly helping us. All right.

Thank you.

Thank you. We will take our next question from Simant Kulkarni with Canaccord Genuity. Please go ahead.

Hello. This is Kyle Chan speaking with Simant. So two questions. Erumakumal, can you compare and contrast your approach with Intrabios and the potential for you to have an adcom that is back to class with that product, given the proximity of the two action dates? And the second question is, have you had adcoms already on Erumakumal? And what are potential findings and those that you guys have considered surprising or counterintuitive?

Thanks, Kyle. I'll take the last question and I'll hand off the question to Adrian around differentiation. To answer your question, yes, we are thoroughly preparing for potential advisory committee. We've had a number of Red Team, Blue Team exercises, preparing briefing books, multiple mock adcoms coming that we're learning from and perfecting our craft as we move forward. So I feel like we are thoroughly preparing for that at this point. In

regards to there being two products being assessed for pneumopic see, it's great for patients. I think let's start with that. I think it's important to understand that Erumakumal with its unique motivation is really a disease modifying disease where the intubioid product is more symptomatic treatment addressing all these certain symptoms of the disease. The differentiated motivation and the specific clinical profile of Erumakumal, we believe will lead to be the foundational treatment for patients with pneumopic see. And that's kind of where we're looking forward to.

Thank you, Kyle.

All right, and this concludes the Q&A portion of today's call. I would now like to turn the call back over to Neil McFarlane for any additional and closing remarks.

Thank you, Ashley. We continue to make solid advances towards achieving our mission of building a leading patient focused rare disease therapy with company. As we look to our catalyst in the second half of 2024, our strategic priorities are clear and we look forward to updating you in the future. Thanks for joining us today. Have a wonderful day.