Title

Presentation

Avadel Pharmaceuticals plc reports earnings inline with expectations. Reported EPS is $-0.05 EPS, expectations were $-0.05.

Operator: Greetings, and welcome to Avadel Pharmaceuticals’ Fourth Quarter and Business Update Conference Call. At this time, all participants are in a listen-only mode. Accompanying slides for this call can be found on Avadel’s Investor Relations website. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Austin Murtagh with Precision AQ. Thank you. You may begin.

Austin Murtagh: Good morning, and thank you for joining us on our conference call to discuss Avadel’s fourth quarter and full-year 2024 results. As a reminder, before we begin, the following presentation includes several matters that constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. These risks and uncertainties are described in Avadel’s public filings under the Exchange Act included in the company’s most recently filed Form 10-K and subsequent SEC filings. Except as required by law, Avadel undertakes no obligation to update or revise any forward-looking statements contained in this presentation to reflect new information, future events or otherwise.

On the call today are Greg Divis, Chief Executive Officer; and Tom McHugh, Chief Financial Officer. At this time, I’ll turn the call over to Greg.

Gregory Divis: Welcome, everyone, and thank you for joining us on our conference call to discuss Avadel’s fourth quarter and full-year 2024 earnings. Following my opening remarks, Tom will review our Q4 and full-year 2024 financial results and we will conclude with a question-and-answer session. Many of you joined our call in January, where we provided a corporate update and preliminary unaudited financial results for Q4 and the full-year of 2024. The final results released today are in line with that previous announcement, and we are reiterating our guidance for 2025. Before Tom gets to that, I want to begin by providing some color on how LUMRYZ is doing in the marketplace and discuss our strategic and operational progress to fully capitalize on the LUMRYZ opportunity and secure our leadership in the sleep space.

We are now 18-plus months into our launch. In only a few months, we built a commercial organization, launched LUMRYZ in record time for an oxybate approximately four weeks post approval. And since have added over 2,500 net patients on to LUMRYZ, which is approximately 3x that of our nearest competitor over the same time period. Or another way to look at LUMRYZ’s uptake in the market since launch, is of the reported 3,450 total net patients added onto therapy to either LUMRYZ or the twice-nightly mixed salts product since LUMRYZ’s launch, nearly 75% of them are on LUMRYZ as of December 31. This reflects the strong clinical value proposition of LUMRYZ as well as the consistent demand and interest from all patient types which has been driven by nearly 2,200 unique prescribers.

Patient and physician feedback consistently highlights the value of once-at-bedtime dosing, a feature the FDA recognizes as clinically superior to all first-generation oxybates. Recognizing we are only 18-plus months into our launch, we still have much to achieve, however, our confidence in LUMRYZ and its $1 billion market opportunity remains strong. Furthermore, we are very confident our refined commercial strategy and recent investments will accelerate our launch and advance our progress towards realizing LUMRYZ’s full potential. In fact, we are seeing early signs of this shift already. Although it is still early in the year, our data and most recent trends point to promising momentum on our most important patient demand-based metrics, which are currently tracking at or above our internal expectations.

While these improvements appear to have begun taking hold during the first quarter, we expect their impact on revenues to become more apparent as we move into the second quarter and beyond as these newly added patients funnel through the system. This is encouraging both based on the underlying demand we continue to see and because it confirms that our investments and commercial focus are on point. With that, let me recap our refined commercial strategy, including the ongoing investments to accelerate the launch, our life cycle management programs and key priorities for 2025. We continue to see broad adoption across all 3 patient segments, switch patients, oxybate naive and those who previously discontinued an oxybate. The growth in new to oxybate and reinitiating previously treated patients confirms that LUMRYZ is expanding the overall oxybate market, not just competing within it.

And aligning with our early launch targeting strategy, a core group of 500 early adopters have been instrumental driving nearly 2/3 of LUMRYZ patient starts to date. Yet this group represents less than 25% of the oxybate market. As such, significant growth opportunity remains across these adopters and the broader oxybate prescriber base, who are a key focus for us in 2025 and is reflective in some of our early positive trends. Our launch strategy has built a strong foundation set up for continued growth, driven by these targeted investments to accelerate demand and optimize the LUMRYZ patient experience. By achieving market leadership with the new-to-brand patients, while generating growth from all patient segments and delivering sustained positive cash flow generation in 2025 and beyond.

As we enter this next phase, we’re applying key learnings from the first 18 months while enhancing our commercial leadership, including the ongoing search for a new commercial leader. We have invested in the expansion of our customer-facing teams to enable greater customer specific engagement, whether it be patient, provider, caregiver or other. This includes our sales team, our field support team and our nursing support team. These investments will expand our reach among potential LUMRYZ prescribers and enable us to deploy higher touch, more frequent and more personal support services to better help patients transition onto LUMRYZ. We’ve also enhanced our commercial leadership team with our two recently announced new hires who are both industry veterans with highly relevant experience and proven track rates.

They are fully focused on both driving patient demand and supporting patients through our patient services, distribution and reimbursement services, respectively. We are pleased to see the high level of interest in Avadel for many talented and qualified commercial leaders and will provide additional organizational updates as appropriate, including the anticipated hiring of a new commercial leader. Moving beyond LUMRYZ and narcolepsy, I’d like to provide an update on our other key initiatives. We also believe will be important drivers of value creation for the company. First, enrollment is progressing and on track in our Phase III REVITALYZ trial evaluating LUMRYZ in idiopathic hypersomnia, or IH. We continue to expect to complete enrollment in the second half of this year, topline data in the first part of 2026, followed by a potential NDA filing as soon as possible thereafter.

IH represents a significant opportunity for Avadel as we routinely here that LUMRYZ’s value proposition can potentially have an even greater impact in the IH community. This is primarily due to the deep sleep inertia IH patients face, which makes it challenging to wake up in the middle of the night to take a second dose and to receive the full therapeutic benefit of a twice-nightly treatment. Of the approximately 42,000 diagnosed IH patients under the care of physicians, less than 10% are being treated by the only FDA-approved treatment, further underscoring the need for additional treatment options. In addition to our ongoing IH trial, we are continuing our work on a once-nightly no or low sodium formulation with a target product profile bioequivalent to LUMRYZ to maximize our competitive position in the market, a once-at-bedtime no or low sodium formulation for potential appropriate oxybate eligible patients would be an additional compelling treatment option that would expand the patient population of those suffering with hypersomnia related disorders who could benefit from our proprietary technology and our patient-centric innovation.

And lastly, we remain confident in our legal strategy related to ongoing litigation. This includes the injunction case, which is pending the appellate court ruling; our antitrust case against Jazz that is currently scheduled for a jury trial in early November of this year; and our recently filed patent infringement suits reflecting our actions to protect our novel once-at-bedtime innovation. To wrap up, we’ve made significant progress over the last 18 months and are very focused on these most important priorities that we believe will deliver on the promise of LUMRYZ. We’re proud to have the opportunity to reduce the burden of narcolepsy and help avoid oxybate eligible people having to forcibly wake up in the middle of the night, night after night to treat a chronic condition using a twice-nightly dosing regimen the FDA stated is antithetical to the goal of improving sleep.

Now to translate our progress into our results and expectations, let me turn it over to Tom.

Thomas McHugh: Thanks, Greg. Before I begin, please note that full financial results are available in the press release issued this morning and the 10-K. I will also be reviewing non-GAAP financial results, which can be found on our Investor Relations website at investors.avadel.com. Our final financial results for the fourth quarter and the full-year ended in line with the preliminary results provided at the beginning of January. In the quarter ended December 31, 2024, we reported net revenue of $50.4 million and gross profit of $45.6 million. Additionally, I’ll note that gross profit includes an adjustment in cost of goods sold for a potential 3.5% royalty on sales of LUMRYZ related to the Delaware court memorandum and opinion issued in September of 2024.

To be clear, while this matter is pending a final resolution, it is a non-cash expense. A ruling from the Delaware court is pending, and we intend to appeal the final decision, but from an accounting standpoint, we have included a non-cash accrual and cost of goods sold. Turning to operating expenses. We reported $48.9 million of GAAP operating expenses for the fourth quarter which includes $5.1 million of non-cash charges comprised of stock-based compensation of $4.1 million and depreciation and amortization of $1 million. After adjusting for these items, cash operating expenses were $43.8 million. With respect to cash, for the first time since LUMRYZ was launched in June 2023, the company was cash flow positive during the fourth quarter, resulting in an increase in cash of approximately $8 million and ending 2024 was $74 million of cash, cash equivalents and marketable securities.

And lastly, a few comments on our path to sustainable operating breakeven. During the fourth quarter, GAAP operating loss was $3.3 million. However, after adjusting for noncash operating expenses, adjusted operating income, calculated as gross profit of $45.6 million, minus cash operating expenses of $43.8 million was positive $1.8 million. This marks the consecutive – second consecutive quarter of positive adjusted operating income for the company. I’ll finish my remarks with a few comments regarding our expectations for 2025. Revenue is projected to be in the range of $240 million to $260 million, which at the midpoint represents a nearly 50% increase over 2024 and that patients on therapy will increase by nearly 40%. Cash operating expenses for 2025 are expected to be in the range of $180 million to $200 million.

And importantly, with a highly leverageable cost structure, cash flow for 2025 is projected to be in the range of $20 million to $40 million and that we can fund the ongoing launch and Phase III IH study for cash on hand and expected cash flow from operations. Finally, just a brief comment on Q1. At this point, we are 2/3 of the way through the first quarter. And based on what we are seeing, the early trends developing Q1 across key metrics are tracking in line with our internal expectations to deliver significant year-over-year revenue growth and achieve the full-year guidance. We are encouraged by these developing trends. And as Greg noted, we expect to see this translate into improvements in revenue in the second quarter. With that, I will turn the call back to Greg for closing remarks.

Gregory Divis: Thank you, Tom. Before we open the floor for Q&A, I’ll summarize where Avadel stands today. LUMRYZ has started 2025 with positive momentum as we continue to make progress during Q1 across our key patient metrics. We’re investing strategically to accelerate launch execution throughout all of 2025 and beyond which positions us for a cash flow positive 2025, while making important progress in maximizing the full potential of LUMRYZ. Our life cycle management programs are advancing with the goal of expanding the oxybate market opportunity significantly. And all of this is supported by a robust and growing intellectual property portfolio that protects LUMRYZ into early 2042, and we will continue to vigorously protect and to defend.

LUMRYZ continues to offer a high-growth and high-value opportunity built on a highly leverageable cost structure, which we believe will deliver significant cash flow and EPS growth over time. We remain both confident and optimistic about LUMRYZ’s prospects in 2025 and beyond. We look forward to sharing commercial and key company progress updates throughout the year. We thank you for joining us in your time today and as always for your support. We will now open the line for Q&A.

Operator: [Operator Instructions] Our first question comes from the line of François Brisebois with Oppenheimer.

François Brisebois: Hi. Thanks for the question. So in terms of the sales reps, can you just remind us maybe the evolution of numbers of sales reps and where you’re at now? And then any thoughts about DTC? Or is this just a little different given it’s more of a rare disease? And then I have a follow-up.

Gregory Divis: Yes. Thanks, Frank. In terms of our customer-facing roles, including our sales reps, we had about a 15% increase in our sales team that was fully effective as of 1/1/25. That number is now at 53%. And we’ve basically doubled the size of our field support team that is also effective as of 1/1/25 and that is now up to 28%. And then we’ve doubled the size of our nurse support team that’s fully operational as of 1/1 as well, which also takes it to right at 28%. In terms of your comments about DTC and what I’ll just characterize as patient education through media. We’ve made a fairly significant increase in both our channels and our investments beginning here in Q1. And it’s important in terms of educating and reaching out and connecting and activating patients where they are and where they seek their information. So we spent a lot of time to understand that over the course of the last 18 months, and we’ve increased our investment in that area as well.

François Brisebois: Okay. Great. And then on the field support and then the nurses – can you just – what is – how different are these two? You doubled up on field support. Can you just help us understand what exactly field support’s responsibility is?

Gregory Divis: Yes, it’s really twofold, and they’re really customer-facing roles in terms of the physician audience and their offices and their practices. They work on patient pull-through from the point of prescription becoming active through the point in time when they’re on therapy and are following up with the offices, in particular in and around refill times for patients. So think of them as post prescription is written to help process the patient through the reimbursement process. And then once the patient is on therapy, they have the opportunity to communicate and engage with their office staff around where the patient is on their treatment and in particular in and around the refill of their upcoming refills or subsequent dose titration.

Thomas McHugh: Yes. Maybe, Frank, I’ll add to that. These are the targeted investments we described last year, fully operational, as Greg noted, 1/1/25 but these are the types of investments that we see as contributing to the early trends we’re seeing now in 2025 and as they continue to take hold, become more effective, it should naturally lead to more patients on therapy and higher revenue.

François Brisebois: Is there a part – like you talked about a couple of different forces here between the field force, the nurse support, the DTC effort, the reps, is there one of these – like which one is most important to get to the switch patients and increase the number of switch patients? Or is it just an effort of all them together?

Gregory Divis: Yes. We think it’s a cumulative effect of the full approach with all resources, given our sales force really started at the very top of the funnel and then our reimbursement team really pulls them through and then our media strategy meant to educate and activate patients to go in and to talk to their patients or their physicians about it. So I think they’re all important in that regard to not only make sure we’re driving the right sort of patients into the top of the funnel. But as they go through the funnel, we’re working and doing the things necessary to keep them on therapy. And as Tom noted and we’ve noted in our commentary, the early trends in terms of the byproduct of these investments are favorable relative to where we thought we’d be at this stage.

And that is a very confirming sign that the investments are the right approach. And then as these trends become more durable and sustainable, but certainly lead to an uplift in net – the most important metrics, which is net patients on therapy and revenue potentially.

François Brisebois: Great. Thank you. Very helpful.

Gregory Divis: Thanks, Franc.

Operator: Our next question comes from Andrew Tsai with Jefferies.

Unidentified Analyst: This is John on for Andrew. Any additional color on the Q1 patient trends that you can share? And then how should we think about gross-to-net inventory for Q1 as it relates to your Q1 sales? You saw a sizable draw – sorry. Go ahead.

Gregory Divis: No, we understand the question, John. I’ll take the first part and then let Tom answer the second. Again, I think what we’ve seen coming off of the trends in Q4 and in the second half of last year has been – regardless of the metric you’re looking at, whether it’s the top of the funnel metrics in the form of enrollments or patient starts or even as we think about as patients go into therapy, all of those trends are favorable for us relative to how we’ve seen the year start versus internal expectations and the trends we saw through the back half of last year. So all of that, we think, is both favorable from an underlying demand and growth potential perspective. And as those things progress through – patients progress through the funnel, so to speak, we would expect to see some of that impact and begin to take effect in Q2.

But it’s also confirming from our perspective in terms of the strategy and where we’re deploying our resources and the focus of the organization, including our breadth of our targeting more prescribers to expand our prescriber base while we continue to work on those who have been the fastest adopters of LUMRYZ as well. So I’ll turn it to Tom on inventory.

Thomas McHugh: Yes, certainly. So thanks for the question. Listen, I think in terms of gross to nets, it’s always highest in the first quarter. That’s not unique to Avadel, it’s true for any company operating in our space. It’s primarily impacted by patient dynamics, if you will, primarily in the form of insurance deductibles resetting and we provide financial assistance to the patients to make sure they continue the therapy on LUMRYZ. With your question on inventory, what we have seen so far in the quarter, and keep in mind, we’re 2/3 of the way through the quarter. But the quantity of inventory in the channel has remained consistent from where it was at the – as we exited 2024.

Unidentified Analyst: Great, thanks guys.

Operator: Our next question comes from Ami Fadia with Needham.

Poorna Kannan: Hi. This is Poorna on for Ami. Thank you for taking on questions. Can you remind us of the pushes and pulls in your guidance range? What have you assumed for the low end of the guidance? And what do you believe needs to happen for you to get to the high end of the guidance range? And could that be upside to the upper end of that range? Until how do you see first quarter sales related to fourth quarter? Will it be flat or slightly down given the first quarter resets? And the last one, with an additional 2 months since the January update? What are you seeing in terms of patient mix between switches and new to oxybate?

Gregory Divis: Yes. Thanks, Poorna. On the first question, and I would just describe in terms of key drivers of the forecast and mix of patients, they’re really interchangeable because the 2 most important metrics – the most important underlying metric is net patients on therapy and that is a byproduct of more patients at the top of the funnel and keeping patients on therapy. So if we have more demand overall and if that demand – the mix of that demand, SKUs towards switch patients, as an example, from where it was trending at the end of Q4, then all of that will likely – and our persistency efforts continue to show promise like they have early in this year, all of that will lead to upper ends of – upper ends of the guidance range or beyond the upper ends of the guidance range.

So ultimately, those are the most important metrics in terms of patient starts, net patients on therapy and then – and the ability to keep them on therapy. In terms of your commentary, and then I’ll let Tom maybe comment on the second question, but your question on what we’ve seen in terms of mix of patients early on in the course of this quarter, in particular, around switch patients. Our commentary around all patient metrics, including switch patients, really holds true for all of them, right? And the favorability we’ve seen across these trends early in the quarter includes the signs of both stabilizing and beginning to reverse what I would just describe as the declining switch patient trend at the end of last year. So again, I think we feel really good about the early signals and the progress we’re making.

We expect that to translate into its impact beginning to be felt from a revenue standpoint in Q2, but it’s confirmatory of where we’re focused and what we’re doing.

Thomas McHugh: Yes. Certainly, listen, maybe just a follow on to the guidance, then I’ll ask to get to your question around Q1. With what we’re seeing so far, and again, these are early trends, but all positive and in line with our expectations. We have a clear line of sight to achieving the guidance that we had articulated at the beginning of January. Specifically with respect to Q1, maybe just a follow-on to my previous comment to Frank is that what we’re seeing so far in Q1, we’re pleased with the early developing trends. The – you have to remember that Q1 is very dynamic in terms of gross to net. It’s going to be higher in Q1 than it is in subsequent quarters. So we’re certainly keeping a close eye on that as we progress through the quarter.

Poorna Kannan: Got it. Thank you.

Operator: Our next question comes from the line of Oren Livnat with H.C. Wainwright.

Oren Livnat: All right. Thanks for taking the questions. Jazz has obviously switched a lot of their Xyrem franchise over to Xywav. Some more recently, many of those patients switched a long time ago. Can you just talk about – I guess, your messaging and the feedback you get from physicians with regards to switching patients whether they have been on low sodiums that way for a long time versus more recent switchers? Is it appreciably easier to switch somebody who wasn’t switched more recently? I guess, for obvious reasons. And then when we just talk about hurdles to switching, how is your insurance coverage relative to the competitor? Has that changed appreciably in the new year? And maybe can you talk about whether there is a difference between your actual coverage and perceived coverage out there?

Is there any fear real or imagine that switching patients would result in them not being able to smoothly get on to Xywav such that they’re afraid to switch and risk disruption in their therapy? And I have one follow-up there.

Gregory Divis: Yes. Kind of working in reverse order. From a coverage standpoint, our commercial coverage is greater than 90% now. We have coverage status and reimbursement access and greater than 90% of all commercial lives. We’ve seen – and that’s fairly comparable to our competitors. We’ve seen improvements in our Medicare coverage this year. And I would view that as fairly comparable to our competitors as well. We have very little to no coverage in Medicaid, primarily because of the penny pricing that exists in the marketplace today. But over 80% of this market, 82% to 85% of this market is commercial. So we believe we’re well positioned from a competitive standpoint. Like many products early in their launch, it is a fairly standard objection you receive around the perception that access may be difficult or you don’t have the same coverage as an established product.

That’s something we continue to sell through and communicate and engage with to change if those perceptions exist at any individual physician level. By and large, when we’ve seen switch patients get prosecuted, we haven’t seen a significant hurdle or challenge for the most part in terms of being able to effectively drive to switch and deliver a switch through the payer or the reimbursement process. There will be steps they have to go through to get coverage, but those are pretty well laid out. And for the most part, those patients will have met all of the aesthetic criteria that would exist before being able to go on to an oxybate given the parity coverage we have today from that standpoint. In terms of the demographic or the type of patient who has switched or is switching and where they are in their kind of treatment journey of being on an oxybate.

It really – I wouldn’t say there isn’t really one core demographic, whether they’ve been on oxybate for a long time or a shorter period of time. We certainly early in the launch, saw patients switching who, we would describe as much more dynamic patients who are looking, I would say, early adopting patients who are looking for the next therapy, so to speak. Today, as we see switches come in, they come in all different forms, different demographics, different lengths of therapy and different reasons for why they want to consider the switch. So for us, the key to that is to stay vigilant in our commercial efforts, in our promotional efforts, around the reasons to switch and the opportunities to switch from that standpoint. So that’s an important thing that we’re focused on this year and how we built the management programs around that and the commercial programs around that to ensure that switch is an important messaging for us.

In particular, not only where we have strong adoption, but in the larger part of the market where we’re really focused in expanding our reach and our impact. So I appreciate the question. Thanks Oren.

Oren Livnat: Okay. And just quickly, you did mention litigation. I don’t know if Jared or anyone wants to comment more on any of these, or if he’s even on call. But with regards to your expectations on timing and next steps. How long do you expect to hear anything back from the pellet appellate post oral arguments at the beginning of the month? And do you also have any expectations around the royalty determination and the timing of next steps as we can think about sort of how long that process will take to work itself out one way or another?

Thomas McHugh: Oren, it’s Tom. So I’ll take the last part of your question there. The hearing was on February 7th with respect to IH injunction. We expect to – we don’t have exact time frame, of course, it’s up to them to decide when they’ll issue ruling, but we have an expectation within two or three months following that hearing. On the royalty decision, it’s – I would just simply describe as pending at this point. All parties have submitted the judge what he had asked and he – we are just awaiting a ruling at this point.

Oren Livnat: Okay. Thank you.

Thomas McHugh: Thanks, Oren.

Operator: Our next question comes from the line of David Amsellem with Piper Sandler.

David Amsellem: Thanks. Just got a couple. Maybe this is sort of a backward-looking question. But do you feel like with the sales organization initially after the launch, there was just a lot of low-hanging fruit in terms of pent-up demand and maybe a more robust switch market, and you found that the sales organization is just going to have to work harder to get that incremental patient or at least get more switch patients? So that’s number one. And then maybe with that in mind, can you just talk about how you feel about the performance of the sales organization, particularly these past couple of months since the guide. And then secondly, I wanted to get your thoughts on just the long-term implications of the orexins, which is sort of an elephant in the room here, at least long term?

And how are you thinking about the oxybate market or the direction of the oxybate market in narcolepsy, specifically? Do you feel like you’ll be in a position to hold on to patients? Do you expect pressure where you’re going to need to make up for that from IH adoption? Just help us better understand how you’re thinking about the business over the long term in an orexin agonist world. Thank you.

Gregory Divis: Yes. Thanks, David. To your first round of questions around the sales force, I’m really proud of the way they’ve embraced the expansion of our commercial strategy and the focus of our commercial strategy over the last couple of months. The trends have demonstrated that in terms of what we see happening across our primary field-based, demand-based metrics. Really around what happens at the top of the funnel and at the bottom of the funnel. Inevitably, we’ve over-indexed early in the launch in what we characterize as adopters. And we probably had some low-hanging fruit, but we’ve also been quite successful in that audience. And now we’re expanding our efforts into the broader oxybate prescriber base, and we’re seeing early signs of expanding our reach and impact there as well.

So I’m proud of our sales force and the efforts that they’re delivering right now and feel really good about the momentum that they are creating specifically. In terms of your question around orexin, there’s clearly a lot of investor excitement about the prospects of orexin. What we are most interested in is the clinician and prescriber perspective. So it’s certainly an exciting new mechanism of action that – for these serious sleep conditions with clear benefit on the daytime. It’s a little less clear what their benefits at night are and whether those are positive or whether in fact they may lead to some potential concerns. But we certainly believe that there’s going to be a role of the use of oxybates as a night time agent that also helps consolidate sleep and produces additional daytime benefits as our data says.

Our goal is to make sure LUMRYZ is that oxybate of choice. So we’ve been investing a lot of time in this and really talking and researching with hundreds of physicians in this regard. And our expectation is that there will continue to be listening to physicians. There will continue to be a role of oxybate and our goal is to make LUMRYZ that oxybate of choice.

David Amsellem: All right, thanks.

Operator: Our next question comes from the line of Marc Goodman with Leerink Partners.

Madhumita Yennawar: Hi. This is Madhu on the line for Marc. Just a couple from us as well. Just curious, are there specific geographic regions where there are lower rates of cardiovascular comorbidities in the narcolepsy population, where your once-nightly could be more attractive than the low sodium option and where you could expect to capture greater market share in? And then also just curious if you can share any specific initiatives that you are planning to implement to increase persistency in the new to oxybate patients? Thank you.

Gregory Divis: Yes. Thanks. Maybe I’ll take the questions in reverse. From a persistency standpoint, we have obviously spent a lot of time identifying where these discontinuation risks are, and we’ve introduced very targeted programs to try to intervene and engage specifically with patients, prescribers through data and with the goal of really meeting the patient with the right message at the right time. And again, early in the quarter, but we’ve seen positive signs so far of those initiatives across our different investments. In terms of your question about CV risk geographically, or whatnot. What we can say on that topic is we’ve now conducted a number of research projects with closed integrated health care systems and CV risk in terms of patients with narcolepsy, people with narcolepsy doesn’t show up in the top 20 comorbidities.

And relative to the controlled cohort of the standard patient population. We know there is a percentage of patients overall that we – that physicians talk about to us in the 10% to 15% range. You may have some sodium sensitivity or other matters. But I can’t tell you that there’s a geographic area around that. We haven’t seen a geographic disposition one way or the other from that perspective. What we know is that once-nightly dosing is viewed as a highly important attribute for people who suffer from a chronic sleep disorder. And over the last 18 months, we have outpaced the patient starts 3:1 to the next nearest competitor. So we’re pleased with the early trends we see in 2025 and continue to build – and we plan to continue to build on that momentum.

Thomas McHugh: Yes, maybe I’ll just add. Persistency, listen, it’s important across all patient segments. And as we continue our initiatives, we believe we’re working on the right things, doing the right things. And as we continue to drive those improvements in persistency, it just – again, it’s one of those metrics and naturally leads to an improvement in revenue throughout the year.

Madhumita Yennawar: Thanks.

Operator: Our next question comes from Myriam Belghiti with LifeSci Capital.

Myriam Belghiti: Thank you for taking the question. As you’re targeting the broader prescriber base, many are writing for oxybate for the first time, how are you thinking about converting these physicians to regular prescribes of LUMRYZ? And do you have any specific feedback in that group in particular, the one-off prescribers?

Gregory Divis: Yes. From a market expansion perspective, Myriam, it’s another really great example of what LUMRYZ is bringing to the oxybate category in totality. We’ve seen well over 200 physicians who have never written an oxybate before, now prescribe LUMRYZ and many of them have written for more than one, some have written quite a few. So from that perspective, it really is. It’s organic in terms of what’s happening because these physicians are kind of signing up by enrolling in our REMS program, which gives us a trigger that they want to use LUMRYZ. What we’ve done in terms of our sales force expansion is to try to identify physicians who look a lot like those physicians and expand our reach into a new audience to try to if you will, generate even more new oxybate prescribers. But we’re pleased with what we’ve seen so far, and it’s a great signal in terms of the ability to grow the market.

Myriam Belghiti: Okay. Makes sense. And one last question. In terms of goal for patient mix for 2025, do you have an ideal ratio in mind for switch versus new to oxybate population mix? Is there a goal in terms of vacation mix for 2025?

Thomas McHugh: Myriam, it’s Tom. So listen, we have certainly set our internal goals, how we’re tracking so far is clearly inclined with our internal expectations, 2 months into the year. Our goal is not just to improve patient mix. It’s also to drive overall demand as we referred to the top of the funnel. All these initiatives, whether it be top of the funnel, patient mix, persistency, all are designed to continue to improve revenue throughout the year.

Myriam Belghiti: Got it. Thank you for answering my question.

Operator: Our next question comes from the line of David Hoang with Deutsche Bank.

David Hoang: Hi, there. Thanks for taking the question. So I just wanted to ask a little bit about your efforts to improve persistency in the naive or new-to-brand patients. So what specifically can you do there? And what would you expect the long-term persistency and discontinuation rates to look like for those patients? Do you think it would be in line or better than the twice nightly oxybate? Thanks.

Gregory Divis: Yes, David, we covered that on a number of questions, but let me just give you a little bit more perspective. In terms of our efforts from a persistency standpoint, we’re really focused in 3 different areas. One is our direct engagement with patients through our nurses. Two, our direct engagement with office staff around patients on therapy. And three, supporting persistency with our pharmacy partners. So whether you’re new to oxybate, a switch patient or another one, we’re trying to – we’re intervening with all those patients. And again, even through this part of the launch, we – our persistency rates certainly look better than the legacy twice-nightly first-generation products but from our viewpoint, that’s not good enough, and we’re continuing to make strides to improve it.

And early – so far this year, we’re seeing some positive signs of those interventions. And if those – and as those trends continue on and became sustainable and durable. We would expect to see that result in more net patients on therapy, which will result in an uplift in revenue.

Operator: Our next question comes from the line of Brandon Folkes with Rodman & Renshaw.

Brandon Folkes: Hi. Thanks for taking my questions and I appreciate all the color. I do want to follow up on a question that’s been asked, I think, twice already. But you mentioned you’re seeing very good trends in 1Q, and you expect this to translate into revenue growth in the second quarter. I appreciate the industry headwinds that we all see in 1Q. But I just want to be clear here, for I’m wondering, are you implying that we should consider the potential of a sequentially down quarter-on-quarter revenue, quarter in 1Q over 4Q? Or can you rule this out at this stage given sort of the early indicators that you’re seeing from what you’ve put in?

Thomas McHugh: So Brandon, it’s Tom. Let me start on that. So for the first time since LUMRYZ launched, we provided revenue guidance. And granted it was for the full-year in the range of $240 million to $260 million. We’re – we haven’t provided quarterly guidance. I don’t intend to at this point. Stay tuned for future quarters as we evaluate the ongoing market dynamics. Appreciate you recognizing the Q1 dynamics that occur for any company in our space, particularly around gross to net. It’s a very high quarter in terms of gross to nets. And obviously, we’re monitoring it and keeping a close eye on it but that’s where we stand at the moment. But again, I think what’s important for us is the initiatives we laid out, what we’re working on, which should lead to continued improvement throughout the year. And for us, at this point, a high level of confidence and a clear line of sight to achieving the guidance we provided.

Brandon Folkes: And I do appreciate all the color. Maybe just one follow-up. Any color on the pediatric indication, just sort of how that launch is going to date and how you’re thinking about its contribution in 2025? And then that’s it for me. Thank you.

Gregory Divis: Yes. It’s clearly a focus. We’ve added some more physicians who are exclusively pediatric prescribers or pre-pediatric treaters, and we’ve got really great stories of parents and families benefiting from the introduction of LUMRYZ with a formal approval and being able to get clear coverage from that standpoint. It’s a relatively small percentage of patients overall. And in terms of the total market, given just how the diagnosis of patients occur, it can take up towards of 8 to 15 years from onset of symptoms to a formal diagnosis, which most patients are in their 20s or 30s when that occur. So – but we are focused on it. We’ve got very specific segmentation within each of our respective geographies. And pursuing it accordingly, and we’re proud to be able to offer to this patient population as well.

Brandon Folkes: Great. Thank you very much.

Gregory Divis: Thank you.

Operator: That concludes today’s question-and-answer session. I’d like to turn the call back to Greg Divis for closing remarks.

Gregory Divis: Thank you, and thank you, everyone, for joining us and really appreciate your time this morning. Look forward to our follow-ups through the course of today and this week and have a great day. Thank you.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.