Good morning. Thank you for attending the H.C. Wainwright's twenty-sixth Annual Global Investment Conference. My name is Oren Livnat. I'm a specialty pharmaceuticals analyst here at H.C. Wainwright, and it's my pleasure to welcome for a brief chat today, Avadel Pharmaceuticals, and with us is CEO Greg Divis. Welcome, Greg. Thank you, Oren. Appreciate the opportunity to be here. Thank you. I think it's been exactly to the day, a year, since we last did one of these fireside chats, almost perfectly bracketing the first year of your launch of LUMRYZ, your once-nightly sodium oxybate for narcolepsy. And here we are, just a year in, and you're already on the cusp of break even, so congratulations. I think four for four on the quarters, you've beaten estimates. You recently disclosed some patient numbers for the first time. They were also running ahead of my estimates. And so before we dig into the dynamics, can you just give us a very high-level view of the progress of the launch? Yeah. You think about how far we've come in the last 12-18 months, from pre-approval, to approval, to a launch within about four weeks, and then what's occurred over the first full quarters, you know, as we built the organization at launch, I think it speaks to what the team has been able to execute. As you noted, you know, four straight beats on terms of of quarterly estimates, on the cusp of cash flow break even, with a product that has 95 plus% gross margins. And as we approach cash flow break even, I think you'll see our balance sheet continue to get stronger in terms of cash generation. I think most importantly, and I'm sure we'll talk more about it, like, where we're getting our business really, we think sets us up for longer term in terms of really turning LUMRYZ into a potential blockbuster. Right. So I'm pretty conservative usually in my modeling. I have LUMRYZ being quite successful just by competing effectively head-to-head for the normal churn of new patients coming into this space versus twice nightly oxybates, like old Xyrem or even low sodium Xywav from Jazz. Clearly, you are out-competing them. You're growing net patient adds much faster than Xywav, but can you talk more about where those patients are coming from? Yeah, I think it's one of the things we're most pleased about and gives us a lot of confidence in the future. When you think about our source of patients, leading into launch, we had done a tremendous amount of research in terms of really trying to understand the market opportunity explicitly for LUMRYZ, and we always believed that the opportunity was much larger than just competing for those new patient starts- Right ... and that's exactly what we've seen materialize. The source of our patients have come really from three categories. They've come from existing oxybate patients in the form of switch patients. They've come from those naive patient categories as well, but they've also have come from a category of previously treated oxybate patients, and those who but who subsequently have discontinued. So when you think about those three categories, those three, you know, buckets of patients, if you will, that's well north of 33-35 thousand, and could approach 50 thousand, depending on the dataset you look at. So we believe the opportunity for LUMRYZ is quite robust, and what gives us a lot of confidence in the future is we're seeing real material, you know, patients from each one of those segments that has led us to this point in the launch. Right. So I guess I would say, I always put market growth, which is essentially what you're describing for oxybates, squarely into the Show-Me category, because, look, it's such a mature market. It's... You know, Xyrem has been around a long time. So what you're telling us is, you know, your market research is playing out, that that market really is dramatically growing potentially with the introduction of LUMRYZ. Well, we are headquartered in the States, in Missouri, so we come from the Show- Me State, so we're happy to accommodate your show me story. But when you step back and look at our source of business, there's a couple of data points I think that's very interesting for us that gives us, again, additional confidence in the prospects. Our research said we would be getting patients from these three segments. That's occurred. Our research also told us that over time, we should expect to see an expansion of oxybate prescribers, and potentially patients who have not been treated with an oxybate to potentially come in and be treated with oxybates. And although we thought that could occur, we didn't know if that would happen as early as it has happened, and it has happened. And here are the two data points to support that: First, I would say that we've got well over 100 prescribers who are prescribing LUMRYZ, who historically have never written an oxybate before. So these are patients who are not in the denominator, doctors who have never written an oxybate, and I'll note, they've done that without any sort of direct promotion on our part because they're not in our call plan. So once they sign up for our REMS, it becomes a signal for us to go and follow up, but I think it speaks to the value proposition of LUMRYZ in and of itself. But in addition to that, we've actually seen what I would describe as previous oxybate prescribers, but prescribed very little, start to prescribe much more. And the net effect of that is that I would say that almost one in five of all of our enrollments that come into the top of our funnel, into our patient services program, come from physicians who either we don't or are marginally, actively, directly promote to. So I think, again, couple that with where the sources of patients are predominantly coming from today, I think gives us a lot of confidence about the opportunity for LUMRYZ going forward. So when we try to frame how big the upside might be due to this phenomenon you're seeing actually play out, your market research playing out in reality, if there are 20,000 more patients that have once upon a time been on, you know, a twice nightly and discontinued, what do you know about the reasons patients were discontinuing twice nightly oxybates that gives you confidence in making maybe peak projections of what share you could ultimately capture with a once nightly product? Again, I go back to our research leading into launch, and I think, you know, the notion that we're seeing it play out in real time in the marketplace gives us a lot of confidence on the potential opportunity. Yeah. That research told us that, you know, we have the opportunity to be the market-leading oxybate over time, you know, assuming we can gather patients from all three segments. Specifically to the previously treated and discontinued, we value that segment at about 15,000 patients when you look back over the last four-plus years of the actual patients who have started and discontinued oxybate. You can't look at claims data and understand why they stopped, so you have to go do additional market research, direct market, primary market research to try to understand those insights. I would say that they really fall into a few categories. One is the drug just didn't work for them. Two is they couldn't take the dosing, and those two are a little bit related. Of course, there's adverse event-related phenomenon as well. We're not suggesting that any of those that all of those patients are potentially up for grabs for potentially LUMRYZ. But what we are suggesting is that when you think about our segments of probably today, Oren, about 14,000 or so actively treated twice-nightly oxybate patients, with another 12,000-15,000 or so previously treated and discontinued, plus another 3,000 or so, you know, annually, every new starts every year, 3,000-4,000, that market in and of itself, where our competitors tend to only source patients from the 3,000-4,000 new starts a year, we've got. That's only 10% of our market opportunity. The other 90% are up for grabs, almost uniquely for us, to our benefit, and we're pleased with, you know, the early, you know, kind of uptake and impact we've made in those markets while we continue to grow our share of new patient starts. I know it's still early, but is there any change to your potential peak sales now that you've got more information a year in? And how fast do you think you could ramp towards peak? I'll avoid giving guidance on time to peak at this stage, but I will say, even when we go back pre-launch or right at launch, when we were, you know, communicating some of our launch insights in terms of how we looked at the potential market, I don't think it's changed. We think the market potential, if we can execute, is $1 billion plus for LUMRYZ and narcolepsy, and again, I think what we're seeing play out on the marketplace today is beginning to reflect what our research told us could possibly happen, and in some cases, we think it's happening sooner than what we thought, in particular with the expansion of previously no oxybate use to beginning to use oxybate, beginning to use LUMRYZ. So you just think about that opportunity on a fairly well-established cost structure today, $40-$45 million of OpEx really will cover, you know, what we need to. What we're doing today, and that includes the launch. We would expect to, you know, be generating, over time, as we get to peak, a lot of free cash flow. Sure. Just to speak to execution in general, you know, by my math, I think to date, based on the numbers you've given us between enrollments and actual starts, looks like cumulatively, we're at about a 65% conversion rate, but I assume that's lower when you first launched and probably higher right now. I guess you can tell me if my math is right. But can you talk in general about what are the trends you're seeing in terms of speed of conversion and overall success rates of getting patients onto paid therapy, and how will that change over time with, you know, an evolving payer coverage landscape? Yeah, I think we've as we've seen every quarter, we've seen improvements on rate of conversion quarter over quarter over quarter. That's a by-product of both payer coverages and favorable coverage policy decisions being put in place, coupled with, you know, offices and staff and those becoming much more familiar and with our process and the steps you need to take to get access to LUMRYZ. And our view is that will only continue to improve as we go forward, and what experiences offices have with, you know, using our programs to support this process accordingly. So I think we're pleased to continue the progress we continue to see generally, knowing that, you know, the goal is to continue to get better at it. From a payer coverage standpoint, you know, our team has done an excellent job, you know, through the first part of the launch, in particular on the commercial side of the business, and I'll step back and just say it's always been our view, and again, this is something else that has played out, that we expected 80%-85% of LUMRYZ to be a commercially focused patient population, and that's what's that's occurred, right? The balance of it really is predominantly split between Medicare and Medicaid, and with a little bit of other government, but the balance of it is predominantly government-paid with Medicare and Medicaid. And, you know, those two segments, we've had very little coverage, if at all, up until this point in time of launch, predominantly because in Medicare. But when we launched, we just weren't in a position to be added to formulary for 2024- Mm-hmm ... although we've gotten some utilization, and the next big kind of change in that for us will be in 2025, when the formulary decisions for 2025 come forward for LUMRYZ and narcolepsy, for Medicare. And recognizing that, relatively speaking, it's a smaller portion of the pie, but when you're a government-sponsored patient, if we don't have coverage, then we tend to put them on our patient assistance program. So you're pretty confident, based on your experience on the commercial side, that you'd probably get parity coverage in general on the government side next year? I mean, ultimately, that is our strategy. You know, we'll see how, you know, these decisions, you know, kind of pan out over the next couple of months, and we should have visibility to that, you know, as we get, you know, into Q4. I think an underappreciated aspect of this market, and you sort of touched on when we talked about churn, is that even for Jazz, for when they had years and years of, you know, modest growth in that market or even stability, there were actually, underlying that, a lot of discontinuations, right? They were bringing in new patients and losing a lot of patients always, right? And so it looks like, based on, you know, what you've reported to date, your discontinuation rate is certainly seems lower than the twice-nightly, which is intuitive, right? With your innovation being a once-nightly product. But can you just speak to your discontinuation rates, how they're trending versus expectation, and is there anything you can do with more experience to improve that in terms of your patient support services? Yeah, excellent question. I, again, I think if you do the simple math of, you know, patient starts into patients on therapy, you can, you can calculate a discontinuation rate, but it probably isn't the right way to look at it. Mm. You have to really look at it in two different patient cohorts. You got to look at switch patients, and you have to look at, you know, truly naive patients. As you look longitudinally back at twice-nightly oxybate patients for who are new starts, you see about, historically, about a 25% discontinuation rate in the first 30 days, and then that grows to about 50%. To your point of starting 3,000 patients every year on the first-generation oxybates, you see about half of those 3,000 discontinue within the first 12 months of therapy. We do know that the, you know, the market was quite dynamic, much more than it looked like from the outside looking in. For us, what we've said, whether it's a switch patient or a twice-nightly patient, at least through the first one, three, and six months of data, which is where I would say our cohorts are the most robust, I can't tell you twelve months into launch that our twelve-month cohort is- Yeah ... that robust at this stage. But I will say that numerically, we see better discontinuation rates, which is why I think cumulatively you see what, you know, optically appears like probably an overall lower discontinuation rate. But by no stretch should we be satisfied with just being better, because we work really hard to get a patient on therapy, and these are very challenging patients. And you see most of your discontinuations in the first couple months, and in particular, in the first thirty days, and you see that with an introduction of a new dose, either at start or titration. So we've learned a lot over the last year, like, when's the right time to intervene? How do you intervene on a naive patient differently than you intervene on a switch? What is the message you need to get delivered to them? You know, how do you intervene before dose titration, and help that patient, you know, be educated on things to expect and, you know, from that perspective? So all of those things we're constantly trying to improve on, but with the goal of trying to help patients who are eligible and appropriate to be able to, you know, navigate through these treatment experiences, and hopefully, you know, realize the full benefit of LUMRYZ. I think you touched on the investment you're already making, but it's not lost to me, with getting all these prescriptions from doctors you're not even calling on or barely even calling on, what does that tell you about opportunities to expand your promotional or infrastructure, your footprint? How much growth do you think your current investment level can support, or even a portion of peak, if you want to frame it that way, versus, you know, investing significantly more for growth? I do think we've launched with an investment strategy to really maximize the launch as we thought about it from a go-to-market strategy in narcolepsy. I feel like what we've done has been right from that standpoint, and it's played out, you know, I think in a very positive way so far. As we've gone through, we've learned a lot, right? We've seen things emerge that says to us, if we deploy more resources against that, can we, you know, capture something additional that we hadn't thought about? That's what we're doing. We are making some investments now. I don't think it materially changes the way we think about our guidance on OpEx from $40-$45 million a quarter. We don't see any change in that. But we are looking for ways to expand and deploy resources in places where we think that we've uncovered some opportunity, and see how that plays out, whether that's on the sales rep side or the reimbursement side or our patient support service side, or whatever it may be. Revenue estimates are pretty wide, which is common for any launch, in 2025. I'm just curious, do you anticipate being in a position early next year to give guidance for 2025, or is that too early still? I won't commit to it right now. I understand the importance of guidance for the Street. We appreciate that, and know that people are looking for that, and when the time is right, I'm quite confident we'll be doing that. So without time bounding that to any degree, we appreciate the importance of it for the Street. All right. And then, further out, beyond twenty twenty-five, certainly I know Jazz investors are always asking me, and certainly it's not lost to me that it could be relevant to you as well, what are your expectations for generics of twice-nightly products entering the market in twenty twenty-six and beyond? And what kind of impact do you think that'll have on your growth trajectory, considering that I guess you're already competing with an authorized generics of twice-nightly, and it doesn't seem to be slowing down your launch? Yeah. I think as we sit here today, we have to assume, whether it materializes or not, we'll see, but we have to assume that there will be multi-source generics in January of 2026. How many? We don't know. There's only one actually approved, as I understand it today, actually approved today that still doesn't have a final approval by FDA. But under the assumption that multi-source generics come into play, we've really tried to understand what this means to us and means to the oxybate market overall. And I think our takeaways, as we sit here today, is that I think we should expect that as a branded oxybate with LUMRYZ in the category, that patients will likely have to... New patients, new to oxybate therapy, so truly naive patients, will most likely, assuming pricing matures or evolves the way it typically does, new to oxybate patients likely have to step through a twice-nightly generic, right, to get to a branded oxybate, right? We think that positions us very well, right? Today, we're growing our share in naive patients, right? But if the branded oxybate market becomes one where we're competing only for predominantly switches, which represents almost 90% of our market today, with currently treated twice nightlies and previously treated and discontinued, we think we're well-positioned for patients to step through a twice nightly to, if they want to stay on an oxybate, for LUMRYZ to be the oxybate of choice for those patients. So maybe the denominator of total patients gets slightly smaller, because maybe some stick on a twice-nightly generic, but we don't think that the introduction of twice-nightly generics impedes our ability to continue to add patients to LUMRYZ- Right ... new patients to LUMRYZ. Do new mechanisms of action in development, in various stages, keep you up at night for narcolepsy? Like a lot of chatter around Orexin 2 agonists or others. Or do you think, given this, or I guess, niche area of oxy-