All right, let's get started. David Amsellem again from the Piper Sandler Pharma Team. And welcome to day two of the 35th annual Piper Sandler Healthcare Conference. We have Optinose with us. We have Ramy Mahmoud, CEO, and Jonathan Neely. Is it Head of Corporate Communications? Is that the right title? Investor Relations, Business Development. Business Development. Anything else. You wear many hats. Yeah. I will leave it at that. Okay. Well, thanks, gentlemen, for joining us. So lots to cover, a lot of questions, but maybe, Ramy, if you could go through just a quick intro, kind of lay the land and then we can go on the questions. Sure. So, allergy ENT-focused company, commercialize XHANCE. 2023 has been a different year for us. Mm-hmm. We've really focused on, bottom line and for, improving our cash runway, and I think we've been very successful this year, quarter-over-quarter, every quarter this year, in, meeting or exceeding the guidance that we expected for, for the year. We're eagerly anticipating a couple of transformational events which could really, you know, sharply change the trajectory for the company in the future, including a, PDUFA action date coming up in just a couple of weeks. Yep M iddle of December. And some other transformational things in the next month or two that could really transform the company into a different entity. Yeah. So let's talk about that, regarding chronic rhinosinusitis. Anything new to add or any updates on the FDA process, communications with the FDA, requests from the FDA, anything that you could add as we move closer to the December 16th PDUFA? Well, as you said, David, the PDUFA date is December 16th. Yeah. So it's only a couple of weeks away. That's right. I can't comment specifically on that, but what I can do is try to refresh your mind a little bit on what we're looking at here. This is not a full-on NDA. Mm. If you think about things like human factors and manufacturing and CMC, those kinds of things aren't on the table. This is a clinical application. Mm-hmm. As a consequence, the things they're really looking at are efficacy and safety-related. We've previously disclosed the efficacy and safety results from the pivotal trials that we submitted to FDA, and we feel good that they put us in a good position for approval. The parts of the package insert that you're talking about, sort of negotiating, that are sort of up for, you know, primary effect here, are the indication section. Mm-hmm. And we are not certain what that indication language will look like, but I think it's on a material basis, almost anything they give us will allow us to do the kind of promotional activity that we expect to produce the future revenue stream that we're projecting with the approval. So we're not that sensitive to precisely what language is used there. Mm-hmm. The other section that's going to be influenced is the clinical trial section. Sure. Which would be, you know, putting in the actual results for efficacy and new safety data. We're pretty comfortable we know what that's going to look like too, because we've seen the data and we think, you know, although we're not certain, precisely what FDA will choose, we think that, you know, almost anything they choose will give us adequate leeway to do the kinds of promotional activities that will get the word out for the product. So to be clear, you have been or are in labeling discussions or negotiations with the agency? Well, I mean, to be clear, I haven't commented on what's- Yeah H appening right now over the last few weeks, at- I had to ask, though. Yeah, I don't blame you for asking. Yeah. But I did try to lay out sort of what's at stake right now, and it's really just those limited sections of the package insert. Okay. So let's take a step back and talk about the addressable market here for XHANCE in CS, and talk about the extent to which the market does expand from the current core audience of nasal polyp patients. Yeah. The number of patients with chronic sinusitis is much larger than the number of patients with nasal polyps. Sure. The difference is even larger if you look at the number of diagnosed patients with chronic sinusitis versus the number of diagnosed patients with nasal polyps. Mm. To illustrate that, if you look at claims data, which is codes that a physician applies at the time of a patient visit, there are about 660,000 claims per year, coded by the physician at the visit for nasal polyps. Mm. And that compares, that 660,000 compares to about 10.7 million claims, where the physician is making the diagnosis code for chronic sinusitis. And on top of that, we, we believe, based on the epidemiology, that's been done, that there's about another 20 million or so patients who don't go and visit a physician every year- Mm-hmm W ho, in principle, in future, could be activated to see a doctor. Because many of them know they have the disease, know they have symptoms, want to be better, but don't feel like the doctor has anything to offer them because they've already been to the doctor before and there's nothing new. Mm-hmm. Okay, that's helpful. Want to switch gears a little bit to the physician audience here. So historically, you've focused on ear, nose, and throat specialists, allergists, some degree of general practitioners, but I would imagine that going forward with CS in the label is gonna be more of a focus or need to be more of a focus on general practitioners. So can you just talk about, at least within, you know, the wider CS population, how much more GP-centric is it relative to the product as it stands now with the narrower label? Yeah, it's important to recognize that there are two future potential revenue streams- Mm A ssociated with an approval on the new indication. Sure. One is in the specialty space that you just talked about, ENT and allergy, where we have an existing commercial footprint and existing relationships, and we think that opportunity could be three, four, or five times what we have today. Mm. So it's a much bigger opportunity that we can go after ourselves. Mm-hmm. However, we think that probably two-thirds of the patients with this disease who go to see a doctor aren't necessarily going to specialists. Yeah. So there's a lot of incremental opportunity in that non-specialist space. We don't have a mechanism to naturally go after that with a direct selling model because, you know, we have 75 sales territories, and you have to have sort of a primary care infrastructure to do that. Sure. That's why, as I've said before, we're actively seeking a partner who could work with us to commercialize the product in the primary care space. Okay. Yeah, and I know you've talked about the partnership discussions and or co-promote structure, but, you know, I guess a hypothetical is, you know, let's suppose that kind of deal doesn't materialize for whatever reason. Maybe you don't, you know, like the terms, maybe there's an interest, whatever it might be. To the extent that you do it on your own, how, what kind of approach would you take to salesforce expansion? Well, our strategy in 2023, if I could just back up- Yeah. One step from that has very much been bottom-line focused rather than top-line focused. Sure. We've been very successful in increasing our cash runway by reducing our use of cash, and sort of improving the operating efficiency of the company. Mm-hmm. We don't want to let that go. We think we can effectively launch without a material increase in our operating expenses in 2024. Now, does that mean that there's not incremental opportunity associated with the possibility of growing sales force? There probably is some incremental opportunity at the margin, but it's not an enormous growth. Mm-hmm. It's a comparatively small degree of growth to optimize the specialty space. So, I guess in a primary care audience, just irrespective of partnerships, do you have market research on how concentrated prescribing is within the GP audience in terms of intranasal corticosteroids? In other words, do, say, the top two or three deciles of GPs account for, I don't know, a disproportionate share of the, you know, ICS volumes? So first thing I'd say is that, I don't think of this as an ICS market that we're entering into. Fair enough. I think of this as a chronic sinusitis market. Mm-hmm. and some of that might be reflected by current prescriptions in the intranasal corticosteroid space, and some of it might not... Mm-hmm. Including because of the use of, over-the-counter products or dissatisfied dropouts and all the other things that we know are in that space. So when we think about this, defining the space, what we're looking at is, who are the doctors that are diagnosing chronic sinusitis today? Mm-hmm. If you look at the footprint of doctors who are diagnosing chronic sinusitis in primary care, there's a fairly large number, as you would expect. You know, it's a broad audience. There is a number who are, you know, seeing relatively more patients than others, like with most primary care products. Mm-hmm. We think that that's a suitable audience for a company with a primary care promotional footprint of a variety of sizes. Sure. So you can picture companies with, you know, 100, 200, 300, 500 reps. The more you have, obviously, the deeper into that audience you will reach. But, you know, the density is greatest on the first 10 or 20,000 that you reach. Sure. Can you speak to your dialogue with payers regarding the CS opportunity? And I guess, what are you expecting to see on that front, based on your discussions? Yeah. So, what I'd say, David, is that our payer environment and the coverage reimbursement on the product, the day before the PDUFA date and the day after an approval is the same. Nothing will change abruptly. Mm-hmm. Now, will something evolve gradually over a period of years? Absolutely possible, just as happened in previous years, and this happens with every product. You don't know exactly what the payer environment is gonna look like. Sure. So in the long run, that's sort of a different question. It has more to do with the environment and, not even the product necessarily, specifically. In the short run, though, I will point out that, for those plans which have a prior authorization in place- Mm-hmm. T hat is, requiring a doctor to attest to the diagnosis. Mm-hmm. Right now, that's administratively a limitation to nasal polyps. Sure. Because that's the indication. When we get the new indication, even though that's encompassed within a prior authorization in principle for approval, it may take a little time for those payers to bureaucratically get chronic sinusitis included in that consideration- Mm-hmm. So that that is also approved. I wouldn't expect that to be instant. Okay. Can you speak to launch preparedness, at least in the ENT and allergist setting, ahead of the CS approval and launch? We have an outstanding commercial team. We have a Chief Commercial Officer who joined us at the end of 2022. This is his first full year, and one of his chief jobs has been getting us ready for the CS launch. Mm-hmm. One of the things we've done during 2023, even in the context of reducing operating expenses and looking for increased operational efficiency, is to maintain the infrastructure necessary to support the launch. Sales territory, sales training, all the other kinds of things you need to support the launch. A lot of intensive planning around the launch, and we think we'll be ready to go. Now, does that mean that we'll be immediately on the steep part of the curve on January second? Mm-hmm. Not necessarily. It takes a little bit of time to do the things that you have to do to get a launch once you have final labeling in hand. Mm-hmm. Sure. So, sales training, new sales materials, optimized sales footprint, a whole range of things that are normally done in a launch. So let's talk about nasal polyps and the current commercial landscape. And I think it'd be helpful to take a look backwards and in terms of what happened regarding payers, and why things got more restricted over time. Y eah, I think, I think the entire payer environment across products has become more and more difficult over time. That's been sort of the secular trend for the industry as a whole. Sure. And I think that for our product in particular, there was maybe an expectation that there would be a great deal of off-label, meaning non-nasal polyp use of the product. Mm-hmm. If you think about it from the perspective of physicians who are writing for the product- Mm-hmm. You don't have to have every single patient under a PA or rejected because of a non-nasal polyp diagnosis to have that affect your prescribing- Mm-hmm. Broadly across patients. Right. And so we think that having a new indication will make that easier, because now physicians will feel like I'm less likely to be rejected. I'm prescribing this on label. Matter of fact, it's the only medication I can prescribe on label, for this condition. Sure. We think that will make life easier. Just, you know, I apologize if you were aware of this already, but even in our specialty audience, there's a meaningful number of doctors who don't really diagnose nasal polyps. If you don't do nasal endoscopy, you don't really have a good mechanism for doing that. Right. You may have polyp patients that you treat that already had the diagnosis- Mm-hmm. But you don't really have any means to do that. And when those doctors are asked to attest to the presence of nasal polyps, many of them are very reluctant to do that. Right. They don't want to treat sort of empirically when they're asked to do that kind of attestation by a payer. Right. All of that gets easier once we have on-label treatment of chronic sinusitis. For instance, if a patient is seeing an allergist, and that's a standalone practice and not part of a broader ENT- Which is very common. Which is common, then that allergist will, you know, if that allergist has to attest the polyp, chances are that patient's not gonna get the script. Okay. Is that what you think about it? Yes. Yeah. But frequently, they diagnose chronic sinusitis all the time. Sure. Sure. This is one of the things that drives the difference between the $10.7 million- Mm-hmm. And the $660,000. Yeah. It's not just disease prevalence from an epidemiologic perspective, it's the diagnosis gap. So what portion of payers, if you could say, are actually restricting access to only patients with nasal polyps, I guess, in terms of covered lives? We estimate that about half of our patients are under a restriction, like a prior authorization. Sure. Most of the prior authorizations are specific to diagnosis. Mm-hmm. They want people to be an adult- Mm-hmm. With an on-label diagnosis. And so it, it's a material part of the business. Yeah. Are there- Absent the label expansion, and I'm not saying that, you know, you're gonna get a complete response or anything, but in a hypothetical that you know there wasn't even a label expansion opportunity. Absent that opportunity, are there any levers that you could pull to improve patient access in the polyp well just in the you know in the CS setting, even without the label expansion? Yeah, I mean, we are- I mean, we think there is, there is growth, it, not, not easy growth- Yeah. But there is a growth opportunity in the nasal polyp setting. Sure In part, by making the product, making it less difficult for the physician's office to work with the pharmacies and the payers in order to overcome the barriers that are in place. So by having the right kind of pharmacy network and improving the quality of sort of white glove services that can be provided to support that, we think we might be able to get higher approval rates- Mm-hmm. Which is really more important than just coverage rates. Sure. But there are some things you can do around that. But big picture, if you back all the way up, today, we're a single product company. Yeah. That's fundamentally not efficient. Yep. So one way or another, we would like to see a strategic path that leads to this being a multi-product entity. Yep. So let's go to net economics and just talk about net revenue per prescription, historically and, you know, what your expectations are, at least going through the end of this calendar year. We've given guidance, and it, and we still think it's true. Okay F or 2023, that the average net revenue per prescription for the year should be about $200. Right. Now, historically, and again, this continues to be true, that's not the same every quarter. The first quarter in particular is always worse than the remaining quarters of the year, and that's due to the way insurance resets, and that's not unique to our product or our company. That's sort of a broader trend. But overall, for the year, that's what we expect it to be for 2023, and we don't really expect that to change a lot in future. Okay. So in 2024, at least- Even with the label expansion? The label expansion won't really have any direct effect on the product price or on the- Mm-hmm. Gross to net. Those things should remain approximately the same by virtue of indication. Right. Yeah, I'm not saying that they will never change in future. Any product subject to a payer environment has to project a possibility of change. So, just to be clear, you know, the idea here is that, you know, with the label expansion, you're obviously opening yourselves up to more hassle-free access and just a wider market. But in terms of the actual net pricing, you're not expecting any real change? The biggest growth driver- Yep Will be a larger number of patients, with an easier diagnosis, and an easier pathway for a payer to discuss it with a payer, for a physician to discuss it with a payer when they need to- Mm-hmm. Because it will be the only product indicated for treatment of this disease. Yep. So just looking backwards and we've seen some degree of pressure on net revenue per Rx. Can you just talk about... What's been happening, you know, regarding that net revenue for Rx? For us, it has been relatively stable. Okay. And that's-- You know, it's not that there are no moving parts. There are moving parts, but- Mm-hmm. We don't expect that to materially change, you know, in the coming year. There have been a couple of things that we have been able to do, and we've done in the past and have done in this year, that I talked about earlier, to modify, to sort of optimize your co-pay support program. Sure. We will continue potentially to do some of those kinds of things, which could have an impact on the average net revenue per prescription. Mm-hmm. Or on prescription volumes, particularly for volumes of, unpaid or not profitable prescriptions. Right. So we may continue to do some of those kinds of things, but, yeah, again, overall, we don't expect that to change the net revenue per prescription. Yeah, I mean, just to follow up. Yeah. Go ahead. Yeah, I mean, last year, our, excuse me, our average net revenue per prescription was, you know, a little bit over $210. Mm-hmm. I think for most of this year, we've been signaling that we would finish the full year 2023 at approximately $200. And, you know, we're already, you know, through third quarter, we're approximately $200, and usually, you know, fourth quarter is a good, you know, revenue per prescription quarter. And as Ramy mentioned, you know, we've made some changes in third quarter and fourth quarter to co-pay assistance this year. I think you saw some of that, you know, reflected in our third quarter results, where we actually increased revenue per prescription by about 6% on a year-over-year basis. Mm-hmm. You know, all said, though, you know, there's a lot of puts and takes. You know, I think overall, you know, you know, we see relatively stable revenue per prescription over the long term. What is the average out-of-pocket co-pay for patients these days? The most common out-of-pocket co-pay for a patient who has commercial insurance- Yeah Is zero. Yeah. There are individual patients who will pay $25 or $50 or even $75. That's much less common, and it tends to be patients who either don't have coverage or who have coverage that doesn't encompass XHANCE. So just a hypothetical here. If somehow the label expansion in CS does not occur, how do you think about strategic options for the company and your overall plans for XHANCE? I'll kind of refer back to what I said before. Mm-hmm. In the long run, this product shouldn't be alone. Our company or any company that we are partnered with- Mm-hmm In one way or another, you know, and we're always open to evaluating all strategic options. It should be some kind of a context with more than one product. Yeah. That's true today. That will be true tomorrow with an approval. Mm-hmm. That would be true tomorrow without an approval. Yeah. The specific partners or the specific strategic options will vary in those different scenarios. Mm-hmm. But I think that that's the sort of you know, broadly writ, that's the direction that we need to go. Yeah, and that certainly makes sense, and that's commercially efficient. I guess the question is, how do you get there? I mean, is that. I mean, you're not, unless I'm missing something, in a position to, you know, buy up assets. So I mean, does that, I mean, I'll just kind of come out and say it, is ultimately the goal to find a buyer for the company? Our options are going to be different depending on what happens, even- Yeah In the next couple of months. Sure. Sure. So if we engage a primary care partner- Yep I would expect that to be accompanied by meaningful, non-dilutive capital, and an increased future revenue stream- Mm-hmm Which would, you know, result in a number of different downstream consequences, including increasing the options for considering what we might do to sort of be a multi-product entity- Mm-hmm With or without any kind of M&A activity. Okay. That would be different than a scenario where we don't get an approval, which you asked about before. Yeah. Don't think that's super likely, but it's certainly possible, and if we didn't get an approval, we'd have to look at those kinds of transactions through the lens of, you know, the resources available to us at the time. Yeah. How are you thinking about your cash position and your need for, you know, future equity or debt capital? And I know you're talking about a co-promote, and that could be, you know, an upfront, can be a source of non-dilutive capital. But let's just say that doesn't materialize, and you have this label expansion and, you know, where do you go from there? You know, a primary care partnership would be a source of non-dilutive capital. Sure. Primary rights to the product overall, outside the United States, also can be a source of non-dilutive capital. Sure. There has been interest expressed by a number of parties in different aspects of our ex-US rights. We would have to evaluate our strategic options carefully around, you know, what kind of capital is available to us. One thing we don't plan to do is to materially increase our operating expenses. Right Going into next year. We have been much more efficient and controlled in our use of capital this year. Mm-hmm. We intend to continue doing that in 2024. So I would imagine R&D spend will become way down with the completion of the CS study. We have materially less R&D spend. Yeah. We do have some spend- Yeah Because we have post-approval requirements- Mm-hmm In the pediatric space Sure As you would expect, you know, with these kinds of approvals. But outside of that, we don't really have R&D spend, until such a time as we're in a position to build pipeline. Okay -which we'd love to be able to do, by one means or another. Right. And just lastly, to the extent you have the label expansion in hand and, you know, whether or not you have a primary care partnership, how much more investment, sales and marketing investment, do you put into the business to, you know, beef up your, you know, your calling efforts on in the ENTs and allergists- Yeah With those expanded label? How do you think about that? So, depending on the capital available- Mm-hmm Available to us to invest in growth, there are several opportunities. Mm-hmm. As I was saying earlier, in response to your question about the size of the sales force- Yeah You know, could you take 75 and make it 85, 95, 100? There probably is growth potential associated with some growth in those kinds of things. Mm-hmm. One of the biggest areas that we can think about is activating the 20 million patients I talked about before- Mm-hmm Who we call dissatisfied dropouts because they don't have a reason to go to a doctor because there's nothing the doctor can give them they don't already have. Right. We have pilot data that suggests those people can be activated relatively easily, but it requires investment- Yeah To get them to come in. So that would be- And we have other growth investments available to us, too. Optimizing our manufacturing to bring down COGS, other kinds- Sure Of things. So with the right capital, yes, there's places we'd love to invest. Okay, great. Well, it looks like we're out of time. Ramy- Great J onathan, thanks so much for joining us. Thank you in the audience. Thank you, David.