We're going to get started with the next session. I'm Andrew Tsai, Senior Biotech Analyst at Jefferies. Thanks for joining us. Next up is Verona Pharma. To my direct right, we have David Zaccardelli, President and CEO, and to his right, Mark Hahn, CFO, and to his right, Chris Martin, Chief Commercial Officer. Welcome. Thank you, Andrew. So, for those who might not know Verona, the story. Maybe help us tell the story a little bit. Spend a couple of minutes telling what you're up to and what kind of news flow we can expect over the next 12 months. Sure, happy to. Good morning, everyone. So just as a brief summary, Verona Pharma has asset ensifentrine, a novel phosphodiesterase 3 and 4 inhibitor, and as such has very consistent clinical outcomes around bronchodilation and nonsteroidal anti-inflammatory effects. It's been developed in multiple indications, but we have progressed it now through approval and launch in COPD in the US. We have just around 14 weeks ago launched Ohtuvayre in the US in COPD and have had a very strong launch as we announced at our Q3 earnings with great traction, over 5,000 scripts being filled, over 2,200 prescribers, and a breadth of prescribing across all types of COPD patients. So we're incredibly pleased with the progress of Ohtuvayre in COPD. With that, we have continued our development as well, and we have started two phase II trials, one in non-CF bronchiectasis as well as in a fixed-dose combination of ensifentrine plus glycopyrrolate for COPD, which we think will work very well as life cycle management as Ohtuvayre continues to progress in the market, so we're very pleased on the commercial regulatory front as well as on the development, and over the next 12 months or so, again, great progress on the launch we expect and continuing to address the unmet need in COPD through Ohtuvayre as well as advancing both our clinical programs. And so congratulations again on the strong approval and the strong launch. But how do you explain this? What makes Ohtuvayre differentiated and what makes you confident this is going to be a durable uptake, not necessarily just an initial "bolus"? Sure, I'll just make a few comments, and I know Chris will give his perspective as well. It all starts with innovation and a novel mechanism of action with Ohtuvayre, and combining a novel bronchodilator and nonsteroidal anti-inflammatory is something that I think the market has needed. There's been relatively little innovation over several decades in the COPD treatment paradigm, and physicians and patients were looking for something additional. There were, of the 8.6 million patients under maintenance treatment in the US, approximately 50% remained symptomatic despite optimal care. And Ohtuvayre serves a large unmet medical need, which we've seen already early on in the launch being addressed across the COPD population. But that gives us great confidence of how Ohtuvayre can be inserted into the treatment paradigm and ultimately change how COPD is treated in the US. Yeah, just to add to that, Andrew, I think the thing we heard in market research throughout the last two years was about the unmet need that existed in COPD. We have to remember that these patients are dealing with a chronic progressive disease. Their lung function continually declines, and they continually have increasing symptoms that affect day-to-day activities. And so when we introduced the profile of Ohtuvayre, what the doctors have done in the early launch is responded like we saw in market research. They responded to this. They're responding to this unmet need and needing to help these patients with additional bronchodilation, additional nonsteroidal anti-inflammatory effects. And this is not something that we believe will. It's a sustainable attribute that will continue throughout the rest of 2024 and into 2025 as well. Great, and help us level set things too, for you to get to $1 billion in peak sales, what kind of patient number does that imply based on the net price that you have? Sure. So I think we've mentioned before and it's included in our presentation materials. When you take a look at Ohtuvayre and the patient population in the US, just 1% of the patient population, if you take certain assumptions of our price as well as how often patients typically renew their prescriptions, which on average is about six months a year, all of that boils into for every 1% of the patient population, just over $1 billion in revenue. So you can see that relatively modest penetration into the market is a blockbuster drug. Great. And you did $5.6 million in Q3. October is at least $5.6 million. So if I straight line 5.6 times 3 throughout Q4, you're at, what, almost $18 million. That assumes no growth. Are you comfortable with that, or do you think there could be a slowdown due to holidays, vacations, and so forth? Yes, I mean, I think we're not providing any specific guidance. Definitely follow your math, which makes, of course, sense. I don't think we see any particular seasonality in COPD treatment. And while there are holidays over the coming weeks, there's also dynamics of patients seeing their physicians before the end of the year. They've already met their copay for the year. There's dynamics around how patients refill prescriptions at the end of the year. So all of that is in play. And ultimately, we don't see any slowdown. And actually, depending on your view, fortunately or unfortunately, there are millions of patients. And I think that cadence early on in the launch, we expect to continue through the Q4 and well into 2025. Okay. And 5,000 prescriptions written as of October. And presumably, uptake is looking good, but is it in line or above or below your expectations for the month of November so far? Yeah. So again, we're not providing any specific guidance around it. I would just say that the momentum that we saw from the first day of launch continues. We talk about increasing prescribing week over week, and that's to be expected in a strong launch. So I would, again, that is all our expectation as we move forward. There doesn't seem to be anything that would stop that type of progression in this early stage of the launch. When we speak to doctors, my understanding is patients don't necessarily go back to the doctors after getting prescribed Ohtuvayre until three to six months later. Is that your understanding, meaning that maybe refills or whatever don't necessarily kick in until, let's call it, Q2 of next year? I don't know. Chris, you want to give your thoughts on it? Yeah, I think each doctor is going to be very different in how they prescribe Ohtuvayre and where they see these patients. Typically, a doctor will prescribe a medicine within COPD and put refills on a prescription. They may not see that patient back for three months, four months, five months. But the expectation is that if the patient's doing well, they'll continue to refill that over time. The dynamic in COPD, as Dave talked about, is that patients tend to are delayed in filling prescriptions, which is one of the reasons why we felt distributing Ohtuvayre the way that we did through a specialty distribution network provided potentially an upside to that long-term adherence for these patients because those pharmacies are constantly in contact with the patients and can provide additional support and adherence reminders that maybe aren't as readily or easily available on other channels out there. I see. And going back to the 5,000 prescriptions into October and the vast majority, if I understand correctly, are new patients, not refills. Do you expect that proportion out of all your scripts to remain the same or similar throughout 2025, or once refills kick in, that ratio might go down? So how do you think about that? Yeah, no, by definition, refills start to take over, if you will, on a month-to-month basis, if you can imagine how new patients over time continue to add, start the refill process, and then the month and month before that. And they all start to stack on each other after a while, depending on what assumptions you'd like to make. And that's what we would expect. Clearly, in this early stage, 12 weeks of launch, the vast majority were new patients. Refills, of course, have started. We're encouraged by that as well. And we'd expect, of course, through 2025, that the refill dynamic will continue to start to make up a large portion of the month-over-month prescriptions. But with that, we stay incredibly focused on new patients, as we should, deepening the prescriber base. And we have more prescribers every week. And those prescribers, in our view, don't go anywhere but to prescribe for additional patients. We also know that once a prescriber writes a prescription, they tend to write more prescriptions over time. So we're also seeing a shift in the prescriber base from those that started out with one or two or a few prescriptions to writing more. So all the dynamics are happening, I think, in a positive way. But with that said, clearly, refill, it is a refill business as the business matures. And for 2025, what you kind of touched on it, but maybe just reiterate, what do you think are the key drivers for volume growth? More prescribers, the depth of prescribing, is it more sales rep marketing efforts? Let me talk about that. Yeah, Andrew, I think there's a couple of things that come into play for drivers as we move into 2025. The first is the prescriber base. So if we think about the prescriber base at the end of October, we talked about 2,200 prescribers that were out there and about a 30% penetration within our tier A or tier one physicians. As we think about the rest of 2024 and 2025, expanding that prescriber base is going to be very important and getting a little bit deeper because one of the things as Dave talked about is what we see is when we increase our frequency against these prescribers that have written, they move from what I would call an initiator to a trial or to eventually an adopter or believer. And so the more interactions that we can have, we can move them along that continuum where they're writing more prescriptions and putting more patients on therapy. So I think that's a big driver of growth. What goes along with that growth and that driver is the doctor getting the patient experience back. You want a patient who comes back into an office and tells the doctor about how they feel on Ohtuvayre. That helps those physicians move in addition to our rep interactions. And one of the things that our marketing team has been doing and focusing on is bringing some of those case studies or reports to life within the physician offices so that they can hear what these patients are experiencing. So I would consider that a second component. And then the third is expanding what we would say is our direct-to-patient activities. We've already been doing some direct-to-patient activities today through search, Facebook, and some smaller channels, but we've started to expand that by going indirectly to the office of our top accounts to ensure that when patients walk into an account that we're calling on, that they're aware and know Ohtuvayre is there as a new treatment option within COPD. So I think all three of those will play significant dynamics into growth in 2025. Great. And you recently got included in the GOLD guidelines. What are your exact thoughts on that inclusion? Yeah, from our side, it's continued validation of the novel mechanism and what Ohtuvayre can provide the marketplace. If you recall, the GOLD guidelines has a variety of different areas where Ohtuvayre or ensifentrine could be included, and if we look at what Ohtuvayre has been included in, you're included as a bronchodilator, you're included in the dyspnea pathway, you're included as an anti-inflammatory. These are all things that provide further validation to what this molecule can provide a COPD patient. I will say for the practicing pulmonologists today, the guidelines really don't make that big of a difference. They treat these patients based on the symptoms and issues that they face on a day-to-day basis. But as we think about the future and we think about doctors that are maybe initiating therapy or seeing maybe less severe patients like a primary care doctor, these guidelines provide further validation to what Ohtuvayre's potential is and how it should be used. So we look at it as an upside, and it provides further validation to what the molecule provides the COPD treatment paradigm. Makes sense. So I mean, everything seems to be pointing in the right direction. So why couldn't sales or scripts grow exponentially? As you're growing new patients, you're getting refills. What exactly could go wrong? What are the risks in your view? Yeah, I mean, I think as we see it right now, this early in the launch when you're in the front end of that curve, we're seeing all the right attributes to the launch besides prescriber depth, breadth. The unmet need is going nowhere, especially as you look forward in the next year or two. There is a substantial need. So we see that in place. Clearly, we need to keep up with the execution as we have in the past. We talk a lot about sales, marketing, commercialization efforts. You also have to keep up on all the drug supply packaging, distribution, availability, and all of those activities, which I think we have well in hand. But it is a business that needs constant attention and makes sure that we pay attention to all those attributes. But right now, we see that the launch is going extremely well. We don't see any slowdown, and we'll continue to execute. And the patient mix, I think 50% are back on triples, remaining actually are on earlier therapies. That's great to hear. How does that mix change in Q4 and 2025 in your view? I'll just say a couple of things. Chris can weigh in as well. I think because the need exists across the spectrum of patients, we'll see that blend continually. If you look at how the ENHANCE trials were done, you can see that utilization of Ohtuvayre earlier in the treatment paradigm makes a lot of sense. Adding it to patients who may be symptomatic on single or dual therapy is consistent with its activity. We know that patients on triple who are symptomatic have very few options. And because the benefit to risk of Ohtuvayre is so compelling, we see physicians wanting to use it in those patients as well. And initial feedback is very positive across all patient types. So I expect it to continue into 2025 across all of that. Ultimately, I think Ohtuvayre is going to get inserted earlier in the treatment paradigm. You'll see a shift of using ICS later in the treatment, as it probably should if you look at the GOLD guidelines that have been referenced. I think this is being the first time physicians have had an inhaled drug such as Ohtuvayre where you have nonsteroidal anti-inflammatory activity by the inhalation route. That's when it's going to take hold and be utilized earlier in the treatment. We're very confident that it'll change the way COPD patients are treated. Wow. Okay, and is this going to be the strongest COPD launch in history in your view? Well, it already is. So if you take a look at Breztri or Trelegy or other launches in COPD, and you look at the Q1 on a revenue basis, we have surpassed those. So I think it is already going very well, and I expect that to continue. Great. And as we turn the calendar, there is another broker conference in January. Are you thinking about providing updates then about Q4, whatever? Yeah, yeah, great question. And I think it would be a reasonable expectation that prior to that big conference, we would put out at least a range of revenue numbers for the Q4. It will still be going through our audit, of course, with our external auditors. So it probably won't give a real precise point estimate. But I would think it's reasonable to expect at least a range of revenue numbers. Okay. And going forward, would you consider providing other metrics outside of prescriptions filled and doctors prescribed? Yeah, Andrew, that's another great question. I think you should expect over time that we'll broaden the set of metrics that we put out, and we haven't said anything set in stone yet, but things that come to mind are like refill rates, length of therapy, that sort of thing. How should we think about inventory for Q4? Right, so our SPs, our specialty pharmacy partners, by contract, are required to hold no less than two, no more than three weeks of inventory at any point in time, so as sales increase, of course, the amount of inventory in the channel will increase, but as a percentage, it should stay relatively constant. We were right in that two- to three-week range at the end of Q3, and I think we'll continue to be there for the foreseeable future. Anything to note on the payer front so far? How's reimbursement looking? Are they enforcing step edits? Yeah. On the reimbursement side, it's been consistent with what we expected at launch. When we think about Medicare Part B or traditional, let's talk about traditional medical benefit, which can be Medicare Part B or Medicare Advantage under the Med B side. What we're seeing from a reimbursement side is very consistent from what our expectations were. On the commercial Medicaid side, we're seeing a simple prior authorization step edit, which was what we expected as well. Those tend to be step through a LAMA or a LABA or make sure that patient's tried that. And those are things that our SPs and our payer team are working through, but nothing that has been unexpected from that standpoint. Okay, and you do have a non-specific J code right now. You will be getting the official product-specific J code early January, I guess. Does that matter or help with a lot? Andrew, it does help with our pharmacies and our adjudication process. So right now, under a non-specific J code, the pharmacies are adjudicated under a manual process. So that takes some time. So the product-specific J code, which has been issued by CMS and goes into effect January of 2025, allows that to become a more automatic process. So it also makes some of the state Medicaids and some of the other supplemental insurances follow the process because you actually have a product-specific J code versus a non-specific J code. So for me, it's a time thing. It's a time to adjudication that helps, not necessarily changing what the reimbursement landscape looks like, but changing the time. I see. I see. And how was, I don't think anyone asked during your conference call, but how was gross net in Q3? And where is it going to shake out in Q4 in 2025 in your view? Yeah, great. So as we went into launch, we were looking at a gross-to-net of about 25% was what we expected. We expected that based upon what we saw from Yupelri, which is another nebulized product that's distributed largely through specialty pharmacies. Ours came in a bit under 25%. And I think long-term, there's some additional room for improvement in that as Yupelri is distributed through both retail and specialty pharmacies. And that retail channel is very expensive in comparison. Ensifentrine Ohtuvayre is only distributed through specialty pharmacies. So we expect we'll be able to balance that cost out over time and end up with a lower gross-to-net. But I think that'll take a couple of quarters for us to sort out completely. Is there such a thing as free drug right now? Yeah. Yeah, we do have two free, what I would call, free drug programs. So, the way we developed our reimbursement pathway, if a patient has a delay in coverage, we can provide that patient up to, let's just say, one month of bridge product. And then if they're still in that delay, they can get a second month. And then we have a traditional patient assistance program that exists for patients that meet financial qualifications. I will say that the vast majority of our prescriptions are paid prescriptions, but it's a program in place to help when there's time or financial hardships that these patients have. Got it. And remind us, what kind of sales do you need to see for you to break even on the launch? So when I talk about break even, I often talk about cash flow break even, which is different than net income break even. And I think for a company like Verona that has a single asset, relatively tight sales force, low overhead in that we don't have laboratories, we don't have a discovery engine, I think that cash flow break even can be achieved in the $250-$300 million run rate. Net income break even might be a little different because of non-cash charges and those sorts of things. But I think the cash flow is in the $250-$300 range. Any color on when you might hit break even? Not yet. We'll keep you posted. Maybe last question, you do have other programs going on. I'm actually very curious, however, aside from those programs, are you thinking about doing any other kind of BD deals to take advantage of your current launch? Yeah, sure. Clearly, we're attentive to that. We are looking at respiratory and pulmonary space broadly. We want to leverage our development regulatory commercial capabilities. I think that we've demonstrated that we have an ability to execute on those attributes. And so we are looking at that. I think as we increase our value, it allows us more flexibility in order to do a larger BD, BD function and acquisition. So we'll see in the coming months and in through 2025. But clearly, that would be one of our strategies in addition to what we feel is a very strong internal pipeline. Great. I think that's all the time we had, but thank you for the updates and congrats on the progress. Thank you. Thanks, Andrew.