Avadel Pharmaceuticals PLC (AVDL) 2024 Q1 法說會逐字稿

Greetings, and welcome to Avadel Pharmaceuticals' First Quarter 2024 earnings call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce Austin Murtagh with Stern Investor Relations. Thank you. You may begin.

Good morning and thank you for joining us on our conference call to discuss Avadel's First Quarter 2024 earnings. As a reminder, before we begin, the following presentation includes several matters that constitute forward-looking statements within the meaning 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 statement. These risks and uncertainties are described in Avadel's public filings under the Exchange Act included in the Form 10-K for the year ended December 31st, 2023, which was filed on February 29th, 2024 and subsequent SEC filings. Except as required by law, Abbott undertakes no obligation to update or revise any forward-looking statement contained in this presentation to reflect new information, future events or otherwise.

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

Thank you, Austin, and good morning, everyone, and thank you for joining us to review our first quarter 2024 results. Following my opening remarks, Richard will provide an update on our launch progress, including our key metrics through March 31st. Tom will then review our Q1 financial results, and we will conclude with a question and answer session.

I'm pleased to report another quarter of strong execution and results of our new RISE loan. We continue to deliver on our ability to reach the narcolepsy community and drive significant quarter over quarter growth across our early launch metrics. Metrics, we believe are critical to building a strong foundation for Lumos, both in the near term and in the long term.

While our top business priority and focus remain on the launch of Bloom rise during Q1, we also made important progress in our efforts to expand our reach into those living with idiopathic hypersomnia or IH. as well as pediatric patients with narcolepsy, both of whom can possibly benefit from Rice. And if approved for those uses offers potentially significant incremental value and future growth opportunities for loom rise beyond narcolepsy. Since launch last summer, our team has begun to deliver on the promise of Lumera's in our pursuit of becoming the market leader and achieving preferred oxybate status among patients and providers.

Our early robust uptake among patients and physicians provides unequivocal evidence of this progress and of the opportunity based on the clear unmet needs of oxybate eligible patients, evidence that has been further solidified by the consistent and compelling patient caregiver and provider feedback. We routinely hear as we now approach our first full year in the market with low rise, I continue to be impressed by the relentless newness and the results being delivered by the entire Avid team. It is their collective efforts, contributions and achievements that have established the initial foundation for loom rise, which we believe positions us very well to achieve our future aspiration and expectation of achieving market leadership, underscoring the results we announced this morning. Since the launch of Lumera's, greater than 28 hundred patients have enrolled into evidence rise up patient support services program in greater than 1,700 cumulative patients have initiated new monotherapy. In addition, in Q1 of this year, we generated $27.2 million of net revenue. The results we achieved continued to show the strength and the opportunity of Loomis is positioned in the evolving narcolepsy treatment landscape. And as a team, we are laser focused on the launch of Lumenos and ensuring we continue to deliver on the promise of Lunesta, the narcolepsy community. And we are well positioned to continue advancing the launch in driving growth for room nights in narcolepsy and beyond.

In this regard, while our launch broker and our launch focus and priorities are very clear, we are also in parallel beginning to make real progress on specific future growth opportunities we believe can deliver additional long-term value for patients for the Company and our shareholders.

Our first near-term opportunity is our potential expansion into the pediatric narcolepsy population, which represents approximately 5% of all oxybate treated narcolepsy patients. Our supplemental new drug application for Luminex has been accepted by the FDA and a target action date is set for September seventh. We believe blue lines that are approved for this use has the potential to address both patient and caregivers unmet needs while potentially offering a transformational treatment option for pediatric patients and their families. We look forward to hearing the FDA's decision later this year or next.

As we have previously shared, we are evaluating new lasers used for the treatment of age during Q1 we've made significant progress on our readiness to initiate a pivotal Phase three trial for IH. in the second half of this calendar year.

Similar to pediatric narcolepsy, we have heard from many experts in the field that there is a clear and compelling need for once at bedtime Rice for those suffering from age due to the associated deep sleep inertia making it extremely difficult for some patients to even wake up for their second dose of an immediate release oxybate. We are currently on track to dose our first patient in the second half of this year and plan to provide additional details at that time. Additionally, we are progressing the preclinical development of a potential lower low-sodium once at bedtime oxybate formulation with a target product profile that is bioequivalent to Luminex for this program. We currently expect to provide updates by the end of 2024.

In summary, we have a number of opportunities to continue to build our leadership in the sleep space and most importantly, positively impact even more patients. These opportunities will continue to be supported by our launch execution for LumiSpa narcolepsy which has created a strong foundation for continued growth.

And with that, I'll turn the call over to Richard for details on our commercial progress. Richard?

Thanks, Greg, and good morning, everyone. As Greg commented, our Lumera's launch has been off to a strong start this year. And today, I'm excited to provide some additional context into the encouraging trends we're seeing. We continue to build on the momentum generated since launching the rise and have made strong progress during the first quarter. Our team's commitment to bring our much-needed therapy to the narcolepsy community has allowed us to build a strong foundation, and we believe we are well positioned to see continued growth throughout the year.

Now turning to our key launch KPI.s, we had more than 2,800 patients enrolled in Horizon program at the end of March, which demonstrates a nearly 50% increase since the end of December. Additionally, 700 patients initiated therapy as of the end of Q1, representing a greater than 70% increase in cumulative patients who initiated therapy since the end of 2023. Since our launch last June, we continue to build strong and steady positive demand for rice.

Looking more closely at that patient segment dynamics, we continue to see patients initiating therapy with Rice from all three patient segments. Now in comparison to last year where the majority of patients were switch patients this year, we we're seeing beginning to see a more balanced ratio with roughly 50% coming from switches and the other 50% from discontinued and naive patients.

Another differentiator from last quarter is that we're seeing a growing number of naive patients on therapy, which signals that we might see this value proposition is compelling to patients who have not previously been on an oxybate.

Moving to HCP.s, more than 21 hundred HCPs have completed the REMS certification as of March 31st, an increase of more than 300 since the end of December, including those who are often experienced oxybate prescribers and some of the previous two MIs had not written for an oxybate. As a reminder, there are more than 4,500 HCPs who make up the entire oxybate prescribing universe and our field teams have been focusing their initial efforts on the 1,600 high-volume oxybate prescribers who represents 80% of the total prescription volume for the top 500 prescribers who make up 50% of the total oxybate prescription volume. Now 80% of these HCPs have written the following rise, up from 64% at the end of December. Gaming use in the highest volume oxybate prescribers has been a key part of our launch strategy, and we are pleased with the progress we are making with these HCPs.

Additionally, we reached an important milestone last month when we introduced our first Lumera's patient ambassadors to the narcolepsy community. Katie Taylor and Wendy are amazing people with narcolepsy who want to share their personal journeys and how being treated with balloon rise has changed their lives. Our market research continues to show the importance of the patient voice in the narcolepsy treatment journey as patients often receive the therapy they asked or HCP. four with the numerous patient voice now activated, we are unlocking another opportunity to drive the Lumera's conversation in a CP. offices transitioning to product fulfillment. Our overall reimbursement process continues to improve with over 700 new starts in the first quarter. We have seen through a combination of our strong payer coverage and the growing experience with ACP. offices that we are getting more patients initiated on therapy. And we continue to see good early signs of persistency with Cinryze when compared to twice-nightly oxybate.

Lastly, on the payer front, we have payer coverage policies in place with the three largest PBMs own GPOs. Additionally, we recently gained coverage with a large PBM group, Prime Therapeutics taking overall commercially covered lives to about 85%. Overall, we exited Q1 with growing momentum, and we are thrilled to see the results of our team's relentless newness and dedication to the narcolepsy community materialize and grow quarter-over-quarter. We believe Lumeris is positioned for long-term growth and is on track to becoming the preferred oxybate for the narcolepsy community.

And now I'll turn the current call over to Tom to discuss our financials. Tom?

Thank you, Richard, and good morning, everyone. And before I begin, I'll note the full financial results are available in the press release issued this morning and in the 10 Q, we're pleased to report that we generated $27.2 million net revenue and gross profit of $25.7 million for the quarter ending March 31st, 2024. And additionally, as of March 31st, there was approximately one month of demand in the channel, which is consistent with prior quarters.

Turning to operating expenses, we reported a total of $51.7 million of GAAP operating expenses for the first quarter of 2024 compared to $28.3 million in the prior year. The increase in year-over-year operating expenses is primarily attributable to launch related costs and higher compensation and legal costs. GAAP operating expenses in the first quarter of 2024 includes $6.5 million of noncash charges comprised of stock-based compensation of $5.4 million and depreciation and amortization of $1.1 million. After adjusting for these items, cash operating expenses were approximately $45 million for the quarter. This is at the upper end of our previously communicated guidance of $40 million to $45 million of quarterly cash operating expenses is due primarily to higher legal costs related to the patent trial that took place at the end of February for the remainder of 2024, we expect a recurring quarterly cash operating expenses will be in the range of $40 million to $45 million and non-cash operating expenses will be in the range of $5 million to $7 million. We believe that net cash used for operations will be materially lower after taking into account expected cash receipts from continued Lumera's sales.

With respect to the balance sheet. As of March 31st, we had approximately $89 million of cash, cash equivalents and marketable securities compared to $105 million as of December 31st, 2023. With our current trends, plans and assumptions, we maintain that we can achieve breakeven when there are approximately 1,300 to 1,500 commercially reimbursed patients and that we could achieve this milestone during 2024.

In addition to the number of reimbursed patients on therapy, our expectations regarding the timing of achieving breakeven, taking into account a number of other assumptions, including how quickly patient demand grows, net pricing alone rise in operating expenses.

Closing out today's financial updates, we pay close attention to the sell-side estimates and at this time, we are comfortable with current consensus of approximately $162 million for the full year, including the possibility that 2024 revenue could be higher. If actual results such as the rate of increase in reimbursed patients, the total number of reimbursed patients who are treated with memorize and net pricing outperformed. The assumptions currently used by the sell side.

And with that, I'll turn the call back to Gregg for closing remarks.

Thank you. Coming with the LUMRYZ launch well positioned for continued growth this year and are meaningful expansion opportunities in the sleep space. The value we are creating today is laying a strong foundation for the long term. We thank you as always, for your support and look forward to providing future updates on our progress.

And with that, we will open the call for questions. I'll turn it over to the operator.

(Operator Instructions) Andrew Tsai, Jefferies.

Hey, good morning. Congrats on the progress and the fact that the slope of the curve and such and my question is around the patient additions and treated patients this quarter seemingly grew faster than the actual sales numbers. So can you help us reconcile the reported sales number? Was it driven more by one-time headwinds like a higher gross-to-net or maybe even free drug use? Or was it more driven by clinical permanent patient discontinuation rates increasing?

Thanks. Richard, do you want to start with that?

Yes. Hey, thanks for the question, Andrew asked. So I think overall immaterial, but we're very pleased with our early launch metrics. And having you know, another 900 patient has to rise up in 700 patient initiations at this stage of launch. The most important thing we're really focused in on is getting patients on therapy for that patient experience and be to get a CP. offices used to prescribing and hearing those patient experiences as well. So that's really been our focus to your point. There are some headwinds that we experienced as an industry in Q1 with higher deductibles and other things that impact our co-pay. So we expect those to have settled down.

And maybe one last comment on your discontinuation rates. We're pleased with our early discontinuation rates that we see. They are numerically lower than what we see historically with the twice-nightly. So I'll turn it around what's going on there is we're really pleased with our early launch KPI.s. And maybe I'll turn it over to Greg to add some more color.

Yes. I think that for us, most important for us is patient initiations and getting and keeping people on therapy. And I think the team the team has done an excellent job in that regard to the launch and from a from a persistency standpoint, I think we remain really bullish on how that will translate to revenue over time.

Thanks. Very clear. Congrats again.

François Brisebois, Oppenheimer.

Thanks for the question. So I'm just wondering in terms of rise up that metric, do you ever see? I know it's difficult to know exactly how quickly patients move from rise up to on therapy, but are there cases where they just they do not. They tend to rise up and they never get the therapy? If so, what would be the reasons for that?

Yes, sure. I'll take that, Greg. You asked a great question, Francois. But as far as a write-off is concerned and I would say, you know any new therapy that comes from marketplace. There are patients who are quote-unquote, abandoned the process along so that they do not ever get to initiate therapy. That's we're not immune to that either. That embedded memory for us is very low and has stayed relatively consistently low throughout our entire launch. So we've seen very good stick to it. And frankly, it's the same reasons for almost any product and sometimes a patients whose interests it could be insurance, it could be something else has come up in their life. We don't really get all of those details. But once again, our abandonment rate has been relatively low for patients entering rice up.

Thank you. And then in terms of the pediatric endpoints, you mentioned 5% of the population, but how often do these patients once they're on something that seems to work?

Obviously, there's discontinuation and we're going to follow that with time to see if it's better with you guys, it seems like it's trending well, but that 5% pediatric population, do you guys see that as much bigger than 5% kind of as a read through where it is. Obviously, it takes a lot of time to diagnose, but if the diagnosis gets quicker, you get pediatrics and then they probably don't want to change what they're on when they become adults. Is there any upside to that 5%?

Well, I think I think we agree with all your thoughts, friends from that perspective, we think that the actual market opportunity is likely from a pediatric perspective is likely a materially larger than what's actually being treated today, predominantly because the condition is really a condition of adolescents, right? Where initial symptoms predominantly present earlier in life. Your comment about the time to proper diagnosis is a major challenge and has been for quite some time from that perspective. So we do think the total opportunity is actually larger than what the actual treated pool is today, no different than how we think about adult. So so for us, I think the opportunity to bring something new that doesn't disrupt the entire family, we think offers opportunity for both for currently treated and potentially are patients who aren't being treated today.

Okay, great. In terms of IH., it seems intuitive as these patients need to sleep and are still restless. And are you getting a lot of feedback that the waking up in the middle of night is a problem or is it not a big deal for these patients?

Richard, you want to comment on that?

Yes, I think for IH, it really comes down to more of the sleep inertia. A lot of these folks just have signature where they're just unable to wake up during the middle of night to take a second dose. So that's really the key area of the feedback and research that we hear about is and oxybate are very effective. But if you can't wake up to tip their second dose, you're getting a subtherapeutic dose.

Thank you.

Ami Fadia, Needham & Company.

Hi, good morning. Congrats on all the progress. And I had a couple of questions just around them, raise them. Can you sort of quantify what are the net number of patients on treatment and currently and with regards to net price, how has that progressed in Q1? And as you comment on your confidence in being able to achieve or potentially beat or where the consensus stands today? Or what are the assumptions you're making with regards to net price and evolution to the course of the year?

Richard, you want to take the first?

The second yes, sure. I mean, yes, thanks, Ami. Right now where we're the clear focus on our early launch metrics, there's a lot of dynamics are going on here. And at this stage of the time, we really believe that rise up enrollments in patients who have initiated therapy over the right view to look at things. We're going to continue to look at these metrics. And in the future, we will be transitioning to other metrics like patients who are actually on therapy at this time as well. And there's a lot of dynamics at this stage of launch, but we do tend to shift to that in the future.

Yes. I mean, so with respect to the second part of your question on net pricing, we've consistently pointed to an expectation that on average, patients will generate about 120,000 of net revenue per year. And I'll show you, I will share with you.

We're at that point now the expectation has always been that when we have more patients continuing on therapy, as Richard just noted, the new patients coming in would represent the tipping point, as I call it in the past. The other things that can affect net pricing, one of them is certainly compliance. Some doesn't have every patient took every dose every day of the year. And net revenue goes up, of course. But that's certainly one of the variables. And the other is, is the gross senescent cells, which yes, as we commented earlier, there were some we're not unique in that regard. Gross-to-nets as a percentage of net revenue as percent of revenue go up during Q1, but that's settled out over the course of the rest of the year?

Yes. The only comment I'll add, and I'm if I may, the only comment I'll add generally on on metrics and KPI's, I think we've got our eyes set that as the launch continues to mature a little bit in some of these variables are getting hit a little bit more mature that really drive and ultimately result in kind of net average patients are net exit patients on therapy that we will transition to that during the course of this year. What our intention is to do that and have an overlapping quarter where we continue with the same metrics and add in patients on therapy. And that ultimately, I think where we'll net out over time is just patients on therapy.

Got it. And if I may ask one more question. As I think about the total number of patient adds to rise up over the last couple of quarters, it seems that you're continuing to see growth and average monthly patient adds per quarter over the last three quarters of which we have the data. Can you just talk about sort of the momentum as you see progressing through the course of the year and sort of seeing a kind of an increase by 100 new patient adds per quarter. And in addition, to sort of the previous quarter. And I'm just sort of trying to understand how should we be modeling that and as we go through 2024.

Richard, do you want to comment?

No, it's a great observation. No, I think Ami, first, we're just very pleased with the strong and steady positive growth we've seen with Lumeris. And really just the feedback that we've heard from offices over the last couple of quarters, we've sort of been commenting sort of on the sort of net sort of over 900 patient adds into price up and it's hard to predict exactly where this will go going forward. But we're only reporting on our third quarter of full launch and we think steady positive growth is a good and positive thing. So that trend of those 900 ish adds every quarter. We'd like to continue that trend at a minimum going forward.

Thank you.

David Amsellem, Piper Sandler.

I just have a couple of questions on So and I apologize if I missed these. If you mentioned these details, can you talk to the percentage of Lumera's patients who have actually been on Xywav. That's number one.

And number two, can you talk to the lag time between enrollment and rise up and initiation of therapy and how that lag time differs it between patients who have access and patients who don't have access or don't have good access.

And that's the second question. And then last question is on idiopathic hypersomnia. Is it fair to assume that that's going to be a randomized withdrawal design similar to the registration study that Jazz ran for Xywav? Thank you. Thanks.

Thanks, David. Richard, maybe you could take the first two.

Yes, sure. No problem. Thanks, David. So as far as the percentage of Xywav patients, so the majority of our up to up one launch to date. Right now, the majority of our enrollments in patients initiated are patients who have switched from twice-nightly oxybate. And the majority of those are Xywav patients. So if you take more than 50% of overall enrollments and more than 50% of those, it's somewhere north of 25% to 30% of the patients who have switched from Xywav. And if you look overall as far as the lag time as or the timing to get that initiation through, we have raised that for the enrollment into a patient started. Your point is very different for the two groups. Those who are who have are covered in essence, meet all the prior authorization criteria. Those are averaging. So right about 30 days about a month for us to get those initiated. And those without coverage are are much longer are being measured in months for several. We can still get through any sort of period of time. The range is quite large. But if you don't have a coverage policy does when Stephanie take has are those timelines are measured in months and definitely not in weeks. Greg, I'll turn it over back to you for you.

Yes.

I think the developments that we haven't said explicitly with the trial design is yet that will become public, you know, certainly over the summer as it gets posted on clintrials.gov and whatnot. But what I will say is that there's been a handful of companies who have done all studies in this in this area with full support of FDA. We obviously engaged with FDA on this process, and I think it's fair to say that those proxies are good proxies for how our trial will about what our trial design look like as we go forward.

Okay. That's very helpful. Thank you.

Marc Goodman, Leerink Partners.

Hey, good morning. Two questions. First, Tom, what's your sense of how many patients are actually on oxybate this past quarter, just in total between all the companies involved? And second of all, can you just give us an update on the litigation that's still outstanding? Thank you.

Yes, Richard, dp you want to answer the first one as to our ability.

Sure. Yes. It's a great question, Mark. And the data is becoming a little more fragmented across the different oxybate as we go forward. Right now. So I can't say we have a perfect answer for you today. But what we can say is we definitely see growth in segments that we're really not there prior to EMRs coming to the marketplace. A couple of notable ones are in patients who have previously discontinued twice-nightly oxybate who are now on the rise and also that we have people HCPs writing for Alkermes who had never written for an oxybate previously as well. So we are definitely piecing those numbers together to our claims and reports from other oxybate companies and our overarching view is the market is growing. It's just hard for us to give you an exact number at this stage, but we're definitely working on that.

Yes. And regarding the litigation. I'll just describe it this way. Kind of generally, right. There's a couple of near term hearings upcoming. The APA hearing in terms of the suit against the FDA is scheduled for this Friday at 2 p.m. and in the DC Federal Court. As noted previously, we intervened alongside FDA and the Department of Justice, and we'll make our own arguments in support of the government this Friday. So that's the APA status.

In terms of the Delaware patent litigation, obviously, we had the ruling a couple of months back on our from the jury and the royalties and whatnot. The next stop there is a hearing on June fourth, and that's along this process in Delaware. So we'll be glad to get those two hearings behind us and continue to move forward with our launch in outside of those comments, there probably isn't much else to say right now in terms of what's near term on the litigation.

Thanks much.

Ash Verma, UBS.

Hey, thanks for taking our questions on. I say I'm joining a little bit late so maybe something is repeated, though. Let me know like on under first question, like can you clarify like on this 1Q pricing or inventory dynamics that you saw with Zoom right it seems the patient adds were pretty encouraging, but the revenue came in a little bit lighter versus how the patient numbers are.

And then secondly, so Daryl noted on the Q4 call that there's some of these patients that came off item because it's starting formularies. And for those patients who are in transition, do you think go Lumera's can be an attractive option? And now how many of these patients do you think you stand to benefit from during this year? Thanks.

Tom, can you take pricing and inventory and maybe Richard, you can take the other come.

Yes. I'd say that precedent inventory came in as we expected it to. I commented on an earlier question that average net revenue per patient. We're currently annualizing at about 120,000 per year. The inventory in the channel has consistently been at about a month, and that's going back to when we first launched. So really no surprises there relative to revenue.

Yes. And as far as the changes in formulary, yes, there clearly were checked several changes in formulary in many cases where the branded twice-nightly sodium oxybate and or the EG. were no longer being covered. So those patients have definitely been a focal point for us and they've been going on for a while. So we definitely see that as an offer a unique opportunity going forward here with some of the payers as well for them.

Yes. Thank you.

Oren Livnat, H.C. Wainwright.

Thanks for taking the question. I just want to build on others. We've heard from piecing together Jazz and your commentary today. It does seem clear that you are seeing market growth now that you're driving some market growth from where the market was before you entered. And I'm just wondering, going forward now you're at a 50 50 mix, where do you see that playing out in mix as you go forward? Because I'm seeing, you know, Xyrem is highly eroded now, right? And a lot of those patients have both for AG. and Xywav, our and your product, do you need to take patients away from Xywav to meet your targets? Or are you feeling less through this year, your comfort versus estimates rest on your opportunities in other buckets?

Richard, do you have any maybe opening comments on it?

Yes or yes, it's a great app perspective. So first, we're just very pleased to see continued demand for all three patient segments, the switches, the PUCs discontinuing naives. Going forward, we anticipate to still have robust representation from all three segments and as we've talked before. So yes, there was a little bit of an increase in eight patients. But the proposition for switch patients is as strong as it's ever been if they've been on a twice-nightly sodium oxybate or twice-nightly mix salt version. So we do anticipate a demand coming from all three patient segments going forward. The composition may may switch switch a little bit over time here, but we do definitely anticipate a second all three segments being lever represented for the rest of this year.

Okay. And I was hopping on and off the call. So I apologize if I misheard, but I thought I heard you say 700 patient starts in the quarter. I wasn't sure if I heard correctly I don't believe that's a metric you've given us in the past. Is that does that mean new patients initiated on paid therapy? And do we know what that 700 on top of what before we tried to see if you have, we can piece together of patients on therapy number, if that's wishful thinking, Richard, you want to clarify?

Yes or Yes. So just to be very clear, and we had announced that we had over 1,700 patients initiated cumulatively through the end of the first quarter. We were at about 1,000 at the end of Q4. So that's in Q1, an additional seven over 700 patient initiations that occurred in Q1.

So just to clarify, so the same metric that we've given before. So is just sort of taking the 1,700 and subtracting out how we ended up in 2023.

Okay. Thank you.

Chase Knickerbocker, Craig-Hallum.

Morning, guys. A lot's been asked maybe just a couple around the edges here now that we have more patients from the naive and previously discontinued groups on drug. If we think about persistency, you know, specifically in this these groups on Lumera's or, you know, trends in the larger population of people or patients on drug. Now that they're a bigger portion of your patients have trends and discontinuations at the one kind of two month timeframe ticked up at all from these patients as they become a larger part of the mix, you know, basically as there are higher level of discontinuation with these two patient populations?

Yes, I think yes, thanks for the question. Chase. Yes, no, overall, our discontinuation rate across all three segments is very strong. And if we look at our overall composition, it is lower than what we saw traditionally for twice-nightly oxybate. And, you know, for them naives ended discontinued like it was really just this quarter. Were they sort of stepped up in the representation?

We are seeing slightly lower rates compared to the switch patients, but not meaningfully lower. So it's still relatively early on. So we're going to definitely watch those trends. So as I mentioned it, so it's lower. But what we had sort of articulated is not meaningfully lower at this stage for color.

And then maybe another one for you, Richard. As we think about the pediatric opportunity, obviously, Medicaid is a very important payer. There can you update us on how coverage looks for Lumera's with Medicaid generally today? I know it's likely to be different state to state, but just general color there yet.

We are going through the process, Jason Medicaid, as you know, takes a very, very, very long time. So we haven't really had a significant amount of Medicaid usage come through at this stage. And we'll provide more updates as we make more progress there. And we also do have other assistance programs if patients aren't covered through our patient assistance. But we're at this stage, right now we've got some we're still early in the process as far as and getting our Medicaid coverage.

Got it. And then 85% in commercially covered lives plus there is an impressive number on maybe anywhere else that you're hearing from physicians as far as kind of key sticking points as far as coverage goes as far as making this a where you can kind of block and tackle from here to make this an easy, the easiest as possible kind of writing experience for them.

And then just lastly on the as far as any impact from change the change disruption from cyberattack on the quarter, did we see any change in fill rates there with that kind of part of what might have affected the quarter?

Yes, sure. So as far as that would be to your point, Chase, we're really pleased with our commercial coverage. The team has done an excellent job in securing those nearly 85% commercially covered lives. And I would say in general, we're sort of in the same situation now with other established products where there's just always going to be some bumps in the road for some patients going through it. Now it's have the patients met all the PA criteria and those sorts of things even though that their coverage. So we have an outstanding field reimbursement team that's there to actually help walk offices through every step. And our goal is to really help sort of guide every new patient initiation through with our field reimbursement team to make it as easy as possible for the offices. And as far as our change health common is concerned, thus far, we have not seen any any meaningful impact any of our fill rates being impacted by them.

Got it. Thank you.

Myriam Belghiti, LifeSci Capital.

Thanks for taking my question and congrats on the quarter. I was just wondering if you could provide a little more detail in terms of the distribution of patients initiating therapy. I understand 50% is both discontinued and naive, but can you provide a further breakdown and of those two segments?

Yes, sure, Miriam. Thanks for the questions. So yes, as we said sort of we've seen if we look at the overall gestalt of all of our patients thus far, the majority are switch patients to Q. one was where we saw some more of a balance between the switches and the discontinued flash naive and out those discontinued in naive there, they're moderately balanced, but there definitely has been growth almost quarter over quarter for the naive segment with in that other bucket. So it's a little more balanced in Q1, and we'll sort of see where the trends going forward. But it's been nice to see the naive segment start to tick up here over overtime.

Okay. And the IH. opportunity, are there any important differences between age and narcolepsy patients when it comes to cardiovascular any relevant co-morbidities when it comes to sodium intake.

Richard, any general thoughts?

I'm sure I sort of had, Greg. Yes, in general. No. And you know, these are still generally younger patients less of a Medicare population overall. So a general statement, it would be not not really that we see from our data.

Okay, got it. Thanks for taking my questions.

Matt Kaplan, Ladenburgh Thalman.

Good morning, guys and Pam, and congrats on the quarterly results. Given your success in terms of adding prior Xywav, patience to memorize and how important is it to and have a low sodium offering in the market? And I guess second part of that question is How difficult will be to create a low-sodium, a bioequivalent and the rest?

Yes, I think our view has been has been very consistent on this topic from the beginning, which is that we think all patients should have the opportunity to have an uninterrupted night sleep. And for the subset of patients who are at risk for sodium, if we have the ability to formulate and develop and bring that opportunity to the marketplace. Then then we're certainly going to do the work to trying to trying to accomplish that. So from our perspective, it isn't a requirement it to have a successful French or once it once-nightly Lumera's franchise because we do believe the data on sodium speaks for itself, that being said, we certainly know there's patients out there who could benefit from both a lower sodium version and a once at bedtime Lumera's. So that therefore, we're doing the work in terms of the difficulty of it. It's it's a formulation challenge in and of itself, given how the active moiety performs in this sort of situation. But we certainly have our best and brightest working with our third party partners on this, and we'll look forward to giving an update later this year.

Great. Thanks for taking the question.

Thanks, Matt.

That concludes our Q&A session. I will now turn the conference back over to Greg Divis for closing remarks.

Thank you. And most importantly, thank you, everyone, for joining us today. Thank you for your time. And we wish you a great day and we'll look forward to future updates. And any follow-up during the course of today and over the next couple of weeks, have a great day. Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.