Marinus Pharmaceuticals Inc (MRNS) 2022 Q3 法說會逐字稿

Ladies and gentlemen, greetings, and welcome to the Marinus Pharmaceuticals Third Quarter 2022 Financial Results and Business Update Call. (Operator Instructions) And now it's my pleasure to introduce your host, Sasha Damouni Ellis, Vice President of Corporate Affairs and Investor Relations. You may begin, Ms. Damouni Ellis.

Thank you, and good morning. With me from Marinus are Dr. Scott Braunstein, Chief Executive Officer; Christy Shafer, Chief Commercial Officer; Dr. Joe Hulihan, Chief Medical Officer; and Steve Pfanstiel, Chief Financial Officer.

Before we begin, I would like to remind everyone that some of the statements we are making today are forward-looking statements under the securities laws. These forward-looking statements involve substantial risks and uncertainties that could cause our clinical development programs, future results, performance or achievements to differ significantly from those expressed or implied by such forward-looking statements. These risks and uncertainties and risks associated with our business are described in the company's reports filed with the Securities and Exchange Commission, including Form 10-K, 10-Q and 8-K.

I will now turn the call over to our CEO, Scott Braunstein.

Thank you, Sasha, and welcome to our call. I'm extremely proud of the progress the team has made as a commercial company following the FDA approval of ZTALMY. We initiated the launch at the end of July and are excited to report our early launch metrics for the first time.

In a few moments, I will turn the call over to Christy Shafer to discuss our commercial progress, including strong early demand and payer coverage determinations. We are confident in the investments we have made in our commercial infrastructure and believe we are executing on a successful launch. On the clinical side of the business, we remain focused on advancing our pipeline and prioritizing our 2 Phase-III programs in refractory status epilepticus and tuberous sclerosis complex.

Starting with TSC, we've been actively engaging with the community, including our participation in the recent World TSC conference. After our team's interactions with both clinicians and families, we continue to believe that there is a significant unmet need for individual suffering with refractory seizures associated with TSC and that ZTALMY has the potential to be an important option for these patients and families.

Moving to our IV program. As previously communicated, we continue to implement important amendments to the raise protocol, including expanding the inclusion criteria with the specific goal of broadening the patient population that would be eligible for treatment with IV ganaxolone and accelerating enrollment in the study.

The amended protocol had been adopted across a growing number of clinical sites, and we expect full adoption by year end. Sites continue to express enthusiasm to enroll a larger number of patients under the amended protocol, and I will leave a further discussion for Joe to review in his prepared remarks.

We continue to expect data from the RAISE trial in the second half of next year and data from the Phase III Trust TSC trial in the first quarter of 2024. Similarly, the early-stage programs for both the IV and oral franchises progress as previously discussed.

Finally, some comments on how we plan on bringing ZTALMY to patients and families globally? In Europe, we are on track to submit complete responses to the EMA's Day 120 list of questions for the CDD Marketing Authorization Application by the end of November, which would result in a CHMP opinion by the end of the first quarter of 2023.

I want to acknowledge the entire Marinus team and our partners at Orion Corporation for their tireless efforts to ensure that are responsive to the EMA questions are complete and robust. Together with Orion, our teams continue to prepare for a potential European commercial launch next year.

In addition, we believe that there is a broader global opportunity for ganaxolone and are exploring further ex U.S. commercial alliances. We are targeting a strategic agreement for China by year-end and another important global collaboration in 2023. With the sale of our priority review voucher, the exercise of the contract option by BARDA and completion of the revenue interest financing agreement with Sagard, we have executed on our plans to extend our projected cash runway with non-dilutive financing into early '24, while creating the opportunity to secure a U.S. based source of API to improve our future business fundamentals.

Furthermore, with the equity offering announced last night, which is expected to close on November 10, we now project our cash balance to carry us into the second half of 2024. Additionally, we are delighted to expand our shareholder base and at the same time, thank our existing shareholders for the commitment to the organization.

Upon closing the equity offering, our new cash balance will allow us to continue to invest in the ongoing ZTALMY launch, our development pipeline and prepare for 2 additional potential commercial launches.

Now I would like to turn the call over to our Chief Commercial Officer, Christy Shafer, for updates on the commercial launch of ZTALMY. Christy?

Thank you, Scott, and good morning. I'm pleased to share our early progress on the commercial launch of ZTALMY in the U.S., where we have seen continued high enthusiasm from both physicians and caregivers, reflecting the need in this community and the potential that ZTALMY could provide in seizure management.

We launched ZTALMY on July 28, and by the end of the third quarter, generated $560,000 in net product revenue. During those first 9 weeks of launch, we received over 50 CDD prescription enrollment forms, more than 30 of which were for new commercial patients not previously treated with ZTALMY with the remainder encompassing the transition of all U.S. CDD, OLE and EAP patients to commercial product.

Importantly, these prescriptions are coming from a diverse prescriber base of over 40 unique accounts, including interest from outside of our 265 target accounts. We believe this speaks to the unmet medical need in the CDD community as well as the strength of our digital marketing tools, publication strategy and robust education and awareness efforts ahead of launch.

In addition to a strong level of new patient enrollment and prescriber activity, we're also encouraged by the early trends we're seeing from payers with approximately 40% of CDD patients with completed prescription enrollment forms on reimbursed therapy by the end of the third quarter.

As a reminder, we expect approximately 60% of the CDD patient population will access coverage through both fee-for-service and managed Medicaid with the remaining 40% being managed commercially. As of November 1, ZTALMY received positive coverage criteria from over 15 payers, representing approximately 70 million lives, and we expect the majority of the remaining coverage statements in the fourth quarter.

In addition, 57% of all U.S. commercial plans have already extended label coverage to ZTALMY. We continue to believe payers appreciate the impact of the disease on patients and their families as well as the unmet medical need within this CDD treatment landscape and ZTALMY's profile as the first and only product indicated for seizures associated with CDD.

The field interactions are being supported by our educational speaker programs as well as 2 product theaters, one which took place in October at the Child Neurology Society Annual Meeting and the second planned in December at the American Epilepsy Society Annual Meeting. Our formal ZTALMY Speakers Bureau commenced in December with a meaningful number of programs planned through the end of next year.

We will continue to educate and raise awareness within the CDD patient community, starting with the CDD community webinar early next year. We have also been actively engaging with leading patient advocacy organizations, which have proven to be an important source of 2-way communication. These groups help share information within the patient community and provide a channel for feedback to ensure we're meeting the evolving needs of the CDD communities.

We're grateful for the insight and support with the IFCR CDKL5 alliance and the LouLou Foundation provides the families living with CDD. We are very pleased with our early launch progress and are grateful for the impact we believe we are making on CDD patients and families. We are excited to build on our strong commercial foundation and look forward to continuing to work with patients, caregivers, physicians and payers over the coming months.

As a final update to further our commitment and continue our progress towards building an acute care hospital franchise, we have brought on an additional commercial leader to my team, Kristin Rudisill, who has a strong track record of success and hospital launch experience to support the development of our U.S. commercial strategy for status epilepticus.

I'll now hand the call over to our Chief Medical Officer, Joe Hulihan to discuss our ongoing development programs, including the data we continue to generate and present a scientific conferences, which remain critical to supporting our launch and driving awareness of ZTALMY.

Thank you, Christy, and hello, everyone. First, I'd like to provide an update on our IV programs in status epilepticus and dive a bit deeper into where we stand with the raised protocol amendment we announced in June this year.

As we've previously shared, we broadened the inclusion criteria to permit randomization of patients who have been treated with high doses of IV anesthetics such as propofol for up to 18 hours rather than excluding any patients who have been treated with high-dose IV anesthetics, regardless of how brief the administration of these agents may have been.

We believe this is an important change because it will allow for the enrollment of patients transferred to the ICU from other hospitals to the emergency room, 2 of the most common pathways for identification of refractory status epilepticus. The original protocol had excluded many of these patients who represented a significant proportion of the Phase II trial population.

I think it's also important to mention that the patients enrolled prior to implementation of the amendment would still meet eligibility criteria under the revised protocol. As Scott mentioned, the majority of RAISE sites have implemented the protocol amendment with the remaining sites expected to transition to the revised protocol by year-end.

Investigators have expressed considerable enthusiasm about the potential of the changes in the protocol to allow recruitment of a greater number of eligible patients. We continue to expand the number of participating RAISE study sites in the U.S. and plan to expand the centers in Canada and Australia, all of which we expect will be activated under the amended protocol.

In August and November, we held investigator meetings in the U.S. to educate our sites on the updated protocol, and we continue to work closely with them to support timely study enrollment. We recently reviewed the baseline characteristics of the Phase III RAISE trial patients. We're pleased to share that as of September, the baseline characteristics of the Phase III patients closely resemble those of the patients enrolled in our Phase II RSE study.

Participants in both studies are roughly the same age, a similar proportion to have a history of epilepsy and they have similar mean baseline seizure burdens and status epileptic severity. These demographics are outlined on Slide 29 of our November corporate deck.

In addition, in September, we presented data from the Phase II RSE study and an overview of the ongoing RAISE trial at the London-Innsbruck Colloquium on status epilepticus. The presentation received a positive response from those in attendance who are leading researchers and clinicians in the field. They expressed that the RAISE trial represents an advance in clinical research on refractory status, a condition for which there is no data from rigorously conducted placebo-controlled studies.

We also had several Marinus representatives attend the Neurocritical Care Society Annual Meeting in October, where we presented 2 posters with data from the IV ganaxolone program, one of which was designated as a distinguished poster presentation. There, we had the opportunity to meet with many investigators and other team members to RAISE study sites.

Additionally, neurocritical care physicians from other leading centers expressed interest in participating in the trial. Looking to the future of the RAISE study, we will continue to actively monitor what's working well at a site level and where we can provide additional support for trial recruitment and execution.

There's also the potential for expansion of the age range of eligible patients. Currently, the trial can enroll patients ages 12 years and over. We will shortly be submitting a request to the FDA with supporting data to potentially allow us to include younger patients.

Given the higher incidence of status epilepticus in children under 12, this change could expand the pool of eligible patients and further support timely study enrollment. As previously disclosed, we have the option for an independent data monitoring committee to conduct an interim analysis when 2/3 of participants have completed the study, approximately 82 patients.

At that time, if the interim is conducted, the committee would recommend either stopping the study for efficacy or continuing to full enrollment. While conduct of the interim analysis may affect the sensitivity of a study to detect a treatment effect should it continue to full enrollment, we have designed the interim analysis for the RAISE study to have a minimal effect on the efficacy outcome of a fully enrolled trial.

We're pleased with the changes we have made to support enrollment of the RAISE trial and continue to expect top line data in the second half of 2023.

Planning continues for a separate Phase III RSE trial, the RAISE 2 study to support a marketing authorization application in Europe. The protocol is finalized and enrollment is expected to begin in the second half of 2023. This trial will not only serve as a critical piece of the European approval strategy. We believe it also has the potential to further broaden the indication for IV ganaxolone in the U.S.

Moving on to the Phase II RESET study in established status epilepticus. We have activated the first site and expect to begin U.S. enrollment this year, and we continue to advance the exception from informed consent process for additional sites.

Now I'd like to turn to our oral ganaxolone programs. As Christy stated in her remarks, we continue to work to increase awareness of ZTALMY across the scientific and medical community. On October 13, we presented 2 posters at the Child Neurology Society Meeting from our pivotal Phase III MARIGOLD study, including open-label extension data that showed continued seizure reduction over a 2-year period.

Although a 24-month data was available for only 16 of the 54 patients remaining in the open-label extension. The reduction in major motor seizure frequency for this subset continued to improve with a median reduction of 53% at the 24-month mark versus a 30.7% reduction at the conclusion of the double-blind phase.

The discontinuation rate was about 30% during the first year of the open-label phase, but declined to about 10% during the second. These data in total suggest that patients who remain on treatment long term may demonstrate continued reductions in seizure frequency. We also presented data from a post-hoc analysis from the anxiety depression and mood scale that was administered during the Marigold study, which showed that ZTALMY was associated with improvements in certain domains of behavior, specifically reductions in the compulsive behavior and manic hyperactive components of the scale.

While these findings would require confirmation through further research, they suggest that there may be potential benefits of treatment beyond seizure reduction. Moving to our Phase III Trust TSC trial in tuberous sclerosis complex, we are pleased to share that we are actively screening patients. We're targeting 85 clinical sites, predominantly in the U.S. and Europe, with activations in Canada and Israel expected by year-end and Australia in the first half of 2023.

We're encouraged with the high level of enthusiasm in the medical community for this trial and continue to anticipate top line data in the first quarter of 2024.

Finally, I'd like to provide you with an update on our second-generation formulations. As shared last quarter, we saw promising initial results from a Phase I single ascending dose study of the first of our reformulation candidates, which we believe support advancing it further in clinical development.

Participants in the Phase I study received reformulated oral ganaxolone at doses ranging from 100 to 900 milligrams with the current oral suspension given as a reference control. The PK profile of the new formulation showed increases in overall exposure relative to the maximum concentration or Cmax. Therefore, this would potentially allow for upward titration beyond the dose of the current oral suspension to further optimize efficacy without producing a concomitant increase in Cmax-related adverse effects such as somnolence.

The next steps in the evolution of this program include enrollment of an additional Phase I study cohort to assess single doses above 900 milligrams to determine whether we can achieve additional increases in overall exposure relative to peak concentration. We expect the data to be available by the end of the first quarter of 2023.

We will also be performing PK modeling to determine the next steps in development of this formulation, including the need for a study with multiple ascending doses, which we would be in a position to initiate in the first half of 2023. We anticipate selecting one of the second-generation ganaxolone formulations for a Phase II study in Lennox-Gastaut syndrome to begin in 2023.

We Lennox-Gastaut syndrome is highly treatment refractory, and we believe the new oral formulation has the potential to provide more consistent and predictable exposure to ganaxolone, which we expect would allow physicians to individualize dosing to achieve an optimal response for each patient.

Additionally, we've developed several pro-drug candidates that could offer further improvements in efficacy, tolerability and dose individualization as well as operational and manufacturing efficiencies. Lead oral and IV prodrug candidates have been selected for additional IND-enabling studies with Phase I data targeted for 2024.

We look forward to continuing to raise awareness within the medical and scientific community over the coming months. And we'll have a robust presence at the American Epilepsy Society Annual Meeting in December, including presentations of data from our oral and IV ganaxolone programs during the general sessions as well as during Marinus Scientific exhibit.

As a clinical team, we remain focused on our Phase III clinical programs in status epilepticus and tuberous sclerosis complex, advancing our reformulation prodrug candidates as well as our continued support for ZTALMY and CDD.

Now I'll turn the call over to our CFO, Steve Pfanstiel, who will provide you with a financial update.

Thanks, Joe, and good morning to everyone. Before discussing our financial results for the third quarter of 2022, I would like to provide a few key financial highlights our prior call. As previously touched on by Scott in his opening remarks, we have been incredibly active on the deal-making front over the past several months, adding over $150 million in funding to our cash position in the near term.

Specifically, in August, we closed on the sale of our rare pediatric disease priority review voucher, receiving gross funding of $110 million. That was followed in September with an additional $12 million of increased funding from BARDA as they exercised the first contract option to support our API onshoring initiatives. Just recently in October, we completed a royalty monetization agreement with Sagard Healthcare, which provided an upfront payment of $32.5 million for future royalty payments related to U.S. revenues associated with ganaxolone, including ZTALMY.

We ended the quarter with cash and cash equivalents of $168.2 million, which does not include the funds received from the Sagard revenue interest financing agreement. Adding the net funds from that recent deal results in a cash balance of approximately $200 million, which is projected to be sufficient to fund our operations into the first quarter of 2024, inclusive of maintaining the minimum cash balance of $15 million required under our credit agreement.

As Scott highlighted, upon the closing of the equity offering announced last night, we project our cash balance to carry us into the second half of 2024. I'll now move into our financial results for the third quarter of 2022, and I'm particularly excited to share the results of our first quarter with ZTALMY product sales in the U.S.

For the third quarter of 2022, we recorded ZTALMY net product revenues of $560,000, which represents just over 2 months of actual commercial launch. This revenue consists of ZTALMY product sales to our single specialty pharma partner Orsini and includes an estimate of gross to net deductions inclusive of expected Medicaid discounts.

Focusing on BARDA revenues only, we recognized revenues of $1.8 million and $5.1 million for the 3 and 9 months ended September 30, 2022, respectively, as compared to $1.1 million and $4.8 million in each of the same periods in the prior year. Research and development expenses increased to $19 million and $58.5 million for the 3 and 9 months ended September 30, 2022, respectively, as compared to $18.4 million and $55.5 million for the same period in the prior year.

The change was due primarily to costs associated with increased R&D headcount and start-up of the Phase III Trust TSC trial. Selling, general and administrative expenses increased to $13.4 million and $42.2 million for the 3 and 9 months ended September 30, 2022, respectively, as compared to $9.5 million and $26.7 million for the same periods in the prior year.

The primary drivers of the change were preparation for and launch of ZTALMY and additional support for scale-up of the company's operations. As previously mentioned, the third quarter of 2022 included a net gain of $107.4 million related to the PRV sale. As a result, the company reported net income of $73.3 million and $14.5 million for the 3 and 9 months ended September 30, 2022, respectively, as compared to net losses of $19.5 million and $70.5 million for the same periods in the prior year.

These totals include noncash stock-based compensation expense of $3.9 million and $11.1 million for the 3 and 9 months ended September 30, 2022, respectively, as compared to $2.8 million and $10.9 million for the same periods in the prior year.

Cash used in operating activities was $91 million for the 9 months ended September 30, 2022, as compared to cash used in operating activities of $33.7 million for the same period in the prior year. As a reminder, our 2021 operating cash flow total includes $30 million of funding from the signing of our European collaboration agreement with Orion.

Now I'll turn the call back to Scott, who will provide concluding remarks.

Thanks, Steve. This has been a busy and exciting time for the Marinus team, and we are pleased with the early launch results, the progress we've made toward a potential approval in Europe next year and the organization's research efforts. We look forward to building on this commercial foundation with ZTALMY and advancing our 2 Phase-III programs over the next 12 months.

To conclude, I would like to mention that Marinus will be holding an investor breakfast Monday morning, December 5 at AES. We will be meeting with a variety of physicians and efficacy organizations over the course of the weekend and hope to see there live Monday morning.

This meeting will give you the opportunity to meet with our commercial and scientific leadership who have been integral to this exciting launch. Sasha will provide more details on the event over the coming weeks. Operator, can you now open the call to questions.

Yes. Thank you. (Operator Instructions) We'll take our first question from Marc Goodman with SVB Securities.

Good morning, Marc, you may be muted. Operator we don't hear anything.

I don't hear Mr. Goodman either. Mr. Goodman, if you can hear us, please requeue. We will move to our next question from Joseph Thome with Cowen and company.

Maybe a first one on the ZTALMY itself. Good to see the sales start rolling in. It looks like consensus for the year is hovering around $2.5 million. I guess based on what you know of the launch so far, is this a number that you're comfortable with? And can you comment on any stocking patterns that we should be aware of? And then second, on RSE. I saw the upper end of the enrollment for both the Phase II and the Phase III with 88 years and then you discussed potentially going down to kind of 12 years or below. Is there any difference in response either to therapy or which is normal kind of care based on this sort of broad (inaudible) that'll be helpful?

Steve -- why don't I turn it over to Steve for the ZTALMY question, and then we'll let Joe take the RSE question.

Good morning Joe. Thanks for the question. With regard to ZTALMY revenues, we aren't providing guidance for '22 or '23. So I won't speak to that specifically. But as we said, we're really focused on the number of patients on therapy. We're focused on driving access across government and commercial payers. We're really extreme -- extremely happy with our progress on both those fronts. We feel like we have a really strong trajectory there in just this first couple of months of launch.

And additionally, as we mentioned, we'll be launching speaker programs later this year. We're going to have a strong presence at AES. So we're really bullish on our launch trajectory here, but we're going to hold off on guidance for now. In terms of inventory impact, we are working with a single specialty pharma partner.

We have a really tight distribution thought process. Think of our warehouse and our specialty pharma partner being within just a few hours of each other. Given that, we measure the inventory impact on the order of weeks, not months. That's going to be the case for the foreseeable future. So a very limited inventory stocking impact, and that will be the case moving forward.

Steve, before we turn over to Joe, maybe you want to remind Joe Thome and the audience about our -- what we talked about breakeven and how we're feeling about that relative to the first few months of launch.

Yes, Joe, just to add a little more color in terms of the number of scripts and the trajectory. We've said that we think this $25 million investment in the CDD commercialization is really a 2-year to breakeven type of investment. So by the middle of '24, we think we should be annualizing at a sales run rate of around $30 million that with a 90% gross profit margin on the product should cover that $25 million commercial investment. We think it will be a pretty steady build over that time frame. And we think that, that breakeven of $30 million happens probably at around 240 million to 250 million patients -- or 240 - 250 patients on therapy.

Great. And Joe, before I turn over to you, I just wanted to comment a little bit for Joe Thome and the folks in the audience that the RAISE trial itself, primarily we're using adult sites, but we have about 10 sites who are in the pediatric age range, typically 12 and above. And so the extension of the trial to younger patients would primarily affect those sites that right now have a limited 12 and above population.

But in terms of our expectation and the success of the drug in younger populations, I'll turn it over to Joe. And Joe, you may also want to comment on some of our experience in SRSE with ganaxolone.

Yes. No, absolutely, Scott. Yes, we don't -- I think what you were asking about, Joe, there was a little bit of background noise, but it was about the response in children compared to adults. And we don't expect children to do certainly any worse and at least as well as adults. And we have had some -- we've treated now about 14 patients under emergency INDs for super refractory status, and we've had some great responses in the kids.

And so we expect the kids to enroll in the trial to do well. And actually, this amendment should give us a good boost in terms of the eligible population because in terms of kids, status is more common in kids under 12 than in adolescents. So we're hoping to go down to age 2 and we're sending a request to the FDA very shortly about that.

Perfect.

And we will take our next question from Andrew Tsai with Jefferies.

All right. Congrats on all the progress. So maybe one on CDD, another one on RSE. So on the CDD launch, 50 patients seems pretty strong as of September 30. You've previously said not expectable. Is that still the case for you guys? And just curious, where is the total patient count today relative to the 50 as of September 30.

And then secondly, for RSE, can you just remind us the latest and greatest on what you expect the placebo response rates to be for the 2 co-primary endpoints and why that should be the case. So percent of patients having a cessation within 30 minutes and then percent of patients not moving to IV anesthesia. That would be very helpful.

Thanks Andrew, Joe you want to take the first question on RSE and then we can turn it over to Steve and Christy on CDD.

Yes. So we were very conservative in terms of sample size estimation for the trial. We got an idea of the placebo response from our investigators and our advisory boards. And for the first co-primary endpoint, response within 30 minutes. I think the placebo response, frankly, I hate to be overconfident, but will be negligible.

The thought that status would stop on its own within a half hour, I'm confident about that. So conservatively 10% placebo response potentially. The second co-primary endpoint, escalation to IV anesthesia. Again, we surveyed our sites. And they said, we're getting the profile of the patient coming into the study. That's where we got the estimate. The sample size calculation is based on a 45% placebo response and a 75% -- I mean 75% placebo response that is progression to IV anesthesia and 45% progression in the ganaxolone arm, I mean, I think that's extremely conservative. And so the 30% delta. And actually, that gives us 90% -- over 90% power.

And we talked about the interim analysis. We also -- that's also well powered. At the point we get to 82 patients, I think that still gives us a very high amount of power to effect the treatment difference.

Steve, you want to kick off on the numbers, and then we'll turn it over to Christy for any other comments?

Yes. Sure, Andrew. I think in terms of the bolus, maybe I'll start there. We had just over 20 patients in our EAP open-label program that would come over time. So it's not a huge bullet that we did from that program. And I'm not sure if that's what you were specifically referencing. But I think the other piece that's really important is when we had talked about this previously we had said, it could take 3 months or more on average for patients to work through the reimbursement process. We know payers will put NDC of the blocks or other things in place, which just can take some time to work through.

But I think our payer team has done a really phenomenal job of really being out there, getting good patient access. I think our pricing strategy has paid off extremely well. And in fact, we're seeing about 50% of our patients being reimbursed and approved within 30 days. Some are going to take longer, but we're really proud of what we've been able to do.

So these patients are just going to come in over time as they work through that payer process. But to have that many patients on after 9 weeks, I think, shows the work we've done on the payer side. Christy, I don't know if you wanted to add anything there?

Yes. Thanks for the question, Andrew. I think that Steve hit it on the head there. However, just to reiterate those numbers 20 patients in our EAP and OLE programs with just over 30 patients that were naive to ganaxolone. Of those 30 patients, we saw a nice balance of when we saw those enrollment forms. So there certainly was no bolus of them in the first couple of weeks, and we've continued to see interest that is equal to that, that we saw early in the launch days. So only a few weeks in, but we're encouraged by the effort as well.

(Operator Instructions) We will take our next question from Joon Lee with Truist Securities.

This is Austin on for Joon. Just wondering if you've seen an uptick in enrollment for site that has implemented the new third quarter RAISE, given that it should be negative recruit out of patients? And then maybe on the previous question, if you can just talk a little bit more about the 3 months or more towards the reimbursement process. Just a little bit of color on that would be interesting.

Look, I'll take the first one on the RAISE trial. We couldn't feel more confident about where we are today relative to even 6 or 9 months ago. I think there are a lot of factors playing an important role here. First, I think the hospital system was really overrun a year ago. We've had several hundred personnel changes in hospitals where the study has been taking place, and we really feel like that is now stabilized to a meaningful degree. And we've talked about that on the call. So we really kind of feel from an overall hospital standpoint, the worst is behind the hospital systems.

I'd say secondly, we have done everything in our power to really help with those hospital systems. We've added several teams to the core clinical team, including 3 great PharmDs who are interacting with pharmacists and personnel.

Say, thirdly, Joe and the medical team has been out on the road meeting with key sites. And so we feel as though all those things together, we really now have a significant number of sites that can be important contributors to the study. We're seeing an increased number of sites enrolling patients in the study.

This is always a tricky one because it is an incident study. And so we have -- we don't want to get too ahead of ourselves in terms of our timing and what we talk about publicly, but we certainly are enthusiastic about where we are today. I feel like the team has made great progress. Joe has really taken a lot of his own and working closely with sites and making sure we're getting them through the mechanics of what we knew would be a complex study.

So I feel as though we're in a better place than we've been in a very long time, probably the early days of COVID. I think we have more tight engagement than we've had. We continue to see encouraging signs on enrollment, and we're confident about ending the study later this year. Joe, any other comments you want to make that I missed?

No. I mean I think the investigators are very positive about this amendment and universally. This is going to allow, especially the patients who come in from other hospitals or emergency departments that were excluded before that come into the study. So we've gotten great feedback on it, and we're really optimistic about the impact it's going to have.

Great. And Christy, do you want to talk a little bit about the reimbursement process?

Absolutely. Just taking a quick step back here. Steve mentioned that we could take up to 3 months or more to get through the enrollment process. And we mapped that out just based on a couple of typical payer hurdles early in launches, such as NDC blocks and really lack of published payer policies and coverage. What I would like to say is that we're super proud that we've been able to accelerate this payer access and drive an efficient payer adjudication process that we're already seeing approximately half of our scripts covered within 30 days or less. So with an ultra-rare disease population, sometimes there are medical necessity requests and all of this takes a little bit of time, but we're proud of the current access that we have and the speed at which we've been able to get to them.

Chris, I'm just going to add on, I think it's really been a great relationship with not only our payer team, our medical science liaison team, but the payers and our advocacy groups. I think the payers really understand that in these ultra-orphan conditions that have genetic diagnosis or other DEEs. There are not a lot of options for patients. And I think that we've done a lot on the education side. Our advocacy groups have other advocacy groups like the TSC alliance as well. And so we really think this is a business that has sustainability given the unmet need.

So I think the early days have taught us a lot of different things, not only about CDD, but the viability for us as a really differentiated orphan treatment for these genetic disorders and more refractory encephalopathies. Next question, operator.

We will take our next question from Brian Skorney with Berger.

This is Luke on for Brian. So I think you said 40 unique accounts for the 50-something completed forms. To your knowledge, do the accounts you've reached thus far still have patients to work through? Or do these existing accounts have forms filled for the majority of their patients? And then just one more, you note about like 40% of those completed enrollment forms were on therapy by the end of 3Q. You gave favorable -- you gave color on favorable coverage determinations to the beginning of November -- especially since you're saying about half we're getting reimbursed within a month at this point, if I heard correctly, could you provide a general idea of what additional proportion beyond that 40% have moved on to reimbursed therapy through early November?

Yes. Luke, it's a good question, and I'm going to turn it over to Steve and Christy. But you make a good point that people should really remember as we go through these numbers. We're reporting the numbers due the end of September, which means if a patient got a new script the third week in September, they're in that 40% number, right? So we're incredibly excited that early days, early prescriptions, the carriers of both on the commercial side and even on the Medicaid side, have made coverage determination. And we continue to see that on a very regular basis. And quite honestly, the vast majority of scripts are not being delayed, not being denied. And so we could not be more enthusiastic from that standpoint.

Christy, maybe I'll turn it over to you for any other comments and Steve, if you want to add.

Yes, happy to. So Scott really pinpointed the fact that these prescriptions are coming in week by week. And so because we've already gotten to half of them adjudicating within 25 to 30 days, we're super proud of that. However, what you're not seeing is those that came in late in September and even those that have come in now. I'd love to hit on about those 40 accounts that we're seeing right now that have engaged in the process. We're seeing an equal number of unique health care providers that have prescribed as well.

So not only do we have 8 CDD centers of excellence that are across the United States, we also have a target base of about 265 accounts that we're targeting today. What this tells us is that I think we got our targeting right early on here in the launch days. And with this representation, I think that, that breadth of interest, not only from accounts but physicians as well really dictate success.

I think we've yet to see a physician that says I don't have any more patients because we have an incidence of about 1 in 40,000, we'll continue to see patients that not only age into 2 and above for our indication, but there's going to be new patients in the database as well as we go on through the years.

And maybe I'll just make one other comment. I think that's important. If you think about the 2 big buckets here, commercial payers and Medicaid, we're clearly making tremendous progress on the commercial side and good steady progress on Medicaid. And as we've always guided to in this launch, we're confident that by early '23 -- and again, Medicaid has a routine and a time line, which is pretty ingrained both from a mandatory or optional side. But by that first quarter '23, we'll have the vast majority of Medicaid patients with policies in place. So we are right where we want to be. I would say we're pleasantly ahead of schedule on the reimbursement side. And again, I think what we're really focusing on is the cadence of new patients going forward. And then as we've kind of made it clear on this call, we're really happy where we are both from the diversity of those patients, and they're not really coming solely from our centers of excellence.

Steve, anything we missed that you wanted to add?

No. I know I think we did all the key topics there.

Great. Let's -- operator, why don't we take the next question?

Our next question comes from Douglas Tsao with H.C. Wainwright.

So just maybe following up on the commercial launch. Just, it sounds like, you've seen prescriptions coming from 40 accounts. I'm just curious, does that represent 40 unique prescribers? Or do some accounts have multiple prescribers? And I'm just curious in terms of the total universe of 265 hospitals, how many have you had an engagement with so far and identified patients that they have and potentially put them on therapy at some point over the next 12 months?

Chris, you want to kick it off. Yes.

Absolutely. Thanks for the question. So just to go back to it, 265 targets that we have balanced approach on we've got targets that we're mapping out between A through D, so A-B-C-D here on their level, not only of influence across the country, but then number of patients that we believe that they could be potentially treating.

So of those 40 accounts, I just mentioned that we have an equal number of breadth of physicians. Some accounts do have more than one physician that are treating patients. This year we tend to have a multidisciplinary approach for CDD patients. So you'll have several physicians there. We also have accounts that work very distinctly with not only their nurse practitioners, but other ancillary staff that focuses on these patients. So we're getting a large breadth of not only accounts but physicians and health care providers as well that again, is encouraging and tells us that our targeting strategy has worked.

Christy the specific question from Doug, and I think I can say this, but you should clarify. When we say accounts, we are seeing unique physician practices, not unique physicians. Is that correct? Because that was Doug's question?

That is correct. But not only are there unique accounts, but they are unique physicians as well.

Did that get the (inaudible) your question.

No it did. And I guess, also, I'm just curious, to the extent that do you have a sense of -- is there a spectrum in how many patients each account is treating? Or is it fairly evenly distributed?

A lot of that information. Sorry, Scott. A lot of that information we're gathering now. Our MSL team did a significant amount of work early in the days to be able to map where patients are. We're confirming a lot of that data and also covering additional patients across the United States. But right now, we do not have a specific amount of patients at each individual account. And that's information that we will continue to inform

Maybe I'll just add, again. I think we could have expected early days of this launch to only come from the 8 COEs that have roughly 20 to 50 patients each, but that would have been very logical. And certainly, 1 or 2 COEs that were big enrollers in the Phase III have been very big commercial supporters. But that's the minority and not the majority.

Then we have our next layer of accounts, which Christy walked you through those roughly 250 key accounts. But what's been interesting is we've seen scripts not only at COE, not only of those 250 accounts, but some other accounts where physicians have read the Phase III publication, downloaded the prior authorization form from our website and submitted it effectively spontaneously without meeting the representative. So I think we need to give a little kudos to our marketing team who's really created a great website, a great informational portal for physicians -- and we know within our discussions with the IFCR and other alliance groups that many of these patients are treated on a more local basis, and they're only going to their centers of excellence once or twice a year.

So it's clear to us that physicians are not necessarily waiting for those visits. Some are actively prescribing today. We've had several thousand hits from both caregivers and physicians on our website. And so we really feel we're getting some great traction early days.

And again, I'll thank our publication team and (inaudible) team on driving that Phase III publication of great editorial in the Lancet, inclusion in the global CDKL5 guidelines as a recommended therapy. All those things have, I think, really broadened the reach of the drug in early days.

Again, early, and we know that these families and patients have a lot of medical problems, see a lot of physicians. And so we know there's going to be some rate in great limiting steps for families to get to physicians. But early days, again, we could not be happier with the depth and breadth of the launch.

Is that helpful?

Yes. Noted, Scott. And just as a follow-up because I think your point is an important one about not just seeing volumes from the COEs. I'm just curious, do you have a sense -- I mean, I think you mentioned the website and knowledge of the Phase III. Do you have a sense of like is there a pattern for folks who -- and I know it's difficult because obviously, you're not necessarily interacting with them. But for the scripts that are just kind of, for lack of a better price, just kind of a peering in the system, do you have a sense of where that awareness is coming from?

I'm going to turn it over to Christy, who as a reminder, has spent many years of her career in the rare orphan disease space. So Chris, maybe I'll turn it over to you Christy who has a reminder has spent many years of her career in the rare orphan disease. So, Christy maybe I'll turn over to you for maybe general comments about the ultra-orphan space and what you think we're seeing early days here?

Yes, absolutely. So again, we had enormous kind of warm entry into the COE, but a good amount of our time was spent out in the community, understanding how these patients are moving between the COE and the community. So we have a minimal amount of prescriptions that are, I would say, just showing up rather without any involvement from either our medical affairs team or a direct promotional efforts from our sales team. So right now, again, to Scott's point of understanding how these patients are being treated when they're showing up in the COE versus their community setting.

We're mapping that out right now. But again, this is a direct process by which a good promotional effort from not only our marketing, medical affairs and promotional efforts from our sales team.

Thanks Doug.

And we will take our next question from Jay Olson with Oppenheimer.

Congrats on all the progress. Now that you sold the PRV, can you talk about how you plan to invest the $110 million proceeds? And how are you prioritizing asset allocation? And then could you share any thoughts on business development opportunities to diversify your portfolio, especially since there are a number of assets available at relatively low valuations.

Steve, do you want to talk a little bit about the balance sheet, and then I'll talk a little bit about assets.

Absolutely. In terms of the use of the proceeds, and obviously, in addition to the PRB, we brought in $30 million plus from the Sagard deal and obviously, the offering we announced. All of those will go into continuing investment in our commercialization of ZTALMY. Our continued investment in our clinical development, which includes the 2 Phase III trials we have ongoing the RSE trial and the Trust TSC trial, plus we'll start a second European-based RAISE trial next year. That will be a Phase III as well.

And then general expenses in terms of working capital, capital expenditures as we build up our IV infrastructure as well. So those funds will kind of support all of those activities. In terms of prioritization, I think we've been clear, the commercialization of ZTALMY use is incredibly important.

Obviously, we're extremely focused on the Phase IIIs we have going with the RSE readout expected second half of next year in Q1 for TSE. Those are just obvious critical priorities from an investment perspective. Scott, I'll turn it back to you.

Thanks Steve. Jay, I think what you're hearing from us is that we are having -- we're just really enjoying working in the ultra-orphan disease space. I think working with the advocacy groups and helping these patients get therapies for various severe conditions. -- gets a lot of us through the day with a lot of excitement. There are challenges in the ultra-orphan disease business. And I think the epilepsy space even more complicated of these patients, multiple medical conditions. But to my earlier point, I mean, we're really seeing very strong reimbursement from the community from our payers and the opportunity to really share this information with physicians broadly.

So we love this model, and we would love to expand our presence in the space. We think there are some really great targets out there. We're spending more and more time looking at other mechanisms of action. We're certainly still very invested in our second-generation program, which we think can drive increased efficacy with a great side effect profile, which is so critical in these patients who are really suffering from so many other medical conditions.

But we're certainly happy that we can take some real resources and look at other assets in the space. And I think Christy and her team has done a great job on the commercial side. And it would be great to think about adding another product to the portfolio over time. I think we're incredibly focused on this launch and what we are very hopeful will be an important TSC launch in '25 and of course, the RSE launch around the same time.

So I think Christy seems to have a lot on her plate. We're thrilled to have a new commercial lead on the IV side of the business, is going to complement our sales leadership on the oral side tremendously well.

So most of our time today is looking at relatively early stage assets nothing late stage in the epilepsy side. And I think we've become pretty good at developing these drugs, and I feel incredibly fortunate that we have Joe, Dr. Ian Miller, who is fantastic, really a strong scientific team. We have another epileptologist on the team who's been just critically important on our payer side.

So that's a really strong intellectual firepower and we're doing our best to look at all the compounds that are out there. And obviously, the markets have been pretty tough on all the companies in the biotech space. We're certainly seeing the ultra-orphan neuro diseases, for lack of a better being left behind. We've had a lot of inbound calls from companies who have broad portfolios and can't find the resources to work in the ultra-orphan neuro space.

So we do think there will be some opportunities for us over time. We've got to stay focused on our execution on our late-stage programs. But I think we'd love to do more in the space. We all really enjoy it. Thanks for the question, Jay. Operator, we'll go to the next question.

We have no further questions at this time. So I would turn the call back to Mr. Scott Braunstein for closing remarks.

Well, thank you, and thanks, everyone, for dialing in today. Thank you for all the questions. We really could not be more excited about where we stand today at early days is the ZTALMY launch and the progress we're making on the clinical side as well as the expanded pipeline and now the extended cash runway. So we really appreciate all your support and your time today and look forward to seeing you live. Have a good day, everyone.

Ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.