Concord Biosciences Holdings, Inc. (NASDAQ:HRMY) Q3 2023 Earnings Convention Name October 31, 2023 8:30 AM ET
Firm Members
Luis Sanay – Head, IR
Jeffrey Dayno – President & CEO
Jeffrey Dierks – Chief Industrial Officer
Kumar Budur – Chief Medical Officer
Sandip Kapadia – CFO
Convention Name Members
Francois Brisebois – Oppenheimer
David Amsellem – Piper Sandler
Eason Lee – Needham & Co.
Charles Duncan – Cantor Fitzgerald
Jason Gerberry – Financial institution of America
Graig Suvannavejh – Mizuho Securities
Corinne Jenkins – Goldman Sachs
Operator
Good morning. My title is Ashley, and I will be your convention operator right now. Right now, I wish to welcome everybody to Concord Biosciences Third Quater 2023 Monetary Outcomes Convention Name. All participant traces have been positioned on mute to stop any background noise. After the audio system’ remarks, there might be a question-and-answer session. [Operator Instructions] Please be suggested that right now’s convention name could also be recorded. [Operator Instructions]
I’ll now flip the decision over to Luis Sanay, Head of Investor Relations. Please go forward.
Luis Sanay
Thanks, Operator. Good morning, everybody, and thanks for becoming a member of us right now as we evaluate Concord Biosciences third quarter 2023 monetary outcomes and supply a enterprise replace.
Earlier than we begin, I encourage everybody to go to the Traders part of our web site to seek out the supplies that accompany our dialogue right now, together with a reconciliation of our GAAP to non-GAAP monetary measures. At this stage of our life cycle, we imagine non-GAAP monetary outcomes higher characterize the underlying enterprise efficiency.
Our audio system on right now’s name are Dr. Jeffrey Dayno, President and CEO; Jeffrey Dierks, Chief Industrial Officer; Dr. Kumar Budur, Chief Medical Officer; and Sandip Kapadia, Chief Monetary Officer and Chief Administrative Officer.
As a reminder, we might be making forward-looking statements right now, that are based mostly on our present expectations and beliefs. These statements are topic to sure dangers and uncertainties. Our precise outcomes could differ materially, and we undertake no obligation to replace these statements even when circumstances change. We encourage you to seek the advice of the chance elements referenced in our SEC filings for extra particulars.
I would now like to show the decision over to Dr. Jeffrey Dayno. Jeff?
Jeffrey Dayno
Thanks, Luis, and thanks, everybody, for becoming a member of our convention name right now. Q3 2023 was the strongest income quarter in Concord’s historical past. The tempo of progress in web income and common variety of sufferers on WAKIX is never seen in yr 4 of commercialization of an orphan uncommon illness product. What’s driving this sturdy continued progress of WAKIX in narcolepsy is the meaningfully differentiated product profile, the sturdy underlying affected person demand, the sizable market of 80,000 sufferers recognized with narcolepsy within the U.S., and the constant executional excellence of our industrial group.
I’m pleased with this accomplishment and much more vital, I’m happy that our efforts proceed to assist much more individuals residing with narcolepsy. I additionally know that there are a lot of extra individuals residing with narcolepsy who may probably profit from WAKIX and that’s what we’re targeted on.
For the third quarter of 2023, we reported WAKIX web income of $160.3 million, a rise of 37% year-over-year. We imagine that the huge market alternative, which stays in narcolepsy, together with the differentiated product profile of WAKIX gives us the flexibility to develop the franchise for years to return, and we stay assured that WAKIX represents a $1 billion plus alternative in grownup narcolepsy alone, and we’re effectively on our manner.
Along with our very sturdy industrial efficiency in Q3, we additionally proceed to advance our present pitolisant life cycle administration packages in addition to broaden our pipeline and diversify our portfolio past sleep wake. Kumar will present further particulars on our medical growth packages later within the name.
Earlier this month, we reported high line outcomes from the Part 3 INTUNE research of pitolisant in sufferers with idiopathic hypersomnia or IH. Whereas the first endpoint didn’t attain statistical significance in the course of the randomized withdrawal part, a strong medical impact was demonstrated within the open-label part of the research and virtually 90% of the sufferers who accomplished the trial elected to proceed into the long-term extension research, which is ongoing.
I wish to reiterate our dedication to the IH affected person group as we’re actively pursuing a sign for pitolisant and IH and are optimistic in our skill to carry a non-scheduled therapy choice to sufferers residing with IH and the well being care professionals who deal with them. We imagine that based mostly on the totality of the proof that we’ve seen to this point together with the pitolisant receiving orphan drug designation for IH, there is a chance for us to work with the FDA on a path ahead.
As soon as we’ve accomplished our evaluate of all the info, we are going to have interaction with the company with this objective in thoughts. Our present lifecycle administration packages for pitolisant characterize about 100,000 recognized sufferers within the U.S. So if profitable, these may contribute as much as an extra $1 billion of income to the WAKIX franchise.
Transferring to the continued work with our companion, Bioproject, on new formulations of pitolisant with the objective to probably lengthen the pitolisant franchise with new IP out past 2040. We’re advancing these packages into the clinic, and Kumar will present extra element on them later within the name.
One other key part of our progress technique is buying new belongings by enterprise growth, to broaden our pipeline past WAKIX, and diversify our portfolio past sleep wake. On that entrance, I am excited to report that we just lately closed the acquisition of Zynerba Prescription drugs and have added the investigational product Zygel to our pipeline. This acquisition represents a superb strategic match for Concord, with growth packages targeted on orphan uncommon neuropsychiatric issues with vital unmet medical wants.
With Zygel, we added a novel product candidate and two late-stage growth packages that might probably launch in the course of the WAKIX lifecycle. Zygel is at present in a pivotal Part 3 trial for sufferers with Fragile X syndrome with one other alternative based mostly on optimistic Part 2 knowledge in sufferers with 22q deletion syndrome. Each of those indications, if profitable, characterize a big market alternative with the potential to serve 80,000 U.S. sufferers residing with Fragile X syndrome and one other 80,000 with 22q deletion syndrome.
We have now welcomed former Zynerba members to the Concord staff and are excited to work with them to advance the Zygel growth packages and convey a possible new therapy choice to sufferers residing with orphan uncommon neuropsychiatric issues with excessive unmet medical wants. As for enterprise growth, we aren’t stopping with the Zynerba acquisition, however stay very energetic with a devoted enterprise growth staff, which is frequently assessing the BD panorama.
We stay targeted on orphan uncommon neurology belongings and our belongings and different neurological ailments the place we are able to leverage our current experience and infrastructure. We’re searching for belongings throughout a spread of growth phases, together with each early and late stage with the potential to launch each throughout and after the WAKIX lifecycle.
And at last, given our continued confidence within the underlying energy of the enterprise and our conviction within the progress potential for the corporate, this morning, we introduced a brand new share repurchase program of $200 million. Given our monetary flexibility, we’re dedicated to deploying capital to maximise shareholder worth.
In conclusion, Q3 2023 was the strongest income quarter in Concord’s historical past and our enterprise is robust. We’re dedicated to bringing a non-scheduled therapy choice to sufferers with IH and are advancing each side of our enterprise, together with our pipeline packages and enterprise growth efforts. I’m very pleased with the dedication and dedication throughout our group as we stay targeted on growing and commercializing revolutionary therapies for sufferers residing with uncommon neurological ailments who’ve unmet medical wants.
I’ll now flip the decision over to Jeffrey Dierks, our Chief Industrial Officer, to offer extra particulars on our sturdy third quarter industrial efficiency. Jeff?
Jeffrey Dierks
Thanks, Jeff. Q3 was one other sturdy quarter for WAKIX. We had the strongest income quarter in our historical past with continued progress and momentum in our underlying enterprise fundamentals and high line efficiency metrics.
Internet gross sales for the third quarter have been $60.3 million, which represents a 37% progress from the identical quarter prior yr and the primary quarter of over $150 million in web gross sales. We proceed to see sturdy double-digit progress in web gross sales for WAKIX in yr 4 of our commercialization, which displays the excessive curiosity of WAKIX the narcolepsy market. The constant progress within the enterprise reinforces our long-term perception that WAKIX represents a $1 billion plus alternative in grownup narcolepsy alone.
I might prefer to share a couple of key highlights from our efficiency within the third quarter on Slide 5. The typical variety of sufferers on WAKIX within the third quarter elevated to roughly 5,800, a rise of roughly 350 common sufferers sequentially from what we reported final quarter. This spectacular progress in common sufferers within the third quarter was pushed by sturdy high line demand and new affected person begins that offset typical summer time seasonality, yielding quarterly outcomes in line with the outcomes we noticed in Q2.
The expansion in common sufferers on WAKIX speaks to continued product adoption. And most significantly, the massive remaining recognized alternative that we proceed to faucet into every quarter because the market permits. Sturdy affected person curiosity and prescriber adoption proceed to be key drivers of the expansion in common variety of sufferers on WAKIX. We noticed continued strengthening of the WAKIX prescriber base in Q3, each in depth and breadth of prescribing.
The variety of distinctive prescribers on WAKIX elevated once more within the third quarter. And importantly, we proceed to see progress within the WAKIX prescriber base broaden past well being care professionals enrolled within the oxybate REMS program. As well as, we noticed progress within the depth of prescribing inside the oxybate enrolled well being care professionals, even with the supply of latest and generic oxybate choices.
As we proceed to share the meaningfully differentiated product profile of WAKIX and the distinctive characteristic of being the one FDA-approved therapy for EDS and cataplexy that’s not scheduled as a managed substance, gives broad clinic utility and appeals to a broader narcolepsy well being care skilled viewers and affected person base, which is a driver of our continued progress.
We proceed to see significant penetration and progress throughout the roughly 9,000 narcolepsy treating well being care skilled prescriber base. And up to date market analysis carried out in October of this yr helps our view of continued future progress in WAKIX prescribing.
Analysis carried out with roughly 70 well being care professionals with or with out expertise with WAKIX prescribing reveals the next: 100% of the well being care professionals surveyed with WAKIX medical expertise acknowledged they might prescribe the identical or elevated prescribing of WAKIX within the subsequent six months; greater than 40% of these well being care professionals surveyed who had not prescribed WAKIX so far indicated the intent to prescribe WAKIX within the subsequent six months; almost 60% of these well being care professionals who prescribed WAKIX so far, acknowledged they have been more likely to advocate WAKIX to friends and colleagues.
And in line with earlier waves of analysis, one of many highest performing drivers and differentiators for WAKIX was the distinctive characteristic is the one non-scheduled therapy possibility. The supply of latest and generic oxybate possibility hasn’t impacted the continued progress or current sturdy payer protection for WAKIX given the meaningfully differentiated product profile. Our skill to succeed in and educate the broad narcolepsy treating well being care skilled universe, as tapped into the total recognized grownup narcolepsy affected person alternative, offers us confidence in continued progress and the long-term progress potential for WAKIX.
In abstract, I am excited by the sturdy industrial efficiency within the third quarter. In truth, the strongest income quarter for Concord so far. We noticed a powerful progress of 37% in web gross sales versus the identical quarter prior yr. We noticed sturdy progress within the common variety of sufferers on WAKIX to roughly 5,800, a rise of roughly 350 sequentially from what we reported final quarter.
We noticed continued enlargement and strengthening of the WAKIX prescriber base inside and past oxybate REMS enrolled well being care professionals, and payer protection stays sturdy even with the supply of latest and generic oxybate choices. I admire the dedication and affect to your complete industrial staff and the fervour that they’ve for our enterprise and the narcolepsy affected person group. This sturdy efficiency offers us confidence within the long-term progress potential for WAKIX and reinforces our perception that WAKIX represents a $1 billion-plus alternative in grownup narcolepsy alone.
I wish to now flip the presentation over to Kumar Budur, our Chief Medical Officer, to offer an replace on our medical growth pipeline. Kumar?
Kumar Budur
Thanks, Jeff. Good day, everybody, and thanks for becoming a member of the decision. Transferring on to our medical growth pipeline, as proven on Slide quantity 7. Beginning with our growth program in idiopathic hypersomnia, we noticed a strong medical impact within the Part 3 INTUNE research, with virtually 83% of the sufferers responding within the preliminary 8-week open-label therapy interval with a median of 9.4 factors enchancment in [indiscernible] scores. As well as, virtually 90% of sufferers elected to take part within the long-term extension research.
Whereas no statistically vital distinction was noticed between the pitolisant and placebo teams on the first endpoint of ESS on the finish of four-week double-blind randomized with all interval, optimistic occasions favoring pitolisant have been noticed throughout all [indiscernible] endpoints, together with the idiopathic hypersomnia severity scale, which approached statistical significance at a p-value of 0.06 in addition to on different endpoints, together with PROMISE SRI, Fosc 10 and sleepiness share questionnaires (ph).
The protection profile of pitolisant in sufferers with idiopathic hypersomnia is in line with the established security profile of pitolisant and no new AEs have been noticed. Virtually 90% of the sufferers who accomplished double-blind randomized with all interval elected to take part within the ongoing long-term extension research, and we proceed to gather the protection and effectiveness knowledge from this research. We stay dedicated to the idiopathic hypersomnia group and are targeted on pursuing a sign for pitolisant in sufferers with idiopathic hypersomnia.
We’re within the means of conducting an intensive evaluate of the total knowledge set, which is able to inform the following steps for this system. We imagine that based mostly on the totality of the proof that we’ve seen to this point, together with pitolisant, receiving orphan drug ack designation for idiopathic hypersomnia, we sit up for participating with the FDA.
In Prader-Willi syndrome, we acquired FDA alignment on the protocol for the Part 3 [indiscernible] research in sufferers with PWS, which is able to fulfill the necessities for each the registrational trial and now pediatric exclusivity as effectively. We anticipate research initiation within the first quarter of 2024. In myotonic dystrophy Kind 1 or DM1, we’re on observe for high line knowledge from this Part 2 proof-of-concept segmentation research within the fourth quarter.
As for pediatric narcolepsy, we’re on observe to submit a supplemental new drug utility to the FDA for a sign in pediatric narcolepsy within the fourth quarter. Along with our present lifecycle administration program for pitolisant, we proceed to make progress on new pitolisant-based formulation with our companion Bioproject with a objective to generate new IP and lengthen the pitolisant franchise past 2040.
Let me take a second and take you thru the technique for this new pitolisant-based formulation and supply an replace on the standing of this system, as proven on Slide quantity 8. We have now superior the primary formulation into the clinic this quarter. The primary formulation is an enhanced pitolisant-based formulation designed to ship an optimized PK profile and better dosage energy. The chance right here is to increase the pitolisant franchise past 2040 with the potential for brand spanking new IP and discover further indications. This formulation can have a full growth program.
The second formulation is on observe for development into the clinic later this quarter. The second formulation is a pitolisant-based modified formulation with a possible for medical differentiation. The chance here’s a fast-to-market technique for sufferers with narcolepsy inside the rated lifecycle. This formulation can have an abbreviated growth program. We’re additionally happy to broaden and diversify our pipeline with the latest acquisition of Zynerba. We closed the acquisition nearly three weeks in the past, and we sit up for offering a extra detailed replace on the Zygel program at our subsequent earnings name. We have now seen a seamless transition of actions and continued engagement with the medical trial website and investigators.
The Zynerba acquisition as one other revolutionary product candidate, Zygel. Zygel is the primary and solely pharmaceutically manufactured, artificial cannabidiol, devoid of PSC and formulated as a patent-protected formation improve cell for transdermal supply to the pores and skin into the calculatory system. Zygel is manufactured by an artificial course of in a GMP facility. Subsequently, it’s devoid of PSC and has the potential to be a non-scheduled product if accredited.
Just like WAKIX, Zygel represents a portfolio and a product alternative and is at present in a pivotal Part 3 medical trial for sufferers with Fragile X syndrome referred to as the RECONNECT trial. Moreover, Zygel was studied in an open-label Part 2 proof-of-concept research in sufferers with 22q Deletion syndrome generally known as the INSPIRE trial. Each of those indications is profitable, represents a big market alternative with the potential to serve 80,000 U.S. people with Fragile X syndrome and one other 80,000 people with 22q Deletion syndrome.
To conclude, we’ve made nice progress, not solely in advancing our pipeline, but in addition increasing and diversifying it with the addition of Zygel. I sit up for sharing further updates as we proceed to make progress on our medical growth packages. On behalf of Concord, I wish to thank all sufferers and their households who’re collaborating in our medical trials in addition to medical investigators and website personnel for his or her efforts and dedication in serving to us to advance our growth packages.
I am going to now flip the decision over to our CFO, Sandip Kapadia, for an replace on our monetary efficiency. Sandip?
Sandip Kapadia
Thanks, Kumar, and good morning, everybody. This morning, we issued our third quarter press launch and filed our 10-Q, the place you will discover the small print for our monetary and working outcomes. Our monetary efficiency can be proven on Slide 9, 10 and 11. We’re happy to report one other quarter of sturdy income progress, improved profitability and continued money technology. We additionally made continued progress throughout lots of our enterprise priorities, together with finishing the Zynerba acquisition, refinancing our debt at a decrease value of capital in addition to executing on our share repurchase program. Total, we stay assured within the continued progress within the enterprise.
So let me take a second to take you thru the small print of our monetary outcomes. For the third quarter of 2023, we reported our strongest income quarter in firm historical past, with web revenues of $160.3 million in comparison with $117.2 million within the prior yr quarter, representing a progress of 37%. Efficiency within the quarter displays the continued sturdy underlying demand for WAKIX. Within the third quarter, we did see a partial restoration in commerce stock ranges of a few days in comparison with the second quarter, which we famous on our earlier Q2 earnings name.
Within the third quarter of 2023, working bills have been $63.5 million in comparison with $82.3 million within the prior yr quarter. The decrease working bills have been primarily pushed by the $30 million licensing payment incurred final yr as a part of the 2022 LCA with Bioprojet, partially offset by bills associated to the commercialization of Latex and the development of our medical growth packages. Working revenue improved for the third quarter 2023, working revenue of $64.5 million in comparison with $11.9 million within the prior yr quarter.
Non-GAAP adjusted web revenue for the third quarter of 2023 was $58.8 million or $0.97 per diluted share in comparison with $58.1 million or $0.95 per diluted share within the prior yr quarter. The prior yr quarter included a $74.5 million profit associated to a valuation allowance and a $30 million licensing payment associated to the 2022 LCA with Bioproject. We imagine non-GAAP adjusted web revenue higher displays the underlying enterprise efficiency. Please see our press launch for a reconciliation of GAAP to non-GAAP monetary outcomes.
For the third quarter of 2023, we ended the quarter with $438.4 million of money, money equivalents and funding securities on the stability sheet. The stability displays continued money technology with $63 million in money from operations, partially offset by share repurchase actions. Throughout the third quarter, we executed on our share repurchase program and repurchased roughly 1.4 million shares of widespread inventory for $50 million.
As you heard from Jeff, this morning, we introduced a brand new share repurchase program of $200 million. The brand new program demonstrates our continued confidence within the underlying energy of our enterprise and our conviction within the progress potential for the corporate. Our sturdy stability sheet permits us not solely to execute on a return of capital however preserve flexibility to additionally execute on enterprise growth. For us, it isn’t an both/or situation and we’re in a lucky place, given our profitability and rising money stability.
that, we anticipate quarter-over-quarter progress for WAKIX in This autumn. We additionally anticipate to proceed to put money into R&D and SG&A as we advance our medical growth program, which now consists of Zygel and helps the continued commercialization of Latex. As a reminder, we paid roughly $60 million in This autumn for the acquisition of Zynerba utilizing money from our stability sheet.
Pending ultimate dedication, we anticipate to account for the transaction as an asset acquisition, which might lead to a big onetime cost within the fourth quarter, together with associated restructuring prices. Total, we stay assured in WAKIX represents a $1 billion-plus alternative in grownup narcolepsy alone, and we’re effectively on our manner given the sturdy outcomes this quarter, with the potential to contribute as much as an extra $1 billion if accredited in different present lifecycle pitolisant packages.
In conclusion, we’re more than happy with our sturdy monetary efficiency year-to-date and stays effectively positioned for continued progress.
And with that, I might like to show the decision again over to Jeff for his closing remarks. Jeff?
Jeffrey Dayno
Thanks, Sandip. In abstract, Q3 2023 was the strongest income quarter in Concord’s historical past, and we proceed to execute on our progress technique throughout the enterprise. We stay targeted on rising our core enterprise and serving to much more grownup sufferers residing with narcolepsy with WAKIX, advancing our pipeline throughout each our pitolisant and Zygel medical growth packages.
Working with our companion, Bioproject, on new formulations to increase the pitolisant franchise to assist much more sufferers residing with uncommon neurological ailments. Constructing out our pipeline additional by enterprise growth efforts as a way to create a strong portfolio of orphan uncommon illness belongings masking all phases of growth and deploying capital to maximise shareholder worth by our share repurchase program and enterprise growth actions. This concludes our deliberate remarks for right now. Thanks for becoming a member of our name.
And I’ll now flip the decision again over to the operator to facilitate the Q&A session. Operator, are you able to please open the decision to questions?
Query-and-Reply Session
Operator
Thanks. [Operator Instructions] We’ll take our first query from Francois Brisebois. Please go forward. Your line is open with Oppenheimer.
Francois Brisebois
Hello. Thanks for taking the questions. Congrats on the quarter right here. So simply a few issues, Sandip talked about it. And so when it comes to the commerce stock, small points or factor within the second quarter. I used to be simply questioning how a lot did that create type of a lift possibly on this quarter, clearly, not the affected person provides, however possibly when it comes to the fee, in case you have a look at it that manner? And simply possibly the affect there going ahead, you talked about you are anticipating progress within the fourth quarter, quarter-over-quarter. Is that progress when it comes to affected person provides or when it comes to revenues? Thanks.
Jeffrey Dayno
Yeah. Good morning, Frank. Thanks for the query. I’ll have Sandip present some extra clarification on that for you.
Sandip Kapadia
Yeah. Frank, as we talked about final quarter, we did see a partial normalization of stock that we noticed a little bit of a draw down final quarter. As we talked about, final quarter, it was a couple of week, that was in Q2. And we noticed roughly about half a bit recovered on this quarter. So once more, it is a small affect general. We really feel that it is vital to maintain buyers up to date on the affect usually. As you realize, these fluctuations quarterly are fully — a part of our enterprise is determined by the place the quarter ends and so forth. With respect to This autumn, we proceed to anticipate high line progress from revenues in addition to we proceed to anticipate affected person provides. After which possibly, Jeff Dierks, you wish to remark type of on the expectations on This autumn?
Jeffrey Dierks
So Frank, I’d reiterate, sure, we did see a advantage of a few days of stock, however you couple that with the sturdy high line efficiency in new affected person begins. That basically drove that highest quarter of web income that we have seen since our launch. And as Sandip defined, you usually see a little bit little bit of an incremental construct in stock on the finish of the yr, which is conventional throughout the stock, however we’re anticipating progress throughout all of our key elementary metrics, common variety of sufferers, distinctive prescribers, in addition to web gross sales.
Francois Brisebois
Okay. Thanks. And simply when it comes to the brand new formulation, are you able to simply possibly stage set, remind us of the IP scenario and the progress on — I do know you touched on it, however possibly the progress on the brand new formulations and what they may probably do just a bit extra shade on the 2040 metric. Thanks.
Jeffrey Dayno
Sure, Frank, simply to make clear. By way of the IP scenario with WAKIX or the brand new formulations?
Francois Brisebois
Sorry, I imply simply the IP with WAKIX and what new formulations may do to it?
Jeffrey Dayno
Positive, Okay. So when it comes to the IP scenario with Wakix, so we imagine within the energy of our IP. And that goes out based mostly on the polymorph patent with patent time period extension to March of 2030. After which I believe, as you are conscious, we’re pursuing pediatric exclusivity which would offer an extra six months’ safety out to September of 2030.
So that’s our base case on our IP scenario for Wakix. Turning to the brand new formulations, I am going to have Kumar kind of touch upon these efforts. However by design the intent there and what we’re working was producing new IP guards to boost the novel formulations based mostly on pitolisant. And Kumar can present a little bit extra shade on these packages.
Kumar Budur
Positive. Thanks, Jeff. Hey, good morning, Frank. Thanks for the query. Yeah, we’re engaged on two formulations with our companion, Bioprojet, and happy to share the replace on this. We have now made substantial progress over the previous few months. The primary formulation is an enhanced pitolisant-based formulation that’s designed to ship an optimized PK profile and a better dosage energy, however the alternative right here actually is to generate new IP and lengthen the pitolisant franchise past 2040. We’re searching for new indications with this explicit formulation, and this formulation can have a full medical growth program.
That’s formulation one. By way of formulation two, we’re on observe to advancing this formulation into the clinic towards the latter half of this quarter. It is a pitolisant-based modified formulation with a possible for medical differentiation, and the chance here’s a fast-to-market technique for sufferers with narcolepsy inside Wakix life cycle. This formulation can have an abbreviated growth program. So general, two formulations making regular progress.
Francois Brisebois
Thanks.
Jeffrey Dayno
Thanks, Frank.
Operator
Thanks. We’ll take our subsequent query from David Amsellem with Piper Sandler. Please go forward.
David Amsellem
Hey, thanks. So obtained a pair. First, when it comes to prescriber dynamics, are you able to speak to your penetration of Wakix amongst suppliers who should not enrolled within the oxybate REMS? Simply wished to get a way for the way you are doing in that piece of the prescriber viewers. In order that’s primary.
After which quantity two, simply again to the formulations. Simply given the setback in IH, wouldn’t it be intuitive to suppose that you’d pursue IH — to the extent you will go ahead in IH, would you pursue it with one in every of these new formulations? How ought to we take into consideration that? Thanks.
Jeffrey Dayno
Yeah. Thanks, David. I am going to ask Jeff Dierks to reply to the primary query in regards to the prescriber dynamics, the prescribers outdoors the oxybate REMS.
Jeffrey Dierks
Positive. So David, we’re extraordinarily happy with the expansion within the new prescriber base of Wakix. And clearly, as we proceed so as to add new prescribers, the overwhelming majority of them or these healthcare professionals that aren’t enrolled within the oxybate REMS program, as we have disclosed, there’s about roughly 5,000 of these healthcare professionals that aren’t enrolled within the oxybate REMS program. And we proceed to see significant penetration in that group.
I believe on the final earnings name, David, we talked about being about 20% penetrated inside that viewers. It is nearer to about 25%. However we proceed to see very regular progress and adoption inside that viewers, and it actually offers us and affords us the chance based mostly on the general profit/threat profile, the broad medical utility of the product for Wakix, that we are able to faucet into that broad 9,000 approximate healthcare skilled prescriber universe, and we are able to faucet into the total recognized narcolepsy affected person alternative, and that offers us a ton of confidence. As we have a look at Wakix represented $1-billion-plus alternative in grownup narcolepsy alone.
Jeffrey Dayno
Yeah. So David, let me deal with the second query as regards to new formulations in IH. So the brand new formulation of pitolisant, the considering there may be, clearly, we’ve an revolutionary product with a novel mechanism of motion and the chance for formulation work in new IP to increase the pitolisant franchise out, not simply past 2030, however 2040. On the subject of idiopathic hypersomnia, let me be clear when it comes to the place we’re coming off the INTUNE research.
We noticed a strong medical impact within the trial within the open-label part, and we’re going by the total knowledge set and reviewing that which is able to inform our technique when it comes to approaching the FDA as we proceed to pursue the indication for IH based mostly on the INTUNE research and people knowledge. So at this level, we anticipate to finish the evaluate of the info by the tip of November, after which we’ll put together briefing doc, assembly requests quickly after that and method the company.
We stay dedicated to the IH affected person group. We’re actively pursuing a sign as a nonscheduled kind of product and the chance given the present therapy choices for sufferers with IH. So we aren’t trying to new formulations, however we are going to pursue the IH indication based mostly on the work that we have accomplished to this point.
David Amsellem
Okay. Thanks.
Operator
Thanks. We’ll take our subsequent query from Ami Fadia. Please — with Needham and Co. Please go forward.
Eason Lee
Hello. Good morning. That is Eason Lee on for Ami. Congrats on the Wakix progress within the quarter, and thanks for taking our questions. Two, if I can. Traditionally, it seems like type of the sequential provides in common sufferers on Wakix from Q2 to Q3 end up much like that from Q3 to This autumn. Any elements this quarter you’d spotlight, such that we might not anticipate the same dynamic to happen this yr? After which possibly my second query is, as we’re nearing the tip of the yr, would like to know your newest considering on probably offering 2024 Wakix gross sales steering on the subsequent earnings replace or in any other case. Thanks.
Jeffrey Dayno
Mr. Eason, thanks for the query. Jeff Dierks, on the primary one.
Jeffrey Dierks
Positive. So Eason, with respect to fascinated by This autumn with respect to common variety of affected person progress provides per quarter, so once more, we proceed to be extraordinarily happy with the continued progress within the common variety of sufferers and our clearly underlying sturdy enterprise fundamentals. We noticed a sequential add of roughly 350 common sufferers from what we reported in Q2. And I believe the spectacular progress that we’re seeing within the common sufferers within the third quarter was pushed by sturdy top-line demand and new affected person begins that offset the everyday summer time seasonality that we often see yearly.
And it speaks to actually not solely continued product adoption, however most significantly, the massive remaining recognized affected person alternative that we proceed to faucet into because the market permits. Whereas we’re not offering forward-looking steering, we’re happy with the momentum heading into This autumn, and we do anticipate and totally anticipate continued progress for Wakix for the rest of ’23.
Jeffrey Dayno
Okay. Sandip, any feedback or ideas?
Sandip Kapadia
I believe our steering was the pure level, as you talked about, was to contemplate steering can be early subsequent yr. However at the same time as you suppose again and look again at our efficiency during the last yr and the place analyst estimates are, usually, we have been fairly constant general, absent, clearly, stock affect fluctuations quarter over quarter. We stay assured in Wakix being a $1 billion plus in narcolepsy alone, grownup narcolepsy, and we’re persevering with — that kind of is our mid- to long-term steering, if you wish to name it. After which we additionally see the chance to contribute further $1 billion, if accredited, in different present packages.
So we’re assured within the long-term progress potential for Wakix. And with respect to most likely short-term steering and issues like that, I imply, like I stated, we might take into account early subsequent yr can be the pure level.
Eason Lee
Okay. Thanks, Sandip.
Sandip Kapadia
Thanks.
Operator
Thanks. We’ll take our subsequent query from Charles Duncan with Cantor Fitzgerald. Please go forward.
Charles Duncan
Sure. Good morning, Jeff and staff. To begin with, congratulations on a pleasant industrial quarter, and thanks for taking our query. I did not have any industrial questions that I wished to ask, so I am going to simply ask you on the pipeline, and that’s primarily relative to the INTUNE research. We just lately carried out a KOL name, they usually have been — that KOL was fairly enthusiastic in regards to the outcomes that he noticed. And so a query that I’ve for you is once you go to the company, what would be the query? Will it’s round presumably conducting a brand new research? Or will it’s round evaluating the info within the INTUNE research alone and its open-label extension? Thanks.
Jeffrey Dayno
Hey. Good morning, Charles. Thanks in your query and kind of the suggestions that you just acquired on the INTUNE research. I imply, I believe that the method with the company is de facto, first, as I discussed, and I am going to flip it to Kumar, taking a look at all the info and understanding, clearly, the sturdy medical impact that we noticed upfront within the eight-week open-label part and virtually 90% of sufferers electing to enter the long-term extension, that continues on. And we additionally proceed to gather long-term security and effectiveness knowledge that we may use to go to the company, along with the info from the INTUNE research.
The method is to construct a powerful case as regards to the totality of the proof popping out of the trial, together with the pitolisant-received orphan drug designation for IH that the FDA granted. And you then have a look at the present therapy choices. You have a look at general profit/threat. You have a look at the necessity, and we construct the case and talk about that with the company, the place it may match into therapy choices. So that’s the general method. And Kumar, I ask in case you have any further ideas on technique.
Kumar Budur
No. I believe that you just lined all the pieces. Thanks.
Jeffrey Dayno
Okay.
Charles Duncan
Okay. After which, as a follow-up, I suppose you most likely cannot present any data on the persistence inside that IH open-label extension. However I suppose I am questioning, if you consider the mechanism and utility in IH, how would you suppose that compares to, say, narcolepsy and the potential for persistence being higher in IH than even it’s in narcolepsy? Thanks.
Kumar Budur
Good morning, Charles. Thanks for that query. However narcolepsy and idiopathic hypersomnia, each of them are central issues of hypersomnolence, and there may be knowledge — sturdy knowledge to counsel upkeep of impact in sufferers with narcolepsy based mostly on all of the medical trials that we’ve accomplished to this point. Particularly, with the INTUNE research, within the open-label a part of this research, we noticed a strong medical affect.
I imply, eight to 9 sufferers who accomplished the eight-week open-label therapy interval have been respondent based mostly on ESS of higher than or equal to a few standards, which is rather more stringent than the standards from the American Academy of Sleep Drugs. And in addition, we noticed an enormous magnitude of response, 9.4 level drop from baseline to the tip of the eight-week open-label therapy interval.
And to your query in regards to the long-term extension research, as Jeff alluded to earlier, virtually 90% of the sufferers elected to take part in that research, and we proceed to gather the info on the protection and the efficacy parameters. We do not have these knowledge but, and we’re planning to have our knowledge lower someday towards the tip of November, the place we are going to begin seeing the protection and efficacy knowledge from the long-term extension research as effectively.
Charles Duncan
And might we assume that assembly occurs in, say, presumably the primary quarter? Clearly, it relies upon, not solely in your schedule, however is that type of the goal?
Kumar Budur
Good query, Charles. Proper now, we’re targeted on an intensive evaluate of the info which is able to inform the technique once we meet the FDA. Proper now, we’re planning to finish all of the evaluation and evaluation by the tip of November. And instantly after that, we are going to begin engaged on the assembly request, briefing doc, and request a gathering with the FDA in early first quarter of 2024.
Jeffrey Dayno
Yeah, Charles. I’d simply add, so yeah, so we’re shifting kind of expeditiously. That is clearly a excessive precedence for us, so we’re shifting shortly to evaluate all the info, put within the assembly request, and get in entrance of the company to have this dialogue as we actively pursue the indication for pitolisant in IH.
Charles Duncan
Thanks.
Operator
Thanks. We’ll take our subsequent query from Danielle Brill with Raymond James. Please go forward.
Unidentified Participant
Hello. That is Daniel Nee filling in for Danielle. Congrats on the sturdy quarter. We have now a query on — if there’s new updates on the citizen petition. And the second query on that, we see that there isn’t a reporting of sufferers on Wakix exiting this quarter, and there is solely common sufferers reporting. And is that this the brand new conference for the long run incomes as effectively. Thanks very a lot.
Jeffrey Dayno
Positive. Thanks in your query. Jeff, why do not — when it comes to exiting variety of sufferers, do you wish to simply deal with that first? After which I am going to communicate to the residents petition.
Jeffrey Dierks
Positive. So I imply, the prevailing variety of sufferers for this quarter was roughly 5,900 sufferers. We disclosed exiting sufferers within the earlier two quarters to actually hate — assist to border the dynamics in these quarters. You are likely to see the everyday payer seasonality in Q1. And clearly, we had a list dynamic in Q2. However we have all the time traditionally reported common variety of sufferers as a result of we imagine that common variety of sufferers on Wakix is one of the best metric to evaluate the continued progress and uptake of the model, on condition that it takes under consideration new affected person begins, persevering with sufferers, and all of the affected person remedy habits, compliance, persistency, discontinuation charge.
And I believe that what we’re seeing in that sturdy progress in common variety of sufferers demonstrates, not solely the sturdy curiosity within the narcolepsy group, however actually highlights that enormous remaining recognized affected person alternative that we proceed to faucet into because the market permits.
Jeffrey Dayno
Okay. Thanks, Jeff. And so far as — let me come again to your query on the residents petition and simply an replace on that. In order it’s possible you’ll recall, the FDA issued a response to the residents petition in September to satisfy its statutory requirement of 180-day response. And at the moment, it stated it wanted extra time to evaluate the CP. So it is a commonplace response that the FDA makes use of in additional than 50% of the instances, and it is what we anticipated. So whereas we first wished to attend to provide the company an opportunity to conduct its evaluate, now that there isn’t any outlined time line for the FDA to reply, we’re taking motion to try to get the FDA to challenge a ultimate response in a well timed method. We’re evaluating these choices with regard to finest help and work with the company in issuing a ultimate response.
It is our place that Wakix is the one nonscheduled therapy possibility accredited for grownup sufferers with narcolepsy that it could be a disservice for sufferers and healthcare professionals to proceed to be kind of impacted by the unfounded allegations within the residents petition concerning the protection and efficacy of Wakix which may presumably type of affect the therapy choices. So we affirm the regulatory validity of the Wakix NDA. We stay assured within the general threat/profit profile of Wakix and based mostly on the sturdy medical growth program and the post-marketing security knowledge that we undergo the FDA regularly and the FDA critiques. So so far, the company has not contacted us concerning the residents petition.
However as we go ahead, we are going to work with the company and welcome their shut consideration and evaluate as a result of we’re assured that when they evaluate the unfounded allegations in mild of all the knowledge out there to them, it is our place that they’ll finally deny the petition based mostly on its lack of advantage. And that’s kind of the replace on the residents petition.
Unidentified Participant
Very useful. Thanks very a lot.
Jeffrey Dayno
Thanks.
Operator
Thanks. We’ll take our subsequent query from Jason Gerberry with Financial institution of America. Please go forward.
Jason Gerberry
Hey, guys. Good morning. Thanks for taking my questions. First one for me, simply in your annual — or I suppose your web gross sales seize per affected person, your common affected person quantity, it seems just like the income seize is stepping up, supplied you a pleasant tailwind on a year-over-year foundation and has type of frequently been grinding upwards. I used to be questioning in case you may speak in regards to the extent to which that is a development or simply seasonality as a result of once we have a look at the hole between first half kind of web gross sales seize per affected person versus second half, that hole continues to widen.
And I am questioning how we take into consideration that going into 2024. After which simply second one on the share buyback, simply questioning the way you’re fascinated by precedence of the buyback versus M&A. I’d suppose that the buyback is principally the place you see opportunistic alternatives to defend the inventory, one, if it is weak, after which M&A possibly a precedence over buyback. However I’m wondering in case you can make clear that. Thanks.
Jeffrey Dayno
Yeah. Thanks, Jason in your query. Sandip, do you wish to communicate to income per affected person first?
Sandip Kapadia
Yeah. Positive. I imply, look, I believe you see the overall — often yearly, first half, particularly within the first quarter, that tends to go down as you’ve increased progress in web deductions and affect of that, after which it improves as we go all year long. By way of gross and web deductions, usually ranges off by the third and fourth quarter of every yr. And customarily, the important thing change versus prior yr, we’re up about 8% on that metric, and we took a value enhance of about 10% early this yr. So take plus or minus the affect of the value enhance, in addition to some stock fluctuations, primarily will get you to that 8% that we noticed yr over yr.
Jeffrey Dayno
And the best way to consider it going ahead and customarily, like I stated, gross web is comparatively flat for Q3, This autumn, second half of the yr. After which after all, as we go into Q1 of subsequent yr, you will see the identical dynamic once more, the place we’ll have increased web deductions and so forth. So it is following the pure seasonality and sample that we noticed during the last couple of years for this product, which, once more, is just not product particular. It is actually business particular, I’d say, general. I do not know, Jeff, was there anything you wished to touch upon that?
Jeffrey Dierks
So I imply, Jason, I believe the one different issue simply to contemplate once you’re taking a look at common income per affected person is the affected person help program engagement that we have seen has been comparatively constant. And in order the variety of sufferers on common sufferers continues to develop and the participation within the free items program is comparatively flat, you’d see a slight incremental profit as we’re including extra revenue-generating sufferers.
It is nominal, however I believe to Sandip’s level, once you couple that with the gross to web and the value enhance, that is actually what’s type of driving. So it is best to anticipate a slight enhance within the common income per affected person shifting ahead based mostly upon conventional value will increase that we might take, in addition to only a comparatively flat participation in our free items program, as we proceed to develop the typical variety of sufferers on Wakix.
Jeffrey Dayno
Yeah. And as regards to the share buyback, I am going to simply begin and hand it over to Sandip. Jason, I believe, as Sandip talked about in his feedback, it isn’t kind of an both/or. I believe that clearly, we’re in a powerful place as regards to deploying capital, both towards share repurchase or enterprise growth efforts. And, Sandip, additional ideas on that?
Sandip Kapadia
Yeah. No, I believe that is proper. It is actually not a query of both/or. I believe we’re in a well-positioned — given our profile of the corporate, as I discussed in my ready remarks, we generated $63 million of money from simply operations final quarter, sturdy money technology, profitability. We have now a really completely different profile of the corporate. And we predict we are able to additionally –and well-positioned to execute on share buyback, in addition to enterprise growth. And naturally, look, it will fluctuate quarterly, and we’ll present an replace to buyers as we progress on each of those areas.
Jeffrey Dayno
Yeah. And I believe we stay dedicated when it comes to our enterprise growth efforts and understanding the significance of rising the pipeline and diversifying our portfolio to drive long-term progress.
Operator
Thanks. We’ll take our subsequent query from Graig Suvannavejh with Mizuho Securities. Please go forward.
Graig Suvannavejh
Hello. Good morning. Thanks for taking the query. Congrats on the progress. Two fast questions, if I may. First, simply going again to the brand new share repurchase and feedback round potential flexibility round BD, ought to we assume or any feedback you wish to present on type of the scale of the offers going ahead? Actually, Zynerba was, I believe, as you talked about, a couple of $60 million transaction, given that you just obtained a brand new $200 million share repurchase. Is that $60 million type of the glad place for you guys when it comes to the sorts of offers and the scale of offers you wish to do? In order that’s my first query.
After which second, simply on patent litigation with the P4s which were filed. I simply wished to ask in case you may affirm whether or not you’ve initiated patent litigation or patent infringement lawsuit but? And any ideas round time traces with respect to that? Thanks a lot.
Jeffrey Dayno
Hey, Graig. Thanks in your query. Sandip?
Sandip Kapadia
I would not essentially learn into the city transaction is identical as what we might do probably sooner or later. Look, we’ve $438 million as of the tip of final quarter. We proceed to generate optimistic money circulate. We have now entry to the general public markets that want it. We’re able to do sizable transactions than what we’ve at that time. I believe it’s going to actually be the sorts of alternatives that we see that may decide not essentially — we’ve good flexibility when it comes to capital deployment.
Jeffrey Dayno
And, Graig, as regards to your query on patent litigation and Paragraph 4 filings, I believe as we beforehand have communicated, based mostly on the industrial success with Wakix, we totally anticipated to see Paragraph 4 filings, and we acquired further filings past the primary two that we initially acquired and have shared and disclosed. So I believe that we’ll present updates on the method because it strikes ahead. It is a lengthy course of, I believe, as you are conscious. We ready for the generic filers, and that is actually the beginning of the method.
We have now 45 days from the date of every of the Paragraph 4 notification to file the lawsuits, which invokes the 30-month keep, which, clearly, prevents the FDA from approval that generic file throughout that time-frame. So we have engaged knowledgeable IP counsel to characterize each Concord and Bioprojet within the patent litigation. And we’re assured within the energy of our IP, ready to vigorously defend it. And we’ll present updates as that course of strikes ahead.
Operator
Thanks. We’ll take our subsequent query from Corinne Jenkins with Goldman Sachs. Please go forward.
Corinne Jenkins
Good morning, everybody. Might you simply possibly make clear, I believe, for formulation 2, you highlighted an abbreviated growth program. So what does that truly imply when it comes to the necessity for in measurement of Part 1, Part 2, and Part 3 research? And the way shortly do you suppose you possibly can type of get a program like that to market? After which, I suppose as a follow-on to that query, do you primarily see this launch can be a change marketing campaign forward of generic and launches? And what classes are you able to win for different change campaigns that you’d apply there?
Jeffrey Dayno
Good morning, Corinne. I am going to have Kumar kind of touch upon the method to the second formulation quick-to-market technique. From a industrial perspective, I am going to ask Jeff Dierks to share ideas on what that might supply to the market.
Kumar Budur
Good morning, Corinne. The formulation 2 is the pitolisant-based modified formulation, and we’re on begin to get into the clinic within the second half of this quarter. By way of the attributes and the potential medical differentiation, we do imagine that this explicit formulation can have completely different attributes and a number of other completely different medical differentiation, however we aren’t able to touch upon that one as a result of the speed of the formulation or the differentiation due to the IP and aggressive causes. However this might be a fast-to-market technique, and we anticipate to launch inside the Wakix life cycle.
Jeffrey Dayno
Jeff?
Jeffrey Dierks
And Corinne, from the commercialization technique with the brand new formulation 2, it is not going to be a change technique. It is a brand-new product. And given the extent of dissatisfaction that we see within the market, the numerous unmet want, individuals residing with narcolepsy want new therapy choices. And so we see this as a novel possibility that might be differentiated from Wakix and offering a brand new therapeutic possibility for sufferers. So we see Wakix and this new formulation with the ability to coexist and supply two distinctive choices to individuals searching for a therapeutic therapy for EDS or cataplexy and grownup narcolepsy.
Corinne Jenkins
And simply to make clear, once you say inside the Wakix life cycle, I assume you imply your base case, which is late mid-2030?
Jeffrey Dayno
That is right. Yeah, that is right, Corinne.
Corinne Jenkins
Okay. Thanks.
Operator
I am exhibiting no additional questions. Right now, I wish to flip the decision again to administration for closing remarks.
Jeffrey Dayno
Thanks, operator, and thanks, everybody, for becoming a member of our name right now and in your curiosity in Concord. As you heard from us this morning, our enterprise stays sturdy, and we’ve confidence within the long-term progress potential of our firm. We sit up for offering updates as our enterprise advances. Thanks, and have an incredible day.
Operator
Thanks. This does conclude right now’s Concord Biosciences third quarter 2023 monetary outcomes convention name. You could now disconnect your traces, and have an exquisite day.
