Serge Belanger • Needham & Company

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CFO & COO Michael Kaseta explained that the 'vast, vast majority' of Q2 revenue was from initial channel loading, which has been largely absorbed in Q3. He confirmed contracts are signed with three major payers to achieve parity access. General Counsel Rusty Schundler stated that post-trial briefing for the '327 patent case is complete, and while timing is uncertain, the judge's accelerated schedule could indicate a faster decision.

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Chief Commercial Officer Scott Moomaw stated that while pre-launch communication is limited, a 'loud' launch with a full suite of marketing activities will rapidly build awareness. He anticipates the initial focus will be on new patients, though some demand may come from physicians seeking to transition patients who have reverted to nebulized TYVASO. CEO Dr. Roger Jeffs added that the long-term strategy includes competing with oral prostacyclins, targeting a total $4 billion market opportunity.

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General Counsel Russell Schundler responded that the court has not yet indicated whether it will hold an oral argument or rule on the briefs for the motion to dismiss, so no timeline is available. He reiterated the company's policy of not commenting on specific communications with the FDA or speculating on what influences the agency's decision-making process.

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CFO Bill Peters confirmed the company maintains its guidance for flat year-over-year sales, supported by two potential product approvals. He stated that Baqsimi is on track for high single-digit unit growth and a 3% price increase. EVP Tony Marrs added that the company remains optimistic about an AMP-002 approval due to ongoing, productive engagement with the FDA.

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CFO William Peters explained that the MannKind partnership more than doubles the number of salespeople detailing BAQSIMI, expanding national coverage. On epinephrine, he noted that while the multi-dose vial market has 4-5 competitors, Amphastar remains the sole U.S. supplier of the prefilled syringe. He added that a key competitor's return to the market is not expected in the first or second quarter.

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Chief Development Officer James Cassella highlighted the statistically significant improvements across all LCQ domains, which complement the objective cough data. Chief Commercial Officer Farrell Simon noted the importance of LCQ for demonstrating value and reimbursement. CFO Lisa Delfini confirmed that operating expenses are expected to remain relatively flat for the remainder of the year.

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Executive Jennifer Good confirmed the respiratory physiology study is currently screening patients and remains on track to provide data for the end-of-Phase II meeting with the FDA. She mentioned that given recent findings, the team is contemplating whether the highest dose of 108mg is still necessary for this study.

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EVP & CCO Scott Dreyer explained that the key levers for Jornay PM growth are raising awareness among both healthcare providers (HCPs) to drive adoption and among patients/caregivers to stimulate direct requests for the brand. EVP & CFO Colleen Tupper addressed the generics question, confirming no new threats have emerged. She reiterated that for BELBUCA, the last filer has received five CRLs, and for Nucynta, potential entrants lack access to commercial-scale quantities of the active ingredient, tapentadol, with the earliest potential entry for Teva in January 2027 remaining contingent on approval.

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Chief Commercial Officer Scott Dreyer stated that the overall ADHD market is growing at approximately 5-6%. He detailed the prescriber base as roughly 40% pediatricians, 40% neuropsychiatry, and the remaining 20% split between PCPs and mid-level practitioners. Dreyer explained that the primary driver of Jornay's market share growth is patients switching from generic immediate-release products, supplemented by some switching from other branded medications.

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Executive Scott Dreyer stated the current sales force is approximately 150 people and that the company is assessing an expansion to maximize Jornay PM's potential, with details to be included in future OpEx guidance. Regarding formulary changes, Dreyer explained that the removal from one Part D plan affects about 12% of Belbuca and 18% of Xtampza prescriptions but will be net revenue positive. The new formulary addition will not report prescription data to IQVIA, resulting in a net negative impact on reported scripts but a positive impact on revenue.

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Chief Commercial Officer Todd Edwards explained the variance was primarily due to the recovery of distribution channel inventory to normal levels after a drawdown in Q1, not abnormal stocking. CEO Frank Watanabe and CCO Todd Edwards noted that securing Medicare Part D coverage is challenging due to financial disruption for payers from the IRA, making timing uncertain. Frank Watanabe also confirmed there are no current plans to expand the Arcutis dermatology sales force.

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Todd Edwards, Chief Commercial Officer, attributed the strong Q1 demand growth (10% QoQ) to the franchise's momentum and the 'portfolio effect,' where clinicians prescribing for multiple indications use more ZORYVE overall. He noted this drove new-to-brand prescriptions, offsetting typical Q1 headwinds. Regarding coverage, he stated that the 80% reimbursement rate is considered an 'optimal steady state' and he expects it to remain in that range, with minimal changes expected.

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Chief Commercial Officer Todd Edwards reported that as of early 2025, 1 in 2 Medicaid beneficiaries have access to ZORYVE, with ongoing negotiations for Medicare Part D. President and CEO Frank Watanabe stated that the top priority remains investing in ZORYVE's growth to drive shareholder value, viewing the 2026 cash break-even target as a means to gain operational flexibility rather than an end in itself. He characterized the company's approach to pipeline and BD as opportunistic, not imperative.

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Chief Commercial Officer Todd Edwards and CEO Frank Watanabe clarified that Medicare Part D coverage will be a progressive, plan-by-plan process similar to commercial insurance, not a single event covering the entire market. On the competitive front, Frank Watanabe noted that a competitor's delayed AD approval is a positive, but Arcutis's primary competition remains topical steroids and Opzelura, and it is too early to assess the impact of the competitor's ownership change.

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President & CEO David Moatazedi suggested this downturn is unique because it disproportionately affects consumers earning under $150,000, who are feeling the effects of inflation. He stated that he has not seen significant market-wide price changes related to tariffs, noting that neurotoxins are currently exempt.

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CEO David Moatazedi explained that while Evolus has historically bucked market seasonality due to high growth, its moderating growth rate will likely cause it to align more with traditional patterns. He noted the market slowdown in the back half of last year will affect year-over-year comps. CFO Sandra Beaver stated that while Evolus is taking prudent steps to manage inventory ahead of potential tariffs, the company has not seen any change in purchasing behavior from practices, as there is no immediate view that costs will be passed on.

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CEO David Moatazedi stated that new account additions will likely decrease from the historical rate of ~500 per quarter as the sales team prioritizes training existing customers on Evolysse. CMO Rui Avelar added that Evolysse training is straightforward, as the gel is well-balanced, forgiving with a low inflammation profile, and efficient, meaning less product is often needed to achieve optimal correction.

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President & CCO Charlie Gayer confirmed the gross-to-net is in the lower end of the 15-20% range and that Q2 new patient adds significantly surpassed Q1, which was already the best quarter since launch year. He stated that the sales force is perfectly sized and highly efficient, and adding more reps would be unnecessary. CEO Jon Stonehouse reinforced that this efficient commercial infrastructure is a key asset to be leveraged for future products.

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Chief Commercial Officer Charlie Gayer confirmed they will strive to exceed the 85% paid-rate goal, noting that the rate in the Medicare segment is already at 89%, which shows further improvement is possible. He also stated that the mix of new patients in Q1 was fundamentally very similar to the trends seen since launch, with a balanced contribution from different prescriber tiers, indicating broad and sustainable growth.

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Chief Commercial Officer Charlie Gayer did not provide a specific patient count but confirmed that new patient additions in 2024 were well above the annual average required to meet long-term revenue goals. He acknowledged that improved reimbursement confidence from the IRA could potentially boost new patient starts over time, though this has not been a direct driver yet. CEO Jon Stonehouse highlighted the company's patient services as a key competitive advantage.

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Chief Commercial Officer Charlie Gayer confirmed that patient additions are 'very much on track' with their goals. He stated that market research indicates new injectable competitors will primarily compete with existing injectables, not with ORLADEYO's oral formulation. CEO Jon Stonehouse added that increased discussion about switching therapies presents a net opportunity, as patients and physicians open to change would logically consider the oral option first.

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CCO Brendan Teehan noted a nominal, low single-digit decline in surgery room hours during the first quarter. CEO Frank Lee stated that the competitive landscape has not significantly changed, emphasizing that the primary competition remains short-acting bupivacaine and that Pacira has substantial room for market penetration growth.

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CEO Frank Lee declined to comment on any potential settlement discussions but reiterated strong confidence in the company's IP estate and noted more patents are expected. An executive, likely CCO Brendan Teehan, addressed the iovera question, highlighting the new C-code as a key growth driver that provides physicians up to $256 in additional reimbursement. He noted that iovera is at a different stage in its lifecycle than EXPAREL and will receive selective investment to capitalize on the improved reimbursement landscape and new SmartTip for low back pain.

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CEO Joseph Todisco acknowledged the slow ramp in the inpatient market but highlighted recent progress, with shipments doubling to 6% of the total in April and a dedicated sales team now operational. He stated its ultimate size depends on LDO uptake. Regarding TDAPA, he mentioned monitoring the upcoming CMS proposed rule and supporting legislative initiatives aimed at codifying and improving the pathway, though he cautioned the legislative route is challenging.

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CEO Joseph Todisco confirmed that U.S. Renal Care accounted for over 90% of Q3 sales and that CorMedix is actively working to replicate their successful implementation model with other customers, particularly the new LDO. Regarding reimbursement, Todisco stated the transition from WAC to ASP is anticipated, has been structured into agreements, and is not expected to impact ordering patterns or be problematic, as significant ASP erosion is not expected initially.

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Chairman and CEO Gregory Demopulos and Chief Commercial Officer Nadia Dac responded. Dr. Demopulos confirmed that the company has sufficient drug supply manufactured to support the narsoplimab launch for the first two to three years. Ms. Dac added that a targeted field team has been building awareness of TA-TMA diagnosis and treatment with top transplant centers, noting that the topic is now a mainstream discussion among physicians who are actively seeking a solution.

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Executive Gregory Demopulos stated that Omeros is confident it can advance the program independently but remains open to partnering discussions. Chief Medical Officer Andreas Grauer specified that each of the two randomized trials is expected to enroll slightly below 100 patients. VP of Clinical J. Whitaker added that strong prior efficacy data allows for smaller trials and that rapid enrollment is anticipated, which should positively impact costs.

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