Avadel Pharmaceuticals plc (AVDL) Earnings Call Transcript & Summary

Greetings, and welcome to the Avadel Pharmaceuticals data call and webcast. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Tom McHugh, Chief Financial Officer. Please go ahead, sir.

Good morning, and thank you for joining us on our conference call. On the call with me today are Greg Divis, Chief Executive Officer; and Dr. Jordan Dubow, Chief Medical Officer of Avadel. This morning, we should have released with top line data results from the Phase III REST-ON study. The release can be accessed on our website, www.avadel.com. As a reminder, before we begin, the following presentation includes several matters that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. These risks include risks that products in the development stage may not achieve scientific objectives or milestones or meet stringent regulatory requirements, uncertainties regarding market acceptance of products, and the impact of competitive products and pricing. These and other risk factors are described more fully in Avadel's public filings with the SEC under the Exchange Act, including the Form 10-K for the year ended December 31, 2019. Except as required by law, Avadel undertakes no obligation to update or revise any forward-looking statements contained in this presentation to reflect new information, future events or otherwise. And at this time, I will turn the call over to Greg Divis.

Thank you, Tom. Good morning, everyone, and thank you very much for joining us on our call this morning. Let me first start the call off by offering our best to you and your families during this pandemic and our hopes that all are safe and healthy. As you may have seen in our press release issued this morning, today is a monumental day for Avadel, for our shareholders and for narcolepsy patients we look to serve. With today's news and the positive top line results of our Phase III REST-ON trial, we crossed yet another critical milestone on our path to bringing an FDA-approved once-nightly FT218 to patients. Although this day has been years in the making, the remarkable progress that has been made over the last 12-plus months has accelerated this moment by over a year. And I would like to personally thank all of our team, all of our partners and all of the patients, without whom we would not be here today. On today's call, I will provide a few opening remarks, and then we will spend much of the time with our Chief Medical Officer, Jordan Dubow, reviewing the top line data we have reported on today. We will then have a Q&A before we end the call with a few closing comments. So let's get started with the data. As Jordan will cover in much more detail, please allow me to summarize some of the key takeaways from our top line data results. First, once-nightly FT218 demonstrated a highly significant, clinically meaningful improvement compared to placebo at all 3 doses studied: 6 grams, 7.5 grams and 9 grams. For all 3 co-primary endpoints, MWT, CGI and cataplexy and all with p-values of less than 0.001. Second, at the highest dose of 9 grams, once-nightly FT218 appeared generally safe and well tolerated with low rates of commonly known sodium oxybate adverse reactions. And thirdly, once-nightly FT218 demonstrated this statistically significant and clinically meaningful effect within 3 weeks of initiating treatment, again, with a p-value of less than 0.001. In summary, we are very pleased with these results and believe it further validates our view that FT218 can provide a meaningful clinical benefit for patients and provides an exciting opportunity, targeting the estimated $1.7 billion twice nightly sodium oxybate market. Why is that important? Let's not forget that narcolepsy is a serious underdiagnosed disabling neurological disease, a serious condition that still has significant unmet needs. Narcolepsy is characterized by a number of debilitating symptoms, including excessive daytime sleepiness, cataplexy and disrupted nocturnal sleep, to name a few. And to date, only twice nightly sodium oxybate is approved for both of the cardinal symptoms of narcolepsy, EDS and cataplexy. And that is in a patient market based on independent research reports that is projected to continue to grow. And it is based upon these unmet needs in this chronic condition, Avadel made the decision to pursue this opportunity based on our drug delivery technology and our drug formulation capabilities. That decision allowed Avadel to leverage our technology and capabilities for the potential benefit of patients in using our proprietary micropump technology, processes and know-how to develop a once-nightly formulation of sodium oxybate. Our micropump technology contains thousands of microparticles, with each acting as a miniature delivery system, thus modifying the thickness of the controlled release coatings on each microparticle and subsequently creating improved product release profiles like we have seen in our FT218 PK data. We've always believed once-nightly FT218's PK profile is the ideal once-nightly release profile for sodium oxybate, a release profile that until today was only theorized that it could potentially provide patients with a single dose of sodium oxybate at bedtime and deliver a safe, well tolerated and clinically meaningful benefit. Well, today's results does just that. It's no longer a theory, it's no longer a discussion. And we are very pleased to share the details of our top line data. And to do that, let me hand it off to my colleague, Dr. Jordan Dubow. Jordan?

Thanks, Greg, and thank you, everyone, for joining us today. As Greg said, it's really a monumental day for our company as well as for the narcolepsy community. Before I begin, just -- I want to remind everyone, too, that our -- what I'm presenting today and our design was conducted under a Special Protocol Assessment agreement. So all of our analyses, everything that was going to be described in terms of our protocols and key inclusion/exclusion were so agreed upon by the FDA as we move forward in this path. As Greg mentioned, I'm really excited. We're thrilled that FT218 at the 9-gram dose, which is, in essence, the first dose in our hierarchy was highly significant across all 3 of our co-primary endpoints. Additionally, the next 2 highest doses is the 7.5 and 6-gram dose, as we mentioned, were also positive for all 3 of those important co-primary endpoints. And FT218 was generally safe and well tolerated in most common known sodium oxybate adverse reactions occurred at the lowest rate to the 9-gram dose. And the data that we're going to present today obviously is top line data, and today, we're limited to the data that we have. And we obviously look forward to sharing all of our additional data as we get it as well at future scientific presentations. Just a reminder, I want to speak to what the Phase III design is. In our REST-ON design, we randomized patients in a one-to-one fashion to FT218 or matching placebo. Now everyone started at the lowest dose of 4.5 grams for 1 week. Everyone then moved up to 6-gram dose for 2 weeks for weeks 2 and 3. And then at the end of that 2-week period or throughout the whole -- week 2 and week 3, that then is where we conducted efficacy and safety analyses to determine the effect of the 6-gram dose. Following week 3, everyone was up-titrated to the 7.5-gram dose. They stayed on this dose for 5 weeks, and the 7.5-gram safety and efficacy period was conducted during this 5-week period with some assessments at the end of week 8 and things like cataplexy are caught, captured throughout that whole period. After 8 weeks, everyone moves up to 9 grams for the last 5 weeks of the study. And again, the 9-gram dose is -- the effect of that dose is evaluated through that period as well as the safety of the dose. And this is well agreed upon with the FDA on our SPA-agreed-upon protocol, can almost think of it as almost 3 separate experiments, one for 9, one for 7.5 and one for 6 within our study. And if we move to the next slide, we can look at our main inclusion and exclusion criteria. And I think we enrolled patients that were characteristic of, I think most studies that are conducted today in narcolepsy as well as studies that have been conducted in the past. And we enrolled patients 16 and over. Obviously, they have to have a confirmed diagnosis of narcolepsy by the ICSD-3 criteria, which is based on polysomnography. So you're very certain that these patients have narcolepsy. Obviously had to have excessive daytime sleepiness, right? So we did a minimum ESS, which is, I think, on par with other studies. In our trial, patients were allowed to be on wake-promoting agents, i.e., stimulus as long as they were stable for at least 3 weeks. And we also had randomization criteria to ensure that obviously patients had a certain level of disease to enable us to see an effect. And so we've required that they have an MWT at baseline less than 11. As well as they had to have at least 8 cataplexy attacks per week during the baseline period. As I think I've talked about with many of you in the past, we -- any current use of sodium oxybate was excluded. And prior use of sodium oxybate was excluded as well. With the one caveat being in 2018, the company approached the agency and made an improved modification to the protocol, allowing prior use of sodium oxybate for 4.5 grams or less for less than 2 weeks, at least 1 year prior to study entry. And then really, this had no impact on the study. I think only 1 patient came in under this. The other thing not unusual for these types of trials where we look at cataplexy as patients had to be tapered off all medications that have the potential to treat cataplexy like most of the antidepressants, the SSRIs, SNRIs, et cetera. So those all had to be tapered off before that baseline period. And now if you go to the next slide, just to briefly remind everyone and have just a short discussion on how we kind of analyze this and what our primary endpoints were. The primary analysis was the change from baseline to the end for that 9-gram dose. So the 9-gram dose was our primary endpoint. And it's a bit unusual. So we had 3 co-primary endpoints in our study. Many studies just -- are happy to hit on one. We had 3 endpoints that we needed to hit on. And it's important that you look at what our endpoints are, right? So with narcolepsy, and this is typically what the agency likes is they like you to both evaluate endpoints that capture the disease, the underlying phenomenology of the disease as well as some functional endpoint to kind of determine what does it mean? What is a certain minimum improvement on an MWT. What is a certain improvement on less cataplexy episodes? Are those meaningful? And that's why we have that anchor. We have the clinical global impression improvement as an anchor to determine the meaningfulness of the data. The order that you're seeing here was the hierarchical order of our 3 co-primary endpoints, MWT first, if successful, CGI-I, if that's successful, we then go to the mean cataplexy attacks. I think I've spoken to a lot of you about this. The MWT we use is a 30-minute MWT with the average of 5 naps. In the CGI-I, as is commonly done, it's what percentage of people are rated as much or very much improved. And the mean weekly cataplexy effects, i.e., if we did the mean weekly cataplexy attacks during a baseline period compared to the period while that dose is being studied. And some subtle differences with ours is when patients were able to record how many cataplexy attacks they had, they can fill in the diary every day. It had to be done that day, they can either record 0, 1 attack, 2 attacks, 3 attacks, 4 attacks or 5 or more attacks. And that's the way our study was set up. So if they had -- in a rare case, they had a lot like they had 8, it would be captured as 5 or more. And as we've discussed, if we were successful in this order on the 9-gram, we then were allowed to move down to the 7.5-gram dose, starting with the MWT, then CGI if successful, then cataplexy, and we followed the same thing for the 6-gram dose. And now let me walk you through the primary data, starting with the 9 grams, and then we'll show you some data for the lower doses. And as we presented in our press release this morning, we had a very large change on the MWT with the 9-gram dose, close to an 11-minute improvement compared to close to 4.7 minutes for placebo. With a least squares mean difference of over 6 minutes, 6.13 minutes in favor of FT218 versus placebo. A couple of important things here. We don't have our baseline demographics by group yet. But I do know, based on blinded data that the average for the group of the MWT at baseline was just a little bit under 5 minutes, right? So we think for FT218 going from 5 minutes to, on average, close to 16 minutes on the MWT. The other really important thing when looking and interpreting this data is, obviously, the delta of 6 minutes is good, and we're very happy with that. But you also have to take into account what is the spread? What is the variability? And you'd like to also look at the standard deviation of change to determine kind of what your effect size is. And although we don't have it yet by group, typically, it's evenly distributed between the 2 groups. And we know from our blinded review of data, our standard deviation for the MWT at 9.5 grams was quite good. It was about 8.5 minutes, right? And so if you want to try to ballpark an effect size, it is taking the difference divided by the deviation, that's a really robust effect size of well over 0.7. Any time you see the actual delta in the standard deviation is less than 1.5x what that delta is, that really speaks to kind of the robustness of our data. So we're really happy, obviously, with a 6-minute improvement, which is quite good with a very low standard deviation of our data. Now importantly, if we talk about the CGI on the next slide. As I said, this is a really important endpoint that this really can speak to you. This is the anchor, right? Is this data meaningful? And when you look at it here, close to 3/4 of the patients at the 9-gram dose, 72% were rated as much or very much improved compared to a little bit under 1/3 for those on placebo, giving us an odds ratio of 5.56, with obviously a highly significant p-value, less than 0.001. So again, this -- regardless of what the numbers are that I'm showing you to, I mean this is the functional output. And this is why the agency requires this because they want to show you, well, is this meaningful? And this clearly shows an overall function -- an overall assessment of function that almost 3/4 of patients were rated as much or very much improved. And then last in our hierarchy, if we speak to cataplexy at the 9-gram dose. We can see that the FT218 group improved -- had an average of 11 -- over 11.5 less cataplexy episodes compared to a little under 5 for placebo, with the least square mean difference of 6.65 less cataplexy attacks. And I think it's important here to also consider a couple of other things when interpreting this data, one being what's the baseline, right? And again, I have the average baseline to the group, and I think we predicted a probably fairly close to about it between the 2 groups. And it was about 18, is going to be the average. And so it's going to peak at 60-something percent likely reduction for the FT218 group, which we think is a very robust, meaningful change. And as I said with MWT, the important thing also is to interpret when you're looking at that delta, what's the standard deviation? What's the spread? What's the variability looking out? Are there outliers in the data? And we're really pleased that, at least in the blinded fashion, we said the standard deviation is just right around 9, right? So a delta of 6.65, the standard deviation of 9, again, just speaks to the robustness of our data that's also reflected in our highly significant p-value. So clearly, on the 9-gram dose, we showed improvements in wakefulness, improvements in reduction cataplexy, which was anchored by that overall functioning output of the CGI. Let me just briefly touch upon some of the safety at the 9-gram dose. And as I said, the data that we have today is limited, given that the 9 grams is our primary endpoint, we wanted to present kind of adverse reaction data for that dose. And we're presenting adverse reaction, what we have. And again, an adverse reaction is a related adverse event, right? Given it's sodium oxybate, has a known safety profile, typically what goes in one's label is the rates of adverse reactions. And that's what you're looking at here. And that's surprisingly, more people on 218 versus placebo had an adverse reaction, 35% versus 5%. Importantly, looking at the rates of serious adverse reactions, it was quite low, just basically 1% in 218 compared to placebo. I think speaking to the tolerability of the higher dose, the rate of discontinuation, we also think was quite good for FT218 with close to 4%, only 4% of people dropping out due to adverse reaction on the 9-gram dose. And then when we think of the common -- the most common adverse reactions were percent of care as well as some of those lower ones, less than 10% just because typically, they're clinically important when it comes to sodium oxybate. If you look at the top couple here, those are the GI ones, right, nausea, vomiting, well-known sodium oxybate adverse reactions. Nausea was quite low during the 9-gram period; vomiting, 5%, compared to none on placebo and some decreased appetite as well. When we're looking at kind of the neurological adverse reactions that are known to occur with, sodium oxybate, not surprising, we see them with 218. We see them at low rates though. Dizziness rate of 5% and somnolence 4% and tremor is another adverse reaction associated with sodium oxybate. And basically, we see those at rates of 1%. Importantly, too, enuresis or bedwetting, I think it was a common discussion I had with many of you. And we figured it's almost considered a pharmacodynamic marker of deep slow wave sleep, and we see that at 9% with our drug. So overall, we think this really shows that at the highest dose where we have today, FT218 was considered quite well tolerated. And so now after we move to the highest dose, the 9-gram, obviously, we were able to then go down in our hierarchy to the 7.5 and the 6-gram dose. And now in the next couple of slides, we'll present that data for MWT, CGI and cataplexy as well. I think what you're seeing here is that not surprising, 218 behave like sodium oxybate, right, where on the 7.5 on the left side and the 6-gram on the right side. And there's 2 separate placebos, obviously, for each of those periods. I think what you're seeing in 7.5 is quite good, and it almost mirrors what we see at the highest dose 9 grams. So give or take, close to a 10-minute improvement in the MWT compared to a little over 3 for placebo. With an LS mean difference of over 6 minutes for that 7.5-gram dose and then as well as the lower dose 6 grams, which was at 3 weeks into the study, an 8-minute improvement with 218 compared to a little over 3 with placebo or an LS mean difference of just around 5 minutes. So again, when you try to put this into context, and again, we kind of have, again, as I said, blinded standard deviations, and for that 7.5-gram dose, we know that standard deviation for the group is around 8, which again, when you factor in the delta, that's quite good. And even at the lowest dose, the standard deviation is a little over 7. And so we're really seeing large deltas with a very tight standard deviation, which is then reflected in our highly significant p-value less than 0.001. If you go to the next slide, just like with the 9-gram dose, we can see that anchor, right? Is this data meaningful and not surprising, it is, right? Our CGI was highly positive for both the 7.5 and the 6-gram dose. The 7.5-gram dose, 63% of people were rated as much and very much improved compared to 22.8% on placebo. And then interestingly, when you look very early in the study, 40% people in the lowest 6-gram dose were much or very much improved compared to very, very few on placebo, giving us an odds ratio at that lowest dose of 10.3, which is just quite striking. And again, this speaks to kind of the -- how quickly in the study FT218 was able to separate from placebo. So again, the importance of this is that functional anchor, kind of showing improving the meaningfulness of the other data that we're presenting. If we're now going to cataplexy, again, the pattern is similar, right? We see the 7.5-gram dose has nearly 10 less cataplexy episodes on average compared to a little under 4 for placebo with an LS mean difference of a decrease of 6.23 less cataplexy episodes per week. And then on the lowest dose, we still see a 4.63 reduction in cataplexy compared to placebo. As I've been saying, putting it into content, we also know for these 2 doses, we had quite good standard deviations of change, right? It's a 7.5-gram dose, it's on average a little over 8.5, so a delta of over 6 with the standard deviation of only 8.5 is quite good. And at the lowest dose, standard deviation was a little over 7. So I think, again, just speaks to when we're interpreting this data, it's not just the delta that we feel very confident about it was quite good. When you factor in that standard deviation, it just really, again, speaks to the robustness of the data. So before we open it up to Q&A, I really just want to take a moment to give a special thanks to our sites, our investigators, our sub-investigators, the sleep technicians, sleep coordinators who have been just working as our partners tirelessly for many years now, especially in this current last month, locking this database as quickly as we did. We have to do special thanks to them. Obviously, most importantly, those patients. Those narcolepsy patients that were willing to participate in clinical research and go on with our study. So obviously, none of this is possible without them. And as well as our advocacy partners, right? So there's a lot of really important advocacy groups in narcolepsy and they helped along the way. We greatly appreciate their support. We want to ensure that we acknowledge that. So with that, I thank you for listening to me presenting some of this data, and we'll take some questions.

[Operator Instructions] Our first question today is coming from David Amsellem from Piper Sandler.

Congratulations. And just a couple of questions on my end. First, wanted to delve more into the tolerability that I was struck by doing -- looking at the XYREM label. And it looks like your tolerability data are cleaner. So I'm wondering if you can speak to that, how you would stack up your data versus XYREM? And how does the tolerability data speak to the PK profile of FT218? I wanted to get your thoughts and maybe a glimpse into your detailing messaging if you care to go there. And then secondly, I know we've talked about this, and I think it's important to bring up. But what are your thoughts, Greg, on your strategy versus Jazz regarding the legal front? I know this is something you've been pretty transparent to that. But can you just remind us how we should think about the potential for litigation and what your plan is to -- well, I guess, for lack of a better way to say it, prevent a 30-month stay?

Thanks, David. Jordan, do you want to take the first question?

Sure. Yes. Thanks, David, for the question. Yes. So I think I'm not going to comment on comparison of our drug to label the twice-nightly product. Obviously, the studies are a little bit different. I think what I will say, though, is obviously, we're very happy with our safety, our tolerability at the 9-gram dose. Those sodium oxybate adverse events do occur at low rates and during that 9-gram period. And why is that? I mean I think there's a couple of reasons. Obviously, I think there's data out there showing these AEs are associated with Cmax. We put out some data at the AAN that did happen, showing AEs really do occur around Cmax and Tmax, not surprisingly. And there's some data showing the higher the Cmax, potentially the higher rates of these things like nausea because I think part of it is Cmax related. And the other one also is by our study design was a little bit different, right? We titrated people very slowly. Again, we don't anticipate that it's going to be like that in the label based on discussions with the agency. But that being said, it's probably a combination of both, right, a slow titration. We do know with a lot of neurological drugs, if you titrate them slowly, it does decrease the rates of adverse events typically. So I think it's a combination of that. And obviously, our PK profile, we've been very optimistic that our PK profile was going to translate into good safety, good tolerability for this drug while providing good efficacy. And I think that's what we're seeing at the 9-gram dose level.

Thanks, Jordan. And David, regarding your question regarding -- as we'll just characterize our freedom to operate relative to 30-month stays and whatnot. We obviously have talked quite extensively with many, if not all of you, on this topic specifically. And again, I think the way we like to characterize this consideration is, first and foremost, although we share the same drug substance with the reference listed drug, we are a very different drug product. And our labels, by definition, will be different. We are not an ANDA. We are not substitutable for each other. So we will have our own clinical and efficacy data as we started to present today. We will have our own clinical pharmacology section, our own drug-drug interaction data. We will have our own dosage and administration sections. Our label will be different. And because of that, our approach from a regulatory strategy and labeling standpoint is to carve out of our label references or components of any relevant Orange Book-listed patent. And at the end of the day, there is a pathway within 505(b)(2) called the Section 8 carve-out. And the Section 8 carve-out allows you to carve out of your label, those aspects connected to Orange Book-listed patents as described by their use codes as long as it doesn't introduce a safety risk to patients. So our approach for what we describe as their relevant and Orange Book-listed patents, which is a REMS patent, one REMS patent that describes a computer database system for the distribution of this drug. And then their drug-drug interaction patents, which describe the dose adjustment of sodium oxybate when taken in combination with sodium valproate. So again, our approach to these Orange Book-listed patents is to carve out of our label, those relevant use codes. And for the REMS patent, I think it's very clear that as a computer database system, you can't even find the reference to a computer database system in the references to drugs only. So it's certainly not a method of treatment from that perspective. And so we would expect not to -- our label to read on the definition of their use code for the REMS patent that describes a computer database system. As it relates to the drug-drug interaction patents, we've been very clear and transparent that we have done our own drug-drug interaction studies. We have an unequivocal result as to whether we do or we don't have a drug-drug interaction from our perspective. You should assume that we've sought appropriate guidance and insight from advisers and from the FDA itself on what we need to demonstrate in this regard. And the answer to that question, based upon our data is unequivocally clear. So we're not saying what the answer to that question is because we don't think it's in our best interest to disclose which way we're pursuing. But at the end of the day, there's only 1 of 2 paths we can take. Our data either does have a drug-drug interaction or it doesn't. And if it does, then, as we've described, we would seek to carve out and contraindicate those patients for the 1/2 of 1% of patients that are on the combination of sodium valproate and sodium oxybate. And our research would tell us it is approximately 1/2 of 1% of all twice-nightly sodium oxybate patients are on concomitantly with sodium valproate. So we would seek to contraindicate and primarily on the basis that from a patient safety perspective, we don't believe you can adequately dose-adjust our formulation and not introduce unnecessary risk to the patients. For -- and what do we mean by that? One is our formulation is a stick pack, a sachet, if you will, similar to a Crystal Light pack or perhaps an emergency vitamin C pack. That is made up for each dose of proprietary formulation of the microparticles that we described earlier on this call, both immediate release and controlled release, and a specific ratio of those 2 that gives the desired a release curve for the once-nightly product and the therapeutic effect and the safety profile that we articulated today in our data. And when you attempt to dose-adjust or reduce the amount of product in a stick pack: a, you can't be sure if you're accurately reducing by the right amount; b, you can't be sure that the content uniformity of what you've poured out is actually the right ratio, leaving the proper ratio of immediate release to controlled release in the remaining stick pack. And thirdly, what do you do with sodium oxybate product that you just poured out? So we would seek to contraindicate for the 1/2 of 1% of patients who would require those 2 meds, we think it would be better to contraindicate and much cleaner and safer for patients. However, if we don't have a drug-drug interaction then we believe our label will be silent on any sort of dose adjustment, and therefore, we don't have the same dose adjustment requirements. And as such, we don't believe we will read on their label. Now we're the first who would acknowledge that this is a review matter with the FDA, although we sought their guidance they haven't -- they won't give you an answer until they review it definitively, but we clearly know the pathway, and there is a clear path from our perspective based on the evidence that data we have generated to allow us to pursue the carve-out strategy. And if we -- and if we're successful, we will avoid a 30-month stay.

Our next question is coming from Paul Matteis from Stifel.

Congrats on the data. Three questions for you, if you don't mind. First, Jordan, I was wondering if you could comment on 2 things clinically. One, I think I noticed that the rate of nausea was materially lower than the rate of vomiting. Just struck me as a little bit bizarre and I was wondering if you could comment on that or if I'm incorrect. Second, I was wondering if you could comment on the overall retention rate in the study and how you handled from an analysis perspective any data wherein a patient had already dropped out before they titrated up to the 9-gram dose. And then third, question for Greg on this whole bioequivalence. Are we bioequivalent, are we not bioequivalent with sodium valproate question. In your DDI studies, did you look at any clinical endpoints? I know Jazz looked at a number of measures, which they made a case to the FDA that the drug-drug interaction was a clinical consequence. Wondering if that was at all necessary and whether or not if you did show that you don't have the DDI per FDA guidelines, if you would also need to show that a lack of DDI doesn't have a clinical consequence as well.

Sure. So Paul, I can start with your first 2 questions. So thanks for the questions. In terms of the nausea versus vomiting, that -- I don't know, right, I mean we don't have all the granular data yet. It's kind of like the data is what the data is. Your question makes sense clinically, but by potentially one and not the other. I don't know. We'll see once we get yet another doses, is that out differently. It could just be just what was recorded as adverse events. In terms of retention, yes, that's one where we can't really comment on right now. We don't have all the data. But that's just the top line. We don't have our disposition data. I don't know the dropout by group. I don't know the reason for the dropout, but we just don't have that yet. We're [ limiting ] with our data. As I've been saying from a blinded standpoint, we were comfortable with what that is. In terms of how it's handled, obviously, statistically, there's ways that you're missing data is important and how you handle it. I think I said before, our primary analysis was conducted with an MMRM and there's ways that you handle different visits and whatnot. And outside of that, there's other sensitivity analyses obviously that we're going to have to do many of them, right, looking at kind of how you handle missing data because -- good or bad. Not everyone completed our trial, and we do have missing data. And so I'm not going to get into all the details of what those are and what analyses -- we're doing a sensitivity analysis. All we have right now obviously is just the primary analysis that we're presenting that's highly significant. And obviously, I'm very confident and optimistic that once we do those other sensitivity analyses, the results will look very similar, given how significant the primary analysis is.

Thanks, Jordan. Before I answer, Jordan, is there any comments you want to make on the DDI piece or -- based on Paul's question? Or would you like me just to handle it?

I guess my only comment would be in terms of some of the pharmacodynamic markers in the label. I guess my only comment just recall that it's relevant for the twice-nightly product. It's not quite relevant for us, right? For the twice-nightly product, you actually have to get up in the middle of the night, right, and take a second dose. And so theoretically, those pharmacodynamic measures might matter. With our drug, it's once nightly, I think we've clearly proven that we put you to sleep throughout the night. And so I don't really know the clinical relevance of pharmacodynamic markers in the middle of the night for our drug.

Yes. The only other comment I would make, Paul, is that, a, we're not really going to -- we're not going to talk about the specificity of our DDI, but what we will say is the following: Is that you should be assured that we've asked very specific questions about what it is we need to demonstrate as to whether we do or we don't, have a drug-drug interaction. And we've sought that guidance, and we have executed according to that guidance.

Our next question is coming from François Brisebois from Craig-Hallum.

Congrats on the data. Just a couple of questions here. Thanks for the litigation answer to those very in depth. But in terms of the 3 endpoints that you looked at, you talked about the importance of the CGI as an anchor. In terms of the medical community and prescribers, how do they look at these 3 endpoints in order of importance in terms of prescribing?

Yes. Thanks for the question. I mean I think at least -- and Greg can elaborate some from the commercial perspective. I think clinically, these endpoints are important. I think, obviously, people -- most physicians understand what a reduction of cataplexy is, understand what MWT is and look at what patients are better. And so I think in the research that we've done and clinically, yes, I think they get a good sense of looking at these things. I think numerically, to be frank, I'm not sure there's a general acceptance of just looking at a number of what's acceptable. I think if a drug is approved and it's safe, I think that's still the most important thing that physicians use. I can speak to my clinical practice. It's not frequent, but certain physicians actually go into labels and look at labels. I mean I think from what will be in our label, and I have the reason to believe that these 3 endpoints are in our label. I think on face value, they're robust, they're meaningful. But yes, I mean, it just depends on kind of the type of physician. But most people who are prescribing sodium oxybate are probably sleep specialists, who do know these endpoints really well and do understand these endpoints really well as opposed to -- general neurologist maybe isn't prescribing a lot of these type of medicines, really not seeing a lot of sleep -- sleep patients might not quite understand the subtleties of the scales as well. But I think generally those, the sleep community understands kind of what these endpoints are and the meaningfulness behind it.

Okay. Great. And then can you help us -- in terms of next steps, you guys have had the luxury in these times of COVID of having the trial fully enrolled and delivering on the second quarter data here. But in terms of next steps for -- can you help us, what are the plans here? And the rest of the data, when can we expect to see this? What -- is there a specific medical conference that we would expected at? And what is the -- obviously, there's more sensitivity analysis to do, but if you were looking at high level, what would be the main things that you're really excited to see about the rest of the data here that we can expect when it's presented.

Jordan, do you want to start?

Yes. I mean I can start -- take the last question first. And then, Greg, I don't know I'm going to speak to -- Greg, I'll let you speak maybe to the other boxes that need to be ticked. Yes. I mean I think what I'm -- what we, I think, are really excited to see is some of the secondary endpoints. Obviously, we -- the Epworth, it was in one of our primaries. We're really interested to see that. We anticipate it's going to look just like the MWT. I think a really, really interesting thing we'll be looking at the sleep architecture, the PSG data, right? And I think I've talked a lot of you about and we know what sodium oxybate does on sleep architecture so far with at least giving it sodium oxybate twice a night. And so we're really interested to see that, the changes for disturbed nocturnal sleep, looking at the percentage of N3 sleep. I think those will be really clinically meaningful, really important to further elucidate why we think sodium oxybate works. And so I think those are the 2 things that we're looking for. And obviously, I think the important thing for our drug is going to be, absolutely, we needed to show all of our safety information, right? And so once we have the opportunity to scientifically present, it will be really important for us to show that temporal safety profile over time. Those are important clinical information that I'm excited to see and obviously, we'll be anxious to get it out to the community.

Yes. And Frank, I'm not trying to dodge your question. I will cover your question in more detail as we wrap the call up. But one of -- obviously, one of the key milestones -- our key work streams and priorities for us is full steam ahead toward NDA. And there's a lot of components to that, that we need to do from not only the complete data readout, but the pre-NDA meeting, the completion of the rest of the components of the NDA that we need to pull together, pulling it all together and ultimately submitting. So we'll touch a little bit on that here as we wrap the call up, so thank you.

Our next question is coming from Matt Kaplan from Ladenburg Thalmann.

Congratulations on the positive readout. Just wanted to touch on a couple of things. First off, your commercial plans and preparations, where you are with those? And then also kind of thinking about the competitive landscape that's out there and how the FT218 differentiates from XYREM with respect to safety and efficacy, maybe you can specifically talk about the high discontinuation rate that you see with XYREM now. And talk about, I guess, the hangover effect, too, with the twice-nightly dosing protocol?

Yes. Matt, we'll touch a little bit on kind of market prep and where we are as we wrap the call up. But clearly, there's -- as we cross this important critical milestone, those work plans and work streams across the commercial preparation as well as the market preparation for FT218 only continues to accelerate and advance from that standpoint. So -- and that covers a lot of different areas, whether it be distribution, patient services, specialty pharmacy, market access, pricing, sales strategy, so on and so forth. So all of that has been in progress and ongoing and now only continues to advance as we move from planning to begin to build and execute. And there's -- and I'll cover as we close kind of the 3 priority work streams for the company going forward as we wrap up the call. In terms of commercially, how we think about the data, I mean, obviously, there's more data to be had, there will be a label that we will certainly have that, that we'll guide our commercial promotion. Clearly, there will be a lot of data generated and a lot of opportunities to communicate that data through our publications and scientific communication plans and all those things will happen over time as we move from this point forward toward a potential ultimate approval of FT218 and a commercial launch. So thank you.

Our next question today is coming from Umer Raffat from Evercore.

I think a lot of the obvious stuff has been asked, but I did want to touch up on 2 more things. First, Jordan, can you speak to the preferred dose you want to file? Do you think you need to file the 9 grams? Because it seems like the 7.5 is delivering all the efficacy. And presumably, it may save you guys from any hangover effect in the morning. That's one. The second one is there's a trial called N1 that was run by Jazz. It's in moderate to severe cataplexy, where the effect size on cataplexy placebo-adjusted was as much as 10 to 12 attacks per week. I know at the high dose, you guys are tracking at 6.5, but I also know that you didn't get to the high dose until very late in the trial anyway since it is a titration trial. So perhaps can you speak to how we should or shouldn't think about those data comparisons, Jordan?

Yes. Thanks, Umer, for the question. So I think the dosing is an interesting one. I mean, obviously, we don't have all the data. And I think right now, the intention will still be to probably look for approval for all doses. And again, difference versus placebo is still what's critical. Change from baseline obviously was a little bit bigger with the 9 gram. As much as like, listen, we don't treat patients anecdotally, it's also possible there are patients who do need a higher dose when we look at that granular data. And so I think, again, it's early likely the plan, given the reference product is approved for ranges -- recommended ranges of 6 to 9 grams. Now at this point, I guess, I fully anticipate, probably going to all 3 doses. But yes, I think we still need to elucidate the data. In terms of cataplexy and effect sizes, I mean, I think all I say, and we can't make head-to-head comparisons for a reason, right? They're different trials. They're different baselines, right? Our cataplexy scale, again, we capped it. It was a little bit different than what's been done in other trials. I think really, all I'll say is that it's still -- it's the anchor, right? So I think I forgot to mention that 75% of our patients in our trial had cataplexy, right? Came in under that NT1, 8 or more cataplexy episodes inclusion criteria. And so when we just look at -- it's really functional, 72% of our patients were rated as much or very much improved. And so that's where we can have semantic arguments if that's the right word about -- discussions, not arguments about this effect size versus that effect size. I mean I think the purpose of our study is to show our drug is effective. It's not to show how our drug compares to a different drug because it's not -- we don't have an arm for -- we don't have a comparator arm. So we clearly showed our drug is effective. It's highly effective on daytime sleepiness. It's highly effective on cataplexy. And the meaningfulness is reflected by nearly 3/4 of our patients were rated as much or very much improved. And so that's why I just -- there's different data out there for different drugs. But I think on face value, our -- the robustness of our data just speaks for itself and clearly shows the high effectiveness of FT218 given once-nightly for narcolepsy.

Our next question today is coming from Gregg Gilbert from SunTrust.

I have a couple. My first one is about your little 8 strategy, Greg. Is there any precedent for that strategy when the filer is a brand? And how would you characterize the FDA buying into that carve-out strategy, given that it's not technically part of the SPA? I think what you said was you've run it by them, but they can't really officially endorse your strategy until a review? That's question one. And question two, the elephant in the room is that the market may have totally shifted or largely shifted by the time you get to it to a lower sodium form. And I'm sure you have some views on that. And feel free to offer any thoughts. But are you considering we're working on a low-sodium version of your product?

So maybe I'll let Jordan comment on the sodium 8 question, and then I'll talk about our life cycle management and some of the -- and your regulatory strat question.

Yes. So Gregg, thanks for the question. I mean I think from a sodium standpoint, my team and I, we've done a lot of research on that. And I think our view -- one is, like, listen, when you look at all of the research over the years for the 18-or-so years that sodium oxybate has been in the market with a salt content similar to ours, there's nothing that I can find here, that we can find that shows people in sodium oxybate who've been treating with it have had higher risk of hypertension, cardiovascular disease, at least the data that me and my team have been able to see, and I think it's been accepted by the community that sodium oxybate it's a really effective drug. It's been run for a while. And thousands and thousands of patients who have been on it, and I don't really think people have had that big of a concern about the cardiovascular risk of the salt. And it's also important when you actually look at salt in general. And my team and I consulted with a lot of leading salt experts in the world. And it's really funny that the whole salt concept is very debatable, right? This whole notion of 2.3 grams a day put out by the American Heart Association is based on older data. It's based on limited data. And there's actually a lot of newer epidemiological data that shows there's really a j-shaped curve of the risk of kind of salt and so-called cardiovascular risk, like really low salt, i.e., like less than 1 gram a day, or really high salt, like, over 5.5 grams a day. And there some who say it's actually better to be between 3.5-or-so and 5 grams a day of salt. And so obviously, I'm not going to advocating, hey, listen, more salt is better. All I'm saying is based on the data. Our view is that salt, as far as we can tell, really isn't that big of an issue medically to these patients. And then those, most physicians, at least that we've talked to who prescribe sodium oxybate for many, many years, don't see it as an issue.

So Gregg, just with regards to your comment about -- I'll just stick on the sodium concept. From a life cycle management perspective, part of the benefit, if you will, of some of the new team members we've had at it for the last year, really brings substantial experience in the sleep space and really helped shape some of our thinking and -- in terms of life cycle management strategies, in terms of bringing additional value to patients through either formulation or indication from that standpoint. And then couple that with our -- the continued and the expansion of our capabilities from a technical operations and formulation standpoint, we believe we have the skill set to do other things with regards to FT218 from a formulation, and again, in an indication perspective. We haven't talked about those specifically what they may or may not be. We've been clearly and appropriately focused on FT218 to get through this milestone, but those are certainly things that we have plans for. And as they -- those plans turn into a stage where it's reportable and updated, we certainly will do that. As it relates to analogs around carve-outs and whatnot and Section 8 carve-outs, there's probably not one perfect one from that standpoint. We've identified a couple that we -- that are reasonable and close proximities in cases where it's a 505(b)(2), in cases where there's -- there are or could be generics in the marketplace where there's a drug-drug interaction issue. And in one case where there was a DDI study done, in another case where there was not a DDI study done. So those 2 analogs are [ pure action ], which is allopurinol. And the second one is Mitigare, which is a colchicine product.

[Operator Instructions] Our next question today is coming from David Sherman from LifeSci Capital.

I just wanted to discuss in terms of some of the pushback we've heard on the story, just trying to understand how differentiated once-nightly is versus twice-nightly. Some people have thought it might be a little bit more of a convenience factor. Do you think the dataset that you have in hand now gives you sufficient ammo to take to payers as being a differentiated product?

Jordan, do you want to give a comment on that word convenience?

Yes, David, thanks for the question. Yes. I mean we don't view this as convenience at all. We're in the process of collecting data. We have some data to show that there are issues with the second dose in the middle of the night, right? Obviously, not everybody, but I think around -- a few years back, the FDA added a warning in the label that falls or associated with both the first dose and the second dose. Obviously, our patients, we think the data shows are going to sleep through the night. So you avoid those potential AEs in the middle of the night. So there's the potential safety benefit there. As well as there are many people who we talk to who need to set an alarm to wake up for that second dose, and we have lots of anecdotes and data we've collected from patients who talk about the impairment to the bed partner, right? The bed partners that have to wake up every night to alarm for the rest of their night. As well as potential misuse, right? We know with the twice-nightly product, you need to leave -- you leave that second dose out in the middle of the night, and there's anecdotal stories we've come by where they wake up to that second dose and it's missing, someone took that. And so I want to say, it's not -- I mean we don't believe it to be a convenient supply. We believe it's an important medicine for patients that aside from just, we think the benefits of improving sleep architecture consolidate it without kind of breaking that cycle and waking up in the middle of night. But we also think there's theoretical safety advantages. We think our data is going to show that. And we were granted orphan designation based on the belief that we do have -- we will have these potential safety advantages of our drug. And again, I look forward to seeing our full data set, and we anticipate that at least our drug will be very safe and is clearly beneficial while avoiding potential issues in the middle of the night and breaking that sleep cycle and making people wake up.

Thank you. That does conclude today's question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.

Thank you, everyone, and thanks for the questions. And I know we're running up here before the market opens shortly. So let me close with a few final comments, if I may. As we move forward and as we've articulated in some of the Q&A, the next steps for us are very clear as we progress toward our goal of bringing FT218 once-nightly to the market. So we continue to accomplish that, we really have to execute very specific plans that ensure that we have a robust, we have an approvable and a commercially viable NDA submission. With the positive top line data readout, our near-term actions really center around 3 major priorities. The first, really taking all the necessary actions to complete and submit our NDA. This includes, but is not limited to, completing the full data analysis for REST-ON; preparing for, requesting and conducting a pre-NDA meeting; completing the remaining components of the NDA, which we have described is really more kind of perfunctory in nature, but they do require a lot of work, and it's a lot of work to compile and complete a comprehensive and approvable NDA, and all that continues to be in progress. Number two is really executing our clinical programs, expansion of our medical affairs plans and, of course, our scientific and publications communications plan. This does include also the open-label extension and the switch study that we've previously discussed as well as other critical medical related priorities, such as our REMS program. And thirdly is really expanding our market preparation, commercial launch planning and execution. This crosses a variety of work streams, market access, patient services, distribution, commercial analytics, pricing, and then the requisite infrastructure and the sequencing of that as we proceed from data readout to ultimately NDA submission to our pursuit of an NDA approval. So all of the above and more are in progress. They're advancing forward. But at the end of the day, none of these could be possible if it wasn't until today's positive data announcement. So today, we crossed this critical milestone in our pursuit of bringing FT218 to patients and firmly believe with our FT218 once-nightly formulation of sodium oxybate, we do have the ingredients for a successful product. Ingredients that include a potentially differentiated treatment that can deliver a clinically meaningful and highly significant response; a development strategy that has no new chemical entity risk that's operating under a Special Protocol Assessment agreement with the FDA, and let's not forget that has patent protection now until at least mid-2037 with additional patents under development; and lastly, the right team, right, the right team that's targeting this estimated $1.7 billion twice nightly sodium oxybate market to continue to build on this momentum that has been created to date and especially with the results that we presented today. We're proud to be able to potentially help patients who are suffering, and we remain focused and committed to bringing once-nightly FT218 to market as soon as possible. So we thank you for your time, and we wish you a great day and a great week. Thank you.

Thank you. That does conclude today's teleconference. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.