Crinetics Pharmaceuticals, Inc. (CRNX) Earnings Call Transcript & Summary

Welcome to the Crinetics Pharmaceuticals PALSONIFY FDA Approval Conference Call. [Operator Instructions] I will now turn the call over to Gayathri Diwakar, Head of Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining us to discuss the FDA approval of PALSONIFY. Today on the call, we have Dr. Scott Struthers, Founder and Chief Executive Officer; Dr. Dana Pizzuti, Chief Medical and Development Officer; and Isabel Kalofonos, Chief Commercial Officer. In addition, Tobin Schilke, Chief Financial Officer; and Dr. Alan Krasner, Chief Endocrinologist, will also be joining for the Q&A portion. Please note, there is a slide deck for today's presentation, which is in the Events and Presentations section of the Investors page on the Crinetics website. In addition, a press release was issued earlier today and is also available on the corporate website. Slide 2. As a reminder, we'll be making forward-looking statements, and I invite you to learn more about the risks and uncertainties associated with these statements as disclosed in our SEC filings. Such forward-looking statements are not a guarantee of performance, and the company's actual results could differ materially from those stated or implied in such statements due to risks and uncertainties associated with the company's business. In particular, today, we will be reviewing our commercialization plans as well as estimates relating to market size, future performance, growth and other data about the acromegaly market, which are all necessarily subject to a high degree of uncertainty and risk. These forward-looking statements are qualified in their entirety by the cautionary statements contained in today's news release, the company's other news releases and Crinetics' SEC filings, including its annual report on Form 10-K and quarterly reports on Form 10-Q. I would also like to specify that the content of this conference call contains time-sensitive information that is accurate only as of this live broadcast. Crinetics takes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. With that, I'll turn the call over to Scott. Scott?

Thank you, Gayathri. I'm very proud to share that PALSONIFY has been approved by the FDA for the treatment of adults living with acromegaly. This ushers in a new era in the acromegaly patient care and marks a truly transformative moment for both the acromegaly community and for Crinetics. We founded Crinetics 17 years ago to build a company dedicated to transforming the lives of patients by carefully crafting therapeutics that intervene in endocrine pathways. But new drugs are only as impactful as the problems they solve for patients and their caregivers. That's why we began engaging with the acromegaly patient and caregiver community well before our clinical studies began. Through this, I've personally gotten to know dozens of people living with acromegaly. Their insights and those from many others have extensively shaped our discovery, development and now commercial distribution strategies. I'm extremely gratified to tell those patients living in the U.S. that PALSONIFY is now available. As you can see on Slide 5, acromegaly is a serious chronic endocrine disorder caused by a benign tumor that secretes excess growth hormone. This leads to chronically elevated levels of insulin-like growth factor or IGF-1, which is the primary biomarker for the management of acromegaly. The consequences of chronically elevated growth hormone and IGF-1 can be severe, including changes in facial features, enlargement of the hands and feet, carpal tunnel syndrome and enlargement of the heart that can lead to congestive heart failure. These excess hormones also induce insulin resistance, hypertension and there's more. As I said, this is a serious disease. From the perspective of someone living with acromegaly, the physical changes in their appearance, not to mention the sweating and skin changes, can be alarming and socially isolating. Severe headaches, fatigue, joint pain and peripheral neuropathies can be debilitating. What's worse, these are relatively nonspecifics and acromegaly can hide in plain sight for 5 to 10 years before diagnosis, even though diagnosis is relatively straightforward once the disease is suspected. Based on the current treatment guidelines, the first step after diagnosis is typically surgery to try to excise the tumor. But remember, the pituitary gland is located behind the eyes right next to the optic chiasma and the carotid arteries. Depending on how the tumor grew in this confined space, it's often difficult to safely remove it. Elevated levels of growth hormone and IGF-1 secretion from residual tumor fragments are unfortunately all too common. For these patients, for those who are ineligible for surgery, the standard pharmacotherapy has been peptide somatostatin receptor analogs. These are typically administered via monthly depot injections that are difficult to administer and painful to receive. Importantly, these depots can take 6 to 9 months to titrate to the appropriate dose level and their symptom control can be inconsistent. Many patients experience troubling breakthrough symptoms each month. And despite well-established clinical practice guidelines, far too many people with acromegaly don't currently receive these depots or have given up and discontinued medical therapy altogether. We know that people living with acromegaly deserve better. But it's one thing to talk about all the complications and symptoms of acromegaly, it is something completely different to sit down and talk with someone living with the disease like Dave, who I've gotten to know and is shown here on Slide 6. Dave told us how the pain and fatigue caused by acromegaly negatively affects his everyday life despite being on existing medications. Dave has a passion for music, but acromegaly caused his voice to change so he couldn't sing and the symptoms in his hands made it painful to play piano or guitar. Dave told us that some of the things that brought him joy were stolen by acromegaly. We want to offer people like Dave the opportunity to regain their moments of joy, to take control of their disease instead of letting their disease control them. One thing that came through loud and clear talking to Dave and many others living with acromegaly is the high level of unmet needs throughout their entire rare disease journeys. Our roots in the endocrinology community grow deep. We are 1,000% committed to being the partner of choice with the entire endocrine ecosystem and ensuring that people living with endocrine diseases get the care they deserve, starting with acromegaly. Moving to Slide 7. We're very happy with PALSONIFY's broad label. It captures the breadth and depth of the work we put into its discovery and development and the impact it can have on patients for both biochemical and symptom control. Our experienced commercial and medical teams are ready to go, and we are well positioned to bring PALSONIFY to people living with acromegaly in the U.S. Before I hand the call over to Dana, I want to take a moment to express our gratitude to the patients and their caregivers who participated in the clinical trials. I'd like to thank the investigators and their staff who conducted these clinical studies of PALSONIFY around the world. We also appreciate the FDA's constructive engagement throughout this process. Together, the contributions from all these stakeholders have helped shape a new era in acromegaly treatment, offering hope to patients who have long awaited a transformative oral therapeutic option. With that, I'll hand the call over to Dana to review in more detail the clinical data that is now reflected in the approved label. Dana?

Thank you, Scott. Turning to Slide 9. We believe the broad label reflects the extensive clinical data supporting PALSONIFY's safety and efficacy profile. PALSONIFY is approved as first-line treatment of acromegaly in adult patients who have had an inadequate response to surgery or for whom surgery is not an option. The label for PALSONIFY allows a broad population of patients to potentially benefit without having to try other therapies first. Notably, in addition to biochemical control, our label includes data showing improvement in symptoms for the subjects in both experienced and untreated populations. We believe this will resonate strongly with both health care professionals and patients and address an unmet need in acromegaly therapy. The favorable safety and tolerability language in our label is also significant as only expected class effects are listed in the warnings and precautions section. As I'll share in the next few slides, we believe this label provides a solid foundation for our team to educate health care professionals on how the use of PALSONIFY can benefit their patients. Our clinical development program was carefully and intentionally designed to include 2 different but complementary pivotal Phase III studies, which have led directly to the broad indication reflected in the label. As Slide 10 shows, PATHFNDR-1 demonstrated PALSONIFY's ability to maintain disease control in patients who are already biochemically controlled on injectable somatostatin receptor ligands or SRLs. Our PATHFNDR-2 study on Slide 11 demonstrated PALSONIFY's ability to reduce IGF-1 in 3 challenging patient populations, those who are treatment naive, those who were previously treated but uncontrolled and those who were previously treated and underwent a washout period. Furthermore, as shown in the label, 57% of patients who were uncontrolled on their prior therapy achieved biochemical control at week 24 with PALSONIFY. The high response rates and durability of effect, as shown on Slide 12 by the OLE data across the Phase II study and both Phase III studies indicate that PALSONIFY can offer reliable long-term disease control for up to 4 years. Turning to Slide 13. I'm also pleased to highlight PALSONIFY's impact on symptom management, which we evaluated using our novel acromegaly symptom diary or ASD. This innovative patient-reported outcomes tool allowed us to capture the real-world impact of PALSONIFY on patients' daily lives. This is a key differentiator in the approved label as it's the only one with symptoms as a prespecified endpoint. The ASD data revealed consistent evidence of PALSONIFY's ability to maintain comprehensive symptom control compared to placebo, and the results of the trial did show statistically significant improvements in symptoms for PALSONIFY versus placebo in prespecified key secondary endpoints. The label explicitly notes lower severity across all 7 key acromegaly symptoms, headaches, joint pain, sweating, fatigue, weakness, swelling and numbness in both PATHFNDR-1 and PATHFNDR-2 studies. Again, this is one of the biggest differentiators in the label. Patients living with acromegaly often report uncontrolled acromegaly symptoms or breakthrough symptoms while on treatment with currently available injectable SRLs even when IGF-1 is normal. A post hoc analysis from PATHFNDR-1 confirmed a high frequency of breakthrough symptom exacerbations in those patients. This frequency was significantly reduced after switching to PALSONIFY. Turning to Slide 14. The comprehensive safety data from both PATHFNDR studies demonstrate that PALSONIFY was safe and well tolerated across our robust clinical program of over 500 study participants. There were no serious adverse events reported during the randomized control period in patients receiving PALSONIFY compared to 2.4% in placebo. While some gastrointestinal adverse events were observed, these were predominantly mild in nature, typically occurring within the first 2 months of treatment and resolved spontaneously without requiring discontinuation of therapy. The discontinuation rate due to adverse events was remarkably low at less than 4% among PALSONIFY-treated patients. Importantly, our long-term safety monitoring showed tumor volume generally remained stable. The robust safety and efficacy data from our clinical program validate our conclusion that PALSONIFY represents an important advance in acromegaly care. With that, I will now turn it over to Isabel to discuss our launch strategy. Isabel?

Thank you, Dana. Turning to Slide 16. We know that patients should not have to settle or make trade-offs between the burden of disease and the burden of treatment. And we believe that PALSONIFY represents a new era in acromegaly care. We have a transformative product, a very experienced team and the right strategy to successfully execute this launch in a dynamic competitive market. First, activate. We must shift the treatment mindset. Through our engagement with the acromegaly community, we have learned that success for patients is more than IGF-1 control, it is about the impact symptoms have on their lives. Our patient activation initiatives are designed to accelerate appointments with health care providers and encourage conversations about disease control. Our educational initiatives with prescribers emphasize our differentiated profile and the start of a new era in acromegaly [indiscernible]. Second, adopt. We plan to win on efficacy. Both treatment-naive and switch patients can benefit from a therapy that works rapidly, provides lasting results and consistently control symptoms. Our robust clinical data and broad label clearly demonstrate PALSONIFY's ability to deliver in all those fronts and will serve as a powerful foundation for our engagement with practitioners. I'm very pleased that our label will be uniquely differentiated within the class because it includes data on symptom control. Third, access. We have implemented programs to ensure broad patient access and provide unprecedented support to ensure acromegaly patients can start and stay on therapy. We have been educating payers on the unmet need in acromegaly and the value proposition of PALSONIFY, and they have been receptive to our core med. Finally, adhere, getting the prescription is just the first step, especially in a space where discontinuation rates are high. When patients stay on therapy, they see better outcomes. We believe PALSONIFY is a therapy that patients will want to stay on, and we remain committed to providing ongoing education and service to all stakeholders to support adherence and persistency. I will now provide more detail about our specific launch preparations as it relates to our 3 key stakeholders; health care providers, patients and payers. Starting with our health care provider engagement strategy on Slide 17. The medical affairs team has prepared the foundation for our commercial organization to execute on the launch. They have been educating physicians about the PATHFNDR data and PALSONIFY's clinical profile as part of its speaker engagement, congresses and our CME series, all with meaningful engagement. Our sales representatives are ready to get PALSONIFY to patients in need. The field team has extensive experience in rare disease and endocrinology and a shared passion for transforming patient care. They understand that physicians adoption will take time and persistent engagement because health care providers might default the treatment they are familiar with. Our field force will be armed with clear messages that will draft their attention to facilitate use, a first-line oral therapy that delivers rapid and sustained IGF-1 control and allows consistent symptom management. Our customer engagement model is designed so that our field force will be calling on both academic centers and community practices. Learning from our market research on this space, we recognize that success requires meaningful engagement from community practitioners who treat approximately 50% acromegaly patients. Given the profile of PALSONIFY, we believe it will achieve broad adoption, but we expect a gradual ramp considering the long tail of endocrinologists seeing only 1 or 2 acromegaly patients per year. Our sales force will be focusing on the 5,400 targets. Their efforts will be supplemented with omnichannel nonpersonal promotion that will reinforce messages from the field and over time, expand the universe of potential prescribers to reach a much larger health care professional base. We believe our strategy will drive steady growth in the long term as health care providers and patients gain firsthand experience with PALSONIFY. Moving to Slide 18. Before I discuss our patient engagement strategy, I would like to detail how we see the current addressable market and then explain how we plan to reach each segment. First, there are approximately 11,500 addressable acromegaly patients in the U.S. Our market research indicates that approximately 40% are medically treatment naive, 25% are currently on SRL treatment, 20% are using our therapeutic options and 15% have discontinued treatment. Additionally, there are approximately 1,500 newly diagnosed patients each year, of which 500 are likely to be candidates for pharmacotherapy. In the longer term, we intend to help drive diagnosis and treatment for the more than 17,000 undiagnosed patients. Turning to Slide 19. Our patient engagement strategy seeks to refrain the narrative around acromegaly management. There hasn't been through innovation in acromegaly for over 20 years. This is the first time that the acromegaly community will have a treatment that offers unparalleled efficacy, favorable tolerability and safety and once-daily convenient dosing. The current treatment paradigm presents clear opportunities for PALSONIFY. Real-world data we published shows that 80% of patients on injectable SRL discontinue or switch their initial therapy within the follow-up period of up to 5 years, reflecting the inadequacy of these options. In contrast, over 90% of PATHFNDR study participants actively chose to stay on therapy and transition into the open-label extension studies where the vast majority have now been on PALSONIFY for over 2 years. We will activate patients with an omnichannel strategy and a variety of tools to empower them to have more informed discussions with the providers. We're encouraged by the initial response to our disease state awareness campaign. We aim to mobilize patients regardless of whether they need to switch, initiate or resume treatment. As you will expect, patients typically wait for the regularly scheduled appointment to talk to their health care providers and patients who are not actively on treatment might face a wait list of several months to see an endocrinologist. No matter their starting point, Crinetics is committed to helping people living with acromegaly get the care they deserve. We will also continue our decade-long partnership with the patient advocacy community at the corporate level to ensure we continue to be aligned with the needs and effectively address the challenges faced by people living with acromegaly. This collaborative approach has been essential in building trust as we make sure that patients' voices are heard and we support them in their treatment journey. Moving to Slide 20. We have strategically developed our infrastructure and payer engagement plan in order to ensure broad access to PALSONIFY. First, we have controlled distribution model to provide the best patient and practice experience. We're also working with 2 specialty pharmacies and specialty distributor that can provide products directly to the pituitary treatment center pharmacies where many patients get care. And second, for over a year, we have been educating payers on PALSONIFY's differentiation versus current standards of care. Unlike other treatments, PALSONIFY is the first and only once-daily oral SST2 selective agonist that has the potential to achieve rapid biochemical and symptom control that is consistently maintained over time based on the Phase III data. Payers understand that this can contribute to better patient outcomes and lower overall cost due to the burden of uncontrolled acromegaly. Importantly, the label reflects its efficacy, safety, tolerability and ability to address a broad population. We believe PALSONIFY delivers extraordinary value to patients, health care providers and the health care system. Based on our extensive research, we have set PALSONIFY's annual WACC price at approximately $290,000. This is within the price range of other products approved for acromegaly. Importantly, we have implemented a sales pricing structure across both SKUs, ensuring that treatment decisions are based on clinical needs rather than on cost considerations. Payers indicate they accept very low barriers for access with typical prior authorization requirements linked to the indication on the label. Only a small number of payers are expected to require a [indiscernible]. We recognize the critical importance of making PALSONIFY accessible to appropriate patients, and we know that navigating insurance coverage can be complex. That's why we're implementing several key programs within our customized patient support center, CrinetiCARE. In the short term, our quick start program ensures that eligible patients are [indiscernible] PALSONIFY within 48 hours of the prescription. This eliminates potential treatment delays as we work through our prior authorization and securing coverage during the initial review period. Our payer team has been focused on ensuring access soon after launch. As with most new drug approvals, reimbursement at the outset will require prior authorization. We expect that it will take at least 6 to 9 months after launch, in line with other specialty pharmaceutical launches to be placed on formulary without [indiscernible]. We also want to ensure financial circumstances don't prevent access to therapy. For commercially insured patients, our co-pay assistance program will help minimize out-of-pocket expenses. Additionally, our patient assistance program will provide PALSONIFY at no cost to eligible patients. CrinetiCARE also connects patients to foundations that might be able to provide financial assistance. Turning to Slide 21. We have worked closely with payers, pharmacists, patients and prescribers to design a unique patient support program to ensure every patient who is prescribed PALSONIFY can start and stay on treatment. Our patient support hub, CrinetiCARE, is designed to provide white glove service and personalized support throughout the entire treatment journey with PALSONIFY. Our experienced nurse team will provide ongoing education and support throughout the treatment journey to help patients understand their therapy, manage potential side effects and maintain adherence to treatment. This ensures that patients have consistent access to expert guidance and support as they begin and continue the treatment with PALSONIFY. Moving to Slide 22. In conclusion, we are prepared to meet the needs of patients with our broad label, strong value proposition, experienced team and clear strategy. We're excited to launch PALSONIFY and usher in a new era of acromegaly care with a potentially transformative treatment for patients. With that, I will now turn the call over to Scott for his closing remarks.

Thank you, Isabel. With the great clinical data from PALSONIFY, Crinetics demonstrated that we can deliver world-class drug discovery and development. Now with the FDA approval of PALSONIFY, we intend to prove that we can broadly deliver a transformative therapy to people living with acromegaly and help improve their overall rare disease journey. The infrastructure and strong financial position that we've built will support PALSONIFY's launch and serve as the foundation to advance our entire pipeline of first-in-class small molecule therapeutics. As we conclude today's call, I want to emphasize that while the upcoming launch of PALSONIFY represents a significant milestone for Crinetics, it's truly just the beginning of our journey to transform endocrine care. It's not often these days that a company conceives of an idea for a drug, discovers it, develops it and has the opportunity to launch it. I'm proud that we are now joining those rare few. Lastly, I'd like to take a quick moment to thank my fantastic team at Crinetics. Their hard work and unwavering commitment to scientific excellence and patient care has been instrumental in bringing PALSONIFY to its first approval. Thank you all for your attention today. With that, I'll turn the call over to the operator to begin our Q&A session. Operator?

[Operator Instructions] Our first question comes from Josh Schimmer with the company, Cantor Fitzgerald.

Congrats on the approval. I guess what do you think it may take to gain traction in surgically naive patients? Do you plan on running additional trials to expand the label? Do you think the current crafting of the label gives you some meaningful inroads into that population? And then separately, for those patients who are not diagnosed, how do you think about a targeted campaign to find them?

Thanks, Josh. Yes, I think there's already data in our trials and in the label supporting the use in patients who haven't received surgery. Some of the patients in Phase III were not surgical -- had not been in surgery. So it's already there. And in my conversations with various prescribers around the world, I think they see a new opportunity with the rapid onset of action to be able to give it to somebody and if they can't get the surgery or if they can't get the surgery for a while and get control relatively quickly, so 2 to 4 weeks. So I think that's a really obvious population for people to go in. I mean the question isn't why would you use PALSONIFY there, it's why wouldn't you? And then as we get to thinking about finding more patients before the disease has more time to cause damage, I think there's a long history of new therapeutic options improving awareness. And we're going to be out there with awareness campaigns and -- both at the practitioner level, but also at the patient level. And I think that will help. And then we're also starting some brainstorming sessions about how we can apply technology or communications or other routes to try and improve the diagnosis rate. The thing about the diagnosis is if you suspect it, it's really straightforward. You measure IGF levels and then you confirm that you can't suppress them and you do a look for a tumor with an MRI or CT. I mean you can find out within days whether somebody has acromegaly or not. The problem is those things that have been bugging them for years are kind of nonspecific and nobody thinks to look. But we need to make sure that your dentists, your shoe salesmen, your primary care, maybe even somebody treating your diabetes, so a lot of patients who aren't being adequately controlled for their acromegaly have problems with insulin resistance because of the excess growth hormone in IGF. So there's a lot we can do, but that's going to take some time and some effort.

Josh, I was just going to add to what Scott said that those efforts had a target, and we had CME programs that also target primary care physicians, and we have significant participation on those. So it's something that is not an immediate group that we are targeting, but definitely, we want to make sure that we improve care and we accelerate diagnosis.

And the one -- just to follow on, on this because I'm super passionate about it is it's just so sad that people have given up on their treatments. We need to get them back into their physician offices. And then as Isabel's group has dug deeper and deeper into the claims data, we find these patients who -- we found 7,500 patients who've been clearly diagnosed with acromegaly and have no active follow-up. I don't know why. I don't understand that. So I think we can make a big contribution, not just to an improved therapeutic option, but to the overall management of the disease.

Looking forward to the launch updates.

Our next question comes from Yasmeen Rahimi with the company, Piper Sandler.

Congrats on an incredible accomplishment and what a wonderful label that you received. I guess the question, given that acromegaly questionnaire is part of the clinical section, it would be great if you could talk about how your sales team could speak to patients and physicians around a therapy that's available that really cuts through breakthrough therapies that is one of the challenging symptomologies of the disease to feel good for 3 weeks and lousy in your fourth week. Could you maybe talk about how that could be utilized that that's going to be a big driver of utility of PALSONIFY beyond just being highly effective and safe in an oral option?

Yes. Thanks, Yas. I think it's important to step back a little bit and remember that the patient groups have been advocating for understanding symptoms and managing symptoms for a long time. I mean part of their motto has been they're more than just an IGF number, and they've been trying to educate the physician community about that. And they also had active listening sessions with the FDA. Our conversations with the FDA about exactly that, which is why we're glad to see that the FDA listen to that and included comments about symptom improvement in the label, which is something that's not all that common. But let me let Isabel answer a little more directly how the field force can use that to try and improve care.

Yes, Yas. As Scott said, it's highly uncommon in rare diseases to have a label that acknowledges symptom control or quality of life issues. So we're very pleased that we are able to use that. And of course, it will be in our sales materials. We're able to communicate symptom improvement, reduction in severity. We're able to talk about the core symptoms of the disease and how the worst symptom actually improves with PALSONIFY, which is very relevant to patients and physicians. So the label is giving us the opportunity and the data that we collected in PATHFNDR-1 and PATHFNDR-2 to really make sure that patients are not only looking at IGF-1 control, but symptom control and that initiates a dialogue, a different kind of dialogue between physicians and patients that we think is very relevant and will really transform acromegaly in the future.

And if I may ask one question from Toby. Toby, moving forward into the upcoming quarters, what metrics do you hope to share with us as we are going to be monitoring the launch closely?

Yes. Thanks. I think that as we gain experience in the marketplace, we will share key performance metrics. They will be linked to our progress with patients, health care providers and payers. And we'll gain experience over the next few months. And then on the upcoming calls that we have and engagements publicly, we'll provide detailed metrics. So we look forward to providing those in the coming quarters.

Our next question comes from Gavin Gartner with the company Evercore.

Congrats on the approval. So just on the pricing side, I'm currently calculating that Somatuline and Sandostatin net price is probably in the $60,000 to $70,000 range, give or take, depending on dose after all the rebating and discounting. But the Signifor LAR WACC price is pretty closely aligned with what you noted, and it seems like without that much rebating. So I'm wondering what quality of access does Signifor have in acromegaly relative to the SRLs at a higher price? And what are your own expectations on gross to net?

Yes. Thanks, Gavin. And I think that's a great example on Signifor, which, as you know, also impairs insulin secretion. And so you end up having to add antidiabetic drugs as well for many of those patients. But look, we had quite a bit of time to think through that and talk to payers, as Isabel was describing. And I think that with the value that we're bringing, the rapid onset of action, the reliability, durability, consistent control of both the IGF and symptoms and a favorable safety profile and all this is reflected in the label, it's not that hard to communicate the value proposition to the payers. And I think they're getting it. So -- and maybe what's more important is irrespective of that aspect of getting care to patients, we're really committed to making sure that everybody has access to PALSONIFY with a really unparalleled level of patient support, certainly in the acromegaly space. And as well said, that's called CrinetiCARE. But we expect most commercial patients to have 0 co-pay. We have a bridge program so that they get a script, they can get cut, they can get it in days. And we'll have a very generous patient assistance program so that they're not insured or underinsured, they'll get on drug. So I'm very confident that we'll have good access. But Elizabeth (sic) [ Isabel ], maybe you can elaborate on that.

Yes. We conducted extensive payer research, as you can imagine, to make sure what will be the appropriate price point that really demonstrated the value of our treatment as Scott outlined. And we found that basically, when they see the efficacy profile, the impact on symptoms, the safety profile, the once daily convenient dose that allows for patients to stay on therapy, that resonated very well with patients. Also, if you look at the space and you look at the data on IQVIA and different databases, many of these patients right now either are taking more injections per year or are taking less injections per year or are discontinuing. So basically, the disease is not managed. So when we talk to payers in summary, most of them told us that they will expect to primarily cover the drug based on the prior authorization to label, and as you know, we have a first-line label, a minority of the patients might implement a single step edit primarily through NSL or potentially through Cabergoline. And we expect that most of these patients actually at some point during their treatment has been on those medications, which will allow for immediate access to PALSONIFY. They also highlighted for us that there are very few patients per plan that are in their programs, and it will make no sense for them to put too many barriers. So through all the discussions with them and considering the high value that we bring to patients, health care professionals and the health care system, we feel very confident that we'll get access very quickly. And as Scott highlighted, we also have to make sure that the patients we have access -- very fast. So our Quick Start program will allow for a 48-hour delivery of the treatment while we do benefit verification in the background, and we'll be very -- moving very fast through that process. So overall, we feel very confident that this is now going to be a variant and we will be in formulary within 6 to 9 months.

And then I think on the question around gross to net, I think it's early innings right now to guide on a gross to net ratio. However, Isabel has alluded to in the past about a 60-40 split between the commercial payers and the government payers of this product.

Next question comes from Jessica Fye with the company, JPMorgan.

This is [ Dill ] o for Jess. I just wanted to quickly double check if you said that most payers will acquire a step edit through an SRL. And then I have...

No. A minority of payers.

Most will not, sorry.

Most will not, yes. A minority of payers. The majority of payers will cover based on prior authorization to label.

Okay. And then recognizing that you're coming out of a very different price point, I just -- what do you estimate the injectable SRL sales are in acromegaly, both in the U.S. and worldwide?

Yes, that's been very difficult to dig out exactly. So you have to probably ask Gibson and Novartis. We've never had a number and we can really rely on fancy number of scripts, but sales is harder to get.

Got you. And it's okay if I ask one more. How long should we expect for coverage to come online?

How long for coverage to come online?

Yes. So we're expecting that as a new-to-market drug will take 6 to 9 months to be in most formularies.

Our next question comes from Joe Schwartz with the company, Leerink Partners.

Great. Let me add my congrats as well. First, I was just wondering, to what extent do you expect physicians to trial PALSONIFY in their own practices on a relatively limited basis so they can get experience with how it performs in their own hands? We see this dynamic play out sometimes, yet here, it seems like the decision could be relatively straightforward. So I was wondering if we could get your thoughts on potential adoption patterns in the real world.

Yes. Thanks, Joe, and I'm kind of an experimentalist at heart. And I think we're doing that experiment now in acromegaly. And like anything else in life, it's probably going to be a bell curve of different phenotypes. So the experienced pituitary centers, my guess, are going to be quite a bit more confident in prescribing an SRL. On the other hand, they have many more patients, so they may want to make sure and see how it works in the first Q. Similarly, in the community, there's going to be physicians with 2, 3, 4, and there'll be some that want to switch everybody to keep it simple, and there'll be some that will try it out for one. And then when their next patient comes in 4 months later, they'll try it out again. So I don't know. I'm very curious to see how that plays out. Do you want to add to that, Isabel?

Yes. Our market research indicates that one of the key attributes that will help with adoption is the fast set of action. They will see very quickly how the patients respond, how they feel about their symptoms, and that will definitely be a motivation to move the drug. So if you remember, as of the label, the drug works as rapidly as 2 to 4 weeks. So they will see and they will be able to evaluate very different from SRL where you have to wait for several months before you titrate up and make further adjustments and decisions. We are also very excited to see the significant interest from community doctors. Those community doctors tend to have 1 to 5 patients, the majority really 1 to 3 patients. But they had shared with us that if they have a positive experience with one, they will immediately switch the others because they really want to have a single way of managing in their practices, particularly because they have many other patients with diabetes and other conditions. So they want to standardize the way that they look at that. So we are expecting uptake from both PTC centers and community. And again, the onset of action and the rapid effect is going to be very important in that broader adoption over time.

But all that said, I think we're still going to have significant headwinds in just the core -- the way medical access is these days. I don't know about you, but the last time I tried to get past my -- well, even my primary care, when you could get a reasonable appointment time on telehealth, but it was like 2 months to see my primary care and the specialist was 4, 5 months out. So we'll help where we can there, but that's going to be an intrinsic challenge in the system.

That actually anticipated my second question.

Our next question comes from Maxwell Skor with the company, Morgan Stanley.

This is [ Selena ] on for Max. Congratulations on the news. We wanted to ask what are your plans for sharing real-world data? And how might that help with uptake among patients well controlled on injectable?

So look, we have a big set of open-label extensions going. And there's emerging data from that. We showed some of it in the slides today and some will keep on going. But maybe Alan or Dana can comment a little further on our plans in the real world.

As Scott mentioned, we have long-term open-label extension data in patients who have been treated for up to 4 years now in our Phase II extension study and 1 to 1.5 years in our Phase III extension studies. And I'm sure as these long-term open-label extensions wind down, that will be converted into more kind of real-world experience kind of reports as well.

Our next question comes from Alex Thompson from the company, Stifel.

This is [ Patrick ] on for Alex. I guess, could you guys just talk about who you think your early adopters are here? I know the label is broad indication position this is first line, but do you expect to see mostly switch patients in the beginning? And then I guess on the OE, are those patients converting to drug? And maybe how many patients could we expect here?

Yes. So I mean, again, I'll say, I don't know who shouldn't be prescribed Paltusotine or PALSONIFY, still getting used to the new name. But as you start thinking about the dynamics of the practice, it's probably going to depend a lot on who comes in first into that individual practice. I do think that the patients who are currently actively managed and coming in for their monthly injections are a kind of a prime area to -- you know when and where they're going to be or at least the office does. The new patients are an obvious one for the newly diagnosed and untreated patients are an obvious one for the practitioner, but you never know when they're going to come into your practice. And of course, I think that these patients who are untreated, who should be, are a huge priority, but that's probably going to take some while to get to that depth of the potential opportunity. But did you want to comment, Isabel, on how you're thinking about deploying the efforts of our team?

Yes. Frankly, it's interesting. When we talk to patients, there are patients that are newly diagnosed that have been waiting to actually be in this therapy. So we are eager to see adoption in that segment. But as Scott alluded, the majority of the patients are currently in some sort of treatment, whether it's an SRL or Cabergoline or MYCAPSSA. And those already have appointments and doctors are already seeing some of the shortcomings of those therapies, whether it's breakthrough symptoms, whether it's lack of efficacy and IGF-1 control, whether it's the fact that the patients are not consistent in using the medication and are taking some sort of drug holidays. So we are expecting that. Across the board, we will have an opportunity to have patients that are currently on treatment transitioning to PALSONIFY. So across the board, as Scott says, all patients should be benefiting for this treatment, but we see that a lot of that will also come from switching.

Our next question comes from Dennis Ding with the company Jefferies.

This is Anthea on for Dennis. Congrats on the approval. In terms of switch patients, I think you mentioned patients usually switch within the follow-up period of up to 5 years. So curious to see what that frequency of those follow-up appointments where docs are evaluating their progress is? And when do doctors typically start considering a switch in terms of moving away from their current treatment?

Well, I think kind of like I answered one of the earlier questions, it's a bit of an experiment in progress. Typically, patients see their endocrinologists once or twice a year, depending on the state of their disease control, maybe more rapidly if they've recently been diagnosed or have recently had surgery. So that's the natural cadence of the contact point. And then in terms of the -- just how docs think about switching, I think about it both from the patient and the physician point of view. I think there's some docs and some patients who can't wait for their next visit to talk about it. I think there's others who are going to be much slower. And I think momentum will build as patients talk to each other and as physicians talk to each other. Do you want to add something, Isabel?

Yes. There are many patients today that are making trade-offs between the burden of the disease and the burden of the treatment. And they have shared with us many stories. For instance, the treatment doesn't allow them to travel. Treatment is very painful. The treatment is constraining them and not allowing them to do their daily activities for periods of the month, long periods of the month. So those patients are very and many times, not only the prescribing doctors, but the nurses in the practice are aware of that and want to make sure that those patients have an alternative option. All the patients are in suboptimal treatments like cabergoline, and they are not really controlled. And this is the opportunity to actually be in an oral that is effective and is well tolerated and will allow them to have the life that they deserve. So we see that there are different motivations to switch the patients and primarily is the disease under control, IGF-1 control, symptom control, but also the burden of the treatment will play into their decisions.

Our next question comes from Jon Wolleben with the company, JMP Securities.

This is Catherine on for Jon, Citizens. I just have a quick question about kind of the line of sight going into the October launch. Do you have any guidance on how many patients you guys kind of already know that might be coming on drug early in the launch? And also another quick question about the Quick Start program. How long does the initial prescription last? So how much drug do the patients get initially?

I have no idea how many patients are waiting, but I don't think you should expect any sort of a bolus because as much as you might want to call in and get an appointment, good luck. But I feel bad saying that, but it's just tough out there. Our Head of Medical Affairs was Chairman of the Department at Dartmouth before he came and joined us, and it took a year to get an appointment, more than a year, actually. So I hope we can improve that as a health care system. But maybe, Isabel, you want to comment on the second part of her question?

Yes. Our quick start program, the patients will receive a bottle with a treatment for 30 days, which we believe is sufficient time for us to do the benefit verification and move into a commercial paying customer.

Next question comes from Brian Skorney with the company Baird.

Congrats on PALSONIFY's approval, big day. I'm sorry if I missed this on the $290,000 number, but you have 2 different NDCs. Are they both the same price? Or like is it $24,000 per 60 tablet bottle for each? Or do they have 2 different prices? And if so, could you break out the list by NDC? And then on the 60/30/10 breakdown, for commercial Medicare, Medicaid payer mix. Is that in the active treatment segment or the actively managed segment? Just wondering if those injectables might have a higher commercial representation and treatment naive, maybe higher Medicaid representation or if you could just give some better on-the-ground insight there.

Yes. Thanks, Brian. I'm really glad you asked that because I guess we weren't as clear as we should have been. We're implementing a flat pricing. So it doesn't matter what dose, it's the same price. I don't think people should be making dosing decisions on what's best for their patient based on the price of the drug. It's just -- I mean, sometimes that has to be done, but not with PALSONIFY. And then maybe you want to comment on the different coverage groups then, Isabel?

Yes. As we had shared, 60% of the patients currently are in commercial. As you know, the onset of disease is later. That's why Medicare is about 30% of the patients and Medicaid is 10% of the patients. To your question of whether that's different, whether they are in an SRL or they are actively managed, this is basically the breakdown for patients on treatment.

Our next question comes from Richard Law with the company, Goldman Sachs.

This is Paxton on for Rich. Congrats on the approval. I guess a question for me is in regard to the step edits, do you expect that this would have a larger barrier to potentially new patients? What are your expectations for what that percent of payers requiring step edits could be? And what would the trial period be for the prior agents?

Yes. I think the -- really, I want to emphasize that our impressions is, this should be few and far between. This should not be something that happens all the time. We expect it to be primarily just a prior authorization to make sure -- a simple prior authorization to make sure that patients are appropriate for the drug. And so in the case that, that happens and somebody might implement a step edit, it's way too early to predict what that may look like. And we do think that the bulk of the patients initially will be those who've already experienced that drug. And again, it just doesn't make medical sense. So you've got a newly diagnosed patient. You know that they've had surgery, their IGF is not where you want it to be. You can choose between something that is going to be giving you the right answer in 2 to 4 weeks or you could go to one of the depots where you wait 3 months for the first dose, 3 months for the second dose. And if they need the third dose, that's 9 months. And half the time -- at least according to one study, half the time those injections are administered poorly. Why -- what's really in it for the -- any payer to want to impose that on a newly diagnosed patient. So I just don't think it makes sense, and it's not a very supportable physician.

Yes. We come back to the market research, as I mentioned. And for instance, when we're talking to the PBMs, they told us not many of our members have acromegaly. So there is even much more cost trying to implement a step edit than actually covering the drug. There is no much to gain there. So the response that we got is the vast majority will be covering our treatment based on label. Very few will have a single step edit, and we believe that we have everything ready to implement and get over that very quickly because the example that they gave us is potentially we'll put you to a step edit to SRS or cabergoline. And as I mentioned before, the majority of the patients have been on those treatments. So we'll be able to process those fairly quickly. I mean you probably know in rare diseases, it's very, very hard to start implementing that. This is actually across rare diseases that most of the time, it doesn't make any sense to put the patients or the physicians to a step edit if the physician considers that that's the best treatment for the patient.

Our next question comes from Cory Jubinville with the company, LifeSci Capital.

Congrats on this really incredible update. One thing I noticed on the label, there's a section that flags potential ocular phototoxicity findings from nonclinical studies and it found some findings such as early-stage dry AMD and diabetic retinopathy. Since acromegaly patients tend to be older and more at risk for metabolic disease, can you walk us through some of those nonclinical findings as it relates to potential impact in the clinical setting?

Yes. Thanks, Cory. I'm really glad you brought that up because man, if you look through that label, it's so clean overall. I don't want to have any confusion. There -- in the general warnings and things are almost all class effects that you see with all SRLs. So for those of you who haven't had a chance to pour over the entire label yet, what Cory is referring to is a language related to a preclinical phototox study where there were some findings in some of the animals. And so after discussions with the FDA, we implemented ocular assessments in our ongoing open-label extension studies. And as we follow these patients, some for over 2 years now, we've not seen any adverse events of phototoxicity as we're following it. And this is pretty extensive. However, we don't have baseline assessments for those patients and the observations that you mentioned were included in the label. But these observations are conditions that you'd find commonly in any cohort of this age demographic, and none of them are related to the preclinical findings. So overall, I want to make sure there's no confusion there. I don't think this is an issue at all. But I just want to remind everybody what an excellent profile it is overall for PALSONIFY. And just on a personal level, this has been one of the cleanest drugs that any of us have ever worked on. So we're super happy about that. But then you add the clinical benefits on top of it and all of this in the label, the biochemical and symptom control. I think this is just a huge advance for people with acromegaly.

Our next question comes from Douglas Tsao with the company, H.C. Wainright.

Congrats on the approval. It's been a great journey for you, Scott. Just maybe a question for Isabel. I'm just curious, when we think about the launch, where do you expect to see the greatest adoption early going? I assume -- or where will you be focusing most of your efforts? Will it be largely on pituitary centers? And how long do you think it will take before you start to see adoption in the broader community setting?

Again, we're -- I'm an experimentalist, and I think Isabel too -- is too. And I'm eager to see. Of course, we're spending time in the pituitary centers. We've spent time with them for years anyway, both as part of our development of paltusotine, but also part of our development of atumelnant and talking to them about what else we should be doing. So I think the -- we've been at the scientific meetings. We've had high-profile talks at Endo and European Endo. So I think that group knows about us. And we're collaborators and friends and part of that community. So I think we're doing well there. We do have more work to do in the community outside of the centers. But remember, those folks also work very closely with the centers. And we've already started some education programs hosted by top KOLs who are now talking to a broader set of people but it's really hard to predict how this will play out. So I'm just waiting to see.

Yes. So as you know, 40% of the patients are in the PTC centers and 60% of the patients are in community. And as a reminder, our sales team has been in the field for the last 2 months, making connections and educating the physicians on the disease, on acromegaly. So we are now ready to go. What we can anticipate is that the PTC centers have more patients, but they also have a harder time making appointments. So we want to see how quickly they can move through that cycle for the adoption of paltusotine. There is a potential benefit there is that some of them would like us to partner with them. So they had -- they dispense directly, and we have the capability to do that, not only to our specialty pharmacists. And in the community, there is an interest because for them having a nurse injecting the patient, it's actually a burden. And for them, having an oral agent that is easy to use and easy to dispense is important. So we are expecting adoption in both. If you have followed the CrinetiCARE launch, you will see it's also common for endocrinologists in community and PTC centers to start prescribing therapies almost in parallel. We just want to see how the sequence and the volume will come. But for us, it's important to be in both settings, and we are ready to go on both.

Okay. Great. Isabel, just a follow-up in terms of your -- the program to get drug to patients within 48 hours, will you be able to complete benefit adjudication in that time? Or will there be some amount of being at risk in terms of shipping drug to patients?

Well, that's for the Quick Start program. So we will be able to shift the quick start program within 48 hours while we do benefit verification. So the patient will get treatment for 30 days, and we hope that benefit verification will be done relatively soon, but we are accounting for that amount of time to actually make sure that the net prescription will be covered by the insurance.

Yes. We don't want to lose the momentum. You go into your doc, you get a prescription -- you have a conversation, you get a prescription, and then you wait and wait for prescription. That's not the user experience we want for the people we're trying to help. So they walk out, they get the script or the script goes through electronically. And one way or another, we get it to them as fast as we possibly can, and we'll worry about the money later. I think the other thing to note is maybe I don't remember if we said it or not in the prepared remarks, but we've got a group right now out putting labels, printing labels and getting them on bottles so that we can get this drug shipped to people very early in October. So we may not make the 48 hours for the first few patients. But after that, we expect to be very quick.

Yes. We are in the process of getting drug in the channel and as pretty much the new drug, it will take a few days. But once drug is in the channel, we'll be able to supply to the quick start program, we think 48 hours.

Isabel, should we think of that to some extent as sort of in lieu of the sampling program sort of like a starter path?

Yes. We can consider it that way. We are not going to do anything [indiscernible]. It's going to be a big event.

Our next question comes from Andy Chen with Company Wolfe Research.

This is Emma on for Andy. I guess how do you anticipate physician practice patterns will evolve over the next few years following launch? And do you expect PALSONIFY to eventually replace injectables with standard of care expected to remain complementary for certain patient subsets like switchers?

Thanks. This is an interesting debate between the CEO and the commercial leadership, right? So the CEO thinks and has always thought why would anybody stay on the depots? I mean, maybe if you have some -- I don't know. I can't think of a reason why you would stay on it. On the other hand, it's unreasonable to expect that anything would -- any one new drug would completely displace a well-established entry. And so I think the way to think about it is, again, about time. There may be people who are hesitant to make the change. It's working for them. They can tolerate the injections. They love seeing their nurse every month. They don't want to change. Eventually, the new patients will come in. And as I said earlier, why wouldn't you start a new patient on PALSONIFY. So I think with time, we will shift practice patterns. But what I really hope -- honestly, I don't really think the big deal is to switch everybody to PALSONIFY. I think the most important thing we can do is get way more people on medical therapies that need to be on medical therapies, get their IGF levels down to where they should be and get their symptoms under control. And if we do that, in a few years, you won't be asking me about how many patients are still on the injectable depots. You'll be asking us about how we really grew the market or improve care overall for these people living with acromegaly.

Yes. For me, there is no doubt that we will become the new standard of care in acromegaly. And that means we'll have the highest number of patients on treatment than any other drug in the market. So I'm fairly certain about that. That's just the future, but it will take some time to get there because right now, the appointments are slow. We are still -- we have very few patients in our clinical trials in the U.S. So we need to get people to have experience with the drug to really see how that benefits their patients before they adopt more broadly.

Yes. And maybe another clarification. It's not just switching from other SRLs, but there's a lot of people who are on dopamine agonists. And I think we know pretty clearly that the dopamine agonists are not as effective as for most patients as what they really need. So there's that group as well.

Our next question comes from Catherine Novack with Company JonesTrading.

Congrats to Scott and the team on just a really well-executed program from start to finish. My question is a little bit on -- so in doing my market research, one thing that I saw was that the number of patients controlled after surgery is variable from center to center. And I was wondering, a, is this what you've seen in your market research? And b, have there been advances in surgical techniques or anything that might then impact the number of patients who are not biochemically controlled after surgery and therefore, the market opportunity?

Thanks, Catherine. I think that's a great question and part of the overall problem in the care of acromegaly patients and their journeys, there is a great deal of variability in the skill of different surgeons and their ability to excise these tumors. And what's really been found is that in centers where they're high volume, where they're doing this day in and day out, obviously, you practice and you get good at it and your outcomes can be better. So that's an important thing we tell any patient that they should look at the number of surgeries their surgeon does before they choose a surgeon. And some of that information is what we provide on our CrinetiCARE website as we help people with the physician finder. But what was told to me at one of the conferences I was at recently was that the majority of surgeries in the U.S. for pituitary are done by neurosurgeons who spend most of their days doing back surgery and things like that, and they don't do very many pituitary surgeries. And I think that's not a great choice for most patients.

And just to ask again, has it -- have you seen any trends in recent years or it kind of held steady across the board?

Well, I think if you go back a little further, people have gotten into the more careful robotic surgeries. But I'm not sure there's been any big leaps in the area. Alan, are you aware of any big leaps?

No, I think there's a movement towards increasing standardization and defining, for example, pituitary center of excellence and things like experiential caseloads for surgeons and also for the endocrinologists and other health care providers. So there is a movement toward more consistency in care. But even in the best of hands, it is difficult to remove these acromegaly causing tumors in their entirety in many, many cases.

Yes. And yes, that's a great point. It doesn't matter how experienced you are. If that tumor is kind of wrapped around in between the optic nerve and the carotid artery, you just can't risk it. And the angles, again, I'll encourage somebody. If you really want to understand how hard this is, go on YouTube and you can watch them. But it's really hard to get in there safely. And you don't want to mix the optic nerve or do something to the carotid artery, that's for sure.

Congrats again.

Thanks, Catherine. Really appreciate it.

Thank you so much. That will conclude today's conference call. Thank you for your participation, and enjoy the rest of your day.

Thank you.