Biohaven Ltd. Q1 FY2021 Earnings Call

Good morning, welcome to Biohaven Pharmaceutical's Q1 2021 Earnings Call. At this time all participants' lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference call may be recorded. I would now like to hand the conference over to Clifford Bechtold from Biohaven. Thank you, and please go ahead.

Thank you, and good morning, everybody, and welcome to the Biohaven First Quarter 2021 Earnings Call. Speaking on today's call are Dr. Vlad Coric, our Chief Executive Officer; Jim Engelhart, Chief Financial Officer; BJ Jones, Chief Commercial Officer; and Dr. Elyse Stock, our Chief Medical Officer. Earlier this morning, we issued a press release announcing the first quarter 2021 highlights. A copy of this press release can be found on our website at biohavenpharma.com, and we will file our Form 10-Q later today. Before we begin, let me remind everybody that today's discussion contains forward-looking statements based on the environment as we currently see it, and includes risks and uncertainties. A list and description of the risks and uncertainties associated with an investment in Biohaven can be found in the company's filing with the U.S. Securities and Exchange Commission. Please be aware that you should not place undue reliance on the forward-looking statements we make today. For this call, we will focus on non-GAAP financial measures with detailed description of GAAP and non-GAAP analysis in our filings. An archive of today's call will be posted to Biohaven's website in the Investor Relations section. With that, I will turn the call over to our CEO, Dr. Vlad Coric.

Thank you, Cliff. Good morning to our investors, and thank you for joining the first quarter earnings call, representing our first full year of earnings since the launch of NURTEC ODT. The company continues to excel in our launch of NURTEC ODT, and more broadly, advancing our strategic goals across the pipeline to grow value for patients and investors in the years to come. Our first quarter 2021 performance continues to exceed expectations across multiple fronts. NURTEC ODT was approved a little more than one year ago. And despite facing what was perhaps the greatest challenge of any new drug launch with the emergence of the pandemic, the Biohaven team effectively and safely delivered our new migraine medication to patients. To-date, we have achieved over 600,000 prescriptions of NURTEC ODT, and access for patients is broad with greater than 89% commercial coverage. While we had expected first quarter sales to be impacted by the seasonality of patient deductibles and prescription reauthorizations typically experience in our business, NURTEC and our strong commercial team broke the mold and demonstrated exceptional delivery with first quarter net revenues of approximately $44 million for a year-one, post-launch net revenue total of $107 million and climbing, I have to say. A testament to our determined commercial team and the entire organization that fulfilled our responsibility to the patients to ensure the drug supply chain remains strong during the pandemic. Together, we are relieving suffering by delivering this novel migraine therapy to patients. In addition to NURTEC ODT, I'm also pleased to report that our internal robust pipeline continues to grow across both migraine and non-migraine indications in common and rare diseases. We believe that Biohaven has the most broad and differentiated CGRP antagonist platform in the pharmaceutical industry. At this time, we have over 10 CGRP antagonist clinical programs across both migraine and non-migraine indications running around the globe aimed at areas of significant unmet needs. In addition to our growing and robust CGRP platform, we continue to expand the pipeline into areas including multiple system atrophy, ALS, spinocerebellar ataxia, OCD, and others. These programs will bring treatment options to millions of patients suffering from rare and common diseases that are untreated or undertreated. Elyse Stock, our CMO, will shortly speak in more detail regarding these programs, and I'm pleased to share that as we build our pipeline, our goal is to bring value to patients and shareholders for many years to come. We have multiple significant near-term milestones anticipated in 2021 in the early part of 2022. Starting with anticipated approval in migraine prevention in the second quarter of 2021 and then followed closely by top-line results earlier than expected with our MPO inhibitor of vazegepant in MSA in the third quarter. We anticipate that enrollment in our Phase III study for vazegepant, which is being performed at Mass General, will now complete in the fourth quarter. Troriluzole is also anticipated to read out top-line data in SCA at the end of the year or early in 2022. We are excited about the potential of our pipeline to bring value to patients suffering from devastating neurologic disorders and bring long-term value to our shareholders. NURTEC ODT continues to hold strong in the market as our differentiated product profile continues to drive demand. During this quarter, we have taken steps and have made appropriate and rigorous decisions to ensure our continued growth and future success with minimal impact to our share and NBRx. These decisions will allow us to see further improvement in GTN in the latter half of 2021. I would like to thank our entire commercial organization and managed markets team for their dedication and for continuing to deliver strong market performance in the first quarter of 2021. For March of 2020, we heard directly from patients that their experience on NURTEC ODT was quite different than experiences with other standard of care medications. We believe that NURTEC ODT has the potential to become the first-line standard of care therapy given its efficacy and safety profile. This slide shows that we are at the very beginning of our market penetration compared to the triptans, and a lot more growth is ahead of us. The slide also shows that oral CGRPs are making steady progress in increasing market share specifically compared to the triptans due to this profile. I want to note that this slide does not include the separate large population of patients who can't take triptans due to contraindications or patients who have failed or don't achieve a full response to triptans. This type of growth early against the standard of care medications is certainly bode well for the entire oral CGRP class and shows that we are changing the paradigm by which migraines are treated. When we look at CGRP targeting agents as a whole and refresh this slide, it remains evident that oral CGRP antagonists continue to drive the lion's share of the overall CGRP market. The slide also suggests that effective acute therapy results in a diminished need for patients to go on to injectable preventative agents. We believe oral CGRP antagonists for the acute treatment of migraine will ultimately grow into the $4 billion to $5 billion a year annual market in the U.S. alone. Given the projected size of the overall market, we remain focused on investing in the long-term success of NURTEC ODT and growing the overall oral CGRP market. NURTEC ODT is going to continue to be a key growth driver for our company this next year, but we have many other value-adding points for 2021 and beyond. While the commercial organization continues to focus on driving sales of NURTEC ODT, the rest of the organization will be equally focused on driving new value inflection milestones. This slide summarizes the breadth of our pipeline and life cycle management opportunity at Biohaven. Outside of the U.S., we have seen global approvals of NURTEC ODT begin in early 2021 and have already established distributor agreements in certain geographic regions. While we await our EMA approval for dual acting therapy, we continue to advance discussions regarding ex-U.S. partnering of NURTEC in Europe and other major markets. In addition to our life cycle management of NURTEC ODT, we expect to have top-line data from intranasal vazegepant by year-end, and if positive, we will be ready to file vazegepant as the first intranasal CGRP antagonist for the ultra-rapid treatment of migraine. An oral version of vazegepant is also set to begin clinical testing this year in migraine and non-migraine indications. Given our CGRP franchise flexibility in multiple formulations and different drugs that could be optimized for various CGRP-mediated diseases outside of migraine. Beyond the CGRP impact on this franchise, we also have important Phase III readouts in our myeloperoxidase inhibitor and glutamate-modulating platforms. A drug targeting sprain inflammatory pathways is expected to yield top-line results in both MSA and ALS. Troriluzole modulator is also expected to have top-line data by the end of the year or early next year. In addition, we have multiple assets moving through our Biohaven Labs discovery engine, bringing diversity to our portfolio and long-term value to Biohaven, and we anticipate some robust clinical candidates coming to IND in the next year or so, enabling us to branch out further beyond neuroscience, build additional partnerships, and deliver more medicines across multiple areas of serious unmet need. Biohaven's robust pipeline is poised to continue to deliver value for patients and investors for the long-term. Our R&D team has delivered on past milestones and has an exciting list of portfolio that we believe will continue to create value over the next year. To summarize, we have a differentiated commercial product in NURTEC ODT that is generating impressive revenue growth, and we have a strong portfolio of product opportunities that we believe will deliver value for patients and investors in the near-term as well as for years to come. Our goal is to continue to work hard to improve the lives of patients suffering from neurologic and neuropsychiatric disorders and continue to deliver best-in-class therapies from our promising pipeline for patients. I will now turn it over to Jim Engelhart, our Chief Financial Officer, to review the detailed results of our financial performance in the first quarter of 2021.

Thank you, Vlad. Good morning, everyone, and thank you for joining today. NURTEC ODT achieved net sales of $43.8 million in quarter one, demonstrating another strong performance versus the prior quarter, increasing 25% versus quarter four 2020, driven primarily by strong prescription volumes. Continuing down the P&L for SG&A, SG&A expenses in the quarter on a non-GAAP basis were $130.9 million compared to $85 million over the prior year quarter, an increase of $45.9 million. Most of our SG&A costs are in support of our commercial sales of NURTEC ODT. The increase is primarily due to a full quarter of commercial support, including direct-to-consumer investment in Q1 2021, as compared to Q1 2020 when NURTEC ODT was launched in the last few weeks of the quarter. For R&D, our R&D investment in the quarter on a non-GAAP basis was $74.1 million compared to $49.8 million over the prior year quarter, an increase of $24.3 million. The increase is primarily due to the acquisition and integration of Biohaven Labs earlier this year and increased expenses from completing the latter stage trials in the vazegepant program, which had two ongoing Phase III trials by the end of Q1 2021 as well as investments in our expanding pipeline. We reported non-GAAP adjusted net loss for the three months ended March 31, 2021 of $188.4 million or $3.04 per share loss compared to $134.9 million or $2.39 per share loss for the same period in 2020. Turning to our balance sheet, we continue to be well capitalized with $570.9 million in cash, cash equivalents and marketable securities as of March 31, 2021. In addition, we have immediate access to $225 million from our debt facility with Sixth Street and anticipate $182.4 million of additional capital from the previous royalty pharma funding agreement. With that, let me turn it over to BJ Jones, our Chief Commercial Officer.

Thank you, Jim. This year's Q1 earnings marks the anniversary of Biohaven's inaugural commercial launch of NURTEC ODT. It has been a year like no other as we collectively weathered the impact of the COVID-19 global pandemic. But in the midst of this once-in-a-century struggle, Biohaven remains focused on our patients' and customers' needs, and in so doing we were rewarded with exciting commercial milestones throughout. We are extremely pleased with the launch's success to date and what we believe to be positive signals for a strong rebound in the broader pharma market and specifically growth in the oral CGRP migraine market. The 13 months in the market, we are proud to report NURTEC ODT's net sales achievement of $107 million, which is an outstanding outcome for the first year of the launch. And we are particularly enthusiastic about driving strong performance in Q1 despite the traditional challenges of shifting insurance coverages, resetting deductibles, and a non-traditional hurdle of COVID winter surge. We exceeded market expectations again, delivering $44 million in sales on 25% growth quarter-over-quarter. We are also bullish on market growth, as we expect this momentum to continue and only accelerate over time. With the percentage of Americans vaccinated increasing and COVID-related deaths, hospitalizations, and infections falling, we see early signs of this lingering market suppression finally lifted. With each passing quarter, oral CGRPs have continued to win the hearts and minds of clinicians due to their differentiated efficacy and safety profiles, which many believe represent a significant advance over the current standard of care. Syndicated Siris data show more than half of neurologists and headache specialists believe this to be true, as of Q1. We are also encouraged by this data highlighting NURTEC's differentiated profile and preference among specialists and primary care physicians, which suggest significant upside for NURTEC as we break through triptan prescribing habits. The key driver in changing prescriber belief is trial and increased expense as market penetration continues. With increased promotions from various manufacturers, we expect adoption to grow significantly in the months and years to come. As you are well aware, we are anxiously awaiting news from the FDA regarding the status of our sNDA for the preventive treatment of migraine. If approved, we expect to launch NURTEC ODT's new indication by the end of Q2. As such, we are busy finalizing preparation for what we believe is a significant milestone in migraine treatment. This would be the first and only medication proven to treat and prevent migraine. If approved, NURTEC ODT has the potential to offer migraine patients what no other medication has: personal control. For the first time, we will have a highly effective treatment option that offers flexibility and simplicity by reducing polypharmacy or pill burden with one medication that can be used to effectively stop an attack and taking less or prevent one taking more. We will share more once we hear from the agency. In summary, we closed out Q1 2021 with strong performance, delivering above expectations, driven by a best-in-class compound and outstanding execution in the market. The future looks bright, as COVID restrictions lift, markets open again, oral CGRPs continue to penetrate triptans, and we hope to receive approval for a transformational indication. I would like to close, as we often do with a spotlight on our patients. We continue to receive thousands of testimonials each month from patients and their loved ones sharing stories of hope, resilience, and strength. Each with a unique and compelling story of how NURTEC has given them a better quality of life than they experienced previously due to migraine. These communications serve to fuel our collective passion and deepen our resolve to provide access to NURTEC ODT for every migraine patient who needs and deserves more treatment options. We are grateful to all of our patients and their clinicians for the trust they place in us as we partner to address the tremendous unmet need in this disease state. And with that, I will turn it over to our Chief Medical Officer and my partner, Elyse Stock.

Thank you, BJ. Again, this quarter, I'm happy to highlight the significant advances made across our R&D organization, and I'm also happy to look to the future and Biohaven's potential to bring multiple novel therapies to patients. We continue to make great progress across our programs, including our CGRP franchise, our myeloperoxidase inhibitor platform, our glutamate-modulating agents, and the new opportunities we have across both common and rare diseases in our late-stage portfolio as well as our labs. Biohaven Labs has numerous early and exciting platforms being developed, as well as some assets in or nearing clinical trials. We are progressing our antibody recruiting molecules, multimodal antibody therapy enhancers, also known as MACE, and molecular degraders of extracellular proteins, and they have great potential, and you will be hearing a lot about these in the coming years. We expect our early pipeline to bring us exciting compounds in numerous areas over the coming years. But for today, I'm going to focus on our later-stage programs that are in the clinic with many nearing top-line readouts. Our aim, of course, is to always look to novel targets so as to be able to bring treatments to many who suffer from debilitating neurologic disorders. NURTEC ODT remains our cornerstone marketed product indicated for the acute treatment of migraine. NURTEC's prevention sNDA, as you have heard, is currently under evaluation by the FDA and the PDUFA date is nearing. Vazegepant is following closely behind with both intranasal and oral formulations in clinical trials. Our third CGRP antagonist small molecule, 3100, is also headed to the clinic. In the coming days, I will be highlighting some of our most important progress to date. Our portfolio of small molecule CGRPs affords us great flexibility and has the potential for multiple blockbusters. The impressive commercial success of NURTEC in the United States has been touched upon by both Vlad and BJ. NURTEC's sNDA for prevention of migraines is under evaluation and has its PDUFA date this quarter. The European evaluation of NURTEC's dual acting filing is underway, and with these approvals, we look forward to being able to treat the continuum of migraine disease with the simplicity of using one medication product. This significant paradigm shift will improve the lives of many living with migraine across the globe. Filings and approvals for the acute treatment of migraine have taken place or are underway in multiple countries. In the Middle East, we have already secured approvals in Israel and the UAE. We expect further approvals throughout this year. Life cycle expansion beyond geographic regions and the dual indication is also of critical importance. We have ongoing trials in both pediatric migraine as well as trigeminal neuralgia, and expect to study NURTEC in several additional migraine-adjacent areas, including posttraumatic headache, temporomandibular joint disease, and at least one other undisclosed area. Investigator-initiated trials and studies in health economics will add to the wealth of information that will ultimately be available for NURTEC and will help define the scope of important information for patients, providers, and payers. Our vazegepant program includes both intranasal and oral formulations. An acute treatment Phase III study with intranasal vazegepant began in October of last year, and followed a positive Phase II study. The second pivotal vazegepant trial has the potential to confirm an even more rapid onset of effect. An oral formulation has also been advanced and began one of two Phase III studies in migraine prevention in March. Newest in our portfolio of CGRP antagonist, small molecules are a number of next-generation CGRP antagonists. We expect the first of these, 3100, to advance to the clinic in the second quarter of this year. CGRP represents an important pathway in the nexus between the immune and central nervous system. Across our range of CGRP antagonist assets, we will follow the science and conduct multiple proof-of-concept and registrational studies. Some of these have begun, for example, class psoriasis with rimegepant and COVID-19 with divergent. Additional non-migraine studies are planned, including asthma and others remain undisclosed. These multiple CGRP antagonists all open new possibilities for us to expand our CGRP platform and afford us the ability to customize the unique attributes of each of these structurally unique compounds. We have deep experience in this mechanism of action and now we have multiple assets to optimize for different indications. We are quite busy with the CGRP antagonists as well as our other important platforms. Biohaven's pipeline has both low-risk opportunities in life cycle management of our CGRP platform and higher risk, high-reward investments in our glutamate and myeloperoxidase inhibitor platforms. Our glutamate-modulating platform is one of those high-risk, high-reward areas. Troriluzole recently completed enrollment in a Phase III study in spinocerebellar ataxia and is expected to read out top-line results between Q4 2021 and the first quarter of next year. A Phase III program in OCD started at the end of last year with the enrollment in the first study, and the second study was initiated in the first quarter of this year. Both studies are based on critical signaling that emerge from the earlier proof-of-concept OCD study we conducted. Glutamate is the most abundant excitatory transmitter in the brain, and we believe Troriluzole has and will provide important advances in the neuroscience fields across many areas, which may then be expanded. With regards to our MPO platform, our myeloperoxidase inhibitor trial in multiple system atrophy is a rare and rapidly progressing disease that has received the FDA's Fast Track designation and will yield top-line data in the third quarter of this year. The Mass General study that is testing this agent in ALS is also ongoing and is expected to complete enrollment in the fourth quarter of this year. Biohaven's efforts across our glutamate and myeloperoxidase platforms allow us to target three rare and devastating diseases: multiple system atrophy, amyotrophic lateral sclerosis, and spinocerebellar ataxia. We anticipate all of these trials to read out over the next year and hold potential for three global new drug approvals in 2022 and 2023. We are excited by the immense opportunities across all of our assets and platforms, and we will continue to make strategic decisions across the portfolio with both external partnerships and internal programs. Our pipeline is, as always, exciting, and we continue to drive these robust platforms and programs forward. We are very busy, and we remain committed to following the science and keeping the patient at the center of all we do. It is really, again, a pleasure to be able to share all of this with you, and I will now turn the call back to Vlad.

Thank you, Elyse. In closing, Biohaven has generated robust growth in terms of the commercialization of NURTEC ODT and inferred maturation of our late-stage neuro innovation pipeline. We expect continued market expansion in NURTEC ODT and migraine and anticipate at least four pivotal trial readouts over the next year. We have the potential for multiple NDAs over the next couple of years, and it is important to us as a growth company to continue advancing this robust pipeline. Before opening up to Q&A, I would like to end by thanking the entire Biohaven team for their relentless commitment and value creation for patients and investors. I also want to thank all the patients, their family members, and investigators who participated in our clinical trials and have helped advance clinical care in the area of neuroscience. We must continue to work hard to bring novel treatments to patients suffering from these diseases. Finally, thank you to our visionary investors who have helped fund our studies and bring NURTEC ODT to patients. We'd like to now open it up to questions.

Our first question today is from Ken Cacciatore of Cowen.

Congratulations on all the progress. I was just wondering if you could talk about any kind of interactions to date with the agency in terms of the prevention. Are we down to labeling discussions or any nuance or perspective you could provide? And the second question is, to what degree are we going to need to sample support if we do get the prevention approval during the year? So I'm just trying to think about if we could set some expectations for gross to nets as we try to convert over the managed care for prevention, maybe just make sure we are all properly prepared for how we are going to support that launch when it occurs?

Ken, thanks for the questions. We don't give a lot of details about the interactions with the FDA. I think suffice it to say we are at the appropriate time and interactions with the agency, and we look forward to their decision, which should be coming shortly. With regards to prevention, looking forward to next year, something that is really a benefit is the fact that we use the same dose, the same APAC, and there is a significant advantage to that when it comes to both payers and also our sampling strategy. I will ask BJ to add any comments to that, but I don't anticipate there being major changes to DTC around that. BJ?

Yes, just to reinforce that, Vlad, and thank you for the question, Ken. We believe, one, we will retain and maintain our excellent acute commercial access. And continue to aggressively pursue what will be preventive access as well. We can also tell you that we have significant interest in preventive indication among payers and early discussions have been fruitful. As it relates to any changes from a sampling strategy standpoint, we really don't believe that to be necessary as we provide appropriate sample support for all our clinicians.

Great. Thanks, BJ. There is also this efficiency. Think about the fact that in our media spend and our physician outreach, you don't have to do different set advertising. It is not like you have to have a different DTC budget for a different branded agent. So if we had two drugs going into the space, you might expect there would be a significant increase in those costs. You are going to see a pivot in our advertising that will be very focused and streamlined. This is going to include both. And like that slide, BJ showed earlier, we are going to dissolve the line between acute and prevention. That also means we will be very efficient with our marketing dollars and our interactions because we will be able to send this dual therapy message in one interaction or one app.

Next question is from Paul Choi of Goldman Sachs.

And let me also add my congratulations on the quarter and the progress. I also have a couple of questions on prevention as well. Just first, Vlad or BJ. The antibody growth has been pretty flat for the past couple of quarters here. And I was just wondering if you could maybe comment on whether this is sort of a penetration issue or is it primarily a payer issue in terms of that has been driving this flat growth with regard to the antibodies in prevention? And then, second, I know the vazegepant oral trial was just starting to kick off, but could you maybe speak to how you are thinking about positioning down the road as that trial completes and that product can come to market? And how you think about it in the prevention indication versus NURTEC?

Thanks, Paul. Look, come back to a year or so ago, we had made the prediction that if you had oral CGRPs that were readily available, that we believed patients would prefer an oral solution over injectable. We have updated that slide that we showed in the deck here quarter-over-quarter. And as you said, it is flat. Now the speculation for why it is flat can vary, but it is our belief that when you give patients an oral solution and access to this mechanism in acute, it makes sense, right, that if you are effectively treating acute episodes, less people will need to go on to preventative agents. Actually, when you look at the treatment guidelines, they specify that you should go through a set of acute therapies before going on to preventative agents. And so it is speculation, but it is our belief that it is the effect of acute therapy with orals that are resulting in fewer patients needing mAbs. Getting on to your question about vazegepant positioning. Look, I think as you have heard from multiple individuals on the call, this is a franchise that we have developed with multiple assets. We do not want any area of migraine or any area where CGRP is going to be leveraged in a disease to not be a top competitor in that area. So oral vazegepant really puts us in two positions, right, for those very few patients who may need absolute daily use. We want to have a solution for them, oral vazegepant prevention. But then it also gives us massive flexibility in non-migraine indications to bring different formulations forward for those diseases. As Elyse had outlined, we have a vision for this mechanism of action that extends into very large and common disease areas well beyond migraine. Migraine is just the beginning, and we are going to be excited about seeing those studies in future years.

The next question is from Chris Raymond of Piper Sandler.

Just on the primary care versus specialist sort of sales effort, how are you guys thinking about the volume split here between specialists and primary care docs, maybe over the next year or two? I mean especially with the prevention label being added potentially. I know you guys have talked about efficient direct-to-consumer advertising here with the label expansion, but maybe talk about how you approach the sales effort to keep the momentum going among primary care physicians?

Yes. I'm going to have BJ talk about it. It won't be a surprise. We have already transitioned to that focus. I think when you first started the commercial launch, it is no surprise in this space. It starts in the specialty clinics. And BJ, you want to comment about that transition to primary care, how important it is for us and the plan?

Absolutely. And Chris, thanks for the question. This is a very unique scenario in which, as Vlad mentioned a moment ago, it is almost 100%, like synergistic. And so the beauty is we don't need to kind of shift our attention or call, if you will, from the current focus we call. Again, we believe that just as in Q1 and kind of what has been is rapid adoption of oral CGRPs, it happened primarily in specialty first, and then we will slowly but importantly transition out to primary care. We believe the same thing will happen as it relates to the preventive indication. We feel very confident as it relates to our promotion, whether it be direct-to-consumer or whether it be from direct promotion to clinicians is that we are well focused. Again, every dollar we spend supports both what would be acute and preventive. So it all works extremely well for us as we pursue this dual therapy, which is different in the marketplace.

The next question is from Laura Chico of Wedbush Securities.

I guess two. So just kind of following back, the market research, it seems like there is a little bit of a disconnect on a couple of levels. So in one regard, you've got greater familiarity and comfort with the ability versus NURTEC, but more favorable views on NURTEC in terms of durability of tractate of onset. So I'm just wondering if you could kind of help us understand how you are reconciling the data, but also maybe with 2021 having a lot of reopening changes, how are you planning to modify your outreach efforts to position? And then secondarily, just following the EU submission, I guess I'm trying to think about the balance on capital allocation between the SG&A spend and build-out there and further pipeline investment. So I guess any color there would be helpful.

Thanks, Laura. I appreciate it. I know you watch the weekly scripts very closely with your note that comes out every week. And there is a tuber on the NBRx every week. You see that there is probably a split in market share at this point, which I think is a win for both companies and also a win for patients to have choice in the space. We do have to believe, and I think the research reflects it, that we have a more differentiated label from our competitor with the early onset, return to normal by minutes, and then the durability of 48 hours. That is really resonating. The drug is really, I think because of that profile is built for primary care, right. So we think that is going to just continue to resonate throughout this year in our messaging. We think you will see perhaps a little bit more of a differentiation in those market numbers as we continue to penetrate primary care and then the prevention label comes in. BJ, do you want to talk a little bit more about capital allocation and the other aspect?

Absolutely. And Laura, thanks for the question. As it relates to how the market's opening and how we kind of shift our allocation, we will still focus on what are kind of these two anchor points of making sure we can activate patients, but also making sure we communicate effectively and broadly with physicians, and that is the area of opportunity for us. Frankly, it has just been difficult to get to the clinicians in the way that you normally do. We will hit current access opportunities that will broaden, and we will be able to be more productive in some sense. That is the relative shift that we see. It is still consistent with our overall strategy, and we just expect more productivity in that space. So as well as things have gone thus far, we expect them to accelerate as the market opens.

The next question is from Marc Goodman of SVB Leerink.

So before you preannounced the first quarter sales slide, you had talked about gross to net staying high. And at the same high levels that we were used to seeing kind of in the second half of last year, and you said that would be well into this year. Then in the first quarter, it kind of felt like gross to net dropped quite a bit. But obviously, there is a lot of things that go on in between the gross and the average price. Maybe you can talk a little bit about what happened in the first quarter. Was there any one-time adjustment that helped you in revenues or why were gross to net so low? Maybe you could just give us a flavor for how you are thinking about gross nets for the rest of the year? And then secondly, Jim, could you just give us a sense of how we should be thinking about spending for the rest of the year? The numbers went up pretty dramatically in the first quarter. There was some share-based compensation expense that looked very high. Just wondering if there is kind of a one-timer in there or if those things are going to be there for each quarter. Give us a sense of that.

Thanks, Marc. I'm glad to hear you are saying gross nets are low. Thank you for that. As you know, what we had always said is that there will be turbulence around gross nets, and they certainly are. There are so many different variables that go into GTNs. Something that we did say last year we would start to do and we weren't sure what the success of that would be would be to start to change some of the rules around our affordability programs. I think first quarter, you also saw the cycling out of non-AIM customers to more paying customers, and that reflects that after the year of launch, we are able to identify as you know most plans were equal, curing with our competitor, and there are a few plans where we have some wins, and they have some wins. So you saw some of our rule changing that people who aren't on our bridge and UBRELVY is, there is no reason for us to continue to cover those patients. Part of what you saw was coming off of NURTEC, and so you might see a decrease in some of those scripts and then going on to UBRELVY. For us, a very efficient model because it meant that we were fine-tuning the more gain customers. This is going to be a challenging year, as the first quarter always is. We had a little bit more success than we thought on getting through the deductibles and co-pays in the first quarter. It is something I would caution people about, is that we will continue to tweak these affordability programs, and when we do that, there are some learnings that occur and back and forth. It is not so straightforward that you just get better when you stay there. So I would say let's all be cautious about this year. After this year, you should see more steady and predictable GPM numbers.

So thanks, Vlad, and thanks, Marc, for the question. Mark, as you pointed out, the increase in spending. There are a number of drivers there. Stock-based compensation is one of them, which is why we also provide a lens on non-GAAP to see some of those things out. Stock compensation, obviously, when you have stock performance to what we have, there are exercises, but there is also timing of awards that play into that as well. And then outside of the one-timers upon SG&A, as we have said in the past, there are always going to be timing of how we invest in our brand and kind of a pulse strategy, so any given quarter can see variability, but it doesn't necessarily set the tone for what our future looks like in future quarters. Hopefully, that addresses your question.

Next question is from Charles Duncan of Cantor Fitzgerald.

Congrats on a great quarter. Let's see, we are juggling calls. Sorry if this has already been asked. I wanted to ask a couple of questions about the pipeline. In particular, I guess I am wondering, can you provide a little bit more color on how you think vazegepant will fit within the current CGRP franchise? I had a follow-up on the other pipeline assets.

Thanks, Jeff. So vazegepant also represents -- we did comment very briefly earlier about the flexibility in different modalities, formulations, indications, as well as non-migraine indications. But to start with maybe differentiation in the intranasal. We have seen every single migraine medication eventually migrate to an intranasal form, and it does cause an increase in the speed of onset. Also, remind you that when patients are vomiting, it gives an ultimate way for patients to get drugs in their body without that. Again, we want to be at the lead with this robust franchise that we have. With our strategy, we will be the first intranasal, assuming we get positive data towards the end of the year, years ahead of any competitor. I also want to highlight that some of these CGRPs are actually very difficult to make into internals because they struggle with solubility, but vazegepant has really unique characteristics and is time soluble. You are going to see the first entry will be in the intranasal for ultra-rapid onset of action. We think it is going to be complementary to NURTEC. It is not going to take share from neuropathies, generally speaking. Patients prefer oral over intranasal over injectables in that order. This will be a nice additional formulation in the toolkit if you have to have a really quick onset of action or vomiting. When you look past to the oral version, we are going to compete with an oral version for every single day use in prevention for those patients who really need that level. We know this is the minority of patients that will need that level of daily use, but we will have that. The other oral formulations will allow us to specifically target other disease states, and we are excited about that. So it really represents a nice expansion of the franchise.

Okay. That is helpful. Just quickly on Troriluzole and verdiperstat. I know that they are in tough indications initially. But I'm wondering if verdiperstat and Troriluzole in spinocerebellar ataxia, and videos at in multisystem atrophy. I wonder if you could provide a little bit of color on why you have confidence or what you have done to, I guess, reduce risk with those current clinical trials.

Great. Great question. When you look at where we are with Troriluzole and verdiperstat, you are right, these are tough indications historically. The difference is we are finally coming to these registrational trials that have been performed and designed on the platform of Phase II data that showed a signal, right. Our strategy is always to have multiple kinds of basket trial-like approaches for indications because they are tough disorders. The remaining SCA had really nice proof-of-concept data, and we have used that data to increase our dose, increase our sample size, and make adjustments in scale. We did everything we can to improve our probability of winning based on a Phase II output. That is why we are particularly excited about SCA. The same goes for verdiperstat. I think AstraZeneca, prior to exiting neuroscience, had performed a really nice Phase II study, demonstrating a dose-dependent signal in MSA. Once again, it is an area where we are now going forward with an optimized dose, higher sample size, and a scale that has been optimized. We believe both of those areas, although tough, have an increased chance of winning because of the Phase II work that was done, compared to some of the other indications that we were in that were higher risk with high unmet needs without that Phase II proof-of-concept to give us the advantage. We are excited about both those readouts. We are tracking early; MSA will now be a readout in the third quarter, and the FDA by the end of the year or early next year. Thanks, Charles.

The next question is from Tim Lugo of William Blair.

This is (Ph) on for Tim. So you mentioned earlier that you expect increased productivity as the market starts to reopen. Can you sort of help kind of quantify that or just help us think about how much upside there is to the productivity as the team or productivity of the team in the market hopefully continues to reopen? And then secondly, you mentioned the usual payer dynamics in the first quarter. Were there any -- is there any pushback that you experienced or any surprises there?

Thank you. I appreciate it. I will turn it over to BJ to address that.

Tim, thank you. As it relates to productivity and quantifying that, once again, as well as things have gone for NURTEC and frankly for all CGRPs, we know there has been a bit of a blanket on this since the launch. It is because patients haven't readily been going to a lock. Clinicians appropriately have not been widely open to our promotion and to our representatives as well. This is happening across the industry as a whole. As it relates now to what we think is this upside, as well as we could have done, it would have increased what was the growth of our launch; that is what we expect now is to kind of insert back into what should be substantive growth that we could have seen since the launch. So that is what we expect to see. Again, I want to be very careful, and we want to set up what our right expectations. We have not seen, thus far, we don't expect to see just all of a sudden, June 1st, the market opens up broadly and just takes off. It will be incremental because that is the way the nation has been opening up. We are starting to see evidence of that already. We are very focused on that. As it relates to discussions thus far with payers, again, there is a lot of work to be done, for sure, as it relates to the preventive indication. But as I mentioned, thus far, dialogue with different payers and we are well into those discussions. There is a lot of interest. We are having very good and robust discussions. We will not land anything in the near term, but we are still waiting, obviously, to hear back from the agency. So a lot more work to be done, but thus far, things seem too good. Thanks.

The next question is from Vamil Divan of Mizuho Securities.

So, maybe I also apologize if I missed this earlier, but just in terms of the European opportunity, can you talk a little bit more about your partnership discussions? A few months ago, you were making good progress there. Just wondering if we should expect something ahead of a potential approval there or are your plans to go alone if needed? And then just a second question maybe around the, as you move from just having the label to potentially having prevention as well. Can you talk about your market research or anything you have seen kind of talks about the severity of the patients that are coming onto NURTEC? How many migraines do they have in a month? on average or anything along those lines, and do you think as you do the prevention side maybe you can tap into a more severe patient population? Just trying to get a little better sense of where you might be expand your -- the opportunity.

I appreciate it. As you know, with any potential partnerships, we are very careful not to get into too much specific detail around timing and other things around that. What I would say is, just like we have said in the U.S., right, we always have to be prepared to either launch and do things on their own, and we have proven to do that. Ex-U.S., there is definitely an efficiency of other companies and groups that have pre-existing established infrastructures as well as relationships with payers and regulatory front. There would be a heightened efficiency in the U.S. as we previously said, and the interest is varied from local regional groups that are very good in certain markets to larger groups that are global. It is not surprising that one could think that there would be an efficiency in the ease of one global partner. That doesn’t mean that, that would take us to a really strong local group. We have to balance those two and see what the best relationships and economics would be for our investors, but then also who can most efficiently deliver this globally to patients. That is all we can say about it at this point. Getting to your second part of the question about what are the types of patients coming in. About one year ago, again, this is another area we were different than a lot of the messaging that traditionally investors have had around migraine. There is a hyper-focus on prevention. A lot of people missed the fact that it is actually individuals with less frequent migraines that make up a very large number in the space, with more than 65% of our patients having four to eight migraines per month. These have traditionally been people for acute therapy. I think you are seeing that in the great numbers of sales, both ours and our competitors, that are putting up this very large, unsatisfied acute population here. We have not seen a lot of prevention used off-label because I think people are waiting for that data. They are waiting, and they saw the robust data in the Lancet. Step two is getting the approval from the FDA and being able to promote on it. We think there will be a lot of growth ahead in this redefining of the space if we are successful with the NDA of one drug, using the same dose to treat both acute and prevention as we finally get rid of the distinction between these two different categories. Thanks for the question.

Next question is from Douglas Tsao of H.C. Wainright.

I'm just curious, if we look at the script data and the data that you presented, you had sort of really tracked ahead of your rates on the new to brand, and it sort of now seems to be back in sort of back and forth and maybe even having a slight advantage. Just curious if you are seeing anything in market and obviously, we have the prevention launch, which sort of should be quite meaningful inflection point for you. But just on the acute side, what you might be seeing in the near term, some of the dynamics in the marketplace.

Yes. Look, we have been very happy. If you rewind to a year ago, most people were saying, look, your competitors are going to get 70% of this market because they are the established competitor. It is going to be hard for Biohaven to get in there. We are pleased where we are, but we are not resting on our time. Of course, we want to become the market leader. We think we will be on that trajectory given the profile, especially with the upcoming prevention as well. I just if he wants to add anything to that commentary, but don't over-interpret the script numbers, especially when we are changing rules on affordability programs, and you don't have a line of sight into some of the rationale as to how those affordability programs change and the impact. It might seem as though you have a reduction in the subset of patients. But again, if it is converting people over to being more paying than non-paying customers, then it might look like there is a change in the Rx when there really isn't. There is just a change in the affordability programs.

Yes. The only thing I would add, Mike, thank you for outlining that. It is really since July of last year, and if you look holistically, we are spending within a few percentage points of one another when it comes to NBRx. It is a very, very positive thing. We continue to be in that space even with the affordability changes that Vlad talked about. We absolutely believe that, especially with the market research so positive, we will be the market leader, and we expect to make that happen. That being said, this market is huge, and there is plenty of room for multiple very successful drugs. We continue to be excited about the future.

We also think there is going to be a halo effect if we are successful in prevention, right. Wouldn't you -- your patient physician? Wouldn't you want your patients to be on the acute therapy that could also prevent migraines? We think it is going to be a nice halo effect there.

The next question is from Esther Rajavelu of UBS.

I have two quick ones. First on the MPO inhibitor. Can you share your thinking on the commercial environment for MSA and what you would need to do to educate prescribers to diagnose correctly? Any color you can share on the regulatory timeline considerations would be helpful. Then I have a quick follow-up on Nurtec.

Thanks for the question. We are really excited about MSA because as you know, there is no current treatment for it whatsoever. As you alluded to, it often gets misdiagnosed as Parkinson's, but very quickly the right diagnosis is achieved. Patients progress much more rapidly than with Parkinson's. Most of the highly skilled neurology centers that we are working with on MSA, the diagnosis is pretty straightforward. I think where some of the education will need to occur is in more of the larger community center neurology offices where these individuals may be diagnosed with Parkinson's earlier. We have a plan around that and making sure that we are getting more widespread education about the differences between Parkinson's and MSA. Like migraines, you are going to see the launch in specialist centers first and then branch out.

Yes. In terms of Nurtec, I wanted to see what proportion of patients on mAbs are also getting a script for ODT right now?

That is a good question. What we know and what we have heard from folks is that people have used it for breakthrough, we actually don't have a quantifiable number, but that is a good question. We will see if we can drill down on that a little bit, but we are hearing that if you are on any preventative agent, whether it is Topamax or mAbs, patients continue to have breakthroughs. Our understanding from clinicians has been really welcoming to have a new mechanism that can treat that breakthrough, but I don't have a specific number for you, but we will look into it.

And I think we are unfortunately out of time. Thank you, Esther. We are going to have to stop the questions there. Thank you all very much for joining our first quarter call and look forward to the next quarter discussion with you. Thank you all.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.